Super Group’s 48% Profit Jump Hides a Weaker Quarter

Key Points

• Super Group now expects 2026 revenue to be between $2.525bn and $2.575bn. That’s below the $2.6bn it was thinking back in the summer.
• The $46m increase in profit that Super Group reported is all down to tax provisions and recoveries worth $39m.
• If you look at the new targets for 2026, the company needs to deliver a fourth quarter to match its World Cup record.

Super Group delivered a 48% rise in quarterly profit even though it cut its 2026 forecast. And yet, despite that, its shares still managed to finish the day up 3%. A few factors are at play here, such as a tribunal ruling, an Austrian tax recovery and some good sports results for its customers. Of the $46m increase in profit that Super Group reported, $39m came from tax-related items. Now they have to deliver a strong fourth quarter to meet their targets.

Super Group Lowers 2026 Targets After A Pretty Poor Sports Quarter

Super Group, the owner of Betway and Spin, has cut its 2026 forecast, just three months after raising it. The company thinks it will now make between $2.525bn and $2.575bn in revenue for the year. That’s below the $2.6bn it was forecasting back in the summer. They also cut their adjusted EBITDA target, from more than $710m to $700m to $720m.

According to the figures that Super Group released for its third quarter, revenue actually came in at $611m, a 10% increase on the same quarter last year. However, it was down 11% from the $684m it made in Q2, which was a huge quarter that benefited from the World Cup. Adjusted EBITDA fell from $204m in Q2 to $165m in Q3. But it still managed to be 8% higher than the same time last year.

Management put the poor quarter down to customer-friendly sports results, which they think may have cost them around $40m in revenue and $25m in adjusted EBITDA. Sports margin came in at 12.1%, which is down from 12.8% a year ago and the company’s 24-month average of around 13.7%. The boss Neal Menashe pointed out that the company’s casino business is where the profit is really coming from, it makes up about 85% of net revenue. He said: “The casino business provides a solid foundation that lets us ride out the ups and downs of the sports betting side of things.”

The Revised Forecast Is Actually Quite Close To What The Analysts Were Saying

The latest guidance from Super Group is actually not as bad as it seems when you look at what the analysts were expecting. Earnings Whispers had predicted 2026 revenue of around $2.56bn, and Super Group’s new forecast of $2.525bn to $2.575bn is only a tiny bit lower. The shares had already fallen 21% since the last time the targets were raised anyway, so this is probably a bit of a relief. The third-quarter revenue of $611m was also very close to what people were expecting, $614m.

Super Group already made a record $684m in Q2, back in August, and so that’s when they raised their targets. The new revenue forecast is actually back down to what it was before they raised it. The EBITDA target has changed a bit less, with the new midpoint of $710m matching the old minimum target.

Tax Items Account For The Bulk Of The 48% Profit Increase

Quarterly profit stood at $142m compared to $96m in the same period last year and $123m in Q2. Revenue increased by 10% and adjusted EBITDA increased by 8%. The larger profit increase was due to items other than performance from normal operations.

In the reconciliation table provided in the results, there were three tax items. The favourable tribunal ruling saw Super Group being able to reverse $17m in provision regarding a tax issue dating back to 2018 to 2022. Super Group described the issue as remote gaming duty and cautioned that further legal processes may be required. Super Group reversed $5m in penalty provisions and received $17m in gaming taxes in Austria paid in previous years.

Together these three items increased profit by $39m. Adjusted EBITDA does not consider any of the three items. Income tax expense remained flat at $37m in both quarters and there was an increase in profit before tax of $46m. There is no information in the reconciliation table to indicate the tax impact of these items individually.

Africa Grows Faster, But International Still Earns More

Africa contributed $262m in revenue compared to $224m in the same period last year, increasing revenue by 17%. Africa currently represents 43% of total reportable segment revenue. Its revenue growth rate is slower than in Q2 when revenue increased by 36% to $310m during the World Cup period. According to the presentation by the company, revenue increased by 42% in Nigeria, 62% in Mozambique and 12% in South Africa.

Adjusted EBITDA of Africa is $88m and its margin is 34%. On the other hand, International generated $93m and a margin of 27%. International adjusted EBITDA increased by 24% compared to the 23% growth experienced in Africa, despite higher UK gaming taxes. Revenue of International only increased by 5% compared to 9% growth after excluding closed US business.

There are talks of a gambling tax in South Africa. The National Treasury’s discussion paper proposed a rate of 20% on online gross gambling revenue. Menashe noted that an update will be provided in the February 2027 budget. He said: “But importantly, a proposal is not law.”

Share Repurchase Plan Focuses Attention On Fourth-Quarter Performance

A $150m share buyback has been authorised by the board on 30 October, per the results release. News feeds contain no other announcements on that date, and it seems that 3 November was the date of the initial disclosure of the buyback. Some reports indicate that the date of announcement was 30 October, but that is the date of the board’s authorisation.

The buyback will continue till December 2027, and there is no commitment by Super Group to repurchase shares. In 2023, the board had authorised a $25m share buyback, to be completed by the end of the year. As of 30 September, the company had $602m in cash, versus $17m of interest-bearing borrowings and around $61m in lease obligations.

The figures presented in the nine-month results demonstrate what is left for the last quarter of the year. The adjusted EBITDA came in at $521m for the first nine months. The new annual target requires EBITDA of between $179m and $199m in Q4. Revenue guidance suggests Q4 revenues of between $618m and $668m. The midpoint would suggest an EBITDA margin of 29%. The record margin of 30% in Q2 was achieved thanks to the World Cup.

Super Group’s CFO Alinda van Wyk noted that the sports margins in October were the highest this year. She told analysts that “Quarter 4 is off to a great start.” It is expected that sports margins will stay within normal ranges in Q4 under the new guidance.

The casino gross revenue grew 16%, while wagers increased 11%. The casino margin also rose to 4.5% from 4.3%. One analyst wanted to know whether lower growth in wagers indicated lower demand. Van Wyk stated that “we are definitely not seeing a slowdown in the iGaming business at all.” The shares closed at $11.55 on 4 November, up around 3% from $11.20 on the previous day.

Expert Analysis: Did August’s Guidance Increase Have A Solid Foundation?

A 48% increase in profit just doesn’t feel like a clean performance. Of that $46m increase, a whopping $39m came from provisions being released and taxes being recovered, and you know what? Adjusted EBITDA ignores all that. To make matters worse, that $17m tribunal decision might still have some further court battles ahead, so we’re treating that as a maybe rather than a sure thing.

Now, let’s try and make sense of the August guidance increase against the backdrop of Q3 sports losses. When Super Group hiked its minimum EBITDA guidance by $30m and revenue by $50m in August, you have to ask whether they had a solid basis for those targets. But then the customer-friendly sports results started taking their toll, costing the company an estimated $40m in revenue and $25m in adjusted EBITDA. And you know what? Those losses were almost identical to the amounts added when the guidance was increased.

This suggests to us that those August targets might have been based on a sports margin that Super Group can barely keep up in a normal quarter, which is a pretty big ask. We were also pretty surprised to see a Q2 sports margin of 17%, that’s significantly higher than the 13.8% they’re managing to churn out year to date. And Menashe telling analysts that ‘volatility is transient’, yeah, that might be true, but the thing is, sports results can go either way. That Q2 performance was also part of that whole volatility thing.

One thing that also still doesn’t sit right with us is the Africa first description, we’re not entirely convinced that’s the right label for the business yet. International still manages to churn out more adjusted EBITDA, and the South Africa tax proposal is still a bit of a mystery until February. Casino wagers are up by 11%, but that’s compared to a 16% growth in gross revenue, which tells us that the higher casino margins also played a role in revenue growth rather than pure demand.

And what about that $150m buyback programme? That’s six times the size of the one they did last year. But of course they also coughed up $203m in dividends during the first nine months, so not everyone is going to be impressed by that buyback.

So what about October? The sports margin for that month is already in the books. The real question now is how sports results are going to perform in November and December, and by extension, whether the August guidance increase was solid or just relied too heavily on those crazy World Cup-driven results in Q2.