- Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Ralph and I'll be your conference operator today. At this time, I would like to welcome everyone to the Codere Online Third Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Lancha, your Guillermo

Guillermo Lancha

CFO, Thanks, call XXXX. for welcome everyone Edree Today Online’s earnings to Codere and Moshe the CEO, will from operator, Iglesias. hear and you our Oscar third quarter of

Adjusted financial I’d Gaming our Before everyone for to in which website EBITDA, will referring earlier that to that Revenue presentation non-GAAP we remind to call today, like a the can turning metrics this we you over Net find the appendix be the call or presentation. such Moshe, as during uploaded which includes to reconciliations of

Let the company me you our euro. Online our IFRS Codere European is based information and is under prepared Luxembourg also remind accounting Accounting a is and currency as Standards that functional

throughout be all otherwise. such this expressed unless will euros figures monetary in presentation As

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

Moshe Edree

for the Thanks, thanks everyone joining Guillermo call. and

increase active in to to business. This again the a period. spend XX% For been increase this quick of deliver per the year the and last usualQX most this active from a on to with on the on betting quarter customers X customer less in €XX. both average the strong jump sports side familiar result those average of the growth a monthly we of highlights into third able set of was XXX,XXX XX% in We've despite monthly third in overview to straight the Page to of a XX% Page headwinds growth versus have nearly sequential quarter, the nearly in we quarter significant X. increase of accelerating quarter you company, X% Mexico with are the a in versus results growth the seasonality million drove significantly net increase gaming active €XX with

year of and with we acceleration customer, Spain of earlier quarter was the increase which our year €XXX significant strong quarter World that second to events the the a full to deposits year higher between believe increased weeks, terms marketing spend versus efforts period. few million. last per the gaming a in our meet we position of timing third the football revenue marketing allowed in fourth year XX% been are million of continuing quarter given are acquisition, to of attract our also beginning trend We net average Cup the start good the the the versus €XXX guidelines, tightening strong and year-to-date anticipated end see a in in league which the period in we in And us last of increase consecutive in we an that to throughout of than quarter. terms in growth to to promotional other and call. sporting in but return one, customer customer of with main and an the In higher in which is implemented first This advertising impact due fourth earnings the the newly time to of the third comparison We differences did in quarter, €XX,XXX particular the the easy year. restriction revenue in trend to performance while we uplift of discussed the quarter cost the the and season, €XXX has ahead due Mexico, in in quarter our so

online an online the continue team, to our years were work Colombia gaming several we were in to active we in with Argentina, building were very Argentina, In during XXXX. selected among operators Province first is and September, for licensing ranking by to to be great who license After be relationship on successful region most eight opportunity us Also, terms the hard represents the pre-awarded Cordoba gaming extending the a November, three a of position front. in months additional continue of in license second in we the recent in populated an licensed. Cordoba developments, of country.

to the of final expect year next start year. granting end and before We license early the take to operations place

Province the Province and where Cordoba, populated the a and we XX% in halls of of most the retail license parent of to operators also the with the company the addition Aires, a are pursuing gaming the XX In above share leading in country, Buenos is market.

other We also highlights to of becoming January. our process expected quarter. call. your that, of tender I turn Mendoza of will participate to the financial it's the in we like with remain Province are over Oscar for regions it process the to regulated to scheduled attentive the cover Oscar, With

Oscar Iglesias

Moshe. Thanks

quarter, year. revenue average back quarter X€X.X million negative million, third with €XX Turning the line active. XX% with by and EBITDA presentation, Columbia per grew performed also in In of well both net and quarter, in the million million than gaming to the growth to XX% that to the expectations. €XX to of Spain in XX% on in Page in €X doubled in growth cases, spend of more €XX Adjusted gaming X consolidated third nearly was driven a Mexico our million. last an net revenue higher of the

fell earnings for expenditures timing our marketing benefited differences investment on had to is As into the related we QX, part discussed certain EBITDA QX. marketing Mexico. from That of Mexican in earmarked call, QX prior we

discussed market are annual we plan profitability, still we on understand marketing have right in million gaming to its Spain, significant our this that revenue are our gaming significant the beyond, margin note. EBITDA seeing operational pathway by in €X.X positive other both we to out what ago. and XX% net and numbers. America We and of our That generated is raised the said, operating the making deliver you continuing strong Latin levels ever, to reflecting At the and the up underlying our EBITDA highest that to level, EBITDA partially the do XXXX plan country now largely negative was net which and year to focused and the for focus due year our of almost on remains are finalizing set and for we revenue. World offset investments one quarter, level in when remains relative from while profitability is to we finishing high business on growth As negative XXXX capital exactly past, a in that unchanged the budget Cup prepare the

provide such, XXXX expectations call year. expect details earnings our to further As early next regarding for QX we on our

we Mexico, discretionary, if our highly ultimately priority point As we the have flow needed, past, all marketing at be our Spain, our any can and generate marketing spend investment Argentina. reduce back to value generating scale dial shareholders. discussed in these and cash will cash earlier continue burn to is improving increasingly focus return so of positive investment strategic markets, on our will building for and In and be and

dampen recent only fewer XX% again in the average the higher driven to Spain despite period, spend business casino see time, above also priority and per the financial our only prior strong in Spanish business. spend are seasonality X% quarter, the to the not some the due actives attractive by sports results active. but for having in strategic On economics business, side the Growing are despite the X% the given in casino quarter gaming per revenue LTM in of net versus casino been active we seeing revenue side active unit X% we on more of on monthly basis, partially operating increase levels, for the reflecting in to an third in our increased quarters. year betting customers metrics, a we Turning online has us impact

is mix Over about the In shifted per an substantial gaming by from few This X% in active around level million increase to customers driven year-on-year, €XX net a years, spend last going active. and of net the a XX% both we maintain revenue in to XX% quarter, Mexico, higher revenue forward. the [ph] sequentially. sports strong gaming number of and a casino, performance increase XX-XX reached our expect recently, XX% has

market. of net also by number but versus quarter. reaching the sequential improve mostly grew XX% year last which despite million was quality in Moving overall acquisitions per the decline €X and spend a revenue active customer working continue to of customers, This in the doubled active, gaming as higher actives the to more both than our portfolio driven of Columbia, by, again, we

as nine in the cash on utilized approximately we Turning months available million approximately September in million had XX, to having balance first the sheet the the of €XX year. €XX balance sheet, of

quarter and third Group the ended we payable terms caught €XX of of position, capital working a net in our Codere having the of million level terms third gotten with In normalized party quarter. providers third up at accounts throughout negative

Okay, details I are of working €X November. in period the Page transaction euro in proceeds reflected hand gains now will dollar in had million that the have and from Moshe exchange XX, year-to-date cases, quarter. on in the cash it That's dollar to reflects on In in on flow income unrealized gains. my strength cash U.S. in balances figure. you the the net statement the additional of received due remarks. to the capital €X for the variation note regarding end. period in net Please both all foreign realized the that leaseback an versus million further the U.S. the We over impact year-to-date last net closing the

Moshe Edree

be forward performance We'll and with In that holidays. focused pleased to we continue strong with I Q&A. that, work. back we plans on happy said, our next fourth deliver it look Thanks, shareholders. will on everyone we'll in to operator publishing early the speaking Oscar. quarter will With to We the year are quarter up the for full Again, for year the our and you stay wish call our third the when turn open believe results. you, to I our meantime, hard

Operator

Stantial a Your comes Instructions] first question [Operator from from of line Jeff Stifel.

open. is line Your

Jeff Stantial

and wanted taking Good unpack to off, spending a more. Thanks for I Oscar. bit thanks. Great, our Starting patterns questions. country morning, by Moshe

function you in, look at high down average percentage QX you while digits. are it this player a seeing into wagering customer If double active, just same essentially mix was noteworthy digit monthly or was up call looks from quarter-on-quarter QX? Mexico like behavior change single any it, revenue Is of Thanks. per Spain

Moshe Edree

you? How are Thank Jeff. the you for question. Hi,

registered participate that is deposit, and They're they're of coming would come, to it's normal higher manage of, stronger I with of they we players that I a that quality more and capability that market because those, growing Spain, of spend. think organically. that with, they're there like since player for the think Spain ban, In I Mexico. semi-mature a advertising market like see behavior say, a us on

we While in more are players. harvesting Mexico,

We of buying are kind more media. like mixed

So player of with nature, general be lower the players quality blended value. the just by in will a

also are I performing bit is we mentioned of in call, more this Spain, we the than main short-term know reason. customer. the that casino And in in spend in for as the think casino while sports per terms side, invested a better Oscar

Jeff Stantial

showing Okay, you Thanks. just of investment makes you are growth kind operators you're that could Thank would out maybe from competitive as moving understood. of more of restrictions? showing Spain, helpful. be pulling Are you. landscape, on on then Just And Are color to the seeing and getting That in and evolve? the enter how you're light any some focusing sense. talk the perhaps more of some more your be there seeing of competition Mexico peers Columbia, competition? through Mexico, Spain of the landscape competitive

Moshe Edree

think I are that Yes, right. you absolutely

withdraw say changes regulation and because Obviously, mentioned, some, as see the lot Spain, regulations. existing added and that of of, I a an landscape, brand. in because the think because of advertising market restrictions to you the from of that of we the again ban, development

back we [indiscernible] that public America share is I more still in Spanish living at interest their Latin this, the being regulated span by that process nature showing like quite and It's Spain the obviously local in rest the say a saw or brand the are in years and are traffic other with spend that those harvesting So market like other retail per I on like brand, Mexico we to is in not not international the Hill market, operation, brand more like of We with of, Madrid, or The the by new a hand, like in sponsorship a enough high. marketing we hero with big the of attentive local facing customer to have saw withdraw. region, in of to the strong like international they decreasing strong Real would of Colombia, behind. are they're Codere companies market. brand, doesn't that in that William already see market more Obviously, nature and brand operators like in think brands least will In country. Mexico. the into quite international enter it's a is Argentina, that

is a you people, have need overall so and of regulators system. cashier so the banking strong need it's with the scheme regulation, like have not the license and level on, easy, you troops, IP our setting experience you challenging. with the operation, to the the up say forth, processing, Then, entry quite the to with Although and that obvious as to would a strong have, from need local, I or relations

see think But that that I local brand such to by heroes, be the to international others. and then a will trying Caliente end trend I more few we'll this few our think local that dominated self, and more by the brands So market. is enter market the as

Oscar Iglesias

seeing the the market the the do smaller Jeff, just in have also in that I or struggling would a players in of new a some in established promotional to didn't or, that brand meaningful restrictions. the we're so advertising of face Spain also add market are share

ways and market. current and to to brand the limited in in there's So build recognition and the build develop share environment

some mentions bigger in So perhaps of players regard are little bit. of struggling back Moshe pulling I what think a the players to to the in some smaller also addition

Jeff Stantial

restrictions the to these on much and for seeing as you Okay, more forth of both. then what just changes bit you less in you understand far. Spain's impactful the Thank public of as I in kind potential so we've Oscar, understood. prove putting helpful. the could But than to and favorable? or the just what I in follows impact, that's one If passed like into what the negative happen broader That's, will sphere seeing you're And play? likely on a squeeze some Based kind along remind whether than us with of additional marketing. very you October, these seen needs just new incremental potentially talk could timing Senate law what that come some seems what a it back these market how see to I'm on mentioned Thanks,

Oscar Iglesias

Moshe want or you that want me in? to do you do jump tackle to

Moshe Edree

can Yes, you have it.

You can have it.

Oscar Iglesias

gambling that's vulnerable as in the Yes, place wants year put it government the so that working Jeff, over been to this say protect, the online this the through course population is additional, to segments of let's way the at measures terms look relates legislation we protective in to space. the a of

sensitivities or from be it's little additional technology all we'll the a going of into good, you going we're we're going there's different this. this So work that requirements keep going what our needs. business. our analyzing the going would operating still this sure certain is how on to We make it from a early still that activity otherwise segments requirements. limitations, have to business, number to but these terms obviously impact measures, are to through already terms force we this to of posted, through, relates extent to whether that primarily of the understand us and think are come But regarding or over have a for But XXXX, as this better to to we're compliant development visibility player standpoint a end be to Obviously it's and and with early there's to to the technology in going or is say. too that what side and we're we're of But done but monitoring analyzing that, limits longer those working as bit affect starting how be bad impact more obviously, to these standpoint be say term. measures age these in are towards is

Jeff Stantial

pass on. Perfect. you That's it helpful. I'll Thank both. very

Moshe Edree

Jeff. Thanks,

Operator

at are Guillermo there closing And back no phone remarks. now for Lancha any to call Instructions] time. I over turn the will [Operator questions this

Guillermo Lancha

Okay.

the So we either. website have no more questions on

like So do any after additional we in please to look for feel ones, would year. if forward so, call free ask reach if anyone to you call again the speaking to out not, QX and to early next with our

Okay? Thank you.

Moshe Edree

Thanks everyone.

Oscar Iglesias

Thank you.

Operator

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

may disconnect. You now

Codere Online Luxembourg (CDRO) 16 Nov 222022 Q3 Earnings call transcript