Codere Online Luxembourg SA Q3 FY2024 earnings call

• Delisting process: Hearing panel for filing annual report scheduled for January 16, delisting stay continues until then.
• Q3 net gaming revenue: €52 million, 20% above Q3 2023; negatively impacted by peso devaluation, but excluding this, it was a 32% increase.
• Product mix: Casino segment contribution increasing as sports betting declines seasonally.
• Customer acquisitions: 67,000 first-time depositors with average CPA €250, higher due to investment in certain markets and casino-first customers.
• Financial highlights: Adjusted EBITDA was €1.5 million in Q3, with Mexican business contributing €1 million and Spanish business €6 million.

Consolidated net gaming revenue grew 20% to €52 million in the third quarter of 2024. The Mexican business saw revenue grow 27% to €27 million, while Spanish net gaming revenue grew 11% to nearly €21 million. The casino segment's contribution is increasing due to seasonal sports betting decline. Average monthly spend per active customer rose 4% to €120, and the number of average monthly active customers increased by 15%. FTDs dropped 3% but active customers rose 15% due to improved customer retention. In constant currency, Mexico's net gaming revenue growth would have been 32% instead of the reported 20% due to peso devaluation.

Reiterating current guidance, management expects to finish the year 2024 in the upper part of the range for both net gaming revenue and adjusted EBITDA.

• Peso devaluation impact on revenue, with cost structure mostly peso-denominated but some hard currency expenses causing slight mismatch.
• Competitive landscape changes in Mexico and Spain, including new competitors and potential legislative changes that could affect the operating environment.

Q: What is the impact of the Mexican peso devaluation on EBITDA?

A: The cost structure is overwhelmingly peso-denominated, but some centralized costs like streaming expenses are hard currency denominated, causing a slight mismatch.

Q: How is the competitive landscape in Mexico?

A: No major legislative changes, competitors have stabilized, and cross-promotion between casino and sport is successful.

Q: What is the competitive impact in Spain?

A: Higher CPA due to increased competition, but unit economics remain good, and there could be potential legislative changes next year.

Q: What about the gross profit payback period?

A: Difficult to specify exactly, but revenue paybacks are within a year, varying by market.

Q: Are you hedging currency risk in Mexico?

A: Not currently hedging, but may consider long-term hedging as the business evolves.

Q: Plans for license expiries and expansion?

A: Will renew Colombian license, looking at Latin American expansion with disciplined capital allocation.

Q: Thoughts on share buybacks?

A: Discussed with the Board, will continue to be discussed as cash builds.