Codere Online Luxembourg, S.A. Ordinary Shares Q2 2026 Earnings Call

Hello, everyone. Thank you for joining us and welcome to Codere Online second quarter 2026 results. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Guillermo Lancha, Director of Investor Relations and Communications Guillermo, please go ahead.

Thanks. Operator, and welcome, everyone to Codere Online earnings call for the second quarter of 2026. Today, you will hear from our CEO, Aviv Sher and CFO Marcus Arildsson Please note that figures reflected in today's presentation are preliminary and unaudited, and include certain non-IFRS financial metrics, which should be considered. In addition to our IFRS results. Reconciliations, and further details are available in the appendix. During this. Call, we will make forward looking statements which are subject to risks and uncertainties. While these statements reflect our current expectations, we undertake no obligation to update them after this call. A replay and transcript will be available at Codere Online dot com. Where investors can also sign up for email alerts. With that, I will go ahead and pass the call on to Aviv.

Thanks, Guillermo, and thank you all for joining us today. The second quarter was a standout quarter for Codere Online. We delivered our highest quarterly revenue to date alongside strong profitability and cash generation revenue growth accelerated meaningfully versus an already strong first quarter. Driven by a solid execution in Spain and Mexico and improving conditions in Colombia and Panama. Providing us with a solid position and confidence to raise our outlook for the full year Starting with the highlights for the second quarter of 2026 on page eight, we deliver consolidated net gaming revenue of €69.4 million, representing a 27% increase versus the second quarter of last year and a significant sequential acceleration versus the first quarter. Casino accounted for 62% of revenue during the period, while sports betting represented the remaining 38%. These trends are consistent with recent quarters. Although the contribution from sport increased slightly due to the World Cup. All operating KPIs improved in the quarter, with an average monthly active customer reaching approximately 173,000, up 12% compared to Q2 of last year, and average monthly spend per customer, up 13% year over year to €234, reflecting both strong engagement and a higher player. Value base. On the acquisition side, we acquired around 108,001st time depositors during the quarter, nearly 40% more than in prior year quarter Once again supported by strong activity around the World Cup cost per acquisition improve approximately to €200, demonstrating the continued efficiency of our marketing investments.

Most importantly, based on strong performance delivered in the quarter and the momentum, we continue to see across the business, we are raising our guidance for the full year of 2026, with now expecting game revenue, gaming revenue of between 200 and 50 5 million to 265 million, compared with our previous guidance of 235 million to 245 million. We are also raising guidance for adjusted EBITDA between 20 million to 25 million, compared with our prior outlook of 15 million to 20 million. Marcus will cover later the different factors behind our decision to raise guidance with with respect to capital allocation, we did not repurchase any shares during the second quarter. As a reminder, our our share repurchase authorization remain in place through the end of 2026. We continue to take disciplined approach to capital allocation. And believe maintaining a strong balance sheet provide important strategic flexibility as we execute our growth strategy and evaluate opportunities to create shareholder values Before moving on, I would like to briefly comment on the World Cup, which impacted both our Q2 and Q3 results. Overall performance without was outstanding and materially ahead of the 2022 tournament. Excluding Colombia. Unique users were approximately five. 56% above the previous World Cup levels, and we acquired nearly 4000 new customers around the event.

The stakes reached around €63 million. Approximately 180% above the previous tournament, demonstrating the significantly greater scale of the business and the strong engagement of our customers. Net gaming revenue more than doubled compared to the 2022 World Cup. Despite generally favorable outcomes for the customers. We believe these results highlight the significant progress Codere Online has made over the last four years. In terms of scale, customer engagement and monetization. With that, I will now hand the call over to Marcus to review the financial performance in more details. Hello everyone. Turning to slide ten. You can see our consolidated net gaming revenue and adjusted EBITDA performance by country for the second quarter of 2026. Starting with net gaming revenue, we generated 69.4 million during the quarter, representing growth of 27% compared to the second quarter of 2025. Both Spain and Mexico delivered excellent performances and were the primary drivers of growth in Spain. Net gaming revenue increased by €5.5 million year over year to 27.6 million, representing growth of nearly 25%. The market continues to perform exceptionally well and reflects both healthy customer acquisition and strong player engagement. In Mexico, net gaming revenue increased by €7.1 million to 36.1 million, representing growth of approximately 24% versus the second quarter of last year.

Mexico remains our largest market and continues to be a key contributor to both growth and profitability. Our other markets, which includes Colombia, Panama and the city of Buenos Aires, generated 5.7 million of net gaming revenue during the quarter, up more than 50% year over year. The strongest contributor came from Colombia following the removal of the 19% VAT on customer deposits, which was in effect during most of 2025. We have been able to re-engage customers who had previously reduced activity due to the tax and have now recovered, and deposit levels broadly in line with those achieved before the tax was introduced. The attractive market in Panama continued to perform very strongly during the quarter ahead of our expectations and especially during the World Cup. Turning to profitability, adjusted EBITDA reached 5.8 million in the quarter, compared to €2.3 million in the second quarter of last year. Within that, Spain contributed 7.8 million, while Mexico delivered 3.6 million, reflecting the operating leverage inherent in the business as revenue continues to scale Overall, the second quarter reflects strong momentum across the business. Continued revenue growth in our core markets, and a further improvement in profitability. Turning to our consolidated PNL on page 11, we can observe that marketing expense was 26.2 million.

During the quarter. An increase in absolute terms versus last year, a significantly lower as a percentage of revenue. Marketing represented 37.7% of Nr, compared to 41.5% in the second quarter of 2025. We continue to see attractive growth opportunities across our markets and are therefore comfortable investing behind them while improving profitability Additionally, given the good performance we have been seeing this year, we decided to make some incremental investment in marketing, both in Spain and Mexico and acceleration of our top line growth reflects just that. Going forward and has been the case, as has been the case since 2022. We expect to continue gradually reduce marketing investment as a percentage of GnRH, with a direct positive impact on adjusted EBITDA gaming. Taxes as a percent of Nr increased materially in the quarter, driven primarily by Mexico and Colombia.. In Colombia, where the 19% VAT tax on deposits I mentioned earlier is now levied on gross gaming revenue. Beyond marketing platform and content costs continue to benefit from scale, while adjusted EBITDA margin improved to 8.4% compared with 4.3% in the second quarter of last year. Now turning to page 12, net. Gaming revenue increased by 27% year over year, driven by a combination of customer growth and higher spend per active customer.

Average month. Active customers increased by 12% to approximately 173,000 during the quarter At the same time, average monthly spend per active customer increased by 13% versus last year, reaching €134. We acquired. Approximately 108,001st time depositors during the quarter, representing growth of 37% versus Q2 of last year, while cost per acquisition improved to €200 versus 217 in the prior year quarter. This reflects strong execution across both acquisition and retention, as well as a favorable market environment in our core use addictions., turning to Spain on page 13. Net gaming revenue reached 27.6 million during the second quarter of 25% versus the same period last year, and 8% above sequentially. Average monthly active customers increased by approximately 11% year over year. Spain continues to perform ahead of our expectations. The market is benefiting from strong retention, health acquisition, and improved player values. Importantly, since the third quarter of 2025, we're seeing higher player values that have allowed us to increase marketing investment while still generating attractive returns. Spain remains a mature and tightly regulated market, and while we're benefiting from structural growth in that market, we're also recovering market share, which makes the level of growth we're currently achieving.

Particularly encouraging moving now. On to Mexico on page 14. Net gaming revenue increased 24% year over year in the second quarter, reaching €36.1 million. As we mentioned in our last call, we continue to improve the quality of our customer database. Hence the 10% sequential decline in active customers versus Q1 earlier this year. We still managed to grow it slightly versus the prior year period, thanks to strong acquisition around the World Cup, particularly with Mexico making it past the group stage as. The increase in net gaming revenue was driven almost entirely by higher spend per active customer, reflecting the actions we have taken to improve customer quality and reduce promotional abuse within the database. Mexico has also benefited from a more rational, competitive environment than we anticipated at the beginning of the year. Combined with our strong brand product offering and disciplined marketing approach, this has supported continued growth and improved profitability. Overall, Mexico remains our largest market and still one of our biggest growth opportunities to drive future value creation. For Codere Online. On page. 15. Turning to the balance sheet, we closed the quarter with approximately 63 million of total cash, of which 58 million was available.

Our structural negative working capital position remained in line at approximately €25 million, or 10% of LTM net gaming revenue supporting. The strong cash generation of the business. The strength of our balance sheet with no financial debt and higher cash, continues to provide significant flexibility as we evaluate capital allocation opportunities to support and drive future growth. Turning to page 16. We generated 6.9 million of cash flow during the second quarter, increasing available cash to 58 million at quarter end. This result reflects the continued improvement in profitability as well as our ability to convert earnings into cash. As we have discussed in previous quarters, the timing of certain working capital and tax items can impact cash flow in any given quarter In Q2 was positively impacted by some of them. As a rule of thumb, when looking at the full year, we would expect to convert a high proportion of our adjusted EBITA into cash. With corporate income tax being the key relevant difference between the two. Turning to page 18. As mentioned, we are raising guidance for full year 2026 Net gaming. Revenue to between 255 and €265 million, and adjusted EBITDA between 20 to €25 million. The bridge between our original outlook and our revised guidance can be explained primarily by four primary factors.

First, Colombia has benefited from the removal of the 19% VAT on deposits, allowing us to re-engage players who had been who had reduced or stopped playing due to the tax and bringing activity levels back to broadly in line with those seen before. The measure was introduced last year. And second, Spain has continued to outperform our expectations, supported by stronger player values which have encouraged us to add to our investment in marketing while maintaining attractive returns and profitability. And that's on top of. The industry growth we are benefiting from. And third, as I mentioned earlier, Mexico has benefited from a more favorable competitive environment than originally anticipated, with two relevant operators not currently active in the market and for. The. Mexican peso has remained stronger than assumed. When we establish our original outlook, having already contributed to more than €4 million in the first half of the year. That said, the outlook revision is not explained by these factors alone. We have seen strong execution and strong underlying performance across virtually all areas of the business Sports betting has performed exceptionally well, supported by a World Cup that exceeded our expectations. While our casino business has also continued to grow strongly, we have also seen meaningful improvements in markets such as Panama, which delivered its strongest quarter to date.

And overall, we believe the second quarter demonstrates that Codere Online is firing on all cylinders, with growth player engagement, monetization and profitability all trending in the right direction. And that's all from my end. I will now hand it back to Aviv for closing remarks.

Thank you. Marcus. Before we move to the Q&A session, I would like to thank all. Codere Online employees for their hard work and dedication, especially around the World Cup. The strong results we reported today are direct reflection of the efforts of our team across all our markets. I would like also to thank our shareholders and analysts for their continued support and interest in Codere Online. With that operator, please open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jeff Stantial with Stifel. Your line is open. Please go ahead.

Hey, good morning. The Marcus Guillermo. Thanks for taking our questions. Maybe. Why don't we start off on the World Cup? You know, two. Part here. First, can you just talk about what you've seen in terms of retention and cross-sell of the 40,000 new bettors that you called out in the tournament has ended? And then second, it does look like or you called out that cat actually came down quarter on quarter in the conversion rate went up despite more competition around the tournament. So if you could just help us sort of think about that trend as well, because it's a bit surprising. Thanks.

Okay.. Thanks, Jeff. And. Please keep in mind the second question, because I think one word I didn't understand, but the first question regarding the World Cup and we already see players,, that. You to play with us. It's still super early to say right. The World Cup just ended a couple of weeks ago. And the results were the margins were favorable and not favorable depending on the country. So. People are a little bit run out of money, plus some air. So we need to wait a little bit longer to see if those players are ,, I don't want to say one timers, but but for sure, those are new players that, that we didn't see before. And to know exactly the value. So far, it looks,, it looks okay. It looks better than expected. And probably next quarter I can comment more accurate on that and give a better details regarding. The what was the question exactly about the.

Yeah, exactly. So Kak was down quarter on quarter in Q2.

And that's despite, you know, what I would think would be more competition and more folks investing around the World Cup. So just sort of an explanation of, of what drove that.

Yeah, I think, I think and maybe we can. Say we cashed out during the World Cup because we didn't invest as much as others. We invest more around the World Cup. And I think,, our brand was strong enough maybe to enjoy ,, people just searching for betting and arriving to us because of our previous investment. So I think this gives part of the answer. Plus, we didn't invest directly into the World Cup broadcast, which was a extremely high, extremely expensive. We, we tried to, to keep the money around the World Cup. And I think this strategy proved well. So we saw that,, the. Pay went down.

That's great. Thanks for that. Even then, maybe just shifting gears over to the cost side, it looks like just running some some quick back back of envelope that the updated guidance implies about 5% flow through to EBITDA in the back half versus about mid 30% that you realized in the front half. Marcus can you just help us think about sort of some of the puts and takes here in bridging those two? And then, you know, take it a step back more thematically, just how you think about operating leverage in the model at this point in time and what the right go forward EBITDA flow through looks like. I guess if you sort of make that assumption that end user acquisition remains somewhat stable.

Jeff,. First point, broadly speaking, we're not making any substantial sort of statements or differentiation between the first and the second half., we don't. Expect any material differences in terms of flow through to, to,, as you mentioned, it's relatively close in terms of what the implied figures are for the second half. So no, no big changes. In the first half versus the second half. Over time., as you know, there's a number of factors in our PNL, which has more of a variable component to it, which is gaming taxes, which we very much subject to what the authorities do. And we also have a significant other costs in the model, which is basically platform,, which is also substantially variable. And then there's other items in there, like payment methods, etc., which broadly speaking, probably a more variable than fixed. No, there are certain leverage in the business in terms of marketing and other, certain other expenses in terms of, of overheads, basically, you know, so over time, as we've seen so far,, I think the conversation mostly when we have it with you guys, is that there's a lot of focus on marketing, there is a little bit of leverage as well., over time in other expenses.

And so, you know, big picture is that we think will be progress both from keeping marketing as a lower percent of sort of, of GnRH, but there's also probably a little bit of, of additional sort of leverage operating leverage in the other expenses in the, in the PNL. But broadly speaking, we don't we have not foreseeing anything new that comes from,, you know, in the second half of the year. So overall, that's the. That's the outlook that we have with respect to the second half. And just a few points on, on how we see it., was there another.

That's great. Thank you for.

Okay. Thanks.

No, I think I think you hit it for that question. I was just going to squeeze in if possible. One more, which is,, Colombia. So some good news there with with the VAT tax being removed. I'm curious just how you're sort of thinking about investment in that market. You know, how much of a priority it is and maybe how much, you know, there's a little bit of a if there is any, a little bit of a wait and see on, on marketing investment, just given, it seems to us there's still a little bit of uncertainty out there on what ultimately happens from a, from a tax standpoint.

Yeah. Well, I do want to go ahead., know you can listen Jeff the fact is that they there is still tax imposed more taxes than than anticipated., it's enough to allow us to do good CRM and retention and invest, invest back into our players. It's not good enough to start marketing in terms of ROI. So hopefully with the political change there, we will see. Maybe more business oriented present. President. Sorry. And and with that, if the. Another layer of tax will be removed and we are back to the. Prior tax levels, then we can discuss a a marketing investment back again so far, by the way, we are happy. We see good ROI on the. Our current customer base and if we can continue and improve our product, I think we will be in a. In a good position to, to start growing back again. And the marketing investment and see good ROI. So we are a little bit still, as you say, wait and see a little bit more. And I hope by the end of the year we will know exactly what's going on there. And if the extra tax is removed, then we can invest more.

Thank you very much. And nice quarter.

Thank you. Thank you.

The next question comes from the line of Ryan Sigdahl. With Craig-Hallum Capital Group. Your line is open. Please go ahead.

Hey. Good day. Aviv. Marcus., World Cup. Want to say on it?. What percent of new activations, new users are also playing I casino. And then if you have any context from the previous World Cup or previous, you know, soccer tournaments, but curious how that compares relative to your expectations., I won't give exact figures, but,. I think,, let's say I'm a little bit exaggerating. Okay. We see around 30, 30 to 40% cross activation. So far. By the way, the new users fit into this profile. As I said, let's, let's keep this question for the next quarter and then I can report exactly if they behaved as expected and continue with us. And there is no churn so far. We are ,. We are happy with the results. So I think your answer to your question, the answer is, is, is yes, there is around 30 to 40% that are playing iGaming and more table games. By the way, if it's interesting for the audience to hear, then slots, but ,, definitely they are playing. And I think the team is, is doing a good job by causing them. So yes, so far, so far, the profile fits the, let's call it the regular profile that we see.

Great., then just on if I look at monthly actives,, in both Spain and Mexico sequentially took a step down., despite the World Cup, I guess. I know you mentioned it, a bit of a change in customer acquisition strategy, but can you elaborate what specifically?, you guys are focused on there, if that's concerning to you on the active step down, despite, you know, the World Cup.

No, I don't think it's concerning. And don't forget that we are we entered the summer. You are missing half of the World Cup in this. Results by the way you need to take this into consideration in terms of activity because Spain got to the to the final. And we have Spain as one of our leading markets. And we are not we are not worried that the active users that you see is a healthy, active base. Whatever we are cleaning right now is intentionally. Okay. It's not it's not out of control. It's the opposite. This is why you see the spend per customer goes up and revenue goes up. So just looking at the KPI of active is in that case is not enough. So we are happy. We are very happy with the