Codere Online Luxembourg Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2026

Key Takeaways

  • Positive Sentiment: Record quarterly performance: Net gaming revenue rose 27% year over year to EUR 69.4 million, while adjusted EBITDA increased to EUR 5.8 million from EUR 2.3 million, lifting the margin to 8.4%.
  • Positive Sentiment: Management raised full-year 2026 guidance, now expecting EUR 255–265 million of gaming revenue and EUR 20–25 million of adjusted EBITDA, citing strong execution, Spain’s outperformance, improved conditions in Colombia, favorable competition in Mexico, and a stronger Mexican peso.
  • Positive Sentiment: Spain and Mexico remained the primary growth engines, while Colombia recovered broadly to pre-tax activity levels after the removal of the 19% deposit VAT; Panama also delivered its strongest quarter to date.
  • Neutral Sentiment: The World Cup generated substantially higher user activity, stakes, and revenue than the prior tournament, including nearly 40,000 new customers, but management said it is still too early to assess retention and long-term customer value.
  • Positive Sentiment: Codere Online ended the quarter with approximately EUR 58 million of available cash and no financial debt, providing flexibility to pursue Latin American licenses or acquisitions; however, no share repurchases were made during the quarter and management expects potential M&A to receive greater allocation than buybacks.
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Earnings Conference Call
Codere Online Luxembourg Q2 2026
00:00 / 00:00

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Operator

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.

Guillermo Lancha
Guillermo Lancha
Director of Investor Relations and Communications at Codere Online

Thanks, operator. Welcome everyone to Codere Online's 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 codereonline.com, where investors can also sign up for email alerts. With that, I will go ahead and pass the call on to Aviv.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thanks, Guillermo. 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 EUR 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%.

Aviv Sher
Aviv Sher
CEO at Codere Online

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 EUR 134, reflecting both strong engagement and a higher player value base. On the acquisition side, we acquired around 108,000 first-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 improved approximately to EUR 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.

Aviv Sher
Aviv Sher
CEO at Codere Online

We're now expecting gaming revenue of between EUR 255 million-EUR 265 million, compared with our previous guidance of EUR 235 million-EUR 245 million. We are also raising guidance for adjusted EBITDA between EUR 20 million-EUR 25 million, compared with our prior outlook of EUR 15 million-EUR 20 million. Marcus will cover later the different factors behind our decision to raise guidance. With respect to capital allocation, we did not repurchase any shares during the second quarter. As a reminder, 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.

Aviv Sher
Aviv Sher
CEO at Codere Online

Overall, performance was outstanding and materially ahead of the 2022 tournament. Excluding Colombia, unique users were approximately 556% above the previous World Cup levels, and we acquired nearly 40,000 new customers around the event. The stakes reached around EUR 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 double 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.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Hello, everyone. Turning to slide 10, you can see our consolidated net gaming revenue and adjusted EBITDA performance by country for the second quarter of 2026.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Starting with net gaming revenue. We generated EUR 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 EUR 5.5 million year-over-year to EUR 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 EUR 7.1 million to EUR 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 EUR 5.7 million of net gaming revenue during the quarter, up more than 50% year-over-year.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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 NGR 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 EUR 5.8 million in the quarter compared to EUR 2.3 million in the second quarter of last year. Within that, Spain contributed EUR 7.8 million, while Mexico delivered EUR 3.6 million, reflecting the operating leverage inherent in the business as revenue continues to scale.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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 P&L on page 11, we can observe that marketing expense was EUR 26.2 million during the quarter, an increase in absolute terms versus last year, but significantly lower as a percentage of revenue. Marketing represented 37.7% of NGR 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 the acceleration of our top-line growth reflects just that.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Going forward, and as has been the case since 2022, we expect to continue gradually reduce marketing investment as a percentage of NGR with a direct positive impact on adjusted EBITDA. Gaming taxes as a percent of NGR 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 continued 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 monthly active customers increased by 12% to approximately 173,000 during the quarter.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

At the same time, average monthly spend per active customer increased by 13% versus last year, reaching EUR 134. We acquired approximately 108,000 first-time depositors during the quarter, representing growth of 37% versus Q2 of last year. While cost per acquisition improved to EUR 200 versus EUR 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 jurisdictions. Turning to Spain on page 13. Net gaming revenue reached EUR 27.6 million during the second quarter, over 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.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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. 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 EUR 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.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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 EUR 63 million of total cash, of which EUR 58 million was available. Our structural negative working capital position remained in line at approximately EUR 25 million or 10% of LTM net gaming revenue, supporting the strong cash generation of the business.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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 EUR 6.9 million of cash flow during the second quarter, increasing available cash to EUR 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, and 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 EBITDA into cash, with corporate income tax being the key relevant difference between the two. Turning to page 18.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

As Aviv mentioned, we are raising guidance for full year 2026 net gaming revenue to between EUR 255 million and EUR 265 million, and adjusted EBITDA of between EUR 20 million to EUR 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 reengage players who had reduced or stopped playing due to the tax, bringing activity levels back to broadly in line with those seen before the measure was introduced last year. 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. That's on top of the industry group we are benefiting from.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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. Fourth, the Mexican peso has remained stronger than assumed when we established our original outlook, having already contributed to more than EUR 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.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

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. That's all from my end. I will now hand it back to Aviv for closing remarks.

Aviv Sher
Aviv Sher
CEO at Codere Online

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 a 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.

Operator

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.

Jeff Stantial
Jeff Stantial
Analyst at Stifel

Hey, good morning, Aviv, Marcus, Guillermo. Thanks for taking our questions. Maybe why don't we start off on the World Cup? Two-parted 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 now that the tournament has ended? Second, it does look like, or you called out that CAC actually came down quarter-on-quarter and the conversion rate went up despite more competition around the tournament. If you could just help us sort of think about that trend as well, because it's a bit surprising. Thanks.

Aviv Sher
Aviv Sher
CEO at Codere Online

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

Aviv Sher
Aviv Sher
CEO at Codere Online

Regarding the CAC, what was the question exactly about the CAC?

Jeff Stantial
Jeff Stantial
Analyst at Stifel

I was asking for CAC was down quarter-on-quarter in Q2, and that's despite.

Jeff Stantial
Jeff Stantial
Analyst at Stifel

What I would think would be more competition and more folks investing around the World Cup. Just sort of an explanation of what drove that.

Aviv Sher
Aviv Sher
CEO at Codere Online

Yeah. I think 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. I think our brand was strong enough maybe to enjoy people just searching for betting and arriving to us because of our previous investment. I think this gives part of the answer. We didn't invest directly into the World Cup broadcast, which was extremely high, extremely expensive. We tried to keep the money around the World Cup, I think this strategy proved well. We saw that the CPA went down.

Jeff Stantial
Jeff Stantial
Analyst at Stifel

That's great. Thanks for that, Aviv. Maybe just shifting gears over to the cost side, it looks like just running some quick 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? Taking 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 CAC and user acquisition remains somewhat stable.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Yeah. Thanks, 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 EBITDA. As you mentioned, it's relatively close in terms of what the implied figures are for the second half. No big changes the first half versus second half. Over time, as you know, there's a number of factors in our P&L, which has more of a variable component to it, which is gaming taxes, which we're very much subject to what the authorities do. We also have a significant other cost in the model, which is basically platform, which is also substantially variable. There's other items in there like payment methods, et cetera, which broadly speaking, probably are more variable than fixed now.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

There are certain leverage in the business in terms of marketing and certain other expenses in terms of overheads. 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. Big picture is that we think we will progress both from keeping marketing as a lower percent of NGR, but there's also probably a little bit of additional sort of leverage, operating leverage in the other expenses in the P&L. Broadly speaking, we have not foreseeing anything new that comes from in the second half of the year. Overall, that's the outlook that we have with respect to the second half and just a few points on how we see it.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Was there another-

Jeff Stantial
Jeff Stantial
Analyst at Stifel

That's great. Thank you for-

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Okay, Thanks.

Jeff Stantial
Jeff Stantial
Analyst at Stifel

I think you hit it for that question. I was just going to squeeze in, if possible, one more, which is Colombia. Some good news there with the VAT tax being removed. I am curious just how you are sort of thinking about investment in that market, how much of a priority it is, and maybe how much, there is a little bit of a wait and see on marketing investment, just given it seems to us there is still a little bit of uncertainty out there on what ultimately happens from a tax standpoint.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Aviv, do you want to go ahead?

Aviv Sher
Aviv Sher
CEO at Codere Online

Listen, Jeff, the fact is that there is still tax imposed, more taxes than anticipated. It is enough to allow us to do good CRM and retention and invest back into our players. It is not good enough to start marketing in terms of ROI. Hopefully with the political change there, we will see maybe more business-oriented presidents, sorry. With that, if another layer of tax will be removed, and we are back to the prior tax levels, we can discuss marketing investment back again. So far, by the way, we are happy. We see good ROI on our current customer base, and if we can continue and improve our product, I think we will be in a good position to start growing back again the marketing investment and see good ROI.

Aviv Sher
Aviv Sher
CEO at Codere Online

We are a little bit still, as you say, wait and see a little bit more. I hope by the end of the year we will know exactly what is going on there. If the extra tax is removed, we can invest more.

Jeff Stantial
Jeff Stantial
Analyst at Stifel

Thanks very much, nice quarter.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thank you.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Thank you.

Operator

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

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum Capital Group

Hey, good day, Aviv, Marcus. World Cup, I want to stay on it. What percent of new activations, new users are also playing iCasino? If you have any context from the previous World Cup or previous soccer tournaments, curious how that compares relative to your expectations.

Aviv Sher
Aviv Sher
CEO at Codere Online

I won't give exact figures. I think, let's say, I'm a little bit exaggerating, okay, we see around 30%-40% cross-activation. So far, by the way, the new users fit into this profile. As I said, let's keep this question for the next quarter. I can report exactly if they behaved as expected, continue with us, there is no churn. So far, we are happy with the results. I think your answer to your question, the answer is yes. There is around 30%-40% that are playing iGaming. More table games, by the way, if it's interesting for the audience to hear, than slots. Definitely they are playing. I think the team is doing a good job by crossing them. Yes, so far the profile fits the, let's call it, the regular profile that we see.

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum Capital Group

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

Aviv Sher
Aviv Sher
CEO at Codere Online

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

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum Capital Group

Excellent. Maybe just last one for us. With Spain winning, would've maybe expected a bit bigger of a sports win impact. I know a lot of unders hit. I know Yamal didn't score many goals, I think only one through the tournament. Can you just talk through player behavior activity from a betting standpoint in Spain specifically, relative to, again, them winning, but maybe some of the other prop bets that were done?

Aviv Sher
Aviv Sher
CEO at Codere Online

They bet. I think it's a little bit general question to answer. I think they bet more than what we've seen last tournament. I think the beginning, the tie, if we go into specific, the tie with Cabo Verde, a little bit took a lot of money from the players, so they didn't engage till later stages, if it makes sense in some way. Later when Spain progressed, so does the betting on Spain progressed. We see year-on-year. Tournament on tournament, more bets and more stakes. You cannot really compare the two tournaments. Also, it's fair to say, remember, we had here 25% more games than previous tournaments overall. I think in that sense, it helped us to gain a lot more stakes, more than expected. Even in a normalized way, we see more stakes.

Aviv Sher
Aviv Sher
CEO at Codere Online

Overall, I think the bettors were happy. For sure, Spanish people were happy. I think from a bookie standpoint, this is the best results that could happen. The game finished in a tie, but Spain wins, so customer lost money, but still happy that their team wins. It's win-win for everyone in this sense.

Ryan Sigdahl
Ryan Sigdahl
Analyst at Craig-Hallum Capital Group

Thanks, Aviv. Good luck, guys.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thank you, Ryan.

Operator

The next question comes from the line of Michael Kupinski with Noble Capital Markets. Your line is open. Please go ahead.

Michael Kupinski
Michael Kupinski
Analyst at Noble Capital Markets

Thank you, and congratulations on your quarter. A couple of questions or nuances from the previous questions. Excluding the World Cup, how have betting volumes and customer activity trended during July? Are you seeing that momentum continue in the third quarter?

Aviv Sher
Aviv Sher
CEO at Codere Online

I don't think I can give specifics about July, as far as I know. It's important to say that during the World Cup, let's take the World Cup effect sideways or put it aside, we did see a lot of iGaming activity. In general, the activity, not just related to sports, was high. In casino, we beat the expectations, but by a lot. Whether it's with new players coming in, core players, VIP players. Everybody was playing, even though we are entering now the summer I can say that the trajectory or the vector continues. Hopefully, it will continue into the third quarter. We have a little bit of August, let's say, until the La Liga will come back, will take another three weeks, more or less. We need to cruise through August, but I'm optimistic for Q3. I'm optimistic.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Maybe just to add and just reiterate what Aviv was mentioning, both casino side of things as well as sport was doing well. The effect from World Cup in terms of NGR fell roughly 50% in June and 50% in July. Just so you keep it in mind. Just two points to add to your picture.

Michael Kupinski
Michael Kupinski
Analyst at Noble Capital Markets

That's terrific. You added approximately 40,000 new customers during World Cup. Historically, what percentage of tournament-acquired customers remain active 6 to 12 months after a major sporting event? Obviously you can compare it to 2022.

Aviv Sher
Aviv Sher
CEO at Codere Online

In general, listen, the rule of thumb, I'll start from the end. The end is that I don't know the answer by heart, what I can say in general, what we experienced in the past, if you want, Michael, send us an email. I'll check out and reply exactly, or with at least good figures. In general, those players don't last a lot, they come back again for the next big tournament, whether it's Euro Cup or CONCACAF or whatever, related to the territory, then another World Cup or a Canelo fight. They are not one-timers, but they are single bets that they bet on a single market and so on. You can also see it in the CPA. Our rule of thumb is if the CPA is low, probably the return would be as expected, lower.

Aviv Sher
Aviv Sher
CEO at Codere Online

If we buy them cheap, they return cheap. This is more or less how we look at it. I can look for the exact answer and give it to you. This is more or less how I see it.

Michael Kupinski
Michael Kupinski
Analyst at Noble Capital Markets

Great. Mexico obviously is one of your largest growth opportunities. You characterize the competitive environment as favorable, and mentioned about your two major competitors there. I was wondering if you could just add a little color on, because it's curious that the promotional activity, the intensity didn't sound like it was as strong during World Cup. I was just wondering if you could just add a little bit more color about the competitive environment there and the changes in promotional intensity, maybe across the market, even following World Cup?

Aviv Sher
Aviv Sher
CEO at Codere Online

Now, listen, the competitive environment, if you all read the news and follow, you see a lot of new companies. Even two big competitors, let's say they are out, we get instead of them, four big competitors in. It's not a, let's call it a closed competition arena. I do believe that each competitor coming in gives us more strength, and the more they expose gambling top of mind, since we are veterans in the market with heavy investment into TV and good assets, it actually benefit us somehow. The competitive environment is harsh. We see good competitors coming in with good products, with spending a lot of money. If you're talking about the promotional activity, giving a lot of free money, let's say around EUR 100 free, EUR 150 free, which are very big amounts and allow the customers to test their products. We have a very strong brand.

Aviv Sher
Aviv Sher
CEO at Codere Online

We have a very good retention schemes and promotional activity for our core and VIP customers. We are very confident in the work that we are doing in Mexico. We do need to continue and invest, whether it's in top of mind or in the promotional activity, and give some of the money back to the players in terms of promotions. We cannot ignore the competitive environment. It is getting crowded, and they are heavy spenders over there.

Michael Kupinski
Michael Kupinski
Analyst at Noble Capital Markets

Got you. Final question. Obviously, you have EUR 62 million in cash, no financial debt. I was wondering if you can talk a little bit about how you're thinking about capital allocation. You mentioned in your comments that you're evaluating ways to improve shareholder value, and I was just wondering, what are the options that you're considering at this point?

Aviv Sher
Aviv Sher
CEO at Codere Online

Marcus, your turn.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Sure. I can start. Yeah. Things have changed quite significantly for us now during the last two years, approximately or so now, where we've gone from bottoming out in terms of cash and where we're really now seeing significant cash flow generation. The most interesting thing here, I think, for us and for you, is that that starts to give us some significant strategic flexibility to look at options now. The things that we are pursuing, we're in close cooperation with the board, close conversations. We are evaluating strategic options as we speak. Mostly in Latin America, we're looking at how can we get our hands on specific licenses, what's the best route of getting into certain markets. As you know, there's quite a few markets in that part of the world which is regulating many of them for the first time, the online gaming market.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

We're staying very close to those situations, and that's probably going to be one of the key avenues where we will put some of the cash to work. The second piece is, of course, the share repurchase programs, which we have not been active. We have not done any buybacks this year. We did about EUR 2.5 million-EUR 3 million worth towards the tail end of last year. That is still in effect. Obviously, it's sensitive, so we cannot go into specific instructions that we have out there, but that's definitely still in place, and that's definitely still an option of how we will deploy that extra cash we now are generating and have on our balance sheet. I don't know, Aviv, if you want to add anything else.

Aviv Sher
Aviv Sher
CEO at Codere Online

No, I think it mainly should give us a strategic ability to take bigger moves. Again, it's not a lot of cash. If you want the cash in and some working capital, we are not left with a lot of cash to do some moves, but we are constantly looking, and we are keen to materialize some of the moves. We have things in the pipeline, of course. We have some more cash in supplies that we weren't prepared for, I think it will take us another Q or two Qs to decide exactly how to allocate it.

Michael Kupinski
Michael Kupinski
Analyst at Noble Capital Markets

Thank you for taking my questions, and congratulations again.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thank you, Michael.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Thanks to you.

Operator

Your next question comes from the line of Arthur Roulac with Three Court LP. Your line is open. Please go ahead.

Arthur Roulac
Analyst at Three Court LP

Good morning, thank you for taking my questions. My first question is on just full-year marketing spend. I believe on the first quarter call, you'd said marketing for the full year would be roughly in line with 2025. Is that still the case?

Aviv Sher
Aviv Sher
CEO at Codere Online

I don't know if it's a few percent. It will be, I think, a few percentages up. More than 2025. We see good trends in Spain, where we are allocating more budgets over there and good returns.

Arthur Roulac
Analyst at Three Court LP

Okay.

Aviv Sher
Aviv Sher
CEO at Codere Online

We are making the marketing budget a bit higher, but it's a bit.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Yeah, maybe to add to that, given that we're also having quite good performance on NGR. In terms of euro amount, perhaps it will come up a little bit during the full year. As a percentage NGR, we will pretty much be in that ballpark. Maybe also there's a secondary effect where as we spend local currency marketing in Mexico, given that the Mexican peso so far has been very strong, obviously that translates into more euros on marketing. There's also that effect that we need to take into account. Broadly speaking, as a percentage, I think we'll probably end up in the same ballpark, although in terms of euros, we'll probably be a little bit more.

Arthur Roulac
Analyst at Three Court LP

The same percentage as 2025, is that what you're saying?

Aviv Sher
Aviv Sher
CEO at Codere Online

No, not the same percentage. I think what we are referring to, if you are looking at percentage, then it will decrease. I'm talking about the nominal amount, let's say a little bit with FX to add to it. Let's say in terms of nominal amount, the same amount, not the same percentages. If the NGR will go higher, probably percentages will go lower.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Yeah, we're on track. Like we did in the first part now, the percentages is progressively coming down, although in a nominal amount.

Arthur Roulac
Analyst at Three Court LP

Right. Yeah, I know that. I'm just saying, last year you were around EUR 86.4 million. At the beginning of the year, you'd say you're going to be about the same level. Does that mean for the year you'll be EUR 2 million-EUR 4 million higher? Is that sort of where you're thinking about hitting?

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Maybe a little bit. We'll see how it comes out, what opportunities we have during the second year, and what the decisions on a day-to-day basis will be. That could be a good starting point, but also, as I mentioned, we have a little bit more in euro terms. We have a little bit more marketing than we thought, just given the strength of the peso. That adds a little bit to the picture as well.

Aviv Sher
Aviv Sher
CEO at Codere Online

Also, as term of strategic approach, Art, if we are looking at it and we have, let's call it excess EBITDA, we think that this money serves us good in terms of investment. We are pushing a little bit the excess EBITDA down in order to gain more positions in the marketing. Most of it is going to digital and performance marketing to support the results. Basically, I think it's good that if we are able to spend even more than last year, but those are not big numbers.

Arthur Roulac
Analyst at Three Court LP

In 2024, I think you spent EUR 90 million. Are we looking at a 2024 number? Something in that range?

Aviv Sher
Aviv Sher
CEO at Codere Online

Probably, yes. We are trying to stay, let's say, in a ballpark figure, we try to stay around a little bit less than EUR 100 million. This is how we look at it.

Arthur Roulac
Analyst at Three Court LP

For the full year, you mean?

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

For the full year, including, of course, the thinking about as well that the FX in terms of the-

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

I think the FX is hurting us now in that sense.

Aviv Sher
Aviv Sher
CEO at Codere Online

Yeah.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Now, given that it's a cost, but roughly speaking.

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes.

Arthur Roulac
Analyst at Three Court LP

You're sort of saying that the second half will look very similar to the first half. Is that what you're saying?

Aviv Sher
Aviv Sher
CEO at Codere Online

Yeah, small, less.

Arthur Roulac
Analyst at Three Court LP

The first half, you were at EUR 51 million. If you're saying you were EUR 86 million last year, you're saying about EUR 100 million this year for the full year. Is that what you're saying?

Aviv Sher
Aviv Sher
CEO at Codere Online

Yeah, probably less. Probably less than that. I don't want to give specifics, but let's say between EUR 90 million-EUR 100 million, something like that.

Arthur Roulac
Analyst at Three Court LP

I see. Okay. I think you guys have been a public company for a long time, and you've been growing, you've been doing great. I guess the question would be, what is a more non-growth level of marketing for this business? You look at a lot of your competitors that are out there that are in more lower growth mode. Obviously, you guys are growing almost 27%, that's higher than other people. You're spending more money on marketing. From a profitability perspective, what should we think about as owners of the business in a more stable state? You have some guys that are down at 15%-20% as a percentage of revenue, somewhere in the low 20s. Is there any reason to think that a normal state where you're still getting growth, probably not 27% growth, but still healthy growth, but much more profitability?

Arthur Roulac
Analyst at Three Court LP

After being public for so long, can you comment on a very high level about how we should think about that?

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes. You want to start, Marcus, I'll let you.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Sure. Thanks for the question. Of course, it's very relevant, no. We're not in a position to communicate specific targets or specific paths, but what is clear is that we will progressively decrease marketing as a percentage of NGR over time. What is that input? What does that input look like? When will we get there? We don't have it 100% clear, neither do we want to communicate any specific points. There is clear, though, is that as we want to maintain the growth, as a second point, we want to translate less marketing, like less relative marketing into greater profitability. We're on that path. We have been improving and decreasing the percent of marketing as percent of NGR for the last many quarters. We will continue on that.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Depending on the activity we see in the marketplace, depending on the opportunities we have, that will be a process that will take a certain pace, no? That's the path we're on. I'm not sure that I appreciate that-

Arthur Roulac
Analyst at Three Court LP

I appreciate that. I know every business has to start making more money, right? You guys are doing a great job.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Yes.

Arthur Roulac
Analyst at Three Court LP

I guess my question is it's more stepping back, looking at every comp out there is 15%-25% marketing spending.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Yes, I agree.

Arthur Roulac
Analyst at Three Court LP

15%-20% for some. My question is there any reason to think that this business wouldn't be migrating to that in the next few years?

Aviv Sher
Aviv Sher
CEO at Codere Online

The answer is you are correct, and we should be migrating towards those kind of, let's call it the higher end. I don't believe in the lower end. At least not in a regulated market. At the higher end of the range that you said, we should get there eventually. In certain markets, by the way, right now, we are already at those kind of levels of marketing. Don't forget that we still perceive Mexico as a growth market, and we can add more money and grow faster. It's a very big market. As you know, and we commented before that competitors are coming in, we need to hold our positions and continue to spend money there. In Spain, we are performing much closer to the levels that you are saying.

Aviv Sher
Aviv Sher
CEO at Codere Online

Overall, I think as a healthy business, we should look at around, let's say, between 22%-28%. This is what we believe and we see in the numbers that create good EBITDA. Again, it's important to say also, on the other hand, that it's a decision, but by our shareholders, how much EBITDA should we generate on expense of growth? Because we can generate much more EBITDA, we can generate less EBITDA. It depends on the strategic approach that we want to eventually communicate to the market and create the value through whatever, whether it's EBITDA, revenue, market share. It's like a complex, not complex, but it's like a game that we need to control. I think you are correct with your approach.

Aviv Sher
Aviv Sher
CEO at Codere Online

I think for us as a company, we are aiming for the higher end of, let's say, around 25%, ±5% in order to optimize our investment and keep maintaining our position.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Maybe just add just a little bit more visibility in terms of, there is two sides to the business now, like Aviv was mentioning. Basically, as we mentioned before, in Colombia, we're a little bit no in a wait and see mode. We're not spending much in marketing. It's same in Argentina, I would say. In Panama and Spain, basically, we are in those type of ballparks that we're talking about in terms of perhaps what could be considered more of a stable state type of marketing level, whilst in Mexico is where we're spending more marketing. The answer to the question lays principally in Mexico now, and how we manage that level of marketing.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

It has come down significantly over the past years and quarters, there is a bit of a two different sides to the company and the business now in terms of marketing spend. Just so you know a little bit where the pressure points are.

Arthur Roulac
Analyst at Three Court LP

That's extremely helpful. Thank you very much for that. My next question is going to be Spain and, I mean, Spain is a mature, regulated market, and I was just surprised that you guys were able to generate almost 25% growth. Can you talk a little bit about how you've been so successful there?

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes. We are very, very good at what we are doing. No, I'm kidding. I'll tell you what. I think there are a few factors. Probably one of the factor is that the market itself grows double digits, we enjoy that. I think we are growing more than the market at this stage. We managed over the past year, this can be quoted, to stabilize better the platform. AI here, because I didn't hear any questions about AI throughout the whole session, AI here, in terms of technology, helped us a lot to achieve stability that we were seeking for a long time in order for us to execute our plans and maintain our players and build the player value around it. This helped a lot in Spain, these past two quarters.

Aviv Sher
Aviv Sher
CEO at Codere Online

Basically, we are enjoying the fruits of a very long investment that we've made into Spain with the brand. Now with the stability of the market, we are able to produce good player value finally in the last couple of quarters. I hope going forward, we will be able to produce even more. Having said that, I just need to comment that regulation in Spain is still lashing back, if I can say. We still have some more regulation bumps coming ahead of us in the future. Not a lot. I don't think it will affect us a lot, but still some regulation changes around the VIP and joint deposit limits that are coming into force. I think we can overcome them and continue this very good growth.

Aviv Sher
Aviv Sher
CEO at Codere Online

Plus, the fact of what I mentioned before, that a lot of our excess EBITDA we put back into Spanish market and able to produce good results. We continue to buy new players that stay with us and produce high player value.

Arthur Roulac
Analyst at Three Court LP

As you look out in terms of your balance sheet, I assume you have some sort of stock buyback in place and you haven't hit your numbers. You're trading at 1x revenue. Rush Street and Super Group are trading at, I think, 4x and 2.5x. You guys are growing faster than them on a revenue perspective.

Aviv Sher
Aviv Sher
CEO at Codere Online

Yes.

Arthur Roulac
Analyst at Three Court LP

Is there a thought to bump up that level of buyback, or are you looking to go after a license in Argentina? I don't know how close Uruguay is. Obviously, the parent company is very big in Uruguay. Can you talk a little bit more about that? Cash was, we put EUR 20 million, almost EUR 21 million of cash on the balance sheet. It's almost $25 million. Stock's only at nine and change. Can you talk a little bit more about the allocation and what you're thinking there?

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Well, as we mentioned a little bit during the prepared remarks, no. We are actively exploring opportunities to do exactly what you're mentioning, looking at different markets in South America where there are opportunities to enter the market. As you mentioned, Uruguay, Chile, et cetera, that are putting in place regulation where it comes to timing-wise a good point to make a move, no. We have several of those conversations that are ongoing. Depending on the setup, if you acquire a license, maybe some other markets you just need to fulfill the requirements and there's no real cash up front that needs to be paid. Obviously, as you enter into a market, you will need to spend money on establishing the business brand, et cetera. Or whether there's a certain other opportunity we're looking at, there is pure acquisitions. There's a range of different alternatives.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

In parallel, of course, as you mentioned, we have the share buyback program, which we have in place. As you mentioned, we haven't hit our numbers, so to speak, there have been no shares that have been repurchased so far this year. We expect to continue to manage these in parallel. In terms of just size, I would imagine that if we speak in a year's time from now, I would imagine that the M&A side we will allocate more money through that channel, so to speak, than the share buyback program. That would be sort of just broadly speaking, I think our expectations. I don't know, Aviv, if you have anything to add.

Aviv Sher
Aviv Sher
CEO at Codere Online

No. I think all of the things that you've mentioned out, we are discussing in the board level and trying to find the correct path. As I said, I think in previous remarks, we really hope that some of the initiatives that we want to take will materialize soon and we can use the cash. All of the things that you've said are on the table. I just want to comment in terms of our share price. I think part of the game that we cannot play against, let's call it the more, the bigger one, Rush Street or Super Group, is liquidity. I think we suffer from a lack of liquidity, and this affects our share price. Hopefully, the buyback strategy can help with that a little bit. I think liquidity here is key.

Aviv Sher
Aviv Sher
CEO at Codere Online

In terms of the company, I'm sure that our company performs well and should be evaluated more, hopefully we'll see it soon in the share price.

Arthur Roulac
Analyst at Three Court LP

Thank you.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thank you, Arthur. You are helping us a lot with all those questions.

Arthur Roulac
Analyst at Three Court LP

Thank you.

Operator

If you would like to ask a question, please press star one to raise your hand. We have reached the end of the Q&A session. I will now turn the call back to Guillermo for closing remarks.

Guillermo Lancha
Guillermo Lancha
Director of Investor Relations and Communications at Codere Online

Thank you. Thanks everyone for joining. If you have any follow-ups, feel free to reach out, and otherwise, we will be speaking again in mid-November with our Q3 results. Thank you.

Aviv Sher
Aviv Sher
CEO at Codere Online

Thank you.

Marcus Arildsson
Marcus Arildsson
CFO at Codere Online

Thank you.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

Analysts
    • Guillermo Lancha
      Director of Investor Relations and Communications at Codere Online
    • Aviv Sher
      CEO at Codere Online
    • Marcus Arildsson
      CFO at Codere Online
    • Jeff Stantial
      Analyst at Stifel
    • Ryan Sigdahl
      Analyst at Craig-Hallum Capital Group
    • Michael Kupinski
      Analyst at Noble Capital Markets
    • Arthur Roulac
      Analyst at Three Court LP
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