Codere Online Luxembourg SA (CDRO) 2025 Q4 法說會逐字稿

Ladies and gentlemen, thank you for joining us and welcome to the Codere Online fourth quarter 2025 financial results. (Operator Instructions)

I will now hand the conference over to Guillermo Lancha, Director of Investor relations and communications at Codere. Please go ahead.

Thanks operator, and welcome everyone to Codere Online's earnings call for the Fourth quarter of 2025. Today you will hear from our Chief Executive Officer, Aviv Sher, and Chief Financial Officer, Marcus Arildsson. Our executive Vice Chairman, Moshe Edree, will also join us in the Q&A session.

Please note that the figures reflected in today's presentations are preliminary and unaudited and include certain non-IFRs financial metrics which should be considered in addition to our IFRS results. Reconciliations and further details are available in the appendix. During this call, we will make forward-looking statements which are subject to risks and uncertainties. While these statements reflect our current expectations, we undertake no obligation to update them after this call. A replay and transcript will be available at codereonline.com, where investors can also sign up for email alerts.

With that, I will go ahead and pass the call on to Aviv.

Thanks, Guillermo, and thanks to everyone for joining us today. Before we go into details, I would like to say that we are very pleased with how we finished 2025, especially considering the number of challenges we face during the year.

We delivered a strong set of results with a record net gaming revenue of EUR224 million an adjusted EBITDA of EUR13.8 million more than double the prior year. And we once again met the guidance range we had provided for them. This gives us a lot of confidence in the strength of our business and our ability to continue growing profitability in 2026 and beyond.

Starting with the highlights of the fourth quarter of 2025 on page 8, we delivered EUR60 million in net gaming revenue, which represents a 15% increase versus the fourth quarter of 2024 and the highest quarterly NGR in the company's history. This strong finish to the year was driven primarily by Mexico, where net gaming revenue grew 31% year on year. And by continued growth in Spain, where NGR increased by 7%, confirming that the re-acceleration in topline that we started to see in the second half of the year continued through year-end.

In terms of product mix, casinos accounted for 64% of our total net gaming revenue in the quarter, with the remaining 36% coming from sports betting, broadly in line with what we have seen over the last few quarters. We continue to see casino, a very important growth and engagement driver for the business, especially in markets like Mexico.

From an operating KPI standpoint, the performance in the quarter was mainly driven by continued growth in our active customer base. We reached around 177,000 average monthly actives in Q4, which is 20% above the same period last year, reflecting both the strength of our acquisition funnel and improvement in retention.

Average monthly spend per active was EUR114 approximately 4% below Q4 of last year, which is consistent with the larger and more diversified portfolio of customers, including a higher proportion of Mexican players.

On the acquisition front, we continue to invest in growing our customer base. During the quarter we acquired 89,000 first-time depositors at an average CPA of EUR166 the lowest level since early 2023, and which remain an attractive level given the quality of the customers we are bringing onto the platform. We will continue to optimize the mix of the channels and campaigns, particularly in Mexico. But always with a clear focus on profitability and payback rather than absolute volume.

In relation to our share buyback plan, we have continued to execute on the program we announced last year. Through yesterday. We had purchased approximately 391,000 shares of a total consideration of around EUR2.7 million under the plan, which has a total authorized investment of EUR7.5 million and runs through December 31, 2026. We see this as a very attractive use of capital at the current share price levels and a clear reflection of the board and management's confidence in the medium-term outlook for the business.

Looking ahead, as Marcus will detail later for 2026, we are guiding net gaming revenue in the range of EUR235 million to EUR245 million, and adjusted EBITDA between EUR15 to EUR20 million. This guidance incorporates the management initiatives we are planning for 2026 as well as the impact of recent regulatory and tax changes in our markets, and we think it reflects confidence that we can continue to grow both the topline and profitability going forward.

With this, I will now turn the call over to Marcus for the first time, I think. Good luck, Marcus, and cover the financial highlights for the quarter.

Thanks Aviv, and hello everyone. If we now move to slide 10, you can see our consolidated net gaming revenue and adjusted EBITDA by country.

So, in the fourth quarter, NGR revenue increased by 15% year on year from EUR52.6 million to EUR60.7 million. And this growth was driven primarily by our two core markets, Mexico. Net gaming revenue grew by 31% to EUR32.8 million. And Spain, where it increased 7% to EUR24.5 million. In our other markets, Colombia, Panama, and city of Buenos Aires, these markets contributed EUR3.5 million in the quarter, 25% less than in the prior year quarter as a result of a decline in the Colombian revenue on the back of the 19% tax on deposits that have been in effect for the most part of 2025 but expired towards the end of the year.

This top-line performance is translating into profitability and reflects operating leverage in our business model as we scale and as well as continuing improvements in marketing efficiency and certain cost discipline.

In the fourth quarter we delivered positive adjusted EBITDA of EUR6.7 million.

Which was EUR4.8 million above Q4 of 2024 and included EUR7.1 million of contribution from Spain and EUR4 million contribution from Mexico which is now clearly inflected towards profitability. For the full year 2025, adjusted EBITDA reached EUR13.8 million more than doubled the EUR6.4 million we reported in 2024 and in line with the upper end of the guidance we provided a year ago.

If we move to page 11 to have a look at our consolidated P&L. There you can see marketing expense was EUR21.4 million, slightly below last year in absolute terms and significantly lower as a percentage of NR reflecting improved efficiency in our marketing spend. The rest of our operating expenses, namely platform and content costs, gaming taxes, and personnel, were essentially in line with the growth in NGR. Altogether this cost structure resulted in an adjusted EBITDA of EUR6.7 million in the fourth quarter, implying an EBITDA margin of around 11% compared to less than 4% in Q4 2024.

Looking now at our consolidated figures on page 12. You can see the key operating metrics that underpin these results. The 50% growth in net gaming revenue in Q4 was driven by higher average monthly active players, which reached approximately 177,000 players, 20% above those of Q4 2024.

The growth in active customers was fuelled by Higher FTDs, which increased by 89,000 in the quarter, 22% above the prior year period. On the bottom right you can see that customer acquisition efficiency remains at attractive levels with a consolidated CPA of around EUR166 and trending downwards in the quarter. Taken together, these KPIs confirm that we're bringing more customers onto the platform at good unit economics and keeping them engaged over time.

Turning to Spain on page 13, net gaming revenue in the fourth quarter was EUR24.5 million, up 7% versus Q4 2024 as a result of 14% increase in the number of active customers to 56,000. With Spain being a mature and tightly regulated market, especially in terms of advertising, we're pleased to continue growing our portfolio of customers while maintaining a strong profitability.

Looking at Mexico on page 14, net gaming revenue increased 31% year on year from EUR25.1 million to EUR32.8 million. As opposed to prior quarters, the Mexican peso was roughly flat in the fourth quarter of 2025 compared to the prior year period. Revenues were primarily driven by very strong growth in active customers which grew to around 99,000 in the fourth quarter 2025 compared to 69,000 in the same period the previous year.

In December we reached more than 100,000 active customers in the country for the first time, a very exciting milestone for us as we continue to build a sizable portfolio ahead of the World Cup later on this year.

As discussed during last year, player values from customers acquired throughout 2025 had been lower than in prior years, but they've also come with a lower upfront CPA and our performance this quarter reflects that optimization between the existing portfolio and the new acquisitions.

All in all, Mexico continues to be the growth engine for Codere Online. We're building scale, increasing brand awareness, and improving our product and customer experience in the country, all while remaining focused on profitability.

If we turn to the balance sheet on page 15, you can see that we closed this year with EUR50 million of total cash, of which approximately EUR45 million is available. These figures include the impact of EUR2.4 million in share repurchases that Aviv commented on.

In terms of our net working capital position, we ended the year with a negative EUR22 million, or around 10% of our full year net gaming revenue, which is in line with prior quarters and our structural negative working capital position. This combination of negative working capital and growing scale supports our cash generation, which we expect will continue to improve and give us the flexibility to keep investing in growth and as we have started to do, return capital to shareholders through the share buyback program.

Turning to page 16, looking at our cash flow, we generated EUR13.4 million of cash flow before share repurchases and the FX impact on cash balances. This shows that the business is now delivering not only positive adjusted EBITDA but also converting a significant part of it into cash flow. As a result, our available cash increased by close to EUR10 million from EUR35 million at the beginning of the year to EUR45 million at the end of 2025.

And finally turning to page 18 where we are providing our 2026 outlook.

As I mentioned earlier, as we mentioned earlier, we expect net gaming revenue in 2026 to be in the range of EUR235 million to EUR245 million. Which at the midpoint represents around 7% growth versus 2025. We also expect adjusted EBITDA to be between EUR15 million and EUR20 million compared to EUR13.8 million in 2025, which is more than 25% growth at the midpoint of that range.

This outlook assumes a marketing, excuse me, this outlook assumes a marketing investment broadly in line with that of 2025, which we believe is the right decision given that 2026 is a World Cup year and was also considering the current competitive landscape in Mexico. We want to make sure we fully capture this opportunity to reinforce our brand and further expand our customer base in what is already our key growth market.

At the same time, we continue to see clear evidence of operating leverage in the model as our brand matures and our customer base grows. We expect that over time marketing as a percentage of the net gaming revenue will continue to trend down while still allowing us to grow the top-line.

In other words, 2026 is the year where we are leaning into the opportunity in Mexico, but we see a path forward towards a more efficient marketing profile in the medium term.

That's all from my end. I will now hand it back to Aviv, for some closing remarks.

Thank you, Marcos. Before we move to the Q&A session, I would like to thank once again to the old team.

It's been a hard year and we worked very hard in order to accomplish these results. The start, as you remember, was a bit bumpy, but we finished strong, as expected and as we promised to the market.

I would like also to thank the investors and the analysts that have joined us today for their ongoing support and interest in Codera Online. With that, I will hand over the call back to the operator to open the line for questions. Thank you.

(Operator Instructions) Michael Kupinski, Noble Capital Markets - Analyst

Oh, I'm just wondering, first of all, thank you for taking the questions. How, competitive is Spain currently on promotional activity and are margins stabilizing in that market? And then I just have a couple of follow-ups on, Mexico.

Okay, so thank you, Michael. We still see it's competitive, but we are seeing that it's a kind of, going into a plateau. And we are able to grow our customer base, with the current promotional, let's say the current promotional activity or current promotional KPIs that we are using.

It took us a couple of quarters to stabilize it, but we are seeing, two consecutive, quarters with growth. So I think we kind of, found out what to do with this, all these promotions going around. So it's competitive, but I think we are able to compete now.

Gotcha. And then on, in Mexico, I was wondering if you can update us on the regulatory environment there. I know that there was some discussions evolving around the federal regulations and I was wondering if you could give us an update there. And then more recently, I know Mexico had some issues about some of these cartels and things like that. I was wondering if that had any impact on, your business there and in particular how that might be affecting maybe some of your marketing efforts in Mexico.

Regarding the regulatory framework or the federal regulatory framework, I unfortunately I have no news. It's been a the government has been busy, as you probably know with other things like what you've mentioned with the cartels, are there some internal fights, we are also aware that two of our largest competitors there were shut down due to, let's call it regulatory problems, but it's more political problems internally. And they are not, cooperating at the moment, building a regulatory framework.

So, I would say that the conversation with them are a bit stuck. Maybe it will, the beginning of this year, they will come back and, continue this legislation process. As they increased the tax. I think they chose that over completing the regulatory framework, and this is their solution, at least for the short-term.

Regarding the cartel and the news, the online business is not affected. We didn't see any changes in the numbers if, this is the question. Retail location, I'm not sure I'm able to comment, but in general, if the government orders to close down a location or close down areas, then we We are doing as the government are saying, but in the terms of online activity or our marketing efforts, nothing has changed at the moment. The city itself is safe. The areas around the cities are safe.

It's Moshe. Hi Michael. It's, I think that's an opposite. I think that, toward the World Cup, both the regulator and the government will have motivation to keep things calm as possible and To give some sort of like a friendly environment to sport which will support us in the online.

Yeah, and I was thinking just weirdly that it may be that more people staying at home might, play more casino games and things like that online. I thought that maybe that might even benefit you in a way.

From what we hear from our guys in Mexico, it's not as big as it sounds in the news. I mean, it's not like huge riots. It's very local and in certain areas.

Gotcha. All right, thank you. That's all I have for now. Thank you.

(Operator Instructions) Jeffrey Stantial, Stifel, Nicolaus & Company Inc - Analyst

Good morning. Thanks for taking our question. Maybe just hitting on guidance and the Mexico tax hike, which is where we've been getting most of the questions. Can you walk us through the financial impact contemplated in guidance, both in terms of the gross impact as well as what you're assuming for mitigation.

Yes, you want to start, Marcus? You want to comment on that, or you want me to take it? Sure.

No, I can start. I mean, first point, maybe we don't give precise individual guidance on specific items in specific countries. Having said that, the increase in tax is a negative for us as it is for all players and all our competitors in the sector in general.

The things we've been doing, when you think about the outlook for this year, it's, the outlook is a net effect of many issues, no. One of the issue is the tax issue in Mexico. as we, I think we detailed in the previous call, in the last call in November, we are taking a number of mitigations, measures in Mexico, both in terms of number 1, our marketing front, 2, in terms of certain of our suppliers that we're working with. And the overall operational efficiencies.

That's what we're doing principally in Mexico, and, I don't know, Aviv, if you want to add something else. To That.

I just want to comment, to answer your question. I think in terms of revenues, we don't see a risk in, to the revenue generations. We will continue to generate revenues in terms of marketing, investment decisions regarding this year budget 2026. We are, we managed to through our models to keep at least the same level of investment or not even more with the World Cup coming,

This will not be smaller this year. Regarding the EBITDA, there will be an EBITDA effect we see It's not as big as we thought. We are able to mitigate most of it. There is some effect, but it's not a danger to the business. The business will continue to grow, and I think the guidance that we gave ss let's say very none, we don't bake in optimistic number though. This is very down to earth like we always do, and we believe that we can deliver those results.

Great, thanks for that. And I guess just to follow-up on that a bit, can you add some color on what you've seen from competitors following the tax hike? Have there been any immediate exits? Has promo and marketing behavior adjusted yet? And how do you see that adjusting, going forward heading into the World Cup?

Well, we all know, as I said, that from a regulatory point of view, two big competitors are shut down just before the World Cup. We are still not, we don't have the news that they are returning or coming back to the game, and we think that some, we know that some competitors want to come into the market.

We hear the rumours we talk to people. The fact is that there is no change as we speak in let's call it the advertiser's map in Mexico, it's still the same, but 2 big competitors. I didn't see yet newcomers with big budgets. I know that they are talking. We heard the rumours.

I know some of them are contemplating whether to come in now or not with those tax changes. Eventually I believe they will come in, but at the moment as we speak, I didn't see any changes in this map. It's still the same as the last, let's say 34 quarters minus 2 big competitors.

Great. And if I could squeeze one more and maybe. Given the change in player values in Mexico, how does this sort of change your prioritization of geographic expansion and investment elsewhere in Latin America?

No, I think the opposite. I think we are seeing, less, our CPA went lower, the player value for Mexico is a bit, higher, or a bit lower or remains the same, let's say around the same numbers, but CPAs is lower, so the ROI is better. We will continue to invest into Mexico, going into new markets at the moment before the World Cup. I don't think it's wise for us.

I think we will continue if we have, let's call it excessive income or excessive EBITDA. The next dollar we will still invest into the two core markets that we have, which is Spain and Mexico. In Spain also we see good results and we see opportunity. To grow, we are growing. So still our money, ROI on the investments over those two markets is still big. I don't see us coming into new markets in the near future.

That's great, thank you. I'll pass it on.

(Operator Instructions) Arthur Roulac, Three courts - Analyst

Hi, thank you for taking my call. I have a couple of questions. One, can you chat a little bit about, Colombia now that the, I guess the VAT tax, I believe, has been removed and what that may mean or may not mean in terms of investment and opportunity going forward there?

Yeah, we can hear you. I don't know if you want to start taking the question.

Oh, did you not hear.

My question? We have internet problems, I think, on my end. Can you repeat it, please? Oh.

Sure, sorry. I was just asking about Colombia now that the VAT tax has been, I believe, repealed at the end of last year, maybe early this year. What do you view is like, are you going to be putting money back into that market? Are you viewing it more positively? How, what are your thoughts about it?

Yeah, so yes, a good question. The straightforward answer is that we are still not sure if this VAT removal is permanent or not. I'm still not able to get a final answer from lawyers. Let's say in the past few weeks since the removal we see good recovery in our player database.

At the moment, until it's clear to us whether this VAT removal is permanent or not, we will not continue to invest once we understand if this removal is permanent, then we are able to take this decision. For now, we are enjoying players coming back, enjoying our promotions, so it's a positive KPI. And right now, in our budgets we are still treating the VAT as it exists, so there is a small upside there if we understand that this VAT removal is permanent.

Maybe just to add to that Aviv, as well, of course we have the elections on the horizon and, another point also just to mention just recently in the last few days, there were some further legislative changes in Colombia, which seems like there is a small tax that we may be caught up in which is not a gaming tax, but it's a small additional tax that had been introduced under the. Under the last emergency decrees that have been instituted in this country and so, I just wanted to mention that, the environment continues to be fluid and, we would like to, we'll be a little bit more on the sidelines, so to speak, until that we see that the environment turns up and that we can have more certainty around the outlook for the medium term.

Got it. And, on the marketing side, obviously, revenues have grown a lot. I think when you originally raised money, you're doing about EUR80 million and let's say you do EUR240, EUR245, EUR250 million this year. Marketing as a percent has come down a lot.

Most of your, competitors that are more mature, I think you'll be in like the low 30% range this year or down at, between 15% and 20%. Can we think about as a steady state, marketing, is there a reason to think that you'd be materially different than the rest of the industry around the entire world from a marketing as a percent of revenue once you get into a more steady state, period.

Yes, I, I'll answer to that. It's, I think it's a I think it's an easy question and an easy answer. In Spain, where we are more mature, you see those kinds of ratios, even less, right? We are the same way, the same behavior, or let's say like the rest of the world. In Mexico, we still believe we are in a growth phase and we have a strong competition with with Caliente and others that are putting heavy funds into the market. We do see low CPAs there, so we believe that we are still in a growth phase. In a growth phase, you cannot maintain those kind of ratios. So, and right now Mexico consists most of the marketing spend.

So if you separate between Spain and Mexico, in Spain, we are meeting this criteria. In Mexico, I think in the future, not the near future, we will be able to meet this criteria, but we are still in a growth phase. I still want to make more investments and to take more market share, especially with the two competitors right now that are down. World Cup is coming up, so, Let's say Spain, we are already there. Mexico will take us more time to meet it.

I want to add something. It's more. It's a very conservative approach to analyse the ratio between marketing spend and revenues. I think that's what is more accurate and more I think that from our perspective at least, it's about the cost per acquisition and as far as we can lower with the same quality of players the cost per acquisition by many aspects of efficiency. And some action that we are taking with the CRM. So, we prefer to approach and to purchase as much as we can players is kind of like a firepower for the year ahead.

So, it's less about how much we're spending versus the revenues. It's more about how many players can we acquire with a certain amount of CPA as a target that we give ourselves, that we know that the ROI is in a certain multiple of returns over years. And in Mexico, as we said, we still see a very good ratio. We see that we can maintain very stable and even getting lower the CPA over time.

That's very helpful. Thank you for that.

By the way, that's what dictates in the end, the market share. I mean, that's how you build market share in the market.

Thank you. I've got two more I'll just squeeze in. One, in the revenue guidance, are you making any assumption about foreign exchange in there? Are you just assuming that where the foreign exchange was at the end of the year will be consistent throughout the entire year?

Yeah, sure. Well, I mean, we have our forecasts, so at the end of last year, the forecast that we had built in, into, observing the market, the foreign exchange market, and the forwards, with respect to exchanges. That's what we have built into the, built into, our guidance. Of course the guidance will be subject to those exchange rates in reality moving up and down during the year. So, I think so far in the year the Mexican peso has improved a little bit with respect to the EUR, so that is helpful, for us. We'll see how it continues to develop during the year, but clearly there is an ethic component in the forecasts.

Got it. And my final one is, can you share, what competitors. Have been perhaps rumoured or market chatter around who may or may not be interested in entering the Mexican market.

Yes, so we are, we heard about Hard Rock wants to come in. We know a company from Spain called Versus, which is our Franco that are planning to come in. We know Sportium with Ganabet that already bought a huge sponsorship with Tigres wants to come in. And we know that local players like Big Bola just changed their platform and wants to make investments.

I think those are like, let's say the 4 big ones that that are sitting on the fence, but in terms of advertisers map, I haven't seen them. Novibet is there on the background with a sponsorship with cruz Azul that is not taking a lot of attention. There are competitors.

I think right now the big ones are the ones that are taking position is play do it just behind us, I think. And Winpot is over there as well, so. So yes, the market is becoming more and more less, let's call it saturated in terms of advertising on TV. Still Caliente and us are leading the market by far.

(Operator Instructions) Ryan Sigdahl, Craig-Hallum Holdings LLC - Analyst

Good day guys. Nice execution. Speaking on kind of World Cup marketing spend last quarter you said that you were going to kind of lean back into the higher player values, probably CPA going up just based on the channel mix, you were going after feels like you kind of continued with the same trend you were or strategy you were doing last quarter or recently this year, I guess maybe talk through what you're seeing if that strategy changed from the update you gave last quarter, and kind of where you're targeting and which channels for those players.

Okay, so what happened in the last quarter, if you remember, is that we bought a Low player value with low CPA and the strategy. We ended it in the end of the first quarter, mid the second quarter, so this traffic from the mix has disappeared.

What you see now is actually a lower CPA with the same player value, so it means that we are able to optimize our efforts and buy more players with less money. So, the strategy didn't change, but I think, the team, did a good job in optimizing, took us a little bit of a while and investing into technology and, discipline, let's call it like that. So, we are able to execute, this way.

We will continue. We see, as Moshe said before, CPAs go down. Probably we need to increase investment in in order to take more market share. So overall we are happy strategy didn't change. The execution changed a bit, but the strategy is still the same.

Very good, and then just maybe the cadence of that marketing spend this year, is it more concentrated Q2, Q3 with the World Cup, or is it more spread out and how much of that can you do kind of in anticipation in ahead of the World Cup starting?

No, I think, I commented in the past, right now, the World Cup prices are a bit, too high for us. So, in terms of spread, we will continue to spread the or make the efforts the same as we did every year. Maybe just spreading it more evenly because usually during the summer, we are reducing the advertising spend. So here we will continue to spend around the World Cup, but with no increase during those months, no increase relatively to other months, right? So I think in terms of cadence, we will be more or less, we'll spread it more or less the same as we did in the previous years. Hopefully with some upside from the World Cup because we will continue to invest around the World Cup in the summer, which we usually lowering our investment there. So I think this is the tactical way that we see this year.

Last question for me, you launched a poker app, I guess talk through why or in Mexico I should say talk through why that makes sense in Mexico, and then if there's any other product expansion or capabilities you plan on adding.

Poker is a nice product. It will take us more time to push it, let's call it exclusively. Right now, it gives more benefits, to our, customers. We are about, I think, to launch, at least a quiet lunch bingo, to have more, products into our mix in Mexico. So in that sense, we have, nice products coming up.

But they are more supportive. I don't think they will become a main product, but more supportive of our, let's call it game portfolio, to our, to keep retention and to keep the players happy with more, kind of products. If we see that there is an ROI in any of those products, we will start investing, let's call it on a separate, Line of business, whether it's bingo or poker, but right now we launched them as a supportive game. They are doing fine at the moment, nothing exciting over them.

Thanks Aviv. Good luck, guys.

Thank you.

There are no further questions at this time. I will now turn the call back to Guillermo Lancha, director of investor relations and communications, for closing remarks.

Thank you. So if there are no further questions, I guess we can leave it here. As usual, if you have any follow-ups, feel free to reach out, to either Marcus, Aviv or myself, and we will be speaking again with our Q126 earnings, around mid-May. So thank you everyone for joining us today.

This concludes today's call. Thank you for attending. You may now disconnect.