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

Management Statement and Operational Highlights: - Nasdaq Compliance: Aviv Sher provided an update on Nasdaq compliance, stating that the 2023 annual report was filed on May 1, but the 2024 annual report will be filed by the end of May. Despite potential delisting notices, the company expects to regain compliance ahead of any hearing. - First Quarter Highlights: Net gaming revenue was €57 million, 8% above Q1 2024. Constant currency net gaming revenue was €62 million, 17% higher. Casino segment contributed 61% of total net gaming revenue. Customer acquisition was strong with 91,000 first time depositors, 21% above prior-year period, and CPA moderated to 2023 levels. - Mexico Business: Net gaming revenue was €30.5 million, 15% higher year-on-year, but impacted by peso devaluation. Active customers increased by 31% year-on-year. - Spain Business: Net gaming revenue was nearly flat, but active customers increased by 4% year-on-year. Adjusted EBITDA was positive €1.8 million in Q1 2025.

Segment Performance: Codere Online reported €57 million in net gaming revenue for the first quarter of 2025, which is 8% higher than Q1 2024. In terms of product mix, the casino segment contributed 61% of the total net gaming revenue. The Mexican business achieved net gaming revenue of €30.5 million in Q1 2025, representing a 15% year-on-year increase. The Spanish business had net gaming revenue of €22 million, nearly flat compared to the prior-year period. When considering constant currency, net gaming revenue would have been €62 million in Q1 2025, which is 17% higher than the prior-year period.

Guidance: Codere Online reiterates its expectation to generate net gaming revenue between €220 million and €230 million for the full year 2025, and adjusted EBITDA in the range of €10 million to €15 million. The company is confident in meeting full-year guidance due to its operating and investment plans, including the Club World Cup event in mid-June to mid-July.

Risks: - Nasdaq Compliance: Potential delisting notice and the need to appeal, with uncertainties related to trading suspension. - Exchange Rate: Fluctuations in the Mexican peso and U.S. dollar impacting cash balances and net gaming revenue. - Market Competition: Competitive landscape affecting customer acquisition cost and player values. - Legislative: Uncertainties related to legislative changes in operating jurisdictions, such as potential reintroduction of welcome bonus restrictions in Spain.

Question and Answer: Q: CAC was down 6% quarter-on-quarter with user acquisition up. Aviv Sher talked about testing new traffic sources and experiments, where a good experiment on a channel resulted in reduced CPA but lower revenue impact.

Q: Spain's flat net revenue growth and competitive landscape. Jeffrey Stantial asked about the cause of flat growth and legislative initiatives. Oscar Iglesias explained the impact of welcome bonus reintroduction and ongoing legislative efforts.

Q: Average revenue per active down. Jeffrey Stantial inquired about the driver. Oscar Iglesias and Aviv Sher explained lower player values in Spain due to competitive environment and new acquisition channels in Mexico with lower initial player value.

Q: New markets and Italy acquisition. Michael Kupinski asked about potential new markets. Moshe Edree talked about focus on Mexico and Colombia's VAT regime impact.

Q: Marketing investments in 1Q. Arthur Roulac asked about marketing investment. Oscar Iglesias and Aviv Sher discussed marginal marketing, platform, and personnel investments.

Q: Share repurchase and Argentina license. Arthur Roulac asked about share repurchase and Argentina license. Oscar Iglesias explained share repurchase authorization and Argentina license status being stymied over license price.