Codere Online Luxembourg, S.A. Q4 FY2023 earnings call

• Delivered €50 million in net gaming revenue in Q4 2023, 33% above Q4 2022 despite tough comparison with prior year World Cup. Casino segment contributed 58% of net gaming revenue.
• Average monthly spend per customer increased by 35% to €120. Active customers dropped slightly due to mixed effect of market changes. First-time depositors increased sequentially by 17%.
• Significant uplift in projection for target addressable markets across Latam, with Brazil transitioning to regulated market and other Latam markets seeing increases.
• Consolidated net gaming revenue grew by 33% to over $50 million. Adjusted EBITDA in Q4 2023 was negative $4 million, $11 million better than Q4 2022.
• Spanish net gaming revenue increased 17% vs prior year, casino business accounted for 57% of revenue. Mexican net gaming revenue was $25 million, up 54% YOY and 19% sequentially.
• 2024 outlook: Expecting to pivot to profitability with net gaming revenue between $185 million and $200 million, but specific adjusted EBITDA guidance to be provided later with better visibility around events like Euro Cup, Copa America, and Olympics.

In the fourth quarter of 2023, consolidated net gaming revenue grew by 33% to over €50 million. The casino segment accounted for 58% of net gaming revenue. The Mexican business grew by 54% to $25 million, Spanish business grew by 17% to nearly $20 million. Colombia was roughly break-even. Mexican business is the largest by revenue for the third consecutive quarter. Adjusted EBITDA was negative €4 million in Q4 2023, which was almost $11 million better than Q4 2022. Spain contributed nearly €8 million, Mexico's adjusted EBITDA loss improved from negative $8 million to $2 million, and Colombia was roughly break-even.

• Expect 2024 to be the year of pivoting to profitability with net gaming revenue between $185 million and $200 million.
• Specific adjusted EBITDA guidance will be provided after getting more months under belt and better visibility over marketing investment, especially around events like Euro Cup, Copa America, and Olympics.

Q: On the full year guidance, philosophically, talk about where you're weighting focus on driving margin expansion relative to returns on user acquisition and growth left in Mexico?

A: Focus will continue on core markets Spain and Mexico. Argentina is a market of interest but cautiously. Focus on core markets where good CPAs and returns are seen.

Q: Ahead of Brazil launching this summer, any incremental competitive interest in Latin American markets, in particular Mexico, and long-term value maximizing strategic outcomes?

A: Brazil is an interesting market. Core markets still have huge growth opportunity and good investment opportunities in media. Continue focus in those markets to be local leaders with global brand.

Q: Cost per acquisition was a touch higher than recent quarterly trends. Anything going on there?

A: Mainly due to shifting more to casino segment players, who are more expensive than sports players. Also mixed effect with de-emphasis of acquisition in markets like Colombia with lower price points.

Q: How marketing spend will look in 2024 and biggest marketing events to watch?

A: Total marketing investment in 2024 to be similar to 2023. Events like Euro Cup (mid-June to mid-July), Copa America (June 20 to mid-July), Olympics (end of July into second week of August) are important. Pre-work done for inventory, consumption during events.

Q: How dynamics between sports betting revenue vs casino revenue affect marketing strategy and customer demographics?

A: Treat casino and sports betting as different products. Market them differently. Casino has more stability, helps balance sports marketing volatility. Cross players from sports to casino. Treat each product's retention and CRM efforts differently. Continue to harness omni-channel opportunity for retail customers to play in both channels.