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Codere Q1 revenues down amid Mexico and Argentina headwinds

| By Kyle Goldsmith
Codere has reported Q1 revenues of €313.8m (£269.6m/$339.9m), 13.6% down on the same quarter last year as it pointed to challenges in Mexico and Argentina.

Codere’s Q1 revenue fell far short of the €363.1m in revenue Codere accumulated in Q1 2023. The group’s adjusted EBITDA for Q1 also fell, dropping 26.6% from €64.4m to €47.3m.

Consolidated net revenues for Q1 stood at €185.9m, again a 12.1% decrease on the €211.5m reported in Q1 2023.

Despite the fall in revenue, however, Codere noted that the group’s cash position had remained largely stable at €104m from €107.5m at the beginning of the period.

Codere highlighted that the group’s adjusted EBITDA in Q1 showed the continuing recovery of the business following the elimination of restrictions in Mexico and Argentina.

In announcing its Q1 earnings, Codere stated the group was making progress in conversations with bondholders towards a “comprehensive recapitalisation”. It hopes this would reduce debt and strengthen the balance sheet. Codere says it hopes to give an update on the process soon.

Challenges in Mexico and Argentina

Codere noted Argentina’s “challenging macroeconomic environment”, as well as the improving situation in regards to elimination of restrictions in both Argentina and Mexico, as two areas that are likely to see Codere’s financial figures improve as 2024 progresses.

Codere pointed to “substantial progress” in the lifting of operating restrictions. As of the end of the Q1 period, Codere had faced one closure and 14 of its halls being partially affected by restrictions in Mexico.

Additionally, the company noted that its adjusted EBITDA figures excluded adjustments from hyper-inflation in Argentina. Notably, Q1 retail revenue which excludes Argentina would have been €226.2m, a 7% increase since Q3 2023.

When excluding Argentina and Mexico, Codere’s Q1 revenue was up 4% when compared to Q1 2023. Additionally, the exclusion of those two markets would have seen adjusted EBITDA rise by 20%.

Codere Online continuing to shine

Codere’s decreases in revenue and adjusted EBITDA come despite Codere Online performing well again in Q1 after a strong 2023.

Codere Online achieved Q1 revenues of €53m, a quarterly record and 34.2% up on the €39.5m generated in the same quarter last year. This was largely thanks to 51.1% year-on-year revenue growth in Mexico from €17.6m to €26.6m. Meanwhile, Codere Online’s home country of Spain also increased 21.2% from €18.4m to €22.3m.

Codere’s online revenue made up 16.9% of the group’s Q1 total, with retail bringing in €260.8m in revenue, down 19.4% on the €323.6m generated in the same quarter last year.

The company noted improved marketing expenditure in Mexico and Spain, with those enhancements helping to expand the active customer base in the two countries by approximately 25.2% from 89.8 million to 112.5 million.

Codere Online’s Q1 adjusted EBITDA stood at €8.8m, over double the €4.3m accumulated in the same quarter last year. Codere Online’s net income for Q1 was €3.4m, up from a net loss of €1.3m in Q1 2023. Again, the company’s cash position remained stable with €38.5m in liquidity.

Codere Online raising expectations

After a strong Q1, Codere Online is raising its expectations for 2024. It has increased its net gaming revenue outlook to €195m-€210m from the €185m-€200m it set earlier this year. It also reiterated its plan to be adjusted EBITDA and cash flow positive for the full year in 2024.

Codere Online chief financial officer Oscar Iglesias believes the company is well-placed to continue on its upwards growth trajectory.

“Once again, top line growth exceeded our expectations in the first quarter, with Mexico continuing to put distance on Spain as our largest market by revenue,” Iglesias said.

“We are particularly excited, however, to see Mexico now also contributing positive adjusted EBITDA for the first time.”

Retail faltering

Despite the impressive showing of Codere Online in Q1, the group’s retail business couldn’t match that success.

Argentina’s economic problems saw Codere’s retail revenue drop 59.1% from €84.7m to €34.6m. Mexico, meanwhile, produced just €54m in retail revenue, again an 11.3% decrease.

Italy was the company’s biggest retail market in Q1, despite its revenue falling 2.6% to €78.3m. Meanwhile, Uruguay was the only retail market to grow over the quarter, with revenues reaching €17.4m, a 4.2% increase.

Codere’s adjusted EBITDA across its retail sector was €38.5m, a decrease of 35.8% from the €60m accumulated in the same quarter last year.

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