Codere Online (CDRO) Q4 2025: Mexico Active Base Surges 44%, Outpacing Regulatory Headwinds
Codere Online capped 2025 with record net gaming revenue and a sharp expansion in Mexico, driving operating leverage despite tax and regulatory turbulence. A disciplined acquisition strategy and falling customer acquisition cost (CPA) underpin confidence for 2026, even as management braces for continued market volatility and competitive shifts. Investors should watch for margin resilience and customer growth as the World Cup approaches.
Summary
- Mexico Growth Engine: Customer base expansion and brand momentum in Mexico offset regulatory and tax friction.
- Marketing Efficiencies: Lower CPAs and improved channel mix drive operating leverage and cash conversion.
- 2026 Focus: Management leans into Mexico and Spain, aiming for profitable scale ahead of the World Cup.
Performance Analysis
Codere Online delivered its highest-ever quarterly net gaming revenue (NGR), with the fourth quarter up 15% year-on-year, led by Mexico’s 31% surge and Spain’s steady 7% gain. Casino products, 64% of NGR, remain the central growth driver, especially in Mexico where player engagement and product breadth are expanding. The average monthly active user base hit 177,000, up 20% year-on-year, reflecting both robust acquisition and improved retention.
Customer acquisition efficiency improved materially, with 89,000 first-time depositors (FTDs) added at an average CPA of €166—the lowest since early 2023. This translated into a sharply higher adjusted EBITDA margin, reaching 11% versus under 4% in the prior year’s quarter. Marketing spend as a percentage of NGR declined, underscoring the business’s ability to scale profitably even as it invests in growth. Cash flow before buybacks was €13.4 million, supporting both reinvestment and ongoing share repurchases.
- Mexico Active User Surge: Q4 monthly actives in Mexico jumped to 99,000, up from 69,000, marking a 44% increase and crossing 100,000 in December for the first time.
- Colombia Drag Fades: Revenue in Colombia and other smaller markets fell 25% due to a now-expired deposit tax, but player activity began to recover as the tax lapsed.
- Share Buybacks Ongoing: 391,000 shares repurchased for $2.7 million under a $7.5 million authorization, reinforcing management’s conviction in medium-term value.
Overall, Codere Online is demonstrating that its core business model—acquiring, retaining, and monetizing players at improving unit economics—can deliver both growth and profitability, even as local regulatory and tax environments remain fluid.
Executive Commentary
"We delivered a strong set of results with a record net gaming revenue of €224 million and adjusted EBITDA of €13.8 million, more than double than prior year. And we once again met the guidance range we had provided for them. This gives us a lot of confidence in the strength of our business and our ability to continue growing profitability in 2026 and beyond."
Aviv Sher, Chief Executive Officer
"This top-line performance is translating into profitability and reflects operating leverage in our business model as we scale as well as continuing improvements in marketing efficiency and certain cost discipline."
Marcus Harrelson, Chief Financial Officer
Strategic Positioning
1. Mexico: Scaling Amid Regulatory Flux
Mexico is Codere Online’s undisputed growth engine, now representing over half of NGR and showing accelerating customer acquisition. Management is actively navigating a volatile regulatory environment, including a recent tax hike and the shutdown of two major competitors. While political uncertainty lingers, Codere is leveraging brand strength and operational agility to consolidate share ahead of the World Cup.
2. Spain: Mature Market, Margin Focus
Spain remains a stable, profitable anchor, with 14% growth in active customers and continued NGR gains despite a mature, tightly regulated market. Marketing spend in Spain is at “steady-state” efficiency levels, allowing management to balance growth with disciplined cost control. This market provides a blueprint for margin progression as Mexico matures.
3. Customer Acquisition and Product Mix Optimization
Disciplined acquisition spend and channel optimization have driven CPAs to multi-year lows, even as player value in Mexico has moderated. The product mix remains casino-heavy, but management is adding supportive offerings like poker and bingo to increase retention. These moves aim to deepen engagement and improve lifetime value without overextending on promotional intensity.
4. Capital Allocation and Cash Generation
Codere Online’s negative working capital model and rising scale are supporting robust cash generation, with available cash up €10 million year-on-year. The company is balancing reinvestment in growth markets with share buybacks, signaling confidence in intrinsic value and flexibility to respond to market shifts.
Key Considerations
Codere Online’s Q4 performance highlights the interplay between market expansion, regulatory adaptation, and disciplined financial management. The following factors will shape the company’s trajectory in 2026:
Key Considerations:
- Mexico World Cup Leverage: Management is prioritizing brand and customer acquisition in Mexico to capitalize on World Cup tailwinds, while keeping marketing ROI in focus.
- Regulatory Uncertainty: Ongoing tax changes and incomplete regulatory frameworks, particularly in Mexico and Colombia, require continuous adaptation and risk mitigation.
- Marketing Efficiency Gains: Lower CPAs and improved customer quality are enhancing operating leverage, but sustaining these trends will be critical as competition intensifies.
- Product Expansion: New offerings like poker and bingo are intended to support retention, but their impact on revenue mix and engagement remains modest for now.
Risks
Codere Online faces persistent regulatory and tax volatility, especially in Mexico and Colombia, which could impact margins and growth rates. The competitive landscape is in flux, with rumors of new entrants and the recent exit of two major players. Foreign exchange fluctuations and political instability in core markets add further unpredictability. Management’s ability to maintain acquisition efficiency and margin discipline amid these headwinds will be tested, particularly as marketing intensity rises around the World Cup.
Forward Outlook
For Q1 2026, Codere Online guided to:
- Net gaming revenue in the range of €235 million to €245 million for full-year 2026
- Adjusted EBITDA between €15 million and €20 million for full-year 2026
Management emphasized:
- Marketing investment will remain broadly in line with 2025, with a tactical focus on capturing World Cup opportunities in Mexico
- Operating leverage is expected to improve as brand maturity increases and marketing as a percent of revenue trends downward
Takeaways
Codere Online enters 2026 with operational momentum, but faces a complex landscape of regulatory, competitive, and macroeconomic variables.
- Mexico’s active user surge and brand strength underpin growth, but require vigilance as new competitors eye market entry and tax burdens evolve.
- Disciplined marketing and cost control are driving margin expansion and cash generation, providing flexibility for both reinvestment and capital returns.
- Investors should monitor customer acquisition efficiency, regulatory developments, and the impact of new product launches as the company navigates the World Cup cycle and seeks to sustain profitable scale.
Conclusion
Codere Online’s Q4 results reflect a business scaling profitably in its core markets, with Mexico’s momentum offsetting regulatory headwinds and Spain providing margin stability. The focus on efficient acquisition and operational discipline positions the company well for 2026, but execution risks remain elevated as the regulatory and competitive environment evolves.
Industry Read-Through
Codere Online’s experience underscores the importance of local adaptation in regulated online gaming, with tax policy and political risk shaping both growth and profitability. The company’s ability to drive down CPAs while scaling active users in Mexico offers a template for peers seeking profitable expansion in high-growth but volatile markets. Operators across Latin America will face similar pressures around marketing efficiency, regulatory compliance, and product diversification, especially with major sporting events on the horizon. The exit of competitors in Mexico and the cautious approach to Colombia highlight the need for nimble capital allocation and risk management across the sector.