CDRO - Earnings call transcript Q4 2024 | Codere Online Luxembourg, S.A.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Codere Online Fourth Quarter 2024 Results Conference Call. [Operator Instructions] I would now like to turn the call over to Guillermo Lancha, Head of Investor Relations. Please go ahead.

Guillermo Lancha

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

our presentation. over this I'd referring appendix or unaudited the call, presentation for uploaded can call everyone to to you financial the which which and we during today, in constant net disclaimers of that we to adjusted metrics turning such to preliminary reconciliations gaming like Aviv, the remind a includes as Before non-IFRS earlier revenue, and EBITDA website find will figures, be currency These should substitute to our this all measures comparisons non-IFRS not IFRS and discussed year-on-year rates that addition financial unless in considered be noted note as during for a are growth otherwise. call results. Please

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

During related and we our EBITDA numerous those discussed including forward-looking to and us. statements, which the those those our risks are SEC from this actual including currently to adjusted on cause will and results other revenue to and expectations statements beliefs, could to our press release which materially subject uncertainties, outlooks, based our assumptions with statements. These gaming available call, make and earnings current by differ net in reflect these anticipated filed forward-looking information documents

to any we that Although no undertake occur believe these expectations reflect changes statement this we to revise are obligation reasonable, after call.

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

Aviv Sher

the joining eventful spoke months few since It been Guillermo, has at thanks November. today. Thanks, us of to for we and everyone end an

speed let the developments. me latest on to everyone update, up provide that So so is brief a

credible not to only year-end. were plan January, as As resulted you the early us but the but January our in in ground file the in also running This report. auditor hearing, XX maximum our to in ultimately granting extension May NASDAQ new XXth before to auditor, Bailey annual able our 'XX NASDAQ our Marcum, us former board resigned a Malone allowed and present with bring prepare possible them until to we unexpectedly December, know, to hit which on

While lot compliance process have extended this look always, would investors. time report that energy deliver We liked, things this expect we and annual issue appreciate our file putting your support NASDAQ deadline. behind taken are currently we both believe issue the within forward us in to has throughout a more for moving XXXX direction than the and to right patience as our this and to continuing and

gaming in by revenue In above have was weaker period. been fourth currency XX of the gaming million EUR X% as the QX Moving net highlights Mexican the XXXX in prior year the the we XXXX. would above a Page in gaming fourth XX% quarter, constant On X, XX delivered net quarter million EUR quarter, now negatively revenue peso. into of prior revenues, impacted net terms,

in CPA was of In This monthly customer, average in decline acquire mix, the increase, This level X% the the net product Mexico back in the of a in to in in quarter XX,XXX betting XXXX. with results. a margin terms sport versus contribution its net fourth able spend were revenue since increase December, the sport gaming QX the segment NFL average lower we in unfavorably increase active a quarter, an in Casino our of EUR during investment growth quarter, the to of driven sequential as to throughout of by average number the on revenue seasonal around customer the of quarter XX% lowest to had primarily first-time decrease quarter. gaming active our acquisitions, small of as an XXX, customer EUR our while in due together fourth per regard with XX,XXX maintain XXX. In third uptick monthly to well depositor customers the acquired continued resulted we in total

forward opportunity invest Mexico be Looking in and attractive. continues both the Spain and to notwithstanding that very to

ample support Our position Board the us this current room million. to buyback not -- and for us not share generation, approved believe to a expected our we shares is in only up may this themselves, no is continue X-year of but the plan years. Please at cash to and terminate number our that given time. any cash good shares, We plan of coming note the present $X business appropriate flow if that acquire for plan and size opportunities leaving investing for the requirement do over any also under there so when to specific plan,

March this, be implementing. With year quarter before steps, terms highlights to approve out will with Xrd our XXXX. convening initial a be the expectations today financial In to plan meeting shareholder we to I to now next turn call on of the over the sending of of for and Oscar later to the held full a will cover notice respect

Oscar Iglesias

Thanks, Aviv.

XX versus Spanish this, gaming nearly to positive in from headwinds now Aviv a the currency was small primarily year and EUR positive the quarter EUR adjusted grew at XXXX revenue from for our revenue throughout was EUR full the given by million. Spanish reported business. XX was including EBITDA year, betting by gaming contribution on XX Turning X Page positive EUR where grew of in have included revenue the In net EBITDA prior flat quarter each X.X performance the fourth Consolidated and million X% financial XX. and quarter million. Adjusted driven million. the for Mexico, million we million to contribution mentioned EUR but With earlier, sports net XX% business, a to This X.X EUR our approximately Mexico. margin

comparisons in making XXXX classified were at country undistributed expenses country-level BXB the expenses, certain level. year that a difficult reminder, results include As prior in as XXXX for

at by million X.X EUR Looking EUR XX. in Page The increase the gaming million was in in swing marketing on net adjusted EUR a our in now EBITDA a X X million revenue primarily total reduction and fourth quarter P&L spend. driven

the the Page on basis, now increase driven by increase but investment dropped active Despite by which driven in primarily quarter, gaming figure this reactivation revenue to and and by we net continued of active was XX. have a the declines had of net a FTDs in consolidated also XX% in revenue prior Mexico. XX% success an the X%. FTDs in Colombia results quarter, year level to and Spain X% lower X% grew in The on however, in versus focus Sequentially, Turning existing total XX% both currency our decline customers. reported customers due quarter. customers, the the related primarily FTDs due in marketing in in reflected and Argentina, gaming the been the comparatively to strong to On period, constant meanwhile retention would increase in instead of X%, Mexico.

together to X% number and higher quarter increased financial active Net gaming in of a a in the year, Spanish per spend the to active Turning metrics. the XX% prior revenue XX,XXX. operating by versus customers with driven increase the fourth

sports the X declines XX had also in in the following prior in resulting percentage impact a quarters impact of quarter, gaming XXXX, of Mexico, we fourth a we million mostly to with to the the the sequential increase top net back revenue of on have flat quarter would period. our XX% bonuses On net XXXX. In of margin X quarter, about gaming from X% million points, net in in was XX%, constant fourth in second third of gaming quarter. EUR impact peso the revenue revenue to lower a quarter by betting million adjustments headwind the our notwithstanding driven have in the gaming This net NFL of The basis, a reintroduction the EUR quarter, on X the devalued This year welcome unfavorable equivalent X.X Mexican results. grown by currency EUR sequential from the revenue. mitigate made

by season. year customers nearly average is XXXX the top X% prior Mexico. was generally above we above context, quarter. American as customer-friendly the the bet monthly Separately, this understand in And with QX we on more our XX,XXX very and a of XX% football actives, NFL it, ended For sports one

the discussed the opportunity in that months, experienced we calls are quarter. which, to the and as invest Page including grow we XX, to prior comparatively have we of stable earnings the As XX% notwithstanding a Mexico the Mexican believe of continue recent in we while is heightened in devaluation, in discussed peso landscape, the more as and ever. On earlier, fourth evolution against competitive attractive as euro,

this further strengthened headwind rate not making quarter of difficult the for XXXX, if ahead Looking throughout quarter peso as exchange the first worsen quarter. of the a to comparison will XXXX, slightly, continue, first the

to on the Page XX. sheet Turning balance

of of early less where in December cash balance which to million million X in EUR approximately had of on EUR we with sheet, January. going of million As of into year-end available, X XX providers payment more XX, normalized which the approximately cash total ended was transit EUR quarter days than due million otherwise XX the we third and EUR the service

trade a our revenue, it of continuation than with suppliers. terms of XX.X quarters of X% EUR as working which we full gaming more negative lower net or quarter trend year is longer-term with the terms restrictive million position, net In capital around of the our prior ended reflects

by at cash, currency. of XX. X.X we certain hold dollar devaluation in the offset XXXX, ending our balances million In to to from on EUR the cash partially a impact FX Page by available the peso, impact on Looking which generated we X.X U.S. offset cash negative that only due was flow continue positive a of EUR partially Mexican million cash strengthening balances on

our on Page XX. to on Moving for outlook XXXX

currently million versus at XXX increase the between X% We gaming net XXXX EUR to expecting generate million, XXX revenue and of a midpoint. are EUR

this conservative throughout of headwinds Mexican having in XXXX, impact facing of we XXXX. grown of weaker the after half might XX% be first this will While more beyond peso a than range year the just number a look

continuation announced example, less recently restrictive on Spain. and in of promotional For Colombia tax the the new in environment deposits a

expect EUR continue This from similar support are pursue profitability. as closing see adjust EUR in to In first out I As business. That's the a if usual, year range will growth all to levels future remarks. for and we to EBITDA, back which and accordingly the prudent of of otherwise we how to between range plays hand to will the half we end investments the needed. to growth XXXX, it million and reflects end. we to million, those Aviv XX the of XX marketing over regards in my adjusted year balance when needed believe at now

Aviv Sher

Oscar. Thanks,

year. great to for thank their want move Q&A, and we to I to always, Before as team, dedication another Online contribution Codere

ahead delivering with and your challenges our interest, But look that strategic up a the gaming to for And vision analysts our call to overcome I of strong and results experience and as to safe XXXX, turn open operator we other are shareholders, I'm to stakeholders. our for strong As that back commitment and our to we'll always, investors, with it otherwise will them to enjoyable thank and participants you market and inevitable. will employees support and team, providing foundation, patience. With confident online our said, we customers continue the Q&A.

Operator

Instructions] Jeffrey Stantial the comes of question [Operator first Stifel. And line your from with

Jeffrey Stantial

embedded Apologies constant off that's midpoint? share guidance in would to currency us with what or Oscar, you I on what implied relative XXXX guidance. looking the growth it if as the the guidance just just this, at starting at can here X% be I the peso, reported euro the differently, the missed but assumption guess, Maybe

Oscar Iglesias

as full relates saying Yes, specifically it or have for included guide XXXX you're we what in on Mexican the to our peso the year?

Jeffrey Stantial

and As embedded sort guidance, be to of would related that. assume what reported between constant in as would relates have you but I to the dislocation currency it any

Oscar Iglesias

over take of but included I'd can figures, this have have we that call you don't a you in the terms forecast have XXXX get after yes, of in to me it. estimates that and pull the have that so our to FX we front in look, I numbers or

Jeffrey Stantial

the lapping it flow-through growth. And CAC some is implied looks and and some exactly the is maybe in higher that's there XX%, guidance, COPA EBITDA what like you are moderation euros about in around on almost realized XXXX, UA you sticking then NGR to though

Is there of So user I Colombia factored investment? 'XX? be we function acquisition a should Is cost that conservatism a my would is VAT great. perspective Just around here? else guess in any considering from is, the thoughts opportunistic in there question something be

Oscar Iglesias

a Yes. Look, couple I of think things. it's

I into believe if place. July Club taking 'XX, World have going I always, the in especially Cup. June know months. it's mid-year, don't as this first, The we it's or summer

that's planning what tournament, sponsor debate clubs are. So least that of to at in there's lots do around do that We we happening event, X want and are relates what Madrid objectives Monterrey. that it to have our both of as Rayados Real we playing that out and

the in the front, to early a always a reason investment say, as because this factor EBITDA the that it marketing -- outcome is year generic -- So the on is also ultimate on for, conservatism guide how that we in the especially relates very determining let's front. is

if the add key in you that's think to know have that I something I piece. Aviv, don't regard?

Aviv Sher

at no, moment, the no. No,

Oscar Iglesias

sure working still of relatively But still and the significant one others overall though Yes. for business, And imposition follow Colombia front, our tax year, a some of smaller. a those that every few It's Jeff, the have sure, seen on the This that think is very already is a decree. issue small announcement, Colombia you I of information. we're on even this part it's executive a of that through. deposits. I'm that recent Rush a it's even

So seen have. other the part we've other assessing what extent in to from collecting is something in that go or terms different standpoint or otherwise how VAT about doing all of little still would We're we what that we technical and absorbing permissible, than a mitigating factors this bit a markets.

have and in continue all going it's deal and this that for one with we levels, then to one is the but overly this at going our is So Even lower condition our decision. of if size us going investing. we're and plays an is given to to we're take obviously going not to that one to have appetite think investing see important issue material be forward, an I business out how Colombia, to

will we with our a which out year, hopefully, put in the tighter playing little guide that come the out, full extent, or this early X. until conservative power. bit, that a will challenge, the a durable tax how necessarily going again, and this whether tax But plays to the a once into typically constitutional be see to a respect range out we might have isn't the to So effect is And be is and that to full or I which be that temporary some month month year. in than staying of over that bit little But year. next, have would we more plays think throughout assume this invariably a

on So of we conservative a are that definitely business. little part Colombia front, even being small a if overall is bit our

I X%, of X% days total think something our it's like NGR. these

Aviv Sher

and... huge, huge, a huge It's tax

Oscar Iglesias

Yes, it's a tax. massive

Aviv Sher

enjoy environment fast to a regulator The instead think basically the operate. It's it them it's environment -- nonregulated I gaming become hard pushing in I to will realize black and will -- will of in market play to the it not hope the very regulated enough encouraging flourish. players because it's play tax.

at and stage black have it, they taxes money players the to And eventually, will impose companies value to way easy they think once go I an play to will on realize and you to get basically, those the it's players. with. play that want those market with So less basically to the some

Jeffrey Stantial

maybe Right. great really I That's perfect. could color. just in all more. one squeeze just That's If

you've that's quarter, about XXX of and CAC, both it's coming creating the here. upward talked about competitors and If talked down I your pressure EUR You recall during sequentially. markets some think year-on-year into I both correctly, some

CAC you're color a from So all drivers here? think general should of Or little that efficiency? of and from sort Is just improving of some we just bit kind how that's add benefiting of us. I guess the about could this of better you

Aviv Sher

Yes.

their few together. So things I In it. don't some are bit the down competitors I investment have think why, a Mexico, and a fourth the of happened in I think quarter, enjoying little mainly, know we but slowed

all on that it, buying our and how technical of and good we we ability or Another we small identify thing down let's CPA the call few, quarter, solved money. the bit. to is results going the is that investing that problems we in It terms good how happened had a see marketing our fourth are we are a tracking

know a solved marketing our technical issues investment or one quarter. some mix. competition in in which but stronger better little Mexico in crack to don't for we it's I is be So and a us, decision-making fourth plus managed less bit to the

So us I it a think little bit. helps

Operator

line Capital the from comes Craig-Hallum question Corp. Sigdahl with next Your Ryan of

Ryan Sigdahl

on see dynamic. competitive to want I the

mentioned recent but resources, aren't cetera, has benefited which of some onto competitive You Mexico, the moving or market, you going focus, maybe down? some have the that but noticed dynamics you there, your Brazil, I potentially of is that intensity directly of why guys you competitors any other on guys et launch know

Oscar Iglesias

market. as a in little look year. other not And came if at call a think again you is need that once And all investment, brand let's the now, I because at from think that we'll of competitors you come I LatAm. bit saw but you bit in to will all we it, little European And a next know in need the the Brazil, you again moment of your know I the and Mexico, to investment not back focus they I in, maybe that level, Mexico of they the you you very it, to macro build think to competitors and let's operate compared Cup this not operate need lucrative coming into huge market, to I well call But how some World to penetrate order try right see okay, still a -- there. is the thought. competitors, locally. course, huge that markets, lost Probably think succeed them And think in easy huge it's they as a did enter it, market. success

but a the that next think opportunity few short not left, for us. they break it's has took quarters. So I in the it's And competition maybe an

that. advantage We are taking of

Ryan Sigdahl

similar the You split mentioned XXXX and is XXXX. spend specific level market you Mexico? I remarks, versus overall? between in Spain that can or prepared in catch of a And that, didn't marketing that

Oscar Iglesias

investment be don't that spend we to We the 'XX. in I of some being in there breakdowns, especially falling 'XX, -- Mexico. the marketing years, restrictions had in back 'XX would our of a of additional the similar half trend on that what though and Yes, levels even promote was the ultimately abilities over the couple would away to last in spent country-by-country is of at we've Spain, give customers, still say strong of that some but total the to promotional

Operator

comes line Kupinski Michael question next Markets. of from Your Capital NOBLE the with

Michael Kupinski

couple have questions. a I of

In and events to Mexico, of affected timing of anything I of you quarter there that factors other else to there go contributed just revenue that adjusted the the the back impactful outside terms the were there? and may were headwinds, With rate segment? that in exchange had lowest EBITDA have -- results fact that sporting

Oscar Iglesias

quarter just fourth point at and even for would to I the the was specifically good. looking very Yes. performance the though CPA overall quarter that

later that were December, was more overall in Mexico, what really to really being driver momentum, saw throughout acquisition, seeing the of the think some was I specifically driven the in quarter. especially we we that, we -- but importantly, by that quarter that Mexico, is going but lower CPAs were the in gained the into what both

So there the within building momentum quarter. was

into You're the that's in continued numbers not necessarily seeing and those XXXX.

a momentum of that we're a off briefly good in in to and that the foot January marketing of we lifting we've saw standpoint where XXXX. mentioned over terms terms through the a spend a progressively saw I maybe So Aviv gotten think start. is others carry off something we quarter, it's into what was seeing that we fourth from momentum That their pedal month

Michael Kupinski

Got you.

provides You've wondering, look that can what and markets. you you opportunities we'll provided And from was that about have would from if other XXXX not for spend was your in coming can kind of us the into I I opportunities talk as Argentina for your kind some kind bit your in growth XXXX in if in your company growth, that see terms prepare obviously for whether a a which little you give that I maybe in some outlook And growth represent overview there and your and look I are expand market outside or XXXX about as as dynamic big other includes of investment of I virtually of of Brazil you X outsized Peru and countries a XXXX, of of thoughts there Mexico. market for investments some you, then at regions. as just guess, overview, includes dynamic couple Chile. growth -- other and these your online call wondering in shifts you revenues but

Oscar Iglesias

want Yes. that? to you Aviv, do tackle

Aviv Sher

Yes, yes.

a me regarding to yearly I Mexico. maybe of the currency of on want almost just in -- small just Let on results headwind are the a have you understand all the that XX% question your a of we comment basis start. exchange previous from you quarter probably fourth facing

So that, almost let's numbers. if I'm yearly even it's on let's growth, reporting in a a XX% X basis say, nominal say,

for set of Mexico So meeting in are goals miss any our and that showing we didn't I are example, our nominal self. our Internally, think we quite okay, to we and the results predictions.

here in sense we So doing in in because bit think are terms terms numbers numbers a Mexico, euro in I little nominal misleading are that of the okay.

Michael Kupinski

Of course, noted. well,

Aviv Sher

a before. not -- a a Yes, year -- It's We great little yes, us sense. had didn't nominal we ForEx We yes. It helped in not -- the is It's in that just quarter. bit quarter killing can misleading. us help in the a slow numbers. It us. also past it's have

I and all we'll get tailwinds. better then will Sheinbaum Trump with enjoy some situation the and So maybe hope

a this year. So in macroeconomics also kind have an influence here of

Michael Kupinski

Sure.

Aviv Sher

other of In opportunities, about and will I your several things. terms markets note question other

it Brazil match alone. We our go the opportunity We yet. of all, several didn't potential still right partnerships. to did into First too for find us is big look for

to bit market. waiting see to And this are happen little in we We time. time to what's looking going a from are still

there As we hundreds coming know little with know marketing of are problems of people that launch. bit in were budget. the We millions

to doesn't And make on in sitting go bit right and I that let's -- sense markets we not ROI market. for to is in So or amount a we now We Other our a grow the it. It's should when markets, put are it and generate the my market know marketing what next to into Spain new this to are ROI bench it happens we because dollar increase a say, we looking the new spends, on that, know ROI. available of that are into let's terms into there. the analyzing them, of if little market problem my very turn facing next penetrate Mexico enough room figures, how Chile is point a to current, and have of spend -- we call money or that Peru time. to us at still still dollar the core want significant nice the

EUR So the that sense. effectively EUR next invest million or maybe still in into risks I current without our can XX taking markets XX million,

we So I new markets, think always are looking.

also looking the good ROI still short in -- markets core to are But our I we and are seeing still in in want success we grow partners. we good We very taking. we very, actions are where that think term, the are for

Michael Kupinski

update an you Argentina. was didn't mention that us I on just thoughts there? country your give you wondering One was can

Aviv Sher

the province of business third at there the we lot able to unfortunately, only Argentina Argentina, to of our market, not on a we is is are are based -- majority efforts, to the made city. enter to the call it, core in and we maybe, was coming money Argentina -- Yes. of not moment the where let's from. country grow And the our able

good good have We results, enough. but not

sell Argentina. out to coming until grow a we we constantly are some to province Unfortunately, trying be So get and figure license. out Hopefully, maybe to license. there year, how the we over willing to are operators in will figure their able cannot

market. until that. at cannot really into moves are lot looking on We couldn't the But we over third made moment, our big deliver front. to We We up there. we But that want make efforts. a wanted. core be of it We now,

Operator

As begin. the for may Guillermo, now, I'd to call like Mr. you to over turn

Guillermo Lancha

Yes.

So webcast no on either. have the we questions

the we we call And If again earnings So up any on around mid-May. conclude be you discussed, speaking I we to guess 'XX out. can with reach will follow feel our otherwise, here. of free would topics very anybody QX like Thank the to much.

Aviv Sher

Thank you.

Operator

today's all call. joining. concludes That conference for you Thank

You disconnect. may now

Codere Online Luxembourg (CDRO) 20 Feb 252024 Q4 Earnings call transcript