Codere Online Luxembourg, S.A.

Codere Online Luxembourg, S.A. (CDRO) operates as an international online casino gaming and online sports betting group, primarily focused on providing a safe and enjoyable online gaming experience to customers in Spain, Mexico, Colombia, Panama, and Argentina. The company leverages the "Codere" brand, which is well-recognized in the gaming industry across Spain and Latin America, benefiting from its association with the Codere Group's retail footprint ⁵³. Codere Online's business model is centered on offering a wide and updated catalog of online casino games from multiple third-party content providers and enabling online sports betting on various events ⁵⁵. The company generates revenue as users play against the house in online casino games and by setting odds with a built-in theoretical margin for sports betting ⁵⁵. Its primary customer segments are online casino and sports betting users in its core markets.

The company's product offerings are divided into online casino games and online sports betting. Online casino games include slots, video poker, electronic table games, live dealer table games, and bingo, with revenue generated as users play against the house ⁵⁵. These offerings consist of licensed content from leading industry suppliers, with revenue-sharing agreements where the supplier receives a percentage of the gaming revenue ⁵⁵. Online sports betting involves users placing wagers on events at fixed odds determined by Codere Online, with the company paying out winning bets and keeping the wagered amount for losing bets ⁵⁵. The company aims to generate revenue by setting odds with a theoretical margin and offers traditional pre-match wagering, live betting, and live streaming of sporting events ⁵⁶. In 2025, approximately 37.4% ⁴⁰ of Codere Online's net gaming revenue was derived from online sports betting, while approximately 62.3% ⁴⁰ came from online casino products, with the remaining 0.3% ⁴⁰ from other income sources. This compares to 41% from online sports betting and 59% from online casino wagering in 2024, with no contribution from other income sources ⁴⁰.

For the fiscal year ended December 31, 2025, Codere Online reported total revenue of €210.4 million ⁴¹, an increase from €200.7 million ⁴¹ in 2024. Operating income for 2025 was €5.7 million ⁴¹, up from €4.3 million ⁴¹ in 2024. Net income for the year decreased to €1.3 million ⁴¹ in 2025 from €3.9 million ⁴¹ in 2024. Basic and diluted EPS are not explicitly provided in the summary tables. The company had cash and cash equivalents of €50.0 million ⁴⁹ as of December 31, 2025, with €5.2 million ⁴⁹ reserved for customer balances. Total current borrowings amounted to €1.8 million ⁵⁰ as of December 31, 2025, with no non-current borrowings ⁵⁰. Net debt is not explicitly calculated, but current borrowings are €1.8 million ⁵⁰.

Year-over-year, total revenue increased by 4.8% ⁴¹ from €200.7 million ⁴¹ in 2024 to €210.4 million ⁴¹ in 2025. Revenue in Spain increased by 3.1% ⁴³ to €90.5 million ⁴³ in 2025 from €87.8 million ⁴³ in 2024, primarily due to increased online casino wagering ⁴⁴. Revenue in Mexico grew by 12.0% ⁴³ to €107.2 million ⁴³ in 2025 from €95.7 million ⁴³ in 2024, driven by a €10.1 million ⁴⁴ increase in online casino wagering and a €1.4 million ⁴⁴ increase in online sports betting ⁴⁴. Revenue from Other Operations decreased by 26.5% ⁴³ to €12.7 million ⁴³ in 2025 from €17.2 million ⁴³ in 2024, mainly due to a reduction in both sports betting and casino wagering in Colombia ⁴⁴. Operating income increased by 32.5% ⁴¹ to €5.7 million ⁴¹ in 2025. Net income, however, decreased by €2.6 million ⁴¹ to €1.3 million ⁴¹ in 2025, primarily due to a reduction in finance income from Argentinian hyperinflation adjustments and short-term investment gains, partially offset by a smaller finance cost from the change in fair value of Codere Online Warrants ⁴⁷. Personnel expenses increased by 33.1% ⁴¹ to €25.0 million ⁴¹ in 2025, mainly due to an increase in employee count from 325 in 2024 to 369 in 2025, and share-based expenses of €6.0 million ⁴⁴. Other operating expenses increased by 1.0% ⁴¹ to €179.0 million ⁴¹ in 2025, driven by higher gaming taxes and casino license royalties ⁴⁴. Marketing expenses saw a slight increase of 0.2% ⁴⁵ to €85.5 million ⁴⁵ in 2025.

During the reported period, Codere Online incorporated Codere Online México S.A. de C.V. on July 10, 2024, though it has not yet commenced operations or hired employees ⁵⁴. The company successfully renewed its Colombia License until November 14, 2030, in November 2025 ⁵⁸. In Argentina, Codere Online signed an online gaming license agreement with IPJC in the Province of Mendoza on April 12, 2023, and began operating there in May 2024 ⁵⁹. However, on September 25, 2025, Codere Online entered into the Mendoza Transfer Agreement to transfer its 98% ownership interest in the Temporary Union Contract to Cela, S.A. and Vital, S.A., with operations continuing until May 31, 2026, or until a replacement operator is approved ⁵⁹. The company also voluntarily surrendered its B2C and B2B Maltese gaming licenses in February and March 2023, respectively, and liquidated its Maltese and Gibraltar supporting entities by August 2024 ⁷⁴. Codere Online authorized the repurchase of up to 1,000,000 ⁵³ ordinary shares, with a maximum aggregate amount of $5.0 million ⁵³ initially, increased to $7.5 million ⁵³ in November 2025, and extended until December 31, 2026 ⁵³. As of the date of the annual report, 391,002 ⁵³ shares have been repurchased for $2.7 million ⁵³.

Codere Online aims to become a leading online casino gaming and online sports betting operator in Latin America, focusing on replicating its Spanish online strategy in high-growth core markets such as Mexico, Colombia, Panama, and Argentina ⁷⁵. The company intends to expand into new regulated markets in Latin America, including Brazil, Chile, Peru, Puerto Rico, and Uruguay, and other regions of Argentina beyond the City of Buenos Aires ⁷⁵. Additionally, Codere Online plans to explore options to access the large Hispanic market in the United States, which it believes is currently under-penetrated ⁷⁶. Key factors for this future expansion include a football-first focus leveraging sponsorships, an online casino product tailored to Hispanic customers emphasizing electronic bingo and roulette, adapted marketing messaging, experienced Spanish-speaking customer service, and a tested Spanish-language user interface ⁷⁶.

The company's growth strategy involves continued significant investments to support business operations and expansion into new markets and lines of business ²⁴. This includes increasing marketing expenditure through new high-profile sponsorships, traditional and acquisition media, and engaging marketing agencies and affiliates ⁵⁴. Codere Online is also undertaking technology enhancements, such as continuous improvement of its mobile application features, implementation of a new bonus engine, and continuous player and content management system upgrades ⁵⁴. These platform improvements are expected to allow for more efficient and effective CRM campaigns, identifying customers and driving them to their preferred and most profitable channels using various management tools ⁵⁶.

Codere Online has begun shifting its priority from primarily pursuing revenue growth to also focusing on profitability and sustainability of its operations ⁷⁷. While the company is assessing the efficiency of its marketing and promotion activities, it is difficult to predict when it will achieve its longer-term profitability objectives ⁷⁷. The company expects its platform, improved by future enhancements, to allow for more efficient and effective CRM campaigns ⁵⁶.

Planned capital allocation includes selective investments to support the development of its technology platform, which are expected to be made either directly by Codere Online or indirectly through the Codere Group, with recovery of investments over a period of three to five years through service fees ⁹⁴. The company's authorized share repurchase plan allows for the repurchase of up to 1,000,000 ⁵³ ordinary shares, with a maximum aggregate amount of $7.5 million ⁵³, extended until December 31, 2026 ⁵³. As of the date of the annual report, 391,002 ⁵³ shares have been repurchased for $2.7 million ⁵³. No current plans exist to pay cash dividends on Ordinary Shares in the foreseeable future ⁴⁵.

Management explicitly flagged several structural headwinds and execution risks to its growth plan. These include the extensive and evolving regulation of the online gaming industry, which varies by jurisdiction and can lead to license denials, revocations, suspensions, fines, or asset seizures ¹⁵. Changes in existing laws or regulations, or their interpretation, such as advertisement restrictions, taxation increases (e.g., Mexico's IEPS rising from 30% to 50% ¹⁶ of gaming revenue effective January 1, 2026), limitations on payment methods, licensing and sponsorship restrictions, or limitations on promotions, maximum bets, or prizes, could impact profitability and restrict business operations ¹⁶. The company is also exposed to geopolitical and economic instability, particularly in the Middle East, where it has over 40 employees ²² in Israel, and the ongoing Israel-Hamas war and escalating hostilities involving Iran, Israel, and the United States could harm its business, operations, and workforce ³⁸. Fluctuations in exchange rates, especially for the U.S. dollar, Mexican peso, Colombian peso, and Argentine peso against the euro, could adversely affect results of operations ²³. The company's reliance on licenses, some of which require an operating retail presence, and the potential for non-renewal or termination, poses a significant risk ¹⁸. The highly competitive business environment, with larger competitors and the threat of illegal gaming activities, could adversely affect market share and profitability ²⁴. Dependence on Codere Group for certain services and technology platform, and the risk of their inability to meet needs or the termination of agreements, is also a concern ²⁷. The company also faces risks related to keeping up with rapid technological developments, including the use of AI, and potential legal liabilities or reputational damage from mishandling these technologies ²⁸.

Codere Online faces material risks including extensive and evolving regulation in the online gaming industry, which can lead to license denials, revocations, suspensions, fines, or asset seizures if compliance is not maintained ¹⁵. Changes in taxation, such as the increase in Mexico's IEPS from 30% to 50% ¹⁶ of gaming revenue effective January 1, 2026, or the potential 16% ²⁰ consumption tax on online gross gaming revenue in Colombia, could materially impact profitability ²⁰. Geopolitical and economic instability in the Middle East, including the ongoing Israel-Hamas war and escalating hostilities involving Iran, Israel, and the United States, poses a significant risk, particularly given that over 40 ²² of its employees are located in Israel ³⁸. Fluctuations in exchange rates, especially for the U.S. dollar, Mexican peso, Colombian peso, and Argentine peso against the euro, could adversely affect financial results ²³. Operational risks include the potential for failure to manage growth effectively, the need for additional capital which may not be available on acceptable terms, intense competition from larger companies and illegal operators, and the dependence on Codere Group for critical services and technology ²⁴. The company also faces risks related to cybersecurity, data privacy regulations (with GDPR fines up to €20 million or 4% ²¹ of global annual turnover), and the rapid evolution of AI technologies, including compliance with new regulations like the EU AI Act, which could impose fines up to €35 million or 7% ²⁹ of global annual revenue ²¹, ²⁸. Furthermore, the company has identified a material weakness in its internal control over financial reporting as of December 31, 2025, which, if not remediated, could lead to material misstatements in financial statements and negatively impact the market price of its securities ⁴¹.

Management's message to shareholders emphasizes a strategic shift towards balancing revenue growth with profitability and sustainability of operations, while continuing to make significant investments in business expansion and technology enhancements. The company aims to become a leading online casino gaming and online sports betting operator in Latin America, leveraging its established presence in Spain and Mexico to expand into new regulated markets such as Brazil, Chile, Peru, Puerto Rico, Uruguay, and other regions of Argentina, and exploring opportunities in the Hispanic market in the United States ⁷⁵. Key strategic priorities include increasing marketing expenditure to accelerate customer acquisition and market share growth, undertaking technology enhancements to improve mobile application features, implementing a new bonus engine, and continuously upgrading player and content management systems ⁵⁴. Management also highlights the importance of its dedicated and highly-experienced team, established and flexible technology platform, and the "Codere" brand in supporting continued success and market share capture ⁷⁵. The company is actively managing its capital structure, as evidenced by the authorized share repurchase plan of up to 1,000,000 ⁵³ ordinary shares, with an increased maximum aggregate amount of $7.5 million ⁵³ and an extended expiration date to December 31, 2026 ⁵³.