Codere Online Luxembourg, S.A.

drove most of the increase in active customers with 54% more actives than in the second quarter of 2022. Customer acquisition declined 18% in the quarter versus last year with 69,000 first-time depositors in the quarter. This decrease was primarily driven by the substantial declines both in Colombia and Argentina. which combined contributed 25,000 FTDs less than in Q2 last year. As we have discussed in our prior earning calls, we have been and will continue to prioritize investment in our core Spanish and Mexican markets, where we are seeing not only strong overall growth, but also attractive unit economics. With our blended CPA across all markets, more or less in line with our average cost throughout 2022. In terms of recent development, we are pleased to see our hard work being recognized with three nominations in the upcoming SBC Awards in Barcelona. These awards, now in their 10th edition, celebrate the main achievements in the industry and it's an honor to be nominated. Finally, we are announcing today the appointment of Gonzaga Higuero as a new member of the board, replacing Daniel Valdez. Gonzaga recently became CEO of Codere Group, and we wish him much success in that endeavor. This appointment follows the naming of Michal Elimelech in June, who replaced Oscar Iglesias on the board of directors. Michal previously held multiple positions at 888, including head of U.S. marketing, head of bingo, and head of developed markets for EMEA. We welcome these new additions, which will contribute significant operating and marketing expertise to our board, and look forward to working with them, and would like to thank both Daniel and Oscar for their valuable contribution and unwavering support during their term as board members. As you know, Oscar will continue in his role as CFO, and I will now turn the call over to him to cover the financial highlights of the quarter.

Thanks, Aviv. And before diving into the numbers for the quarter, wanted to quickly walk everyone through a few items impacting the figures that we have presented in prior periods. Related to changes in our accounting for value-added taxes in Colombia, which resulted in a reduction to the previously reported adjusted EBITDA of approximately $1 million in 2022 and $0.8 million in the first quarter of 2023. In regards to the first quarter of 2023, this $0.8 million of non-deductible VAT was previously included in provision for corporate income taxes, but has been reclassified as gaming and other taxes, that is, as an above-the-line operating expense. And we are reflecting this change in the earnings deck on a pro forma basis. That is, a negative $3.1 million in Q1 2023 of adjusted EBITDA versus the 2.3 million we reported to the market in May. In regards to 2022, the approximately 1 million in Colombian VAT was capitalized to the balance sheet and not expensed as, at the time, there was an expectation of recovery of this amount. However, this amount will not be recovered and should be expensed as non-deductible VAT, which will be recorded here in the third quarter. Please note, however, that we have not made any proform adjustments to the 2022 figures reflected in our earnings deck. Turning now to the financial performance, consolidated net gaming revenue grew 34% to nearly $39 million in the first quarter, driven primarily by our Mexican business, which grew 51% to $18 million, together with a 24% growth in Spain to over $17.5 million. Adjusted EBITDA, meanwhile, was negative 4.5 million in the second quarter, including a nearly 6 million positive contribution from Spain, 58% more than in Q2 last year. Mexico also improved its contribution meaningfully with an adjusted EBITDA loss of 1.7 million, less than half of last year's loss. All in all, this negative 4.5 million represents a 55% reduction in of the 10 million adjusted EBITDA loss in the prior year quarter and reflects the progress we continue to make towards sustainable growth and cash flow generation. Looking now at our P&L on page 10, the 5 million in improvement in adjusted EBITDA in the quarter was driven not only by the 10 million net gain in revenue growth, but also significant efforts made by the team to keep operating expenses in line. notwithstanding a higher level of gaming taxes in the period due to both mixed effect with a higher contribution by Mexico to total net gaming revenue and the impact of the non-deductible VAT in Colombia. Turning to the Spanish operating and financial metrics, net gaming revenue in the second quarter increased 24% versus the prior year, driven by an increase in both number of active customers and spend proactive on the back of a stronger than expected casino business. In Mexico, net gaming revenue reached 18 million in the quarter, surpassing Spain for the first time. an increase of 51% year-on-year and 3% sequentially. This strong performance was driven by a 54% increase in the number of active customers, driven by increased engagement, particularly on the casino front. Moving to Colombia, net gaming revenue remained just above the $2 million mark in the second quarter. As mentioned on prior earnings calls, Our focus on Columbia is, and for the time being, will continue to be on improving the quality of our customer acquisitions and our portfolio of active customers. Turning now to the balance sheet, as of June 30th, we had over 45 million of total cash on the balance sheet, of which approximately 40 million was available, having utilized about 9 million throughout the first half of 2023. In terms of our net working capital position, we ended the quarter with negative 23 million, or around 16% of our LTM net gaming revenue, which included about 5 million of extended accounts payable, which have already been paid in the third quarter. On page 16, you have our cash flow statement for the first half, together with further details regarding the variation in net working capital. Please note that a 350,000 net worth tax was paid in Luxembourg in the period, And while reflected in the P&L and provision for corporate income tax, the cash impact of this payment is reflected in variation in net working capital. Turning to our 2023 outlook on page 18, we are increasing the net gaming revenue and adjusted EBITDA guidance we provided earlier this year when we reported Q4 earnings. Given the strong performance in the first half, we now expect to generate between 150 and 160 million in net gaming revenue, which reflects a 7% improvement in guidance at the mid versus the prior range. For adjusted EBITDA, we now expect a range of 15 to 25 million, a 5 million improvement versus our prior outlook, and otherwise feel increasingly comfortable that we will meet our goal of delivering positive EBITDA and cash flow for the full year in 2024. That's all from my end. I will now hand it back over to Aviv for closing remarks.

Thanks, Oskar. Before we turn to Q&A, I would like to thank the Codere Online team for their hard work day in and day out. And as always, thanks to the analysts, investors, and other participants for your interest in Codere Online. We look forward to speaking with you again soon. With that said, we'll turn it back to the operator to open up the call to Q&A.