Codere Online Earnings Call Signals Profitable Rebound

Codere Online ((CDRO)) has held its Q1 earnings call. Read on for the main highlights of the call.

Codere Online’s latest earnings call struck an upbeat tone, as management highlighted a clear reacceleration in growth and a sharp improvement in profitability. While acknowledging rising customer acquisition costs and some pressure on player spending, executives emphasized strong cash generation, healthier customer cohorts, and confidence in hitting unchanged full‑year targets.

Reaccelerating Top-Line Growth

Consolidated net gaming revenue reached €64.4 million in Q1 2026, up 13% year over year and 6% sequentially, signaling momentum after a softer H1 2025. Management framed this as confirmation that growth has reaccelerated, supported by both core markets and a broader, more engaged customer base.

Mexico Extends Its Lead

Mexico remained Codere Online’s growth engine, with NGR of €34.6 million, up 13.4% year over year and now accounting for about 53% of last twelve‑month revenue. Average monthly actives in the country climbed roughly 20% versus Q1 2025 to around 98,000, cementing Mexico as the company’s largest and most dynamic market.

Spain Delivers Broad-Based Gains

Spain posted NGR of €25.5 million, growing about 16% year over year and 4% sequentially, underscoring solid demand across both sports and casino. Active customers rose 13% to approximately 59,000, aided by favorable trading margins and stable technology and trading performance that helped convert engagement into revenue.

Customer Base Expansion Accelerates

Across the group, average monthly active customers reached about 183,000 in Q1, a 14% year‑over‑year increase that management attributed to better retention and reactivation. The company also acquired around 90,000 first‑time depositors during the quarter, adding fresh cohorts that are expected to support revenue in coming quarters.

Profitability Inflects Higher

Adjusted EBITDA jumped to €6.0 million in Q1 2026 from €1.8 million a year earlier, lifting the margin to roughly 9% from 3% and marking a notable profitability inflection. Spain contributed €7 million of adjusted EBITDA, up 27% year over year, while Mexico delivered €2.9 million, growing more than 60% and underscoring operating leverage in both markets.

Marketing Efficiency and Cost Discipline

Marketing spend increased modestly to €25 million, about €1.2 million above Q1 last year, but declined by roughly three percentage points as a share of NGR, signaling improving efficiency. Other operating costs rose slower than revenue, which management highlighted as evidence of emerging operating leverage and a more disciplined approach to cost control.

Cash Generation and Balance Sheet Strength

The company generated €6.5 million of cash flow in Q1, lifting total cash to €56 million, with around €51 million readily available to support operations and growth. Structural negative working capital remained at about €22 million, roughly 10% of last twelve‑month NGR, providing a recurring tailwind to cash generation and underpinning balance‑sheet resilience.

Rising Customer Acquisition Costs

Average customer acquisition cost increased to roughly €212 in Q1, rising both year over year and sequentially as marketing competition intensified. Management framed this as partly deliberate, driven by a pivot toward higher‑value players, but acknowledged that sustaining profitability will require continued gains in marketing efficiency.

Slight Dip in Spend per Active

Average monthly spend per active customer edged down to €117, about 1% below Q1 2025, reflecting the impact of a broader and more diversified user base. Executives suggested that while individual spend is marginally lower, the mix shift toward more customers and better‑quality cohorts supports healthier, more sustainable revenue over time.

Promotion Tightening Weighs on Mexico Actives

Despite strong year‑over‑year growth, Mexico saw a slight sequential decline in active customers compared with Q4 2025, a trend that continued into Q2 as promotional rules were tightened. Management described this as an intentional move to curb low‑quality “bonus hunters,” accepting short‑term active softness in exchange for improved customer quality and profitability.

Other Markets Stay Small and Volatile

Operations in Colombia, Panama and the City of Buenos Aires generated €4.4 million of NGR, remaining a relatively small yet volatile part of the group’s revenue mix. A recent tax change in Colombia has constrained new marketing investment, limiting near‑term growth prospects and reinforcing management’s focus on more profitable core markets.

Marketing Still Key to Double-Digit Margins

Management reiterated that sustaining double‑digit EBITDA margins depends on bringing marketing below roughly 30% of NGR over time. Given marketing’s discretionary and sizable nature, future margin expansion will hinge on either dialing back spending or extracting more value per euro invested, a balance investors will watch closely.

AI Adoption Still in Early Stages

The company reported limited use of artificial intelligence, largely confined to support areas such as customer service and advertising tools rather than core trading or operational systems. Executives cautioned that any meaningful benefits from AI may still be several quarters away, suggesting no immediate earnings uplift from these technologies.

Cash Mostly Working Capital and No Buybacks

While headline cash stands at €56 million, management noted that a significant portion is tied to working capital needs across markets and payment flows, tempering perceptions of excess liquidity. Despite having a buyback authorization in place through 2026, the company did not repurchase shares in Q1, choosing instead to prioritize operational flexibility.

Guidance and Outlook

Codere Online maintained its full‑year 2026 guidance for NGR of €235–245 million and adjusted EBITDA of €15–20 million, pointing to a strong Q1 and last twelve‑month figures already near the top of these ranges. Management plans to reassess the outlook after the first half if current trends persist, while downplaying the World Cup’s full‑year impact and emphasizing disciplined marketing and solid cash reserves.

Codere Online’s earnings call painted the picture of a business gaining traction, with double‑digit revenue growth, expanding actives and a clear step‑up in profitability. While higher acquisition costs, promotional tightening in Mexico and constrained smaller markets pose near‑term challenges, management’s confidence in its guidance and focus on marketing efficiency and cash discipline will be central to the stock’s narrative in the months ahead.