• Retail Revenue: $1.4 billion for Q3 2024.
• Adjusted EBITDA: $472 million for Q3 2024.
• Interactive Adjusted Revenues: $141 million for Q3 2024.
• Interactive Adjusted EBITDA: Loss of $91 million for Q3 2024.
• CapEx: Total of $132 million in Q3 2024, with $69 million for project CapEx.
• Total Liquidity: $1.8 billion, including $834 million in cash and cash equivalents.
• Slot Volume Growth: 3.6% year-over-year growth in the first five weeks of Q4 2024.
• Digital Database Growth: Approaching 4 million members.
• Monthly Active Users Growth: 127% year-over-year increase in Q3 2024.
• OSB NGR Growth: Over 200% year-over-year increase in Q3 2024.
• Fourth Quarter Revenue Guidance: $1.36 billion to $1.38 billion for the retail segment.
• Fourth Quarter Adjusted EBITDAR Guidance: $440 million to $460 million for the retail segment.
• Total CapEx for 2024: Approximately $500 million, including $275 million for project CapEx.
• Cash Interest Expense for 2024: Approximately $175 million.

• Warning! GuruFocus has detected 6 Warning Signs with PENN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• PENN Entertainment Inc (NASDAQ:PENN) reported strong year-over-year market share growth in Ohio, Massachusetts, and Kansas, which helped offset challenges in other regions.
• The company is seeing stable consumer demand and is profitably gaining market share in several markets not impacted by new competition.
• PENN Entertainment Inc (NASDAQ:PENN) unveiled seven new ESPN Bet branded retail sportsbooks during the quarter, contributing to higher parlay mix and structural hold.
• The interactive segment saw a 127% year-over-year growth in monthly active users and over 200% growth in online sports betting net gaming revenue.
• PENN Entertainment Inc (NASDAQ:PENN) has a strong liquidity position with $1.8 billion, including $834 million in cash and cash equivalents, and no debt maturities until 2026.

Negative Points

• The Northeast segment experienced unfavorable hold, and the South segment saw volume declines due to severe weather disruptions and hotel remodeling.
• The interactive segment reported an adjusted EBITDA loss of $91 million in the quarter, despite improvements in product and lower promotional expenses.
• PENN Entertainment Inc (NASDAQ:PENN) is facing pressure from new competition in markets like Nebraska, Louisiana, and Chicagoland.
• The company is experiencing a rough start to the fourth quarter due to low hold percentages, impacting their interactive segment's performance.
• Construction disruptions at the L'Auberge Casino in Lake Charles are expected to continue affecting results until the project is completed by January 2025.

Q & A Highlights

Q: How does PENN Entertainment plan to bridge the gap between its mid-teen share in weekly active users and mid-single digits in GGR for ESPN Bet? A: Jay Snowden, CEO, explained that ESPN Bet attracts a more casual mass market base, which is beneficial long-term. They are seeing growth in average handle per user and expect this to continue throughout the football season and into March Madness. The focus is on improving monetization and retention.

Q: Can regional land-based gaming grow in 2025 despite new competition? A: Jay Snowden, CEO, noted that while they are not providing full 2025 guidance yet, the core business is stable, and they have seen an uptick in Q4. New supply in Nebraska, Chicagoland, and Louisiana could impact growth, but they are mitigating these with new projects and expect to play offense in 2026.

Q: What is the outlook for PENN's interactive segment in 2025, and how will costs be managed? A: Jay Snowden, CEO, mentioned that they will provide more details in February. They expect significant improvements in net revenue growth, reduced promotional expenses, and efficiencies from scale. The launch of the Hollywood iCasino app will also contribute positively.

Q: How is the account linking between ESPN Bet and ESPN performing, and what are the future plans? A: Aaron LaBerge, CTO, reported tens of thousands of accounts linked, with linked accounts showing higher engagement and handle. The linking allows for personalized betting experiences, and future enhancements will include more personalized content and offers.

Q: What are PENN's plans for the iCasino launch in 2025, and how will it be marketed? A: Jay Snowden, CEO, stated that the standalone Hollywood iCasino app will leverage cross-sell opportunities with land-based casinos. Marketing plans will be included in 2025 guidance, focusing on the strong brand connection and targeting slot players.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.