Codere Online swings from profit to loss in 2025

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2025/05/08: Flutter swings from loss to profit 2025/03/05: Flutter Entertainment swings loss to profit in fourth quarter 2025/11/17: Codere Online’s third-quarter Spanish gains offset in Mexico 2025/07/31: Codere Online narrows loss, improves cash flow in second quarter

The Backstory

How Codere’s momentum shifted

Codere Online’s swing from a 2024 profit to a 2025 loss lands against a year of operational progress and changing market math. The company closed the year with its best quarterly revenue to date, stronger cash flow and a sharply larger active customer base, led by Mexico. Yet the headline result turned negative as tax, currency and market mix pressed on the bottom line. Codere reiterated long‑view targets, signaling confidence that scale and product intensity in Mexico can offset headwinds while Spain steadies.

The backdrop helps explain the turn. Mexico has overtaken Spain as Codere’s growth engine, with outsized increases in active players and winnings. That mix shift boosts revenue but can raise volatility and exposure to policy changes. A new 50% excise tax in Mexico that took effect Jan. 1 raises unit costs just as Codere leans harder into that market. Colombia’s value‑added tax holiday also expired, trimming a tailwind on margins. Those crosscurrents define the setup for 2026 guidance and the decision to keep returning cash through share buybacks despite a lighter net result.

The stakes are clear: Codere is balancing investment and market share gains against near‑term profitability, a tradeoff its larger peers have been navigating in parallel. The year’s narrative is less about a reversal in demand than about the cost of growth and the price of exposure to Latin America’s most dynamic markets.

Signals from the second quarter

Codere’s midyear snapshot foreshadowed the full‑year mix. In the second quarter, the company narrowed its loss and expanded cash flow even as headline revenue dipped 1% on currency effects. Management pointed to the Mexican peso’s devaluation as the chief drag on reported sales, masking underlying growth. Mexico still delivered the largest slice of turnover and customer expansion, while Spain slipped and “other” Latin American markets contracted. That pattern—Mexico up, Spain modest, others soft—carried through year‑end and shaped the company’s exposure to tax and FX. The interim checkpoint also framed investor expectations for cash discipline: Codere reaffirmed full‑year guidance and continued share repurchases, signaling a bias to defend liquidity and shareholder returns while funding growth.

Those contours tracked closely with Codere Online narrows loss and improves cash flow in the second quarter, which flagged Mexico’s outperformance, the peso swing and the widening gap between the company’s core markets. The update previewed a year in which reported metrics would require more translation as currency and tax lines diverged from operating trends.

Policy and currency whiplash in Latin markets

Policy shifts and FX have become material drivers of earnings quality across Latin America, and Codere’s footprint makes it acutely sensitive. Mexico’s excise tax jump to 50% directly pressures net gaming revenue, tilting the calculus on promotions and marketing. Colombia’s VAT expiration unwinds a margin benefit. These moves arrive as operators scale same‑game parlay and in‑play products that can lift revenue but also concentrate tax incidence and product costs. Meanwhile, the peso’s volatility skews reported revenue when translated to euros, challenging comparability quarter to quarter.

This is not unique to Codere. Peers with Latin exposure have flagged similar frictions: robust user growth and product depth on one side, regulatory levies and FX noise on the other. The read‑through for 2026 guidance is that management teams are baking in higher structural take rates from governments and moderating unit economics, with profitability depending on mix, pricing and retention more than pure top‑line lift.

Peers push to profit despite volatile sports results

The broader operating climate shows that profitability is achievable even amid uneven sports outcomes and higher regulatory costs—if scale, product and mix align. Flutter Entertainment swung from a prior‑year loss to a fourth‑quarter profit while growing revenue and cash flow, attributing resilience to product leadership and market share in the United States and abroad. Management highlighted bettor‑friendly NFL results that weighed on handle growth yet were offset by higher‑margin bet types and breadth in other sports. The company also pointed to strong engagement and structural margin gains from product innovation.

Flutter’s subsequent update extended that theme. In the first quarter, it again swung from loss to profit, lifted cash flow and leaned into a differentiated “local hero” brand strategy. Management lifted international guidance while trimming U.S. expectations, underscoring that geography and product mix can outweigh near‑term sports variance. The message for Codere: consistency on product, disciplined marketing and a focus on leading positions in core markets can deliver profit even as taxes rise and results swing. But it also sets a competitive bar for user experience and pricing that smaller operators must meet to hold share and manage costs.

Investor lens: costs today, share tomorrow

Analysts have pressed operators to demonstrate a credible arc to sustained profitability while investing in product and market share. A recent Jefferies note on BetMGM framed the tension directly, forecasting a modest 2025 loss as the joint venture prioritizes profitability, then a pivot to profits in 2026 and beyond. The call emphasized customer acquisition costs as the swing factor and credited tech integration for share stabilization late last year. That analysis, outlined in Analyst forecasts BetMGM loss now, profit soon, mirrors Codere’s tradeoffs: spend to convert and retain in growth markets like Mexico, or throttle back to crystallize margin sooner.

Codere’s 2025 stance—ending the year with solid cash and no debt, maintaining buybacks and guiding to higher 2026 revenue and cash flow—signals management’s tolerance for near‑term earnings noise if it underwrites durable share in priority markets. Investors will parse marketing intensity, unit economics in Mexico under the new tax and the pace of cash generation as the primary tells.

Why the next four quarters matter

Competition is tightening, especially in Latin America, where operators see faster user growth but lower average revenue per user than in the U.S. Rush Street Interactive’s fourth‑quarter surge showed both sides: Latin America delivered larger user gains than North America, yet ARPU ran a fraction of U.S. levels. Rush Street still printed a profit and set ambitious 2025 cash flow targets, helped by scale and disciplined spend. The implication for Codere is straightforward—LatAm growth can be profitable, but requires relentless optimization of promotions, cross‑sell and payments, especially as tax take rises.

Codere’s guidance corridor for 2026, backed by cash on hand and no leverage, buys time to execute. The company’s fourth‑quarter step‑up in actives, particularly in Mexico, suggests product and marketing are resonating. The question is how that cohort monetizes under a higher tax regime and whether Spain can reaccelerate to balance mix risk. Currency will remain a wild card. So will sports results, which have cut both ways for larger peers. Execution on cost per acquisition, retention and product margin will likely determine whether Codere’s 2025 dip is a blip on the way to its 2026 targets or an early warning that policy and FX are outpacing scale.

For now, the backstory points to a company leaning into its strongest market with a fortified balance sheet and a clearer view of its operating constraints. The next year is about proving that strategy can compound cash even when the tax and currency winds are not at its back.