Codere Online Luxembourg (CDRO) 27 Nov 242024 Q3 Earnings call transcript

Thank you for standing by, and welcome to the Codere Online Third Quarter 2024 Financial Results Conference Call.

[Operator Instructions]

I'd now like to turn the call over to Guillermo Lancha, Head of Investor Relations.

You may begin.

Thanks, operator, and welcome, everyone, to Codere Online's earnings call for third quarter of 2024. from Aviv hear Oscar and will Iglesias. you our Sher, CEO, CFO, Today,

Chairman, also Edree, the Executive Monshe Our Vice will Q&A join section. in us

to that which this Before everyone we find the referring uploaded the revenue call website otherwise. to preliminary presentation as adjusted I'd EBITDA, comparisons turning note earlier and our today, can financial over to net a that presentation. non-GAAP we you call, of like appendix gaming year-on-year during or growth to will includes during be Aviv, reconciliations remind such discussed the metrics which in are rates this all Please for call noted unless unaudited

this Europe accounting is that Let me IFRS you unless also figures prepared information remind will be all expressed presentation, monetary that otherwise. in accounting our throughout under standards and

that will call call will where for Aviv. note that, alerts. of please at be on can With available a our also replay transcript codereonline.com, pass our the sign ahead up and website e-mail you and this to Finally, investor go on I

joining Guillermo, today. for thanks everyone us and for Thanks,

Before and we delisting update a highlights discuss where I to on provide respect stand we with quick process first to with the would the quarter, like the Nasdaq. address of

our scheduled for may January have our panel you would been has additional release, we be where XX. As requesting seen press in report hearing the file time annual to

stayed and the to As you continue hearing currently know, the shares will is delisting of stayed warrants duration process. through our be the of and

annual NASDAQ the the requirements as regain for X hearing. eliminating the file will weeks working hearing so until in need practical to our we In continue the thereby we listing now which to compliance with recovery have terms, report

third gaming EUR QX the Page into of XXXX. above delivered net million EUR Now highlights on the XX X.X revenue, diving XX% in million or XXXX of X. We quarter

prior year was a net Mexican period. about the negatively EUR of result impacted weaker million pesos as quarter a versus by gaming Third X.X

this million the would quarter, have been the record over Excluding XX increase revenue over year in impact, prior an a EUR third improvement the NGR XX% quarter. was second in and gaming net a what

In the in in in from quarter decline casino achieved and our the the with due less during line more increasing in product of or level to the terms second segment betting mix, sports summer contribution seasonal months. active is in net active increase This to was growth together in spend revenue XXX, by average average of per increase X% customers. driven number a EUR monthly a gaming monthly with customer XX% the

we average had depositors XXX. CPA an EUR regard to first-time XX,XXX customer at acquisitions, of With

with cover and the Spain have those cost and With some our generally customers that Oscar been more in which year XXXX. to customer to of of to requires been the of mid-XXXX, acquisition time, recall our has you both For call Panama versus to a over and Mexico Argentina turn and that Spain and you that Colombia, now call expectation upward trend, highlights investment. Mexico average the increased focus and primarily on for to upfront respect investment I casino-first due will acquiring this, an with the mixed in quarter what current the higher financial effect we on since is us will full

Thanks, Aviv.

and EUR our EBITDA Mexican from This million. meanwhile, Spanish by XX% XX EUR grew approximately in by was third performance revenue XX X Consolidated quarter EUR EUR financial included X.X grew positive million. million Turning from X now EUR gaming our Adjusted grew EUR revenue nearly and on Mexico. XX% to of net gaming primarily a to Spain, business million business, the to contribution million XX% was the for revenue driven where quarter Page million. XX. net the In XX to

were classified BXB XXXX, results country-level our expenses. reminder, a As as include that undistributed in now expenses certain

the year are So hard. versus comparison prior periods

Spain, undistributed expenses investment level X of is EUR year-on-year have together with expenses quarter, million example, of a what in year prior otherwise in includes Spain. total and in higher previously adjusted third versus been explains the decline This, would approximately allocation EBITDA a the the BXB platform higher In period. for negatively in adjusted quarter third impacted EBITDA by marketing

revenue, Looking EUR million quarter by higher by a XX, partially adjusted spend Page level of X.X now net the at marketing X.X million driven platform in fees. in in the third and content our increase EUR the higher as as primarily P&L the on was improvement in EBITDA gaming quarter well offset

Page have XX%. gaming in increase per significant to reported helpful Spain being driven June, spend the Mexico devaluation with also XX. higher and the active. of I detail Mexican a from net peso, thought by in Turning in discuss would increase election The be to given together revenue but active later, presidential customers an been is more of will growth, in XX% instead place now XX% would both it the since we the assuming constant for took which currency Mexico, provide

and mostly X% we existing and FTDs, driven a improved retention customers. increase XX% in had the declines the in and Still, in quarter X% Argentina. active in quarter, meanwhile, to of sequentially, due Colombia by primarily dropped customers both

gaming spend financial partially the of XX third XX% active XXXX, in basis, quarter, our net number driven increase in Mexico, Turning gaming XX% headwind gaming net revenue versus to a year-on-year. metrics. decrease third in to and revenue have by Mexico. the XX% third million our a XX%. practice. in in increased constant grown EUR offset currency by revenue would of the was In the increase of in revenue X the EUR million to net an a gaming year, peso the more On Spanish customers by Mexican The resulting prior operating quarter Net devalued the XX% in than quarter XX,XXX,

XX% trend remains number increase seen a customers. performance have by underlying of strong we the the in in driven this Mexico active throughout This So year intact. was

its on and the peso our provide On currency. against euro, Page some recent Mexican the wanted reporting performance context XX, we to

As a peso the closing with reporting From exchange already should prior quarter, rate devalued the vessel comparing devaluation fourth quarter, you headwind in approximately having And versus period XX% the was expect by the you the can see, XX%. XX%. looking around the pre-election similar a levels, standpoint, Mexican the devalued has quarter-to-date yesterday's against to ahead peso period. year in third

balance sheet to XX. the Turning on Page

approximately XX where available, As total we more million of balance we EUR on second cash was of September had which EUR XX quarter. of X.X sheet, than XX, million the the ended EUR million

suppliers. capital gaming both revenue, or LTM continues our trade reflect with to in and prior net which we position, XX% quarters of of a terms negative quarter line the net is terms ended XX with million working restrictive In around and relatively from EUR

my both and closing our back hand Page it part in adjusted flow XXXX guidance EUR year-to-date the FX offset on the EBITDA. at cash, ending all we Looking for will from balances, gaming but Mexican revenue X.X the first the year, negative by XX. With on X to now regards over cash X.X range of cash In outlook due peso the we to million XX, the upper partially months we end. a remarks. period. devaluation generated expect our impact Page of in available for million net the primarily EUR on finish Aviv are of current that That's of year will I the to reiterating

Oscar. Thanks,

delivering for Q&A, continue deliver to I'm turn as I year, we their team, hard approach thank upon the work commitment also like and with Codere always, Before the lies of to results. ahead to as pleased would and beyond. Online to excited year end we the what for the these next the our

As the it that open to XXXX interest, I XX-F investors, especially filing. With to support Q&A. other said, the the back to will analysts always, respect operator patience, up to call with your thanks and market turn for to participants our and

Instructions] [Operator

Capital the from line question first Your Group. Craig-Hallum today Ryan from Sigdahl of comes

to the start peso. Mexican with want I

You revenue guess, country? What's the flow-through either that segmented on or quantified the overall I to EBITDA impact.

good question. Yes. Ryan,

structure as peso our would it generic I is think in overwhelmingly say response, a Mexico, that Mexican I denominated. that also cost --

our and revenue hedge the structure. Mexican natural few with between a are there business So exceptions. there's said, cost the from a That customers

are for into fixed different of expenses gets largely some have the pushed centralized and that denominated currency we for get down which down which some of So pushed businesses. costs, us, all hard expenses operating example, into streaming different the

of slight terms denominated. there mismatch cost of overwhelmingly, the in there amount but a is structure is the structure, So peso cost

would affect the flow typically what operating at effect level. So revenue cash would also

the of aware surprising recent And intensity there? growth, feels staying of kind proposed Mexico, regulation, on months, Mexico? just has then a changed ongoing environment that be I in with market discussion from of new expected guess, it in promotional on the competitors an And to like or any then legislation the strong just anything competitive

Yes.

replaced So by been, in Several people legislation. have say, the government. new far, change no let's

with are in We them. contact far. no so But surprises

with getting to and continue them, work are We responses. we

So it don't currently seems anything has that dramatically changed. nothing like feel that. We

competitors of terms we the World In the into coming competitors, around summer. market, especially saw Cup during the

X, let's X stabilized small now, between, X again, say, it's to maybe and think X X, I competitors another ones.

because a I more bit going pricey think overall, of let's now the prior so the World Cup. it's same more less inflation the And little to or environment, into, winter, say,

over are surprises again, there well. So also as big no there

to referring you're Copamerica, Aviv, correct?

good America, acquired very not good. a of XX I'm euros, World Cup, customers -- referring and really to bunch I'm guys. you the for industry for Copa America cope. new Yes, already Copa thinking On the

when With retention you we time surprise those little from guess, to anything customers, as into events bit now far iCasino surprised engagement, as have a ability I from happened. cross-sell that more or... Anything you those

No.

putting -- customers. sport. in seeing we effort are because Also lot the I from and think are casino more more surprisingly, casino a of the we cross-promoting

is, from are I'm I the we been path. that. there and more spot, has referring say, are casino and now, as in content NFL finished right to this more is are surprising to less We casino that customers getting crossing the when Overall, better started. in looking which at sport, for MLB, Also, more casino Mexico point, also playing would

pick little but first next and year. quarter, starting quiet bit more a probably now, during it's the pick it's up So to will up

think are we that. overall, succeeding are promotion, So getting this better better. at we in cross and getting I We're

Your next the Stantial Jeff question Stifel. of from comes from line

Oscar, tackling appreciate week, wants this, provided process could terms off you XX-F and the hearing filing you successfully add help sort of or the of time as color of the can of take context on about of Nasdaq weeks just to here. whoever in that here file sort look to -- to some notification color with the listing any get last that with maybe blocking the where [indiscernible] test ahead if X line starting you respect you that the at the maybe sort Maybe you're frame schedule

helpful. Just be context any there would

be of to to we filing audit related from the It's love a we'd complete. gating on Obviously, that overwhelmingly position is we're would to the standpoint question. the filing. then now give good us our of in given itself. our to a and really can it's a to say complete can auditor. timetable crossing procedural specific [indiscernible] work I our everything end the say, And thing doing that analysts the audit eyes, issue it's aspects, teas to heavy lifting investors, the Obviously, Jeff, process. that's certain of the I Yes. first-time a in XX-F is terms question a But only

working you give can We're we're as working this up I we right wrapped have. possible. as as can But don't our get #X priority we soon is tell that to we as hard can't is you now. All something that

night. and Day

close to not issue. helpful. predicting recognize here. is And I Perfect. it's That's Then tricky this Perfect. timing

Is par some questions Turning competitive there's the of landscape, some entrants talked mechanically been engagement follow-up CAC? into Is that in it one of the reductions just a in coming maybe or lower higher me the about a around the Ryan in to Is of coming acquisition? of following piece Decree. a the how impact P&L? into it help user a I flowing on Spain, the feel about the understand of asked retention Royal Mexico some of of back terms sort including new you you sort you competitive there Copa. think Can just we're pullback mostly competition through bit that also on platform. back

you has improving, particular, counter that if on to In earlier is curious competition bit Oscar which because about retention more coming I'm think think you I retention piece been a in. the said

kind is helpful. color would any the how just to So there this P&L on of flowing be

Yes.

play is prices start, and are here is when cover we I competition increasing we Basically, has So those because the a mature. see, prepared increasing know growing the later, it's of similar Oscar I'll prices I are The until as ROI and years, and able is think ROI happy. what for more -- more we until this lower, and that role a to by, prices the why is question. increase And both -- thing wait important a media, X not the in eventually or slower, lower which kind we to acquisition now. Mexico goes leads to started are it in maybe see digital then higher, We higher investing the the part. last maybe lower already time and traditional more in in didn't the in expected it and market a this we are and

biggest where much face lower I much than coming market think started to higher when the prices were our a and we prices competitor than in the now. more will started business competitor online now

better you we at a those and in where his CPA and player there as that to are the speech, better still, if is KPI commented investments. do up to it managing affects, But retention probably looking we and on or the the the slower So may be Oscar getting it eventually, retain is this in what longer. in see goes are ROI are you'll part, operational lower

So with pricey, to more us make as clients brand stay it's the investment, choose our the we longer. build although and

means -- So we we the more also players, -- CPA range, there have buy we certain belief will eventually. are also ROI a that through getting be if better expensive which are a we this that

the eventually, up little slower we don't that were want a getting maybe think are say expensive. before, before I more seeing it's ROI we improving than to than are not the player But the X-some because CPA -- prices by and game a I ROI are because seeing. are bit value expected an surprised it's and So than fast we

that the were add otherwise that's the since this in just as on a you is is would of, rollback back I just certain that we're of This that Jeff, of really on Yes, been dynamic XXXX. the call. for those early restrictions balance decree including the the place advertising mentioned, seeing

the I I in being I we're as there of it's and the the competitive of welcome our we've think most one think, bonus. bonus the market, reintroduction welcome is indicated, to landscape and makes as all on else equal, aspect the So that obviously -- margin, think which, have, more for competitors are all important reintroduced it you a adapted we've

says, So profile on it does the very margin right? impact, market. again, the to the as economics successful in And unit return Aviv unit economics, that Spain good, the that. very, in in But been say have still have we mitigating the we

be be an to in -- that might favored welcome I something versus something X, in have competitors margin existing It's operating more X is all this on competitors looking little But you with really we online competitive and for let's aggressive. X additional landscape. tool So the environment is the a or a say, we've a that without that when benign jurisdictions. new grab were years operators in benign, Spain, bonus, which had the is share top new bit incumbents deal relatively context, we from again, others X, relatively this of, just think all this to

the are rollbacks. these And again, there call make there legislative [indiscernible] us restrictions and that under I where the some reinstitute means other be a basically on other where by will the executive to were underway -- next is what take but decree same back to are The royalty way to is initiatives. could legislation -- to of point initiatives there they operating would assumption we that wanted rollbacks by achieve continue, year we're of these

that. So on and to year new is will we where again, the now of of to prior April some this on very we from to limitations. rollback a this well We're that back new could the was whatever counting continue, XX not compete. in have be environment operating which were But assumption these constitutional here operating we're the the we

you been XX but that to us look about in -- -- cohort I as gross philosophically, Maybe acquired one, actually. what at how corollary the you or willing seeing -- is slightly us at you're into what higher seeing XX context. Just helpful remind you've just you're a think payback level some slightly profit you really direct color looking when you think a that, or That's any period kind maybe XX, do then to help have for Can add sort of higher it that's of established in about up last up returns on that's level until And coming months? CAC, spend is users the quarter where on you invest context X months, like the there. a can do you're don't [indiscernible] think XX, it the of you're

good really investment economics understanding a an it's upfront question between business that cash. understanding contribution revenue business this that player to cohort, and also online super It's or unit margin the obviously generation only values flow-through from not operating relationship and Yes. and that is expected important and the but the

little don't the of tell -- well the a share you something but Spain, impact -- level it's you've weakening of of time. this in again I back that on still return dynamic we can on the that margin spend segment level, bit of So very lot the details. of we've We is country seen profile a components, a seen strong. the

revenue a net within year. the the gaming a well still are to standpoint assume can revenue from standpoint paybacks that You definitely

bit little different. look But right? every at market a different, Mexico is We

year up It our much are level So with very we objectives multiple to one has do no what invest? over there's a what period. until do answer to

radio of directionally, recent seeing lot Mexico we the line and a and brand, that in get lot better the investment to in Mexico. we from you return leaseback the the to work rest. the investment continuing of after some was TV, that tell profile, terms which first had years -- above recent periods For investment and that a investment, to I year, right? in quarters Brand X.X directed we're do And reinforcing in benefits early can of example, of is

very I the as X that less has think the relationship to past. what we a thought it little I to we're that the for business is continue in investment think we is us still where today, upfront future Mexican years tested, delivering revenue ago and return -- X in stand between generation is was confident similar or better. going bit that getting only getting Because profile, and optimistic

one. numbers. that's give specific So But we don't

prepared Let in market give maybe and earnings, we're right can us But of not share whether that's we sense. year investors full any. now, stab at something in a to take the that helpful context the

I in That's board very more impact much could or appreciate had in with outcome bit a the I extended squeeze one of euros Or living carrier. there and negative question. that of of [indiscernible] And color. into right? hold a QX QX, just impact just has kind in I finals helpful. obviously last Was if a think the you I of been think clerical

to impact whole there So out noteworthy just on was the front? any call

Cup especially specifically, is maybe of looking just a time in at was a of lot Aviv tournament, and -- X end June. the Euro X-week June, appropriate. Spain which the I in because whatever I'll me fell that complement half Can we the of tournaments, he at spent back thinks remember, the of kind and with of then let just jump But let

engagement. there front bit And -- of work are and like little phases, and activity games, impact those margin, first as an fell of work versus The those pull was other is terms a less second right? tournament X through these ] there weeks all Obviously, the But you the And on forward of Comerica eliminations there's through X of in weeks the Euro again, July. more of in in weeks. of half front the the tournament X there's of end there's [ gain. more a

market Spain. us pull in is the our which Spain sports And we fell in Euro third the of forward the of betting second So also Spain-based results. that also again, over and we in fell impacted third win. variations July quarter and revenue margin have quarter in into and which, some second final had the that activity -- quarter out. don't sports that, Nothing on point little Spain. had a in to quarter, you having which September, being margin of typically a because activity time, final We a In averages is dramatic. let's bit to one-off of won for the typically the in favorites cup, helped margin our say, expense to in terms home betting revenue

But fair we it not when go that, a the little nothing third So But our us with quarter, works in in impacted try want. it be September you then little was that in on and whatever against July works to say both a bit when and there favor. Aviv, and complement of complain our revenue the and Spain. in then in again, ahead bit margin

I it's don't to... have anything I No, think

Your next Pat from McCann Noble Capital Markets. from question of line the comes

I just a couple here. have

at hedge in peso. wondering, Have the you to possibility was I mechanisms the it to looked currency any the comes Firstly, there. of when movement risk

opinion Just any have curious that. about you if

Yes, I can take that.

we're till Mexico. in up inflecting now, look, now and flow think, to of cash generation I operating profitability, just

haven't the hedge, any given and the it cost operating to So matching in of structure between peso. place. elections. Mexican now, the natural revenue the haven't strengthening hedges benefited Mexico, we time putting denomination really hasn't been, we into through the considered up now, until Mexican COVID And it the from the till from pre-Mexican of obviously, elections We and of up

starts greater medium and Mexico. I looking not at that levels get something ramping short profitability we term, business but of as we're and long it's more think term, from

the headquarters, visibility, the that consider think on hard that might timing a cash working and probably operating I would think having we related currency But we the monies here tackle of in to where flow point, near terms better some point, a dollar very analyze the of not market here and will at the hedges Directors, will medium, currency upstreaming long evolves I either doing those of say, certainties But and and in upstreaming it's monies. something let's cash of over flow those say you be term, we're business that some can active that how readily against at the euro. Board with the on there's depending with it derivative or I something and that especially term. hedge

one far to you're Got is Colombia you. be license there. as deemphasized in focused then think -- year. and other opportunity of on growth time pressing That the market be will where And But more sort world new time. the at know makes in sense. looking my this goes And -- for late you I Mexico next first guess, question not and the that's at your the as the let's really most that might come markets, expiries say, in not I just up I the are the being --

and think when forward? growth about for markets is to it to that licenses the the I'm you some do license sort something curious, just down secondary trying you that would maintaining how where of going of renewing line? kind Or market be point at potentially that the comes investment

Yes.

here and to it maintain we at all look lot, least definitely, are think until to and of at little talk Colombia able better and the would I By like we It's a And asset, licenses assets. but as we them, it's EBITDA. Colombia one our we is seeing an bit positive slightly didn't grow a are we about it. better results. way, So

a million disregard X we generates EUR So that market I don't that think this month. around almost can

allow something it, not will we the So for Colombian terms crazy, it's sure, license. renew the will if and

maybe so this for the saw not the how about [indiscernible] in bit so that parliament different, term, deeply questions a closely opportunities here far, there. to today medium market also written especially asking this future, I is And about -- Argentina, more will little market in look we it need advertising look we evolves. and that in than discussion a there I think into

[Operator Instructions]

any questions, While to will further further any we turn questions. web for for call over Guillermo the back wait I

Yes.

the So we questions on have couple webcast. a of

in around is growth one first trajectory can on comment The If XXXX. that. we

Yes.

executing right this think we're one what's balance on of where of I is through now, the left the -- focused year.

December front month want for the also of of and engagement in that activity casino us, on business. which have in typically is sports sure us, we December, betting So lots a strong historically side the and make the we to of

So we in going year close we'll as hopefully the sure year and possible of want full make do we end typically at as the we call, have at our of to February, strong EBITDA which we'll into share any to But yet be just then guidance to regards have XXXX. we adjusted able of both for XXXX. bring revenue, some in to guidance terms don't as

if any expansion we is expand. plans And around into other markets, Okay. to American have Latin second question

Yes.

think to in markets or we in general, cash. other find whether it's our expand LatAm good to I of plan use

of growth considering entering we cash an market are things a the are slowly. think We And of new is that kind building one I market. M&A some or

in short term the in can our more looking heavily will some or we we nothing it. the in current medium to how invested see the our announce -- think markets. share. to growth on But we are cash definitely going are maybe organic create we I at that in term, order use So this

Yes.

ensuring any I what approach we're very of investments to and spec, work we of think years now to making allocation obviously going not than not X being profile Mexico. has disciplined to and in return X that compete change to years, money in the the we're put capital is Spain the post better benefit do

to to it open we're existing new of number capital approach and in new think allocation. to different going I disciplined a markets. our change always we're not But opportunities ultimately, We're So opportunities. analyzing relates as

position that, with we another share to the the that Related question management considered are cash with building any has is Board buybacks?

the Yes. in we said, I Board. to And something that the and discussion discuss past building It's forward on in to move we we it's see we happens. the It's That up what the with discussed a mean have happen. time. will we'll the Board. comes especially something to think extent that something it that I continue needs as time future, cash,

Our is board been will level. been today our investment our -- I primary years, the Spain and core primarily is discussion it's focus in continuing executing at in markets, X, to take over the we've invest us a place which But working think and that what's to X continue last Mexico. for

more any Okay. questions I have think don't we the on webcast.

So operator, unless questions there more are any

about the about asking better, but Steve is last can who in the think equity few in selling think same answer seller months. position I I don't the ponder their Is guy, know Oscar is we the One over

Yes. SPAC only the filings [ what sponsor mean whatever to see see I we we and the of I mean and might aware be. are what it only ] their relates intentions they sponsor, as make.

past had recent the I they've in months. in think

think with the in of reflected was other remember the have their -- what's public EGR over other number terms we over shares. and summer, than I to SEC that, the Guillermo covering company. on in than what respect in I position filings, small a a visibility their be but intentions ownership relatively might filing, an there XXX of don't for no

Okay.

out no are joining, reach you, everyone, to any have and if there thank feel further if free So you questions, for follow-ups.

Thank conference concludes today's participation. your call. This you for

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