Codere Online's recent earnings call was a symphony of optimism. The company, a rising star in the Latin American online gambling market, reported record-breaking revenue, a clear path to profitability, and a burgeoning addressable market. Analysts left the call buzzing, eager to upgrade their price targets and herald the company's bright future.

But buried within the celebratory tone, hidden amongst the discussions of marketing strategies and sporting events, lies a single sentence, a seemingly innocuous remark that could portend a seismic shift in the company's trajectory.

""I think we definitely are in a position where we're starting to explore more things.""

On the surface, this statement might seem like a generic platitude, a vague allusion to future opportunities. But in the context of the entire transcript, coupled with a deep dive into the company's financials, it takes on a far more intriguing significance.

Consider the company's current position. Codere Online is sitting on a comfortable pile of cash, €38 million to be precise. They are on the cusp of achieving full-year profitability, having already generated positive adjusted EBITDA in Q1 2024. They have a proven strategy in their core markets of Spain and Mexico, where they are consistently outperforming expectations.

And yet, they are holding back.

Despite the potential for even more aggressive growth in their core markets, they are maintaining their marketing investment at a similar level to 2023. Despite seeing improved margins in Colombia and Panama, they are hesitant to "put the foot on the pedal" and invest heavily in those regions.

It's as if they are conserving their resources, patiently waiting for the right opportunity to deploy them in a more impactful way.

This brings us back to Iglesias' intriguing remark about "exploring more things." Could this be a hint, a subtle signal that Codere Online is preparing for a major acquisition?

The evidence suggests that this is a distinct possibility. The company has repeatedly expressed its interest in expanding its presence in Argentina, particularly in the lucrative Buenos Aires province. However, they have been unable to secure a license through the traditional application process.

Acquiring an existing license holder would be a swift and decisive way to overcome this hurdle.

The company's financial position makes such an acquisition entirely feasible. With their current cash balance and projected cash flow generation, they could easily afford a sizable deal. And given their demonstrated ability to successfully integrate and scale acquired businesses (as seen in their acquisition of Greenplay), they are well-equipped to handle the complexities of a major acquisition.

Hypothetical Acquisition Scenario

Let's examine some hypothetical numbers. Assuming Codere Online maintains its current cash balance and generates €10 million in free cash flow in 2024, they would have roughly €48 million available for acquisitions. This would allow them to acquire a company generating around €20-25 million in annual revenue, assuming a reasonable acquisition multiple.

Such a deal would instantly catapult Codere Online into a leading position in Argentina, significantly expanding their addressable market and further solidifying their position as a dominant force in Latin American online gambling.

Revenue Growth by Region

The following chart shows the revenue growth of Codere Online in Spain and Mexico in Q1 2024 compared to Q1 2023, based on the information provided in the earnings call transcript.

Of course, this is just one possible scenario. Codere Online might be exploring other "things" besides acquisitions, such as strategic partnerships or investments in new technologies. But the clues within the transcript, combined with their current financial strength and stated strategic ambitions, strongly suggest that a major acquisition is a very real possibility, and one that could have a transformative impact on the company's future.

This hidden clue, overlooked by most analysts focused on the headline numbers, could be the key to unlocking Codere Online's true potential. Investors who recognize the significance of this subtle signal and position themselves accordingly stand to reap substantial rewards as the company embarks on its next chapter of growth and expansion.

"Fun Fact: The global online gambling market is expected to reach over $158 billion by 2028, highlighting the immense growth potential for companies like Codere Online."