Codere Online Luxembourg, S.A. (CDRO) Q1 2026 Earnings Call Transcript
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Overview
The earnings call presents a strong financial performance with 13% YoY NGR growth, increased active customers, and improved EBITDA margins. While average customer spend slightly decreased, the diversified customer base and marketing efficiency are positives. The Q&A session highlights manageable competitive pressures in Mexico and ongoing AI implementation, though lacking specifics. The guidance for 2026 shows confidence, despite not expecting a substantial World Cup impact. Overall, the company's growth and efficiency improvements suggest a positive stock reaction, especially with potential buybacks and no immediate market cap data.
Key Financial Performance
Consolidated Net Gaming Revenue (NGR) EUR 64.4 million, a 13% increase year-over-year and a 6% sequential increase. Growth was driven by healthy trends in casino and sports betting, with casino accounting for 63% of total revenue.
Average Monthly Active Customers 183,000, a 14% increase year-over-year. Growth reflects strong acquisition and retention efforts.
Average Monthly Spend Per Active Customer EUR 117, approximately 1% lower year-over-year. This decline is attributed to a broader and more diversified customer base.
First-Time Depositors (FTDs) 90,000 acquired at an average CPA of EUR 212, an increase year-over-year and sequentially. This reflects a competitive marketing environment and a shift towards higher-value cohorts and channels.
Net Gaming Revenue in Spain EUR 20.5 million, a 16.4% increase year-over-year. Growth was driven by strong underlying trends and a 13% increase in active customers.
Net Gaming Revenue in Mexico EUR 34.6 million, a 13.4% increase year-over-year. Growth was driven by a 20% increase in active customers, despite a decline in average spend per customer due to a broader player base.
Net Gaming Revenue in Other Markets (Colombia, Panama, Buenos Aires) EUR 4.4 million, stable year-over-year. Growth in these markets remains volatile but shows encouraging trends in Panama and Colombia.
Adjusted EBITDA EUR 6 million, up from EUR 1.8 million in Q1 2025. Spain contributed EUR 7 million (27% increase year-over-year), and Mexico contributed EUR 2.9 million (over 60% increase year-over-year).
Marketing Expense EUR 25 million, EUR 1.2 million higher year-over-year but 3 percentage points lower as a percentage of NGR, reflecting improved efficiency.
Adjusted EBITDA Margin 9%, up from 3% in Q1 2025, driven by revenue growth and cost discipline.
Cash Flow EUR 6.5 million generated in Q1 2026, supported by a structural negative working capital position of EUR 22 million.
Available Cash EUR 51 million at the end of March 2026, reflecting positive cash flow generation and efficient cash management.
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Operating Highlights
Net Gaming Revenue (NGR) Growth: Consolidated NGR reached EUR 64.4 million in Q1 2026, a 13% year-over-year increase and 6% sequential growth. Spain and Mexico were the primary contributors, with Spain growing by 16.4% and Mexico by 13.4%.
Market Share in Core Regions: Spain and Mexico accounted for over 93% of the last 12 months' NGR, with Mexico contributing 53% and Spain 41%. Mexico remains the largest market and key growth driver.
Customer Base Expansion: Average monthly active customers increased by 14% year-over-year to approximately 183,000 in Q1 2026. Mexico saw a 20% increase in active customers, while Spain experienced a 13% rise.
Profitability Improvements: Adjusted EBITDA reached EUR 6 million in Q1 2026, up from EUR 1.8 million in Q1 2025. Spain contributed EUR 7 million, a 27% increase, and Mexico contributed EUR 2.9 million, a 60% increase.
Marketing Efficiency: Marketing expenses were EUR 25 million, 3 percentage points lower as a percentage of NGR compared to Q1 2025. Efforts focused on high-impact, cost-effective marketing strategies, particularly in Mexico.
Cost Management: Undistributed and headquarter costs were slightly lower at EUR 5 million, reflecting ongoing cost discipline and operating leverage.
Customer Quality Optimization: In Mexico, tighter promotional rules were implemented to reduce bonus hunters, improving the quality and sustainability of the customer base.
Content Partnership: Secured a partnership with a leading television broadcaster in Mexico for brand exposure during football games, focusing on efficient and impactful marketing.
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Risk or Challenges
Regulatory and Tax Environment: The company operates in a demanding regulatory and tax environment, which could impact its operations and financial performance. Specific challenges include tighter promotional rules in Mexico and advertising restrictions in Spain.
Customer Acquisition Costs: The cost per acquisition (CPA) increased to EUR 212, reflecting a more competitive marketing environment and a shift towards higher-value channels and cohorts. This could pressure profitability if not managed effectively.
Customer Base Optimization in Mexico: The implementation of tighter promotional rules in Mexico has led to a decline in active customer levels into Q2 2026. While aimed at improving customer quality, this could temporarily impact revenue growth.
Market Volatility in Smaller Markets: Growth in smaller markets like Colombia, Panama, and Buenos Aires remains volatile, posing challenges to consistent revenue generation from these regions.
Currency Exchange Risks: The company benefits from favorable exchange rates in Mexico and Colombia, but any adverse changes could negatively impact financial performance.
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Guidance & Outlook
Full-Year 2026 Net Gaming Revenue: The company maintains its guidance for net gaming revenue in the range of EUR 235 million to EUR 245 million for the full year of 2026.
Full-Year 2026 Adjusted EBITDA: Guidance remains unchanged, with expectations of adjusted EBITDA between EUR 15 million to EUR 20 million for 2026.
Market Conditions and Trends: The company is taking a prudent approach to planning, considering the regulatory and tax environment in its markets. If current trends and execution remain consistent, the company may revisit its outlook after the first half of the year.
Mexico Market Strategy: The company is implementing tighter promotional rules to improve the quality and sustainability of its customer base, reducing the participation of bonus hunters. This is expected to enhance customer segmentation and long-term growth.
Marketing Investments: Codere Online is focusing on efficient, high-impact marketing opportunities, such as a content partnership with a leading television broadcaster for brand exposure during football games, rather than pursuing expensive World Cup-related content.
Cash Flow and Financial Position: The company expects continued positive cash flow generation, supported by its structural negative working capital position and disciplined cost management.
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Shareholder Return Plan
Share Buyback Plan: No shares were repurchased under the share buyback plan during the first quarter of 2026. The program remains in place through the end of 2026, and repurchases will be evaluated based on market conditions and business priorities.
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Key Q&A
Q:Can you explain the bridge from EUR 6 million of EBITDA in Q1 to the EUR 15 million to EUR 20 million forecast for the year?
A:The company has had a strong start in Q1, and while the World Cup is expected to bring some uplift in activity, it is not anticipated to have a substantial impact on NGR or financials. The forecast remains at EUR 15 million to EUR 20 million for the year.
Q:What is the competitive environment in Mexico with Stake entering the market?
A:Stake has entered the market but has not yet been visible on TV or Google PPC. The company has not observed any upward pressure on CAC and continues to grow its database and comply with regulations. The entry of Stake is seen as potentially beneficial rather than a challenge.
Q:What is the status of AI implementation in your processes?
A:AI has not been implemented in the core business yet. It is being used in supporting areas like customer service and outbound calls with good results. The company is also working with Google Israel to implement advertising tools, but substantial results are expected in a couple of quarters.
Q:Can you comment on the strong performance in Spain and its sustainability?
A:Spain has shown growth due to market expansion, optimized customer acquisition, and favorable trading margins. The company expects this positive trend to continue.
Q:What is the impact of the new 16% consumption tax in Colombia, and are there plans for new markets?
A:The 16% tax allows the company to operate its current database successfully but limits new marketing investments. The company is waiting for political changes post-elections to consider further investments. There are no current plans for entering new markets.
Q:At what scale can the business consistently generate double-digit EBITDA margins?
A:Achieving double-digit EBITDA margins depends on reducing marketing spend to below 30% of NGR. The company is balancing revenue growth and EBITDA to maximize value and is not ready to forecast when this will be achieved.
Q:How is management thinking about capital allocation priorities?
A:The company prioritizes maintaining a balance between marketing investments and ROI. While cash is being generated and invested in working capital, there are no immediate plans for acquisitions. The company is considering buybacks and further investments in current markets as cash reserves grow.
Q:Review of Unclear Management Responses
A:Management avoided providing a specific timeline or forecast for achieving double-digit EBITDA margins, stating that it depends on reducing marketing spend below 30% of NGR. Additionally, while discussing AI implementation, they mentioned that substantial results are expected in a couple of quarters but did not provide concrete details or examples of its impact on the core business.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Aires EUR
EUR cash
EUR increase
EUR start
LTM gaming
NGR EUR
approach
base active
basis
cash generation
channel
cohort
content
customer base
detail
driver
engagement
example
expansion customer
gaming EUR
gaming country
gaming tax
leverage
majority
outlook start
percentage
portfolio
profitability EUR
quality
retention
scale
sheet EUR
spend customer
sport betting
start core
statement
step
CDRO Transcript
Codere Online Luxembourg, S.A. (CDRO) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call presents a strong financial performance with 13% YoY NGR growth, increased active customers, and improved EBITDA margins. While average customer spend slightly decreased, the diversified customer base and marketing efficiency are positives. The Q&A session highlights manageable competitive pressures in Mexico and ongoing AI implementation, though lacking specifics. The guidance for 2026 shows confidence, despite not expecting a substantial World Cup impact. Overall, the company's growth and efficiency improvements suggest a positive stock reaction, especially with potential buybacks and no immediate market cap data.
Codere Online Luxembourg, S.A. (CDRO) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong financial performance with increased FTDs, improved marketing efficiency, and robust revenue growth in key markets like Mexico. Despite regulatory challenges, the company has effective strategies in place, such as leveraging cost efficiencies and focusing on core markets. The Q&A reveals cautious optimism, with management addressing concerns about tax impacts and competitive dynamics. Overall, the positive financial metrics, strategic focus on growth markets, and effective risk management suggest a positive outlook for the stock price.
Codere Online Luxembourg, S.A. (CDRO) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call indicates mixed signals: stable NGR with currency impacts, a challenging Spanish market, and positive EBITDA. The Q&A highlights regulatory challenges and cautious optimism in Mexico. The share buyback and potential profitability improvements are positive, but concerns about Colombia's VAT impact and unclear guidance on its viability add uncertainty. Overall, the sentiment is balanced, leading to a neutral stock price expectation.
Codere Online Luxembourg, S.A. (CDRO) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call presents a mixed outlook. While there is growth in key metrics like net gaming revenue and active users, challenges such as regulatory compliance issues, currency exchange risks, and competitive pressures in Spain temper optimism. The share buyback plan is a positive, but its limited execution so far reduces impact. The Q&A reveals management's lack of clarity on certain issues, which may raise investor concerns. Overall, the mixed signals and uncertainty result in a neutral stock price prediction.
CDRO Report
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