Codere Online reports steep revenue jumps, modest loss in third quarter

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2025/08/05: Sportradar posts ‘solid’ second quarter, Jefferies analyst says 2026/07/30: Codere execs hail “outstanding” second quarter 2026/02/26: Mexico is a growth engine and a tax challenge for Codere Online 2025/11/17: Codere Online delivers ultimatum to Colombia on tax

The Backstory

Mexico remains the center of the story

Codere Online’s latest quarter extends a pattern that has been building for more than a year: The company’s growth is increasingly tied to Mexico, even as that market becomes more politically and fiscally complicated. The operator’s 31% revenue increase in the third quarter was led by a 37% jump in Mexico, where revenue reached €32.9 million. Gaming win in the country rose 39% to €37.2 million, making Mexico the clear engine behind the company’s top-line expansion.

That trajectory was visible earlier in 2026. In the second quarter, executives described Spain and Mexico as the company’s primary revenue drivers, with World Cup betting helping results exceed expectations. Codere said net gaming revenue tied to the tournament more than doubled its 2022 World Cup performance, while new-player signups and first-time depositors surged. The quarter prompted management to raise full-year guidance and characterize the performance as a breakout period, according to the company’s second-quarter earnings discussion.

The third-quarter figures suggest Codere retained enough of that momentum to offset a return to loss-making territory. Mexico’s scale matters because Spain, while profitable and stable, is more mature. The company has said Mexico offers lower acquisition costs, similar player value and better growth potential. That calculus explains why management has continued to treat Mexico as its most important market despite rising taxes and periodic regulatory uncertainty.

World Cup boost gave way to retention test

The 2026 World Cup created a demand shock for Codere, but the strategic question has been whether the company could convert tournament traffic into durable customers. In the first quarter, executives played down expectations for the tournament, saying it would provide only a limited lift. By the second quarter, however, the event had become a central feature of Codere’s earnings narrative, with Chief Executive Aviv Sher saying performance was materially above the 2022 tournament.

That matters for the third quarter because July included the final stages of the World Cup. Codere’s latest statement attributed part of the quarter’s benefit to that timing, as well as favorable foreign exchange. The company also cautioned that growth in the fourth quarter would likely moderate against a stronger comparison period from the prior year. The implication is that investors should distinguish between event-driven acceleration and underlying trends.

Executives had already raised that issue after the second quarter. Sher said some World Cup-acquired players were continuing with the brand, while acknowledging it was early to judge retention. He also estimated that 30% to 40% of sports bettors crossed into igaming during the tournament. That cross-sell is central to Codere’s model because igaming has been a larger share of business than sports betting and can produce steadier revenue outside major sports calendars.

The company’s customer data show both opportunity and friction. Monthly active players rose 5% overall in the third quarter to 166,800, but Mexico declined 3% even as revenue surged. That divergence suggests higher monetization, stronger betting activity or favorable currency effects, but it also raises the importance of customer quality. Codere has repeatedly said it is willing to curb promotions and shed lower-value players rather than chase headline user growth.

Taxes shape where Codere will spend

Tax policy has become one of the main constraints on Codere’s Latin American strategy. Colombia has been the sharpest example. Earlier this year, the company said a 16% emergency levy allowed it to maintain its existing customer database but did not support new marketing investment. Sher said Codere would wait for political clarity before deploying more capital in the country, as detailed in its first-quarter earnings commentary.

That caution followed a harder line from management in late 2025, when Codere executives said they would make no further investments in Colombia if a value-added tax on deposits was renewed. The company described the market as economically unattractive under the tax regime and said it would return to investment only if conditions improved. The warning, laid out in Codere’s Colombia tax ultimatum, framed the country as a market Codere could operate but not aggressively expand.

The third-quarter results show Colombia, Panama and Buenos Aires together contributing €4.9 million, a modest portion of group revenue. Monthly active players in those markets rose 37%, suggesting operational progress, particularly after executives previously cited product improvements in Panama. But the region’s combined scale remains small compared with Mexico and Spain, and tax uncertainty limits how quickly Codere is likely to push marketing dollars into Colombia.

Mexico presents a different tax challenge. The government has moved to increase gaming taxes from 30% to 50%, a change management has described as unwelcome but not existential. Codere has argued that higher taxes could deter new entrants or weaken smaller competitors, potentially benefiting established operators. That view underpinned the company’s earlier assessment that Mexico is both a growth engine and a tax challenge.

Spain provides balance, not explosive growth

Spain’s role in Codere’s earnings profile is less dramatic but important. The company generated €24.8 million in third-quarter revenue from Spain, up 13%. Gaming win matched that figure, underscoring the market’s contribution as a stable counterweight to Latin America’s volatility.

Codere has described Spain as mature and tightly regulated, limiting the kind of breakout growth available in Mexico. Still, management has emphasized that the Iberian business has continued to improve without requiring aggressive promotions. In the fourth quarter of 2025, Codere said Spain revenue rose 7.5%, while Mexico grew 25.5%. Earlier disclosures also showed Spain producing consistent gains, including 10% year-over-year net gaming revenue growth in the fourth quarter of 2024, when the company reported a 5% increase in net gaming revenue.

The Spanish business is important for investor perception because it supports the company’s claim that growth is not solely dependent on one Latin American market. But its steadier profile also means it is unlikely to change the investment case by itself. Codere’s valuation debate, raised during earlier earnings calls, has centered on whether the company can turn strong operating performance into higher market recognition. Spain helps reduce risk, while Mexico drives the upside.

Cash, guidance and the profitability question

The latest quarter also highlights a recurring tension: Codere is growing quickly but remains under pressure to show consistent profitability and disciplined capital allocation. After a profitable first half of 2026, the company swung to a €1.4 million third-quarter loss. It nevertheless reiterated full-year revenue guidance of €255 million to €265 million and cash flow guidance of €20 million to €25 million, with executives saying they expect to finish near the high end.

That confidence rests on a stronger balance sheet than many growth-stage operators have. Codere ended the third quarter with €65.6 million in cash and no debt. Earlier in the year, however, executives cautioned that not all cash was freely available for acquisitions or buybacks because some was tied to working capital and business needs. They have said Latin American opportunities remain a priority, but they have also resisted buybacks when internal thresholds were not met.

The company’s metrics have also shifted. Beginning in the third quarter, Codere stopped reporting net gaming revenue and began using gaming win, a pre-tax measure that excludes promotional outlays. That change may complicate comparisons with prior periods, particularly because Codere’s earlier public narrative relied heavily on net gaming revenue. It also places more emphasis on how investors interpret promotional discipline, customer acquisition costs and cash flow conversion.

The backstory to the latest results is therefore not simply rapid growth. It is a test of whether Codere can use Mexico’s scale, Spain’s stability and selective Latin American expansion to absorb taxes, retain event-driven customers and produce repeatable profit. The third quarter moved the revenue story forward. The next test is whether the earnings line follows.