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01/11 16:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: strong net gaming revenue growth and improved EBITDA are positives, but the negative working capital and currency headwinds pose risks. The lack of a share buyback program and the cautious approach to hedging currency risk add uncertainty. The Q&A section reveals competitive pressures and management's non-specific answers on key issues, tempering optimism. Overall, the stock price is likely to remain stable, with no significant catalysts to drive a major move in either direction.
Net Gaming Revenue €52 million, up €8.5 million or 20% year-over-year. The increase was driven by a 4% rise in average monthly spend per active customer and a 15% increase in average monthly active customers, despite a negative impact of approximately €3.5 million from the weaker Mexican peso.
Adjusted EBITDA €1.5 million, an improvement of €1.5 million year-over-year. This was primarily driven by the €8.5 million increase in net gaming revenue, partially offset by higher marketing spend and platform fees.
Cash Position €44 million total cash on the balance sheet, with approximately €38 million available, which is €3.5 million more than the previous quarter.
Customer Acquisition Cost (CPA) Average CPA of €250 for 67,000 first-time depositors, reflecting an upward trend due to increased investment in Spain and Mexico.
Active Customers 15% increase in average monthly active customers, with a noted 23% increase in active customers in Mexico.
First-Time Depositors (FTDs) FTDs dropped 3% in the quarter and 8% sequentially, primarily due to declines in Colombia and Argentina.
Net Working Capital Position Negative €23 million, around 11% of LTM net gaming revenue, consistent with prior quarters.
Cash Flow Generated €4.4 million of available cash in the first nine months of the year, partially offset by a €2.4 million negative FX impact due to the devaluation of the Mexican peso.
Net Gaming Revenue: Delivered €52 million in net gaming revenue, €8.5 million or 20% above Q3 2023.
Customer Acquisition: Acquired 67,000 first-time depositors at an average CPA of €250.
Casino Segment Growth: Contribution from the casino segment is increasing, aligning with the level achieved in the second quarter.
Market Performance in Mexico: In Mexico, net gaming revenue grew 27% to €27 million, despite a 12% devaluation of the Mexican peso.
Competitive Landscape in Mexico: No significant changes in legislation; competition remains stable with four to six main competitors.
Spanish Market Dynamics: In Spain, net gaming revenue increased 11% to nearly €21 million, driven by a 18% increase in active customers.
Adjusted EBITDA: Adjusted EBITDA was positive €1.5 million in Q3, with contributions from Spain and Mexico.
Cash Position: As of September 30, had €44 million total cash, with €38 million available.
Delisting Process Update: The hearing for NASDAQ delisting is scheduled for January 16, with ongoing efforts to regain compliance.
Future Market Expansion: Management is considering M&A opportunities and expansion into other Latin American markets.
Currency Risk: The devaluation of the Mexican peso has negatively impacted net gaming revenue by approximately $3.5 million in Q3 2024. The peso has devalued by more than 12% in Q3 2024, leading to a significant headwind for revenue reporting.
Regulatory Risk: The company is currently undergoing a delisting process with NASDAQ, with a hearing scheduled for January 16, 2025. The outcome of this process could affect the company's compliance and listing status.
Competitive Pressure: Increased competition in Mexico and Spain has led to higher customer acquisition costs (CAC). The competitive landscape has intensified due to new entrants and the reintroduction of welcome bonuses, impacting unit economics and potentially leading to lower return on investment (ROI) in the short term.
Supply Chain Challenges: The company is experiencing restrictive trade terms from suppliers, reflected in a negative working capital position of €23 million, which may affect operational flexibility.
Economic Factors: The overall economic environment, including inflation and currency fluctuations, is impacting marketing spend and customer acquisition strategies, particularly in Mexico and Spain.
Customer Acquisition Cost (CAC): The average customer acquisition cost has been on an upward trend, primarily due to increased investment in Spain and Mexico, focusing on acquiring casino-first customers.
Cross-Promotion Strategy: The company is successfully cross-promoting casino offerings to sports customers and vice versa, leading to improved retention and engagement.
Market Expansion: Codere Online is considering expansion into other Latin American markets and potential M&A opportunities.
Cash Position: The company is building cash reserves and is open to discussions about share buybacks in the future.
2024 Revenue and EBITDA Guidance: The company expects to finish the year in the upper part of the range for both net gaming revenue and adjusted EBITDA.
2025 Outlook: No specific guidance for 2025 is provided yet, but the company plans to discuss it in the full year call.
Impact of Currency Devaluation: The company anticipates a continued headwind from the devaluation of the Mexican peso in the fourth quarter.
Share Buyback Discussion: Management discussed the potential for share buybacks in the future, indicating that it is a topic that has been discussed with the Board. However, the current focus remains on investing in core markets, primarily Spain and Mexico.
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.
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.
The earnings call presents a mixed picture: strong net gaming revenue growth and improved EBITDA are positives, but the negative working capital and currency headwinds pose risks. The lack of a share buyback program and the cautious approach to hedging currency risk add uncertainty. The Q&A section reveals competitive pressures and management's non-specific answers on key issues, tempering optimism. Overall, the stock price is likely to remain stable, with no significant catalysts to drive a major move in either direction.
The earnings call presents a mixed picture with strong revenue growth but concerns over negative cash flow and working capital. The Q&A section highlights management's lack of clarity on margin expansion and regulatory impacts, indicating potential risks. Despite increased revenue guidance and cash position, these concerns, coupled with high CPA and negative working capital, suggest a negative sentiment, likely leading to a stock price decline.
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