Codere Online (CDRO) Q1 2025: Mexico Delivers 34% Constant Currency Growth, Offsetting Spain’s Flat Performance
Codere Online’s Q1 was defined by robust underlying growth in Mexico, muted by currency headwinds and flat Spain results, with management signaling confidence in full-year guidance despite persistent regulatory and market volatility. Share buybacks and ongoing NASDAQ compliance issues add complexity, but operational focus remains on core geographies and disciplined investment.
Summary
- Mexican Market Outperformance: Underlying growth in Mexico remains the primary revenue engine, even as FX headwinds persist.
- Spain Faces Competitive Pressure: Promotional intensity and regulatory uncertainty keep Spain’s contribution flat, challenging near-term margin expansion.
- Guidance Reaffirmed Amid Volatility: Management maintains full-year targets, banking on sporting events and operational leverage to drive results.
Performance Analysis
Codere Online’s Q1 2025 results were shaped by divergent regional dynamics. Net gaming revenue (NGR), the company’s primary revenue metric representing gross gaming receipts less player winnings, rose 8% year-on-year to €57 million. The headline growth understates the operational momentum, as the Mexican peso’s 16% devaluation masked a 34% constant currency surge in Mexico—now accounting for over half of consolidated NGR. Spain, the other major market, saw NGR remain flat at €22 million, reflecting a tougher promotional landscape and lower player spend.
Active user growth was a standout, with monthly actives up 13% and first-time depositors (FTDs) rising 21% year-on-year, driven by customer acquisition in Mexico. However, average monthly spend per customer fell 5% to €118, a function of lower-value players acquired through new channels and intensified competition in Spain. Adjusted EBITDA, a cash-flow proxy excluding one-off items, was positive for the fifth straight quarter at €1.8 million, with Spain and Mexico both contributing. Profitability was held back by higher marketing and operational investments, as well as margin headwinds from sports outcomes in Mexico.
- Mexico’s Growth Engine: 34% NGR growth in constant currency, with active users up 31%, but FX shaved €5 million from reported results.
- Spain’s Stagnation: Flat NGR, 4% more actives, but lower spend per user and no clear breakthrough on regulatory relief for promotional restrictions.
- Cost Discipline and Investment: Marketing spend remains elevated but is being optimized, with CPA (cost per acquisition) moderating for two quarters; share buyback underway but limited in scale.
Underlying trends point to solid momentum in Latin America, but near-term comparisons will stay tough due to currency volatility and Spain’s competitive reset. The company’s cash position remains healthy, supporting continued investment and buybacks.
Executive Commentary
"We delivered €57 million in net gaming revenue, 8% above Q1 2024. As in prior two quarters, net gaming revenue was negatively impacted by a weaker Mexican peso. In constant currency terms, net gaming revenue would have been €62 million in the first quarter, 17% above prior year period. In terms of product mix, the contribution from our casino segment came in at 61% of our total net gaming revenue in the first quarter, due to not only focus have placed on this segment in the recent years, but also to a lower sports margin in Mexico."
Aviv Sher, CEO
"Adjusted EBITDA, meanwhile, was positive €1.8 million in the first quarter and included a contribution of €5.5 million from our Spanish business and €1.8 million from Mexico, its best performance to date. This marks our fifth consecutive quarter of positive adjusted EBITDA at the consolidated level."
Oscar Iglesias, CFO
Strategic Positioning
1. Mexico as Core Growth Platform
Mexico has cemented its role as Codere Online’s core growth platform, with management doubling down on customer acquisition and omnichannel integration. Despite currency devaluation, the underlying demand remains strong, as evidenced by a 31% jump in actives and ongoing testing of new acquisition channels. The company is prioritizing market share defense in the face of new entrants, leveraging omnichannel synergies with Grupo Codere’s land-based presence.
2. Spain Navigates Competitive Reset
Spain’s market has shifted to a more promotional, competitive environment following the reintroduction of welcome bonuses and relaxed restrictions. Codere Online is adapting by targeting higher-value customers and optimizing promotional spend, though average player value remains under pressure. Regulatory uncertainty persists, with management not counting on imminent relief but noting potential upside if restrictions return.
3. Product and Operational Investment
Investment in platform stability and payments capabilities, especially outside Mexico, is ongoing. Personnel growth is being managed to ensure efficiency, with automation initiatives expected to yield medium-term savings. The company is also preparing for major sporting events (notably the Club World Cup and next year’s World Cup) to drive engagement and revenue spikes.
4. Disciplined Capital Allocation
Codere Online’s buyback program reflects confidence in long-term value but remains conservative, with €0.5 million repurchased to date under a €5 million board authorization. The broader €10 million shareholder authorization provides future flexibility. Cash reserves are robust, and management is balancing investment with EBITDA targets.
5. Selective Market Expansion
While Mexico and Spain remain the focus, management is cautiously exploring opportunities in Panama and monitoring recovery in Colombia. Argentina’s contribution is expected to be muted after sponsorship reductions, and Italy is not a near-term priority despite parent company activity.
Key Considerations
This quarter’s results highlight Codere Online’s reliance on Mexico’s growth to offset Spain’s stagnation, with FX volatility and regulatory risk shaping the near-term outlook. Operational execution in customer acquisition and cost management will be critical to delivering on full-year guidance.
Key Considerations:
- Currency Exposure Remains Material: Mexican peso devaluation shaved €5 million from reported revenue, masking strong underlying growth and complicating quarter-on-quarter comparisons.
- Customer Acquisition Effectiveness: Recent gains in FTDs came at lower CPA but with lower average player value, raising questions about long-term revenue yield from new cohorts.
- Spain’s Regulatory Overhang: Ongoing uncertainty about promotional restrictions creates margin and growth unpredictability, with management not baking in regulatory relief for 2025.
- Marketing Investment Balancing Act: Elevated spend is being carefully managed to align with EBITDA targets, with seasonal reductions expected in Q3 and cost savings from discontinued sponsorships in Argentina.
- Shareholder Returns and Capital Flexibility: Modest buyback activity signals discipline, while the broader authorization leaves room for opportunistic capital return if conditions warrant.
Risks
Codere Online faces outsized exposure to FX swings, particularly in Mexico, which can obscure operational progress and pressure reported metrics. Spain’s regulatory environment remains fluid, with potential for renewed restrictions or continued promotional intensity. Competitive threats in Mexico and execution risk in customer acquisition strategies could impact both growth and profitability, while ongoing NASDAQ compliance issues add headline risk and potential for trading disruptions.
Forward Outlook
For Q2 2025, Codere Online expects:
- Continued FX headwinds in Mexico, with impact expected to moderate as comparisons lap last year’s devaluation.
- Flat or modest sequential growth in Spain, with promotional spend targeted at higher-value players.
For full-year 2025, management reaffirmed guidance:
- Net gaming revenue of €220–230 million
- Adjusted EBITDA of €10–15 million
Management emphasized that major sporting events and operational efficiency initiatives are expected to drive H2 improvement, with incremental contributions from Panama and cost savings in Argentina supporting EBITDA delivery.
- Sporting calendar expected to boost Q3 and Q4 engagement
- Cost discipline and automation to support margin improvement
Takeaways
Codere Online’s Q1 highlights the company’s ability to drive underlying growth in core markets despite external headwinds, but the path to sustained margin expansion remains challenging given FX, regulatory, and competitive dynamics.
- Mexico’s Resilience: Underlying demand and user growth in Mexico remain robust, but FX volatility will continue to distort reported results and require careful monitoring.
- Spain’s Reset Requires Patience: While the market remains profitable, promotional intensity and regulatory uncertainty are capping growth and compressing margins, with no near-term relief expected.
- Execution on Guidance: Achieving full-year targets will require flawless execution on customer acquisition, operational efficiency, and capital allocation, especially as the business navigates volatile macro and regulatory environments.
Conclusion
Codere Online’s Q1 demonstrates the company’s operational strengths in Latin America, particularly Mexico, but also highlights the persistent challenges in Spain and from currency swings. Management’s reaffirmed guidance signals confidence, yet the business remains exposed to external volatility and execution risk as it pursues growth and profitability.
Industry Read-Through
Codere Online’s results reinforce several broader sector trends: Latin America remains a high-growth, high-volatility region for digital gaming, with FX risk and regulatory shifts as constant factors. The Spanish market exemplifies how regulatory relaxation can spark competitive intensity, compressing margins and requiring rapid adaptation. For peers, the quarter underscores the need for diversified geographic exposure, disciplined marketing investment, and robust FX risk management. Industry participants should monitor how operators balance headline growth with underlying profitability, especially as macro and regulatory headwinds persist.