Business Context and Reporting Period
Codere Online Luxembourg, S.A. (Nasdaq: CDRO) is an international online casino gaming and online sports betting operator. The company operates primarily in Spain, Mexico, Colombia, Panama, and Argentina, leveraging the "Codere" brand and technology platforms provided by the Codere Group. The reporting period covers the fiscal year ended December 31, 2025.
The company is a foreign private issuer and an emerging growth company. As of December 31, 2025, there were 45,249,812 ordinary shares outstanding. The company is controlled by Codere Newco, S.A.U., which holds approximately 66.3% of the outstanding shares.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (€ millions) | 2024 (€ millions) |
|---|---|---|
| Revenue | 210.4 | 200.7 |
| Net Gaming Revenue (Non-GAAP) | 224.1 | 212.0 |
| Operating Income | 5.7 | 4.3 |
| Net Income | 1.3 | 3.9 |
| EBITDA (Non-GAAP) | 6.4 | 4.7 |
| Cash and Cash Equivalents | 50.0 | 40.3 |
| Total Debt (Current Borrowings) | 1.8 | 3.4 |
| Working Capital | 18.2 | 18.0 |
Note: All figures are in thousands of Euros unless otherwise noted. Net Gaming Revenue is a non-GAAP measure reconciled to Revenue in the filing.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased by 4.8% to €210.4 million, driven by strong performance in Mexico (up 12.0%) and Spain (up 3.1%). Online casino wagering revenue grew to €131.0 million, while online sports betting revenue decreased slightly to €78.9 million.
- Profitability Decline: Despite revenue growth, Net Income decreased by 66.9% to €1.3 million. This was primarily due to a significant decrease in finance income (from €1.0 million in 2024 to a cost of €2.4 million in 2025) driven by reduced hyperinflation adjustments in Argentina and a change in the fair value of warrant liabilities.
- Expense Increases: Personnel expenses rose 33.1% to €25.0 million, largely due to an increase in headcount (from 325 to 369 employees) and share-based compensation expenses of €6.0 million. Other operating expenses increased slightly by 1.0% to €179.0 million, mainly due to higher gaming taxes and casino license royalties.
- Segment Performance: The "Other Operations" segment (Colombia, Panama, Argentina) saw a 26.5% revenue decline to €12.7 million, attributed to reduced marketing investment in Colombia following the introduction of a VAT on deposits.
Guidance, Outlook, and Risks
Outlook and Strategy: Management is shifting focus from pure revenue growth to profitability and sustainability. The company plans to continue investing in marketing and technology to expand in Latin American markets (Brazil, Chile, Peru, Puerto Rico, Uruguay) and explore the U.S. Hispanic market. A share repurchase plan was authorized for up to 1 million shares; as of year-end, 391,002 shares had been repurchased for approximately $2.7 million.
Material Risks and Contingencies:
- Internal Control Weakness: The company identified a material weakness in internal control over financial reporting related to a lack of sufficient controls to support effective financial reporting. This weakness was not remediated as of December 31, 2025, though remediation efforts are ongoing with a target completion date of December 2026.
- Regulatory and Tax Changes: Significant tax increases are anticipated in Mexico (IEPS tax rising from 30% to 50% effective Jan 1, 2026) and Colombia (potential 16% consumption tax). In Spain, new regulations regarding joint deposit limits and problem gambling detection algorithms are expected.
- Geopolitical Risks: The company has over 40 employees in Israel (12% of total workforce), exposing it to risks from the ongoing Israel-Hamas war and regional instability, including potential military reserve duty call-ups.
- Related Party Dependence: The company relies heavily on the Codere Group for platform technology, brand licensing, and various administrative services. The termination of these agreements could materially impact operations.
Key Facts for Investor Verification
- Remediation of Material Weakness: Verify the progress of remediation efforts for the internal control material weakness and the timeline for obtaining an unqualified audit opinion on internal controls once the company ceases to be an emerging growth company.
- Impact of Mexican Tax Hike: Assess the specific financial impact of the 50% IEPS tax increase in Mexico effective January 1, 2026, on future margins.
- Argentina Hyperinflation Accounting: Review the volatility in financial results caused by IAS 29 hyperinflation adjustments in Argentina and the stability of the Argentine Peso.
- License Renewals: Confirm the status of license renewals in Colombia (renewed to 2030) and the potential impact of the Mexico Gaming Decree on the LIFO license held by the Codere Group.
- Warrant Liability Volatility: Monitor the fair value of the 6,435,000 outstanding warrants, as changes in their value are recorded in earnings and contributed significantly to the 2025 net income decline.