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 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. The core business model revolves around generating revenue from online casino games, where users play against the house, and online sports betting, where users place wagers on events at fixed odds ⁵⁵. The company's offerings are a mix of licensed content from leading third-party suppliers, subject to revenue-sharing agreements ⁵⁵.

The company's product and service lines are primarily divided into online casino games and online sports betting. Online casino offerings include slots, video poker, electronic table games, live dealer table games, and bingo, with revenue generated as users play against the house ⁵⁵. Online sports betting involves users placing wagers on events at fixed odds, with Codere Online taking risk on the "book" ⁵⁵. For the year ended December 31, 2025, approximately 37.4% of Codere Online's net gaming revenue was derived from online sports betting, while approximately 62.3% came from online casino products, with the remaining 0.3% from other income sources ²⁹. This represents a shift from 2024, where online sports betting accounted for 41% and online casino for 59%, with no contribution from other income sources ²⁹.

For the fiscal year ended December 31, 2025, Codere Online reported total revenue of €210.4 million ¹. Operating income for the period was €5.7 million ¹. Net income for the year decreased to €1.3 million ¹. Diluted EPS is not explicitly provided in the summary tables. Cash and cash equivalents stood at €50.0 million as of December 31, 2025, with €5.2 million reserved for customer balances ⁹¹. Total current borrowings amounted to €1.8 million as of December 31, 2025 ⁹². The company had positive equity of €28.7 million as of December 31, 2025 ⁹¹.

Comparing the fiscal year 2025 to 2024, total revenue increased by €9.7 million, or 4.8%, from €200.7 million in 2024 to €210.4 million in 2025 ¹. This growth was primarily driven by strong revenue trends in Mexico and Spain ⁵⁴. Revenue in Spain increased by €2.8 million, or 3.1%, to €90.5 million in 2025 from €87.8 million in 2024, mainly due to an increase in online casino wagering ⁸⁴. Revenue in Mexico increased by €11.5 million, or 12.0%, to €107.2 million in 2025 from €95.7 million in 2024, with online casino wagering increasing by €10.1 million and online sports betting by €1.4 million ⁸⁴. Conversely, revenue from Other Operations decreased by €4.6 million, or 26.5%, to €12.7 million in 2025 from €17.2 million in 2024, primarily due to a reduction in both sports betting revenue and casino wagering in Colombia ⁸⁴. Operating income increased by €1.4 million, or 32.5%, to €5.7 million in 2025 from €4.3 million in 2024 ¹. Net income, however, decreased by €2.6 million to €1.3 million in 2025 from €3.9 million in 2024 ¹. Personnel expenses increased by €6.2 million, or 33.1%, to €25.0 million in 2025, driven by an increase in employee count from 325 to 369 and share-based expenses of €6.0 million ⁸⁵. Other operating expenses increased by €1.8 million, or 1.0%, to €179.0 million, primarily due to higher gaming taxes and casino license royalties ⁸⁵.

During the reported period, Codere Online successfully renewed its Colombia License until November 14, 2030 ⁷⁰. The company also incorporated Codere Online México S.A. de C.V. on July 10, 2024, though it has not yet commenced operations ⁵⁴. 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 earlier 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 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 explore options to access the Hispanic market in the United States ⁷⁵. This expansion is contingent on the legalization of online casino gaming and sports betting in these regions, a trend Codere Online believes is in its early stages, driven by countries seeking to increase revenues ⁷⁶. The company's strategy involves entering new jurisdictions that open through new regulatory frameworks and licensing regimes, provided it is deemed financially prudent ⁷⁶.

A key growth area is the expansion into new Latin American markets. Codere Online plans to enter regions like Brazil, Chile, Peru, Puerto Rico, and Uruguay as they become regulated, building on its existing operations in Mexico, Colombia, Panama, and Argentina ⁵⁴. The company also intends to explore opportunities within the large Hispanic market in the United States, which it believes is currently under-penetrated ⁵⁴. This future expansion is underpinned by a football-first focus for online sports betting, leveraging sponsorships with football clubs like Real Madrid and Rayados, and former football players such as Carlos Valderrama in Colombia ⁵⁴. The online casino product configuration will be tailored to Hispanic customers, emphasizing electronic bingo and roulette, supported by adapted marketing messaging, promotional campaigns based on cultural affinities, experienced Spanish-speaking call centers, and a tested Spanish-language user interface ⁵⁴.

The company's operational outlook includes a continued focus on profitability and sustainability, alongside significant investments to support business operations and growth ⁵⁴. Codere Online is undertaking technology enhancements, including continuous improvement of its mobile application features, implementation of a new bonus engine, and ongoing player and content management system upgrades ⁵⁴. These enhancements are expected to enable more efficient and effective CRM campaigns, identifying customers and directing them to their preferred and most profitable channels using various management tools ⁵⁶. The company's marketing spend is based on a model that considers product offerings, marketing channel performance, predicted lifetime value, marginal costs, and user behavior ⁷⁷.

Planned capital allocation includes continued significant investments in its technology platform to support the development of additional capabilities, primarily in-house, focusing on fraud and payments systems, CRM and CMS, digital architecture, front-end performance, quality assurance, DevSecOps resources, and customer service ⁵⁶. These investments are expected to be recovered over a period of three to five years through service fees from the Codere Group, as established in the New Platform and Technology Services Agreement ⁹⁴. The company also has an authorized share repurchase plan, approved on March 3, 2025, for up to 1,000,000 ordinary shares over a one-year period, with an initial maximum aggregate amount of $5.0 million, which was increased to $7.5 million in November 2025 ⁵³. The plan's expiration date was extended to December 31, 2026 ⁵³. As of the date of the annual report, 391,002 shares have been repurchased for an aggregate of $2.7 million ⁵³. There are no current plans to pay cash dividends on the Ordinary Shares ⁴⁵.

Management explicitly flagged several structural headwinds and execution risks to the growth plan. The online gaming industry is subject to extensive and evolving regulation, including direct and indirect taxation, anti-corruption, anti-money laundering, responsible gambling, economic sanctions, data protection, and AI regulations ¹⁵. Failure to comply with these regulations or changes in licensing requirements could materially adversely affect the business ¹⁵. The company relies on licenses to conduct operations, and the failure to renew existing licenses or obtain new ones, or their termination, could have a material adverse effect ¹⁶. Operating in emerging markets in Latin America subjects Codere Online to additional costs and risks, including economic fluctuations, regulatory changes, geopolitical events, language and cultural differences, public health risks, onerous tax regimes, difficulties in fund transfers, and reduced intellectual property protection ²³. Fluctuations in exchange rates, particularly between the euro and the U.S. dollar, Mexican peso, Colombian peso, and Argentine peso, could adversely affect results of operations ²³. The company may also require additional capital to support its growth plans, which may not be available on acceptable terms or at all, potentially hampering growth ²⁴. The highly competitive business environment, including competition from larger companies with greater financial resources, could adversely affect market share and profitability ²⁴. The success of existing or future online casino and sports wagering products depends on various factors and may experience significant volatility due to the element of chance and external results ³⁰. The company's reliance on continued compatibility between its apps and major mobile operating systems, third-party platforms for distribution, high-bandwidth data capabilities, and interoperability with widely used mobile operating systems also poses a risk ³¹.

Geographic, regulatory, and macro factors identified as constraints include the ongoing Israel-Hamas war and escalating hostilities involving Iran, Israel, and the United States, given that more than 40 of Codere Online's employees (12% of its total) are located in Israel ³⁸. This geopolitical instability could harm business, operations, and workforce, including potential disruptions from personnel being called for military service ³⁸. Changes in taxation or the interpretation or application of tax laws, such as the increase in Mexico's IEPS tax rate from 30% to 50% of gaming revenue effective January 1, 2026, and the potential 16% consumption tax on online gross gaming revenue in Colombia until December 31, 2026, could have a material adverse effect ²⁰. The draft Royal Decree in Spain, expected to be approved in 2026 and effective a year later, introducing joint deposit limits per player (€700 per day, €1,750 per week, and €3,300 every four weeks), could also impact the business ¹⁷.

Codere Online faces material risks including extensive and evolving regulation in the online gaming industry, encompassing direct and indirect taxation, anti-corruption, anti-money laundering, responsible gambling, economic sanctions, data protection, and artificial intelligence (AI) rules, with non-compliance potentially leading to material adverse impacts on business, results of operations, and financial condition ¹⁵. The company's reliance on licenses for operations means failure to renew existing licenses or obtain new ones, or their termination, could have a material adverse effect ¹⁶. International operations, particularly in emerging Latin American markets, expose Codere Online to additional costs and risks such as economic volatility, regulatory changes, geopolitical events, public health threats, onerous tax regimes (e.g., Mexico's IEPS tax increasing from 30% to 50% of gaming revenue effective January 1, 2026 ¹⁶, and Colombia's potential 16% consumption tax on online gross gaming revenue until December 31, 2026 ²⁰), and reduced intellectual property protection ²³. Fluctuations in exchange rates, particularly for the U.S. dollar, Mexican peso, Colombian peso, and Argentine peso against the euro, could adversely affect financial results ²³. The company may require additional capital to support growth plans, which may not be available on acceptable terms, hindering expansion ²⁴. The highly competitive business environment, including larger competitors with greater financial resources, could adversely affect revenue and profitability ²⁴. The success and margin of online casino and sports wagering products are subject to significant volatility due to the element of chance and external results, with actual take rates potentially differing from theoretical projections ³⁰. Furthermore, the ongoing Israel-Hamas war and escalating hostilities involving Iran, Israel, and the United States pose a significant geopolitical risk, given that over 40 employees (12% of the total workforce) are located in Israel, potentially disrupting operations and workforce availability due to military service obligations ³⁸. The company also 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 adverse effects on the market price of Ordinary Shares and Warrants ⁴¹.

Management's message to shareholders emphasizes a strategic shift from primarily pursuing revenue growth to also focusing on profitability and sustainability of operations ⁷⁷. The company aims to become a leading online casino gaming and online sports betting operator in Latin America, leveraging its established and flexible technology platform, dedicated management team, and the "Codere" brand ⁷⁵. Key strategic priorities include replicating the Spanish online strategy in high-growth core Latin American markets (Mexico, Colombia, Panama, Argentina), expanding into new regulated Latin American markets (Brazil, Chile, Peru, Puerto Rico, Uruguay, and other regions of Argentina), and exploring options to access the Hispanic market in the United States ⁷⁵. Management also highlighted ongoing technology enhancements, such as continuous improvement of mobile application features, implementation of a new bonus engine, and continuous player and content management system upgrades, to support growth and enable more efficient CRM campaigns ⁵⁴. The company has an authorized share repurchase plan for up to 1,000,000 ordinary shares, with a maximum aggregate amount of $7.5 million, extended until December 31, 2026 ⁵³.