PENN Entertainment (PENN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $1.64 billion, up 1.2% year-over-year, driven by Interactive segment growth and ESPN BET expansion to 19 states, offset by declines in the South and Northeast due to weather, competition, and remodeling.

• Net loss for Q3 2024 was $37.5 million, a significant improvement from a $725.1 million loss in Q3 2023, which included a $923.2 million Barstool disposal loss.

• Adjusted EBITDA for Q3 2024 was $193.5 million, down from $298.5 million in Q3 2023, with margin declining to 11.8%.

• Interactive segment outperformed expectations, with over 200% year-over-year OSB NGR growth, 127% MAU growth, and significant product enhancements including ESPN BET account linking.

• Seven new ESPN BET branded retail sportsbooks were launched, advancing the rebranding strategy and driving higher engagement.

Financial highlights

• Q3 2024 gaming revenue rose 2.9% year-over-year to $1.29 billion, while food, beverage, hotel, and other revenue fell 4.4% to $351.2 million.

• Online Sports Betting (OSB) Net Gaming Revenue (NGR) grew over 200% year-over-year in Q3 2024, with promo expenses as a percentage of handle declining to 2.8%.

• Interactive segment adjusted revenues (excluding skin tax gross-up) were $141 million, with Adjusted EBITDA loss of $91 million, a 12% sequential improvement from Q2.

• Ended Q3 with $1.8 billion in liquidity, including $834 million in cash and no debt maturities until 2026.

• Capital expenditures were $132 million in Q3 and $261.7 million for the nine months ended September 30, 2024.

Outlook and guidance

• Expect Q4 2024 retail revenues of $1.36–$1.38 billion and Adjusted EBITDA of $440–$460 million, factoring in ongoing construction disruption in Lake Charles.

• Product enhancements and disciplined promotional strategy are expected to continue driving digital growth, with a standalone Hollywood iCasino app launch in Pennsylvania planned for early 2025.

• Four major development projects remain on budget and on schedule, with Hollywood Casino Joliet expected to open ahead of schedule in H2 2025.

• Projecting positive free cash flow in 2025 and meaningful interactive Adjusted EBITDA in 2026 as growth projects complete.

• Total 2024 CapEx expected to be ~$500 million, with $275 million for projects; cash interest expense forecast at ~$175 million.