Earnings call transcript Q2 2023

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Operator

Hello, and welcome to the Codere Online Second Quarter 2023 Earnings Conference Call. I would I would like to advise all participants that this call is being recorded. I'd now like to welcome Guillermo Lancha, Director of Investor Relations to begin the conference. Please go ahead.

Guillermo Lancha

Thanks, operator, and welcome everyone to Codere Online's earnings call for the second quarter of 2023. from Aviv hear Oscar and will Iglesias. you our Sher, CEO, CFO, Today,

and Moshe Vice join former Executive Our CEO Chairman, the section. us Q&A Edree, in also will

reconciliations remind to Before as call to net the metrics, adjusted today, a in to or we Aviv, which everyone uploaded referring that EBITDA, we gaming you website I'd will turning revenue the be during over can of for such like presentation. our the presentation includes call, this financial find to appendix which earlier non-GAAP

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

website that transcript can will Finally, you this investor please also sign-up and replay for a alerts. note codereonline.com, at our where on of our email call be available

With on will call and to pass Aviv. that, the go I ahead

Aviv Sher

what presenting quarter to Thanks, quarter earnings Guillermo, I'm today. and excited unpacking been thanks call for the second the us. joining has another be everyone and for solid

Our product this continue to has our offering this this that very we team's with And exceeding build continue to of while goal and both and a expectations period. our clear our improving us in to being experience we XXXX. allowed performance, customer positive are meet commitment momentum company working upon to unwavering ensuring during we profitable

and details ahead. road into the get discuss let's the So

tailwind event delivered particular, X. was the growth with the European quarter benefit million, first highlights expected, versus we page This decline second year XXXX quarter, We in net the EURXX leagues. from prior sporting better especially in first than seasonal less more and quarter. the football Cup into gaming World the Jumping the of quarter flat second and a the in the the considering quarter in on or revenue, XX% of

existing generated by in net What and casino-oriented quarter this continued players this focus our acquiring from being casino customers the net driven our driven with managing gaming was of in the nearly customer gaming with slowdown increase our increase continued a our XX% to is This active re-occurrence in XXX,XXX, becoming contribution per The of was our earnings, portfolio by a to revenue with now relative XX% by our together both average monthly this seen customers casino a growth in quarter. increase to on together XX% in revenue segment. sport spend EURXXX. in

Mexico, year the with the Argentina, year. Customer XX,XXX quarter drove the in most declines, driven Columbia with the the active FTDs last decrease substantial second which combined last XXXX. XX% than was active both in first-time quarter customers versus XX,XXX QX depositors of in by less than and primarily XX% of declined increase in This in in more contributed acquisition quarter.

average will cost earning markets our unit to where are in line calls, have with only more prior prioritize discussed attractive As With have also seeing been in Mexican CPA in our market core blended our throughout investment less we strong continue we and growth, our we but overall Spanish across XXXX. or economics. all not and

honor main of we now award, with Barcelona. work their see pleased terms nominations an edition, In three in it's hard be to XXth the to in This nominated. SBC recent industry, are celebrate our development, Awards in upcoming being in the the and recognized achievements

Iglesias multiple contribute term We in thank the their as previously of marketing, with Directors. Oscar support on of of the appointment that XXX, welcome like Daniel to operating their Finally, Board significant This Markets Gonzaga Gonzaga of to Board recently as replaced follows Group, marketing EMEA. and of and position and replacing a of forward Daniel him Head Higuero CEO the the much new them June for and Board member we naming our look success which who of for we Elimelech held working Bingo, Michal unwavering endeavor. will wish Board, contribution Valdez. are and announcing Michal today appointment the members. US Developed during in became at Codere and both to would and expertise additions, of Head Head these including new Oscar valuable

As the know, to the highlights I CFO, in quarter. Oscar you to now financial continue his him as will his of the turn over will cover and role call

Oscar Iglesias

wanted everyone figures Columbia, have I changes approximately Aviv. we EURX items in into in added to to through and adjusted XXXX. numbers few Thanks, accounting in periods. EURX.X the diving XXXX reduction And walk the that a for impacting a Related taxes in of the before previously the presented our to the quarter, quarter reported quickly value prior first million which resulted in of for EBITDA million in

expense. other In line taxes, the above of provision first in that an corporate included VAT regards as And that market the in to of earnings reported basis, quarter the EBITDA million QX and to May. for gaming in of the is on a EURX.X operating EURX.X as a XXXX taxes, forma this pro XXXX, previously versus million we was reflecting but deck in adjusted EURX.X the has the are negative reclassified we change non-deductible been is income million

to of million an and of Colombian time, the expectation EURX approximately sheet expensed the recovery XXXX, to at balance amount. this VAT not capitalized in the regards as was there In was

the not which any forma recovered adjustments made Please will in we note, VAT, and that not be the in amount here however, to will this should earnings be reflected XXXX expensed pro deck. have However, third non-deductible recorded quarter. figures be our as

over growth net XX% the quarter, Mexican business, by driven EURXX our primarily Consolidated in the Spain, grew million first EURX with to year's a second less an of contribution EBITDA with EURXX.X Spain which million loss. continue to represents in grew XX% million, EURX.X adjusted contribution of million improved million, All its towards loss negative meaningfully the to million. make together the all, XX% a million EURXX negative we loss this nearly in in to EBITDA, revenue last the generation. quarter, last gaming meanwhile, growth quarter more reduction now to XX% year. EURXX adjusted EURX.X Turning EURX.X performance. EBITDA QX nearly sustainable financial positive and in the and of year half than cash from prior flow Mexico Adjusted progress XX% million including a also reflects was than in

with net in total driven and net higher the at quarter XX, growth, by efforts EURXX contribution now our in due Looking Columbia. revenue team of by EBITDA the also significant in P&L higher the to gaming period in keep taxes gaming the not non-deductible level gaming operating made to Mexico on the impact million EURX the line, page expenses in revenue, notwithstanding by the improvement million of a but was to mix in adjusted effect, both VAT a only

in by a the the driven EURXX front. the revenue casino to and strong X% the number increase in by In the gaming sequentially. of financial expected an customers, of increased quarter, active of versus driven increase spend stronger Spanish first number Mexico, metrics. XX% back customers second in year-on-year, on quarter prior driven net million was increase reached the This a increased time, by Turning XX% Net XX% surpassing performance the for business. an and practice year, active and casino particularly engagement, Spain operating of revenue gaming in both than the on

remained the mark revenue quarter. Moving above Net million second just Columbia. gaming the in to EURX

on is our active the to of prior on will As of customer for portfolio improving and focus time our mentioned calls, continue customers. quality earnings on and our be being, the Columbia acquisitions

balance sheet. the Turning now to

was EURXX available, over EURX had of we XXth, cash first the of million June throughout XXXX. utilized of having in about sheet, balance As EURXX of approximately million million the total half which

the or of included with LTM EURX which gaming our of position, capital working XX% revenue, about ended In million EURXX of around the million terms have accounts already third quarter. our which paid quarter been extended net payable, we in negative

our cash EURXXX,XXX cash provision On is of for paid in in page first further worth income that working period. capital. was half, tax net the reflected a impact with net you in Luxembourg payment and this while in together statement the net P&L Please corporate the the details XX, regarding reflected note in tax, capital. And variation for flow the have in working variation

XXXX outlook EBITDA guidance net reported provided year revenue we earlier when adjusted this the are increasing and XX, we our gaming page to Turning we QX on earnings.

generate Given versus improvement X% million the to strong EURXXX expect in first million range. between a performance mid gaming net we half, EURXXX now at in the the the prior reflects and which in revenue guidance

million, the range EURXX of our feel of in we EBITDA, to our EURXX delivering year cash XXXX. EURX versus for expect million and flow otherwise For prior million we goal and will meet outlook full that increasingly improvement a comfortable EBITDA a positive adjusted now

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

Aviv Sher

Oscar. Thanks,

your and the would the their day their for the work Codere to look analysts, thanks up with like we team it operator Q&A. other investors, interest turn hard to Online for soon. again out. open in Q&A, said, With to that We -- turn you forward Codere participants speaking call thank back day Online. Before in to in we'll I to for to always, And and as hard the and to work day

Operator

Thank moment a compile Q&A you. to [Operator roster. just for pause Instructions] we will the

question Jeff of ahead. Please go First Stifel. is from

Jeff Stantial

margins Maybe left continues couple off another excellent Good on kind right operating Spain there congrats Oscar, to leverage starting morning, Aviv, scale looks forward that this on of like or settling for think the to in our still this the quite Oscar, about level are around kind of quarters. in last XX% model rapidly? the as thanks is Great, taking of business, moving thanks. questions the is some here. and quarter just level business

Oscar Iglesias

Hi, question. Jeff. for Thanks the

improvement half be guidance terms it's adjusted today the full we're of think This -- given in I first there results, that with the in fair cautious delivered to and say forward to market. that business. operating putting to we've leverage something still we're there is year, the I we've is the -- is terms will think further go announced think EBITDA of that I the I of think the that for

in the we're is given of going with, also cautious going summer to be in time in year our and still the of going an being bit to leagues, we least growth. lull objectives football and our Board always be sustained for where to the return little coming the And events. engaging a of Directors year strength otherwise, with our some sporting of terms are and focus the process on things about our next stand today fall thinking as I budgeting that this of XXXX. at into what's obviously focus going think focus European in uncertain context for are And after we're going in Spanish we which customer into of think back the the of the I is

off get terms So move we're of set EBITDA we're -- mix we've players, year, a higher we doing but you know, and being sure, especially work figure. build cash not which, spend going values the forth player especially to as active period into as in to to have casino increasingly objective the the upon have per to operating there's higher leverage, per as for in positive that or flow general, tend is

we So where in given we're optimistic going year. forward, the but cautious obviously, are

Jeff Stantial

of as development and markets? Great. by That's roll perhaps are helpful. the was bit, to where talk a shifting product you planning market half gears any back be I Thank features there competitors helpful. could into maybe what in market, And Oscar. your And just out XXXX? roadmap your some various thoughts Just you the kind product would hoping you, Thanks. then of in you bit. do here still lagging to the see a

Oscar Iglesias

Aviv, do jump you want to in?

Aviv Sher

Yes.

of to in a customers a we product think most of and more closed in side, the Mexico. Spain in to functionality I bit sports little and offering, bit sports terms starting little market on and -- in offer the more we the So gaps are and our

launch we to prediction during In terms the engines during our content and mainly better year. to plus next of aiming improve and are quarters couple casino at to and that next of player, our we continuing our are aiming a engine, to unique recommendation experience, develop customer

nice some very have content in. locked that We deals and already

we So for good our very have casino a players, experience.

we what launched also Mexico the and will in [indiscernible]. We probably you communication see call

kind platform. it's on of a gamification So our

in product So product. we the the much of more have in come sport terms and a casino to

Jeff Stantial

players appetite to just Great. That's could regarding couple really from end players feel I from here, in squeeze to you and American global larger enter some if Can of the the what Latin does seeing then, about starting just some the Thanks, more maybe the opportunity. and talk global it European region? we're a terms in of helpful. focused on the US anecdotally, in you're your expand And more Aviv. like hear of

Aviv Sher

Yes.

till of our didn't stake our this going in the competitors investment territories, south high share. have see well. So maybe have any not are still just in and market over with in now, they something Up as in the one huge other a to Mexico last players in I'll in trip take Most or local, American except the we markets, LatAm, Columbia. local players still competitors very Mexico, of not each terms -- of there

we competitors, So market What very that haven't the we market year-on-year. their starting is any see hard their the into to in the and markets. competitors maintain position local marketing their increase seen are share American put to investment, do those investment working and

So the is competition hard.

compete come a now. to to need will money south order go to wants whoever in with lot think I

Jeff Stantial

one if Chile Okay, to the is talk then here, -- and year. just by great. like sounds that flow to expand some out? gambling the any on last in recently population Can size that they've And regulate into you poised you market the it have the appetite end squeeze based about of there's news laid just structure could online I do

Aviv Sher

now. with we have remain and we and market. XXXX and order the more not cash are that Mexico in strategy appetite, to new for markets focus working ROI we to profitability, said stand be to the on what have we we we able we sure take behind that will towards our with in see plan current to but better Spain -- Well, We

for it's it not I'm our good over of to But make Chile thing. and us, as ready Peru that positive are big Both are We terms we radar. So opportunity. at look investments a under a in there. investment, sure

America, us of in maybe the We looking the of are regulation stage. they capitalize a and on focus already the be we tech South will some have that into for not but regulation the and sponsorships part in market

Jeff Stantial

Thanks very nice quarter. that’s for Great, me. all much, a

Oscar Iglesias

Jeff. Thanks,

Operator

Next Noble question McCann of Capital Markets. from go is Pat ahead. Please

Pat McCann

Pat for? with of was, in of your this Hey, Buenos there that And the talk question provide or a regard first Michael any for can the little bit with is on updates My kind you Mendoza, on then launch piggybacking of could Aires? the efforts scheduled when to is you operations that, Kupinski. if province about also

Oscar Iglesias

want me that? you Aviv, take do to

Aviv Sher

Yes.

Oscar Iglesias

We've an diligently prepared bit it's launch get in standpoint to So, the to taking a to taking be things any year a Mendoza, expected. Mendoza's in that initially on specific focused -- But few something It’s longer bit we're in to able we -- working past a be from a than without market. all everything operating say little position I we launch would little should end in would it committing be the been before to over other date. months. few

So we're progress making there.

the differences managed case, standpoint. terms in frameworks of to regulatory probably As in that know other, platform in and there you from in small, one are to technical issues cases, the some which licenses, need some some you the as be terms a creates technology in large, Argentina, regional of, from

As as also it in the disposable biggest toward Obviously, to operating acquiring are Aires, work population, income. a city and we by know, license relates in Argentina, province and -- Buenos the by the you to of continue in market that's Aires. its Buenos continue

And some market. we're sometimes year the the macroeconomic for It's of other point have to in to is elections but time. it also hopefully, with we'll all at working. country that and the been really that's something way the deal the now that focus, get So some has a making, facing announce tricky issues

Pat McCann

a the has but think then tightness when in answered, given Mexico, markets competition. this ask the if any mostly capital I wondering going result of it shakeout was out any the wondering but state asked But any was competitive, competitive, been really Jeff like about shakeout there just pretty sounds already I just the great. there Okay, had maybe sounds had it And the is that remained was it to about capital, as not of competition question had probably if been there I I the if still and just it's or pretty like -- that. of answer -- that, of

Aviv Sher

shakeout, I small competitors have lowered size it can't some mid last in I investment a to of call think but our quarter. the their

really they're think lowered investment think, see say, still like bit media are forget let's that, on a they shakeout, and in most a the position falling three Mexico, No the think I year-on-year. going of defensive their I we all out We and but rest shares at I that moment. is companies up, globally, are prices the one more Don't little behind. has market a

of before. So I barrier said entry is harder, the as

Pat McCann

question, you. of other be expected the given And expect expansion Thanks. that Should Got the of with sort I Colombia be was slight markets. some Columbia, then that that reduction stable one forward? you relatively in going to sort of with imagine to last deprioritized we favor revenue. of in

Oscar Iglesias

I mean, the two I looking focus we're what I breakeven. that do next we think our the keep fair let's year core that's think Colombia, so and EBITDA really priority strength to comment. or say, that strategic just seeing in a much cash markets flow reaching given are of is major profitability

in that portfolio we're portfolio to of the what improving that building of and upon quality the that's having think we of we're looking I the success have customers customers. with

of our holding may more of and more time. where a market over change priority it's now, a our -- a it's So pattern. in focus Right

Pat McCann

color. on again congrats the Great. thanks Okay. the Well, and for great quarter

Oscar Iglesias

Great. Pat. Thanks,

Operator

Oli question of Next Instructions] from is BlackRock. [Operator Westbrook

Oli Westbrook

guidance. on the wanted Congrats taking start questions. for my and guys. Hi, thanks results, off to on just I

could to this I main your sort on in going of to just the you guidance positive XXXX, was you color to EURXX outlook the comparing a million bit driver is what EURXX year, million with wondering bridge of more if of that. help be give EBITDA just So negative

Oscar Iglesias

Hi. Yeah. Thanks the for question.

would our of strength revenue also of decision in pedal only time. the seeing we're improvement how on our in a bit that been of EBITDA the this increase that periods And upfront you're in it's the the you this that taken investment harvesting that standpoint. has of think, works, but I off not most business we've take continued as marketing to significant a our the front, driver, say, a I year longer it's know, from over little the foot

So next continue same. expectation our I the year, looking think is to doing into out

we'll something think be will two we're starting of on since and off with the but that's casino and verticals, seeing let's starting sports mostly now to will side, fall continued strength the the year taking on both our that beyond the the let's I ago through and into that work strategic taken that from all But and operating the success other honestly decisions front, operating the honestly, quite especially year. casino, making where think standpoint we think off. quite in that the XX pay pedal different a we've been this say, I marketing be budget core months months markets things foot our the two, doing like over will an our the given three we're are very investments across all to course and financial There over it's, the years. destocking say combined eight little bit focus, feel next and the ‘XX next just for plan into have the much that initiatives performance on govern, we're about

positive. year both So then of key and and drivers, to the year going next be be I flow for back into think cash half going this EBITDA those the to are

Oli Westbrook

idea is do year, That's when sort for how And your next rough sense. you're to great. to a be guys EBITDA I And you the any of have EBITDA do you in going phased? of aiming quarter Makes breakeven? guess be have mind guidance

Oscar Iglesias

Yeah, good it's question. a

additional quarter-to-quarter, guidance. XXXX, our Is that full from one year same a everyone things this continues the we the that I have think with of by impacted there, a until going any little complicated be going to to as we're for earnings focusing to a we're has because first year on we be to have to But this much you especially notwithstanding is be today want to it going to debate wait from staying it going Mexico. cadence year see and that's be be think that opportunity context as And to going is in it's that terms say, to positive? think able to a stands what whether specific information licensing standpoint in Argentina about I we'll I half positive? at, looking budgeting [indiscernible]. share the next there's have is QX QX to very markets be on ultimately other think bit as the then more we're the into having question of earnings in I decided

bit in market more the behind were early give comfortable to and to So were, then confident I quarter positive. came now than the think for generically were being more it's we when that little I would EBITDA with after we confident I giving us another a think but even ‘XX, May. say year, us, full flow just we're specifics ‘XX we cash around for We're we with more QX guidance even

Oli Westbrook

color. you for minimum external to guys the you'll the need the your question ‘XX. And then cash in side. last cash of on any I plans would what cash think level Thanks guess That's you at? keep operating And great. ’XX and be And be guys additional comfortable the business do would

Oscar Iglesias

Yeah.

answer I think first the no. is to the question

have intention additional capital. raising no of We

capital QX, and would business running be in initially to but think from closing be we're we we will is and that with better the I I capital I'd we're of of from se, the year going growth. unexpected figure sustainable of come than to I additional some where investment given we're markets, a and current and the that some our operating always since that, cash especially position. we have do in that marketing that available expected Obviously, trading on state an even time assumption planned comfortable of rather how -- what running level think of we, with to under going the some we're share buffer focusing not event are planned cash business think not minimum time access retain and an external this to up. level we the surprises, which per

Oli Westbrook

Great. the in Thanks quarter. for color. the Good next luck

Oscar Iglesias

Thank the you. for Thanks questions.

Operator

you. Thank to would back the like I turn to over call Guillermo.

Guillermo Lancha

Yeah. Hi.

So a coming in the webcast. we through have few questions

Argentina. one the more First around than situation the The election political of eventful primary was new online is usual. could licenses? Do that we expect rollout the impact

Oscar Iglesias

Aviv?

Aviv Sher

don't We know.

I don't that think answer is the straight we know.

no have over it. assumption We

continue We any elections are change will we map new will that on online will this top is to will the now. of change -- operate as that operating sure that come. but, impact have that government think not gambling, do the the I'm We some priority any

monitoring think going for don't So we are over what's but us changes happen. we right there. closely, something don't say in is term, that we I It any that to foreseen the can short see now

We are don't looking anyone now. the it of forward eventually, of his licensing of to agenda, course, I But see any think put the how politicians processes. will the and, as affect top macroeconomics it

Guillermo Lancha

Okay.

whether expect the to question presence we have We fully market another around is a have operational? there Brazil and once

Aviv Sher

Brazil? Brazil. Moshe, you to take want

Moshe Edree

I will. Yeah.

environment. we, the Spain to to next, But, good months, before, and we or are moment, and have the Oscar any -- the support keep intention XX not are will mentioned is about as much to we answer to core -- the that Brazil. at very XX the Mexico say, due regulatory don't and I moment, focused for we be therefore, at would definitely the there foreseeing talk any before performance. very activity And clarity especially, more our markets So are not we about the

Oscar Iglesias

the emerged, developments the comes what continue don't monitoring us for we'll now. ultimately in We're right Yeah. terms legislative see think order is actionable relates monitoring or back as executive of that the and ratified but from it if anything I there's comments developments, Congress that

Moshe Edree

Exactly.

it's it not confusing the that for that the Difficulty]. of Latin It's more Spanish. because region think it's the It new people fact in same like, countries same other it's completely same are from requires, the on I in be -- there's It's, that the that the the [Technical ground America, continent, market same, as a operation Portuguese. full-on but and us. can

Guillermo Lancha

the in we kind have Spain. plans the in on was can or EURX.X mitigation planning. IT million QX to are fraud, of question last one if whatever Well, Okay. terms statements that on if of on we related And we comment webcast systems

Oscar Iglesias

Yeah.

terms we In that fraud police release it's in press here the of investigation. Spain, in the under disclosed

new be investigation So obviously, developments new -- we'll unfortunately, what is police and about to say we're course. updates as money there's and in able and important of able going to as be most provide much not recovery But we due the pursuing happened. are the forward, to the thing or moves we're market back developments there obviously, come to the

Guillermo Lancha

seeing know, like else if, anybody don't not to ask webcast. question? any the on more the I'm Okay. would on I operator, questions line

Operator

Yeah. [Operator Instructions]

Guillermo Lancha

Okay.

it further no have So, we questions. looks like

reach we for out our on in follow if not, earnings. And, to you. up Oscar. like speak November Thank to to would anything, me you or If again will feel QX free

Operator

gentlemen, you call. concludes and Thank for all Ladies that today's joining.

You may now disconnect.

Codere Online Luxembourg (CDRO) 31 Aug 232023 Q2 Earnings call transcript