Codere Online Luxembourg, S.A. Q1 FY2025 earnings call

• Nasdaq Compliance: Filed 2023 annual report on May 1, regained Nasdaq compliance, but will likely receive a new delisting notice, with plans to appeal and expect to file 2024 annual report by end of May.
• Net Gaming Revenue: Delivered €57 million in net gaming revenue, 8% above Q1 2024; constant currency net gaming revenue was €62 million, 17% above prior-year. Growth driven by 13% increase in average monthly active users.
• Customer Acquisition: Strong quarter with 91,000 first time depositors, 21% above prior-year, resulting in average CPA of approximately €200.
• Share Buyback: One-year share buyback plan for up to $5 million, with around 68,000 shares repurchased for approximately $0.5 million through May 15.
• Segment Updates: Mexico saw net gaming revenue up 15% but impacted by peso devaluation; Spain had flat net gaming revenue but increased active customers.

In the first quarter of 2025, Codere Online delivered €57 million in net gaming revenue, which is 8% above Q1 2024. In terms of product mix, the casino segment contributed 61% of total net gaming revenue. In the Mexican business, net gaming revenue was €30.5 million in Q1 2025, 15% above the prior-year period, but negatively impacted by a weaker Mexican peso. The peso devaluation resulted in a €5 million headwind to net gaming revenue. In Spain, net gaming revenue was roughly flat at €22 million in the first quarter, driven by a lower spend practice. On a constant currency basis, net gaming revenue was €62 million in Q1 2025, 17% above the prior-year period. The number of average monthly active users increased by 13%, with 91,000 first time depositors, 21% above the prior-year period.

• Reiterates expectation to generate net gaming revenue between €220 million and €230 million and adjusted EBITDA in the range of €10 million to €15 million for 2025.
• Confident in meeting full-year guidance due to operating and investment plan, including around the Club World Cup in mid-June to mid-July.

• Nasdaq Delisting Risk: Likely to receive a new delisting notice, but will appeal and expect to file 2024 annual report by end of May to regain compliance.
• Exchange Rate Volatility: Mexican peso devaluation impacted net gaming revenue, with continued headwinds expected but lessening after second quarter.
• Competitive Environment: Challenges in Spain with reintroduction of welcome bonuses and competitive promotional landscape; testing new traffic sources in Mexico with mixed results on CPA and player value.

Q: CAC was down 6% quarter-on-quarter despite user acquisition being up nicely. What's allowing continued acquisition of more users at lower cost?

A: Testing new traffic sources and experiments; one channel experiment resulted in reduced CPA but lower player value spent. More sources are being tested.

Q: Flattish net revenue growth in Spain. What's driving that and any updates on legislative efforts to bring back welcome bonus restrictions?

A: Impacted by new competitive landscape and reintroduction of welcome bonuses; current government working on legislative initiatives but cooperation with coalition partners needed. Reintroduction of restrictions would be upside.

Q: Average revenue per active down. What's driving that?

A: In Spain, lower spend per active and competitive bonusing; in Mexico, testing new acquisition channels with lower acquisition costs but initially lower player value.

Q: Thoughts on new markets and investments?

A: Focused on Mexico; some improvement in Panama, Colombia issues; group acquired Italian land-based operator, but Codere Online focused on Mexico. Spain unit economics still attractive.

Q: Additional investments in 1Q on marketing. One-time or ongoing?

A: Marginal, mix of growing team, platform initiatives, and personnel investment; medium-term savings from automation but marginal in 1Q.

Q: Share repurchase dynamics?

A: Shareholder authorization is broader; Board approved up to $5 million buyback plan, sits within broader authorization, Board can adjust as needed.

Q: Argentina license acquisition progress?

A: Still stymied over license price, no recent progress on acquisition.