Earnings call transcript: Codere Online Q2 2025 shows strong growth in Latin America

Codere Online (CDRO) reported its Q2 2025 earnings, highlighting steady financial performance and promising growth in Latin American markets. Currently trading at $8.29, InvestingPro analysis suggests the stock is slightly overvalued based on its Fair Value model. The company maintained its net gaming revenue year-over-year, while showing a positive adjusted EBITDA. With impressive revenue growth of 24.16% over the last twelve months and a robust gross profit margin of 90.64%, strategic adjustments and market expansions have positioned Codere Online for future growth.

Key Takeaways

• Codere Online reported net gaming revenue of $55 million, flat compared to the previous year.
• Adjusted EBITDA turned positive at $2.3 million, indicating improved operational efficiency.
• The company saw a significant increase in monthly active customers in Mexico, up 36%.
• Codere Online regained Nasdaq compliance and repurchased 106,000 shares.
• The company is poised for expansion in Latin America, with a focus on Mexico and Panama.

Company Performance

Codere Online’s performance in Q2 2025 was marked by steady net gaming revenue, which remained flat year-over-year at $55 million. However, when adjusted for constant currency, the net gaming revenue increased by 12% to $61 million. This growth was largely driven by the company’s strong presence in Mexico and Panama, where market conditions were favorable. The casino segment contributed 61% of the total net gaming revenue, reflecting the company’s robust product offerings.

Financial Highlights

• Net Gaming Revenue: $55 million (flat YoY)
• Constant Currency Net Gaming Revenue: $61 million (+12% YoY)
• Adjusted EBITDA: $2.3 million (positive)
• Cash Balance: €45 million
• Cash Flow Generation: $7.5 million

Outlook & Guidance

Codere Online has set a net gaming revenue guidance of $220-230 million for 2025, with an adjusted EBITDA target of $10-15 million. According to InvestingPro data, analysts project continued profitability with an EPS forecast of $0.10 for FY2025. The company expects stronger EBITDA in the latter half of the year, driven by strategic expansions and operational efficiencies. With analyst price targets ranging from $10 to $14, Codere Online is actively exploring potential growth opportunities in other Latin American markets.

Want deeper insights? InvestingPro offers exclusive access to 10+ additional ProTips and comprehensive financial analysis for CDRO, including detailed valuation metrics and growth indicators.

Executive Commentary

CEO Abib Sher expressed confidence in the company’s strategic direction, stating, "We do think that the playbook that we have can be applied." Oscar Iglesias, CFO, noted the favorable currency conditions, saying, "The Mexican peso seems to be strengthening and definitely more than what we were expecting." These statements reflect the leadership’s optimism about leveraging their strategies across new markets.

Risks and Challenges

• Competitive pressures remain challenging in the Spanish market.
• The Colombian market faces significant regulatory challenges, including a 50% VAT on deposits.
• Currency fluctuations could impact financial performance, despite current favorable conditions.
• The need for continuous innovation in the digital gaming space to maintain market leadership.

Q&A

During the earnings call, analysts inquired about Codere Online’s growth strategy in Mexico, where the company has seen a 36% increase in monthly active customers. The management also addressed challenges in Colombia due to high VAT rates and discussed the rationale behind the recent share repurchase. Potential tax loss benefits in future transactions were also explored, highlighting the company’s strategic financial planning.

Codere Online’s Q2 2025 results demonstrate resilience and strategic foresight as the company navigates a competitive landscape while capitalizing on growth opportunities in Latin America.

Full transcript - Codere Online US Corp (CDRO) Q2 2025:

Angela, Conference Operator: Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cutter Online Second Quarter twenty twenty five Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Mr. Donero Lancia, Head of Investor Relations.

Donero Lancia, Head of Investor Relations, Codere Online: Thanks, operator, and welcome, everyone, to Codere Online’s earnings call for the 2025. Today, you will hear from our CEO, Abib Sher and CFO, Oscar Iglesias. Our Executive Vice Chairman, Moshe Edre, will also join us in the Q and A section. Please note that while our financial accounts are prepared under IFRS accounting standards, the figures reflected in today’s presentation are preliminary and unaudited and include certain non IFRS financial metrics such as net gaming revenue and adjusted EBITDA, for which you can find reconciliations in the appendix of the presentation, in addition to certain figures presented on a constant currency basis. These measures should be considered in addition to and not as a substitute for our IFRS results.

Let me also remind you that all monetary figures will be in Europe unless expressed otherwise. During this call, we will make forward looking statements, including those related to our net gaming revenue and adjusted EBITDA outlook, which are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated by these statements. While these forward looking statements reflect our current expectations, which we believe are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Finally, please note that a replay and transcript of this call will be available on our website at codeayonline.com, where you can also sign up for our investor email alerts. With that, I will go ahead and pass the call on to Abid.

Abib Sher, CEO, Codere Online: Thanks Guillermo and thanks to everyone for joining us today. Before jumping into operating results for Q2 and for benefit of those of you that may be new to the company, just wanted to confirm that we have regained compliance with all applicable Nasdaq listing requirements following the filling of our 2023 annual report on 05/01/2024 annual report on June 2. This was formally confirmed in a letter we received from Nasdaq on June 5. And thanks to all the hard work by Coderre online and Milan Bailey teams, finally puts an end to an to the uncertainty around our continuity as a public public publicly traded company. As always, we also appreciate the patience and support that all of you have shown us throughout this process.

Moving now to the highlights of the 2025 on page eight, we delivered 55,000,000 in net gaming revenue, which was roughly flat versus the prior year period as a result of the devaluation in Mexican peso, following federal election in June. In constant currency terms, net gaming revenue would have been nearly 61,000,000 in the second quarter, 12% above the prior year period. In terms of product mix, the contribution from our casino segment was 61% of our total net gaming revenue in the second quarter, reflecting reflecting a stabilization of our overall mix at around 60% casino, following a trend of increasing contribution from that segment in recent years. Net gaming revenues in the quarter was a result of a 7% increase in the average monthly active customers, partially offset by 5% decrease in average monthly spend per active customer. Again, primarily due to the weaker Mexican peso.

On the acquisition front, we had a strong quarter with seventy eight thousand first time depositors, 7% above those acquired in prior year period. This increase resulted in an average CPA in the quarter of €218, a small sequential uptick, but largely in line with the average CPA in the prior twelve months period. Finally, a quick update on our activity under the share buyback plan. Through yesterday, we have repurchased around a 106,000 shares under the plan for total investments of approximately 7,700 thousand dollars. With this, I will now turn the call over to Oscar to cover the finance financial highlights of the quarter.

Oscar Iglesias, CFO, Codere Online: Thanks, Aviv. Turning now to the financial performance for the quarter on Page 10. Consolidated net gaming revenue was $55,000,000 up slightly versus the prior year period, notwithstanding the significant headwinds that we had this year that were either not a factor or less of a factor last year. These headwinds include a significant devaluation of the Mexican peso, the introduction of a value added tax on player deposits in Colombia and the reintroduction of the welcome bonuses in Spain throughout the 2024, which resulted in a more competitive landscape and lower level of spend from both new and existing customers. In regards to our other segment, which reflects our business in Colombia, Panama and the city of Buenos Aires, net gaming revenue in Colombia was $1,600,000 lower in the second quarter, which was partially offset by $800,000 in higher net gaming revenue in Panama.

This $800,000 equates to a doubling of net gaming revenue in that market versus the prior year period and reflects certain product improvements deployed earlier this year. Adjusted EBITDA, meanwhile, was positive $2,300,000 in the second quarter and included a contribution of $6,300,000 from our Spanish business, 5% above the prior year. Mexico, on the other hand, was slightly negative due to the increased marketing investment leading up to and around the Club World Cup. In particular, with respect to our sponsorship of Rallados de Monterrey, which finished second in the group, in a tournament which produced its share of surprises and a higher level of activity for the company in what is historically a seasonally weaker period. Please note that adjusted EBITDA excludes $1,100,000 in audit related fees in excess of amounts otherwise provisioned for in our 2024 financial accounts.

While we have historically excluded few items from our reported adjusted EBITDA, we believe that both the amount and the nonrecurring nature of these audit related fees warrant exclusion for the purpose of assessing our performance in the quarter and comparing said performance to prior periods. Looking now at our P and L on Page 11, adjusted EBITDA was $1,000,000 above that of the 2024, primarily on the back of successful overall cost contention throughout the business. Looking ahead, we are expecting marketing spend in the back half of the year to be less than in the front half, which together with our positive outlook for net gaming revenue, we expect will translate into a higher level of EBITDA generation in the back half of the year. This positive outlook is primarily due to the continued strong returns that we are seeing from both existing and new players in Mexico, combined with a better than originally expected evolution for the Mexican BISL going into year end. Turning now to the consolidated figures on Page 12.

The 1% increase in net gaming revenue reflects a 7% increase in active customers, primarily in Mexico, offset by a lower spend per active. On a constant currency basis, net gaming revenue would have grown 12% instead of this reported 1%. As Aviv mentioned, FTDs grew 7% to 78,000 in the quarter and were mostly driven by Mexico, where we acquired a substantially higher amount of FTDs than in the prior year quarter as we continue to prioritize this market and work to build upon our already meaningful portfolio of customers. Turning to Spain, net gaming revenue in the second quarter was flat at 22,000,000 reflecting a slightly higher spend per active, which was offset by a 3% decline in the number of active customers as we have been more selective, at least versus prior periods, in our promotional activity in Spain given the more competitive landscape that we continue to face. In Mexico, net gaming revenue was $29,000,000 in the second quarter, 3% above the prior year period.

The Mexican peso devalued by more than 19% in the 2025, resulting in a $5,700,000 negative impact to net gaming revenue, the highest impact in any quarter since the federal elections in Mexico in June 2024. On a constant currency basis, our net gaming revenue would have grown 23%. So the underlying growth trend in this market is still quite strong. As mentioned before, we had a significant increase in average monthly active customers to 85,000, 36% above Q2 twenty twenty four, albeit with lower player values, but also lower upfront acquisition costs. Mexico remains our priority from a marketing investment standpoint, and we expect that the scale we’re building now will drive this business leading up to and throughout the twenty twenty six World Cup, which will be co hosted by Mexico.

On Page 15, we are including again the evolution of the Mexican peso against the euro, which has improved since the March peak.

: Looking ahead, the exchange rate headwind will continue somewhat into the third quarter, but to a much lesser extent than in prior quarters as we begin to lap the significant post election devaluation of the peso.

Oscar Iglesias, CFO, Codere Online: Turning to the balance sheet on Page 16. As of June 30, we had EUR 45,000,000 of total cash on the balance sheet, of which approximately €41,000,000 was available. In terms of our net working capital position, we ended the quarter with negative €24,000,000 or around 11% of our LTM net gaming revenue, which we believe is a normalized level of working capital. Looking at our cash flow on Page 17. In the 2025, we generated $7,500,000 of available cash, partially offset by a 2,100,000.0 negative FX impact on ending cash balances due to the devaluation of both the Mexican peso and the U.

S. Dollar on cash balances we hold in both currencies, resulting in a total period cash flow generation of over $5,000,000 In regards to our outlook for 2025 on Page 19, we continue to expect net gaming revenue of between $220,000,000 and $230,000,000 and adjusted EBITDA in the range of 10,000,000 to $15,000,000 and otherwise remain confident in our ability to continue executing our operating and investment plan throughout the second half of this year and beyond. That’s all from my end. I will now hand it back over to Aviv for closing remarks.

Abib Sher, CEO, Codere Online: Thanks, Oscar. Before we move to Q and A, I want to thank again to all Cordero Online employees for their contribution in the recent months. Thanks also to the investors and analysts on this call for your support and interest. With that said, we’ll turn it back to the operator to open up the call to Q and A.

Angela, Conference Operator: Thank you. We will now begin the question and answer

: you.

Angela, Conference Operator: And your first question comes from the line of Jeff Spatial with Stifel. Your line is now open.

Jeff Spatial, Analyst, Stifel: Hey, good morning, Oscar and Aviv. Thanks for taking our questions. Maybe just starting off on performance during the quarter in Spain. Now that the reintroduction of welcome bonuses is anniversaried, I’m curious if you’re seeing any improvement in the overall competitive environment or if it’s still relatively challenging? And then just in terms of sports seasonality, how much of a drag was the Euros comp this quarter, I guess, of contribution from Club World Cup?

And should we expect growth in the back half to accelerate just once this, sports seasonality comp has has anniversaried out?

: Yep.

Oscar Iglesias, CFO, Codere Online: I think you wanna start on the competitive landscape, stream performance?

Abib Sher, CEO, Codere Online: Yes. So you are correct about the the regulation environment in Spain. We don’t see it changing in the near future. It’s still a hard competitive landscape because of that. Our competitors, let’s say, are spending money to bring the players onto their platforms and offering generous welcome bonus.

I think it stabilized. At least for us, we manage, I think, to find the formula in order to keep on track with our goals and KPIs. So we feel more secure, and we are looking forward for any regulation changes. But at least for now, we don’t foresee the changing in the near time, in the near months at least, and we we keep an eye on that. Regarding the question about the euros, I think for the Spanish part or in Spain, it was less strong than what we thought.

Although, well, Madrid advanced quite far, but the interest was not that big. We had in in Wimbledon, we had more more traction because of Alcaraz and maybe together Alcaraz and the and the Mondiale Club is we had some interest over the summer. But I think we still see seasonality, so we are expecting a strong season start in this quarter.

Oscar Iglesias, CFO, Codere Online: Yeah. Yeah. Having the Club World Cup definitely was helpful to to bridge this this period of of of of this slow period from a from a sports betting standpoint. And I think it also helped having one of the the clubs that we the sponsor, Raelos de Monterrey. We’re a shirt sponsor, and they did quite well in the tournament.

And they also have, an iconic Real Madrid player, Sergio Ramos, playing with them. So that helped keep, let’s say, a higher level of engagement than we were expecting. But as Aviv said, it’s it’s with the time the time zone difference and all the rest. It it was not a significant event event necessarily. Even though there were some surprises, there were some individual markets and events that, or matches that, that were beneficial to us from a from a trading standpoint.

Jeff Spatial, Analyst, Stifel: Great. That’s that’s helpful. Thank you for that. And then shifting gears and turning over to the Mexico business, Oscar or Aviv, whoever wants to take this. I just wanted to spend a minute on some of the recent marketing initiatives that you’ve called out targeting, call it, lower LTV players that also had a lower overall CAC.

Can you just add a bit of color in terms of sort of where, what channels and how these users are being sourced? And then strategically, I guess, is the way to think about this is it enabled by the peso devaluation? Is this more of a response to the competitive environment? Or is this just reflective constant iteration in UA strategy in a market that’s still growing quite rapidly? Just any color to frame this direction in UA strategy would be great.

Thanks.

Oscar Iglesias, CFO, Codere Online: I’ll turn it over to Aviv, but it definitely wasn’t in response to any strategy to mitigate the the weakness in the Mexican peso. I think it’s it’s more the the latter, the UA strategy that we had and and the experimentation and trial and error that is always part of of both the acquisition and and promotional environments in our business and in our sector. But I’ll kick it over to Aviv specifically on on what he wants to discuss with respect to the specific strategy that we that we were employing.

Abib Sher, CEO, Codere Online: Yes. Exactly. Exactly. Oscar Oscar is absolutely right. As you know, we are testing all kind of channels.

We tested one of the channels mobile app. We we tested it for three months. There is a huge, let’s call it, huge amount of traffic that we can source. We tried to buy. We thought that we are buying successfully.

But when evaluating this kind of traffic, we saw that it’s a low LTV, low CPA, not exactly fitting with our strategy. So we let’s say we optimize it and and and we are back on track. We see it here in the results. We see it a little bit skewed because of that. But overall, I’m I’m I’m happy that we were able to analyze it on time and and to find this source and eventually to rule it out.

But we keep trying all kind of UI strategies as you said, and and we will keep on trying. This is this is, I think, in the operational part, the most important part of our job.

Jeff Spatial, Analyst, Stifel: Great. That’s that’s helpful. Thank you both. And if I could just squeeze in one more here. You know, Oscar, you talked about profitability improvement in the back half with marketing down relative to the front half.

Is this mostly attributable to the River Plate sponsorship rolling off? Are you moderating marketing spend elsewhere? And then how much flexibility or how much should we think about being embedded in guidance for, call it, opportunistic investment heading into the World Cup next year? Yes.

Oscar Iglesias, CFO, Codere Online: I think it’s a number of factors. Obviously, with respect to Argentina the rolling off of the sponsorship there in the early part of the year has helped us mitigate the EBITDA. What otherwise would be an expectation of more of a a small EBITDA loss in that market, we’re trying to get that market to breakeven or better. So, yes, that that helps. In Colombia, the revenue impact on the back of the tax on the the value added tax and deposits is having a significant significant impact in terms of net gaming revenue.

It’s a small business for us. It’s not overly material for us, but we are and expect to continue to be able to mitigate at EBITDA level going forward. So that will be a lesser of an impact for us in our overall ability to meet guidance for the full year period or back half performance. And beyond that, I think it’s again pointing to the Mexican business, the unit economics, notwithstanding the comments that Abid just made. The portfolio and the existing customer base is performing well.

There’s strong underlying unit economics. It’s a continuation of that longer running trend that we have in terms of improving return profile from that portfolio of customers. So we’re we’re quite optimistic. And even in the last, on the back of, you know, some of the news of The US and and and and elsewhere, the Mexican peso, I think our expectations, and we’ll see, right, from one week to the next, this can change, but the Mexican peso seems to be strengthening and definitely more than what we were expecting and what our current expectations going into year end are definitely better than where we were a few months back. So all of these things point to, let’s say, optimism that back half EBITDA generation and performance from this business is going to be strong.

Jeff Spatial, Analyst, Stifel: Great. Very helpful. Thank you both. I’ll pass it on.

Oscar Iglesias, CFO, Codere Online: Great. Thanks, Jeff.

Angela, Conference Operator: Your next question comes from the line of Michael Kupinski with NOBLE Capital Markets. Your line is now open.

Michael Kupinski, Analyst, NOBLE Capital Markets: Thank you for taking the questions. Appreciate that. I’m constantly surprised by the level of growth that you continue to deliver in Mexico, particularly on active players. And I kind of want to follow-up on the previous caller’s question. Is there something unique about that market in particular?

And I know and I was just wondering in terms of eventually as you kind of look to the other Latin American markets as you indicated, the prospect to step on the accelerator in some of those other countries. I was just wondering if the playbook that you Mexico, it can be applied to some of those other countries if you feel like there are better opportunities at some point that you can apply, there. I was just wondering if you just give us your general thoughts about that.

Oscar Iglesias, CFO, Codere Online: Adif?

Abib Sher, CEO, Codere Online: Yes. We do think that the playbook that we have can be applied. We actually took some of our experience in Spain and move it to Mexico. So we we already have proven that we are able to replicate our strategy and grow the market. Of course, in order to execute such a strategy, you need a lot of money.

I’m sure that Brazil will come up in this call eventually. So to replicate it in Brazil, you will need a lot of money. So we do think that we can replicate it, but we think in order to replicate it now, not like five years ago when we started in Mexico, you need more money. The media prices are are a bit higher than than in the past, and the competition is more harsh. We do enjoy less lesser competition in Mexico.

It’s also true that the competition is not as strong, for example, like in Spain. So it also gives us some push over that. And we have a local presence with with that also gives us a push. So if we are talking about a new a new territory that we don’t have a retail presence, then maybe the test case will be a little bit different. So overall, I think I think Mexico, a lot of the stars aligned correctly for us and and help us grow the market as fast as you see and and continue the growth.

Plus, on a side comment, I think the market itself has a organic growth that we also enjoy, which I cannot give a good explanation why this market grows more than other markets, but it it’s still growing fast as we think because we don’t have the exact numbers. But other than that, I think we can replicate. We will need more money and maybe a little bit different approach if it’s a place where we don’t have retail presence.

Oscar Iglesias, CFO, Codere Online: Yeah. It’s been a while since we talked about the omnichannel opportunity, but we’ve never stopped. We’re always looking for new ways of leveraging, especially in a jurisdiction like Mexico where there our retail parent is is a leader in the market, but always looking to leverage opportunities, to improve that dynamic, for the benefit of of both businesses. And that’s something that I think in all the jurisdictions where we have overlapping businesses, we look we look to do. It’s not I wouldn’t say it’s the the driver of our outperformance.

I think the starting point, as Aviv said, is it’s still a developing market. It’s growing. I think it’s every year we’re surprised that it’s still growing more than even more optimistic expectations. So it’s a market we feel we feel like we’ve done the right things. We feel like we have a good model.

But, yes, of course, we would always look for opportunities to replicate that elsewhere, and that’s some of the things that are under analysis.

Michael Kupinski, Analyst, NOBLE Capital Markets: Thanks for that color. I think it was important for investors to hear that. I was also just curious about if you can just talk about the other Latin American countries. You indicated that there were some that obviously fell off a little bit in that quarter. And I was just wondering are there other opportunities there?

And if you could just outline for us the specific countries that you might see a little bit better growth coming from as we kinda go into the second half and into 2026.

: Mhmm. Yeah.

Abib Sher, CEO, Codere Online: I’ll take it, Oscar.

Oscar Iglesias, CFO, Codere Online: Yeah. Go ahead.

Abib Sher, CEO, Codere Online: Yeah. Okay. So the the the I won’t call it an elephant. Maybe a small elephant in the room is Colombia. Their VAT that they imposed of us on us at the beginning of the year is harsh, and and the business there is struggling.

And what we’ve done is basically to reduce everything to the minimum so we keep it on a breakeven point, and that’s why we lost some revenues. Fortunately, we were able to cover some of it with a good success in Panama, but not all of the revenue loss that we had there in Colombia. So to your question on other countries in LatAm, Colombia, which started at the beginning of the at the end of last year to show very good signals that maybe we are able to invest there, Unfortunately, it fell with this VAT that basically give us the business around 50% tax, which very hard for us and our our our other competitors to operate in this market. We we need to see the other competitors report. I’m I’m especially curious about last week, how they are coping with that.

And, unfortunately, we found a little bit more success in Panama, but it will not cover the entire Colombia. It grows very nice. But both of them, in terms of marketing investment, are still small for us, and the two core markets remain Spain and Mexico.

Oscar Iglesias, CFO, Codere Online: Yeah. Mike, I think the good thing is here as we as we as we start generating a little bit more cash flow from from these core businesses, obviously, our focus is still organic growth. But we start feeling more comfortable about our cash position and the ability to, if the right opportunity were to arise, deploying some of that cash. It’s there’s nothing specific on the horizon, but I think we’re starting to lift our heads and looking around, you know, and and not just obviously in response to investor questions or analyst questions to to what’s next for us. And we’re starting to have those discussions, but nothing specific to report.

But we’re we’re increasingly feeling confident that that that we can start exploring some of those opportunities.

Michael Kupinski, Analyst, NOBLE Capital Markets: Great. Terrific. I’ll let others ask questions. Thank you.

Oscar Iglesias, CFO, Codere Online: Great. Thanks, Mike.

Angela, Conference Operator: And your next question comes from the line of Ryan Sigdahl with Craig Hallum. Your line is now open.

: Hey, guys. Let’s stay on that small elephant that is Columbia. Can you comment so NGR was down significantly given the VAT impact, but curious about users and then GGR specifically. Thanks.

Abib Sher, CEO, Codere Online: What about the GGR, sorry?

: Just curious how GGR was in the quarter, growth, not growth, what it was relative to the NGR decline. Basically trying to figure out how big of an impact the VAT promo, impact was.

Oscar Iglesias, CFO, Codere Online: Yeah. Let me let me just take

Jeff Spatial, Analyst, Stifel: it can

: get a real

Jeff Spatial, Analyst, Stifel: performance there.

Oscar Iglesias, CFO, Codere Online: Yeah. Hi, Ryan. If I could just take it from a more generic standpoint, I think the important thing to remember is that, especially throughout the second quarter, I think there was a lot of experimentation by all market players to try to find a way through this issue with the understanding that this would be in place at least until year end. And then it’s, you know, everyone’s guess what’s gonna happen thereafter. I think everyone has a different opinion.

So so we we we tried different things, and and it’s it was a very fluid competitive environment in terms of what people were doing at different points throughout the quarter. I think we decided relatively early on that we wanted to take an approach of making sure we mitigate the impact to our balance sheet, so mitigate the impact to EBITDA and cash, obviously, at the expense of some of the top line. So there’s there were a number of strategies deployed there, including full cash backs of VAT impact on the customer themselves to, you know, making the customer hold through promotional allowances, whether those were free bets or casino bonuses or otherwise. But it was a very fluid fluid situation throughout the quarter. Every operator took a little bit of a different approach.

I think just directionally, it’s safe to say that our top line impact was significant, something in the order of, let’s say let’s say four let’s say 40% lower than what we were expecting or otherwise would have expected without the imposition of the VAT tax on deposit, but we’ve been successful in mitigating the impact at the operating cash flow level. So that that’s been our approach. I think other operators may be taking a little bit of a different approach, but I think what’s true is everyone is struggling with the magnitude of the tax. I think there’s there’s still some work to be done collectively as a sector to make sure that the right people understand what they’ve actually put in place and what this means for the business over the medium long term. But it’s a hard question to ask because it’s it’s, been a moving target throughout the quarter.

: Maybe just as a a follow-up, is it a viable market if this continues? I guess it it goes the temporary decree goes through year end, so you’d have to put in something from

Oscar Iglesias, CFO, Codere Online: Yeah. Yeah. They would have to legislate legislate.

: Yep. Permanent. But but if something if they get something burdensome like this, I guess, is it even a viable market for you guys? Should this continue?

Oscar Iglesias, CFO, Codere Online: I think for us, I think the only way to answer that is we can only answer that for ourselves because every every operator has a different view on and and and this could play out in different ways. I think for us, it’s a question we would have to analyze. It’s not clear, but it’s a question we would have to analyze. Yep.

: Yep. Fair enough. Maybe last quick one. Just thoughts on repurchases. Cash continues to grow in the balance sheet.

Business model is inflecting. You’re investing nicely while still growing that cash. I guess, why not lean in a little more and buy more shares here?

Oscar Iglesias, CFO, Codere Online: Yeah. It’s it’s a it’s a good it’s a good question. It’s it’s a discussion that we’re having at the board level now on a on a recurring basis as opposed to a from from time to time. I think it’s a legitimate question and one that we’re we’re analyzing. But, obviously, as with all capital allocation decisions, it’s it’s a board decision, and those discussions are taking place, but but point taken.

Michael Kupinski, Analyst, NOBLE Capital Markets: Very good. Good luck, guys.

Oscar Iglesias, CFO, Codere Online: Thanks, Ryan.

Angela, Conference Operator: Your next question comes from the line of Arthur Rulak with Three Courts. Your line is now open.

: Hi, guys. Thanks for taking my call. Maybe just to follow-up on the share repurchase. Is it just a discretionary share repurchase program at the moment versus something that’s systematized?

Oscar Iglesias, CFO, Codere Online: We’ve deployed different strategies and the the the at at different times since the plan has been put into place, and that the really, the two options is more of an opportunistic repurchasing, again, always in the in the context of the team not having any MMPI, and the other is a a plan repurchase plan. So we’ve deployed both at different times depending on where we were and where we were or are with respect to different restrictions from a trading window standpoint. But again, I think we’re aligned in that we want to the extent we have opportunities to repurchase at what we think are attractive prices, I think we as a company and collectively as shareholders have an interest in doing so. But we’ve deployed different strategies.

: One other question is what type of, NOLs are sitting, at the company today? Because there’s been a lot of investment in you know, earlier on, there’s a lot of loss making. So in the context of, I don’t know, perhaps an acquisition of the business at some point, are there NOL benefits to someone that could accrue to the buyer?

Oscar Iglesias, CFO, Codere Online: Yeah. I think directionally, and I’ll I’ll take that one. I think directionally, the answer is definitely yes. It’s I don’t have a number that on the top of my head for Mexico, but, obviously, Mexico, is now starting to inflex. So we’ve had three, four, five years of of that heavy level investment, the losses that we’ve been incurring and would expect, that that we, as as that business continues to to generate profits, we’ll be able to benefit from that or or or any in the context of any future potential, transaction.

In Spain, it’s true as well. It’s a little bit more complicated because of the tax perimeter we put into place, the consolidation perimeter we put into place as of 01/01/2023 between our intermediate holding company, which is a Spanish entity, and our Spanish operating business, in that tax reorganization, that that involved the, let’s say, the migration of our business in Malta to Spain and the shuttering of that business. We do continue to have both prior to and as a consequence of losses that have generated NOLs, some of which are activated to the balance sheet, some of which aren’t, that we would be able to use in the future. But yes, yes, I think it is I would say that it’s overall, directionally, it’s a material amount and would be relevant in the context of an underwriting of the business.

: Got it. Thanks.

Oscar Iglesias, CFO, Codere Online: Thanks, Zor.

Angela, Conference Operator: That concludes our Q and A session. I will now turn the conference back over to Mr. Giuliano Malanca for closing remarks.

Donero Lancia, Head of Investor Relations, Codere Online: Thanks, operator. I see that we have no questions on the webcast either. So we will leave it here for today. Thank you, everyone, for joining, and we look forward to speaking again with our Q3 results in mid November. Thank you very much.

Angela, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect. All clear.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.