Caesars’ online sports betting and iCasino division were bright spots in an overall pedestrian second quarter for the company.
After hundreds of millions of dollars in quarterly losses, Caesars Digital set a company single-quarter record of $40 million in positive AEBITDA (adjusted earnings before interest, taxes, depreciation, and amortization). That compares to $5 million in the previous quarter and $11 million in Q2 2023.
The AEBITDA record came off the heels of one of the digital division's strongest quarters for net revenues. Caesars Digital reported a $4 million gain in net income for Q2 2024. That was an improvement from $30 million in losses for Q1 2024 and $22 million in losses for the second quarter of 2023.
Net revenues increased from around $216 million in the second quarter of 2023 to $276 million in Q2 2024, a nearly 28% year-over-year gain.
Caesars stock jumped more than 5% during after-hours trading Tuesday following the Q2 results announcement. The company's stock is down more than 18% year-to-date but has gained more than 2% in the past three months.
“Our Caesars Digital segment posted a new second-quarter AEBITDA record, driven by strong revenue growth and solid flow through,” CEO Tom Reeg said in a statement announcing the results.
Long-term investments leading to profits
Aspiring U.S. sportsbook operators have combined to invest billions in the six years since the Supreme Court struck down the federal wagering ban. Few had posted more eye-popping quarterly losses than Caesars.
Fueled by an aggressive, star-studded advertising campaign and some of the largest free bet promotions of any book, Caesars posted yearly losses exceeding several hundred million dollars in each of the first few years since it launched its mobile platform outside Nevada. Reeg and other company officials said the expenditures were necessary player acquisition costs that would recoup the investment.
For the first time, Caesars has shown the consistent capacity to do so.
Takeaways from $CZR Q2 earnings ahead of call:
— Ryan Butler (@ButlerBets) July 30, 2024
- Caesars, overall, has seen a slight dip in year-over-year AEBITDA as well as Net Revenues in both Q1 and Q2 of this year
- Caesars has made small yet steady progress in its (now slightly profitable) Digital Division
But with revenue figures only slightly above the break-even mark and representing about 10% of the company’s net total, the online casino and sportsbook product has come nowhere close to recouping the billions in investments.
Still, a record quarter and a string of recent improvements, bolstered by a drastic cut in marketing costs, have helped alleviate concerns about the company’s digital future. Caesars, despite a single-digit national sports betting market share, has said it has seen impressive growth in its Caesars Palace Online Casino product, a revamped iCasino that launched just over a year ago.
"April was a terrible month for us," Caesars CEO Tom Reeg said during today's $CZR earnings call; he said the company saw much stronger May and June revenues
— Ryan Butler (@ButlerBets) July 30, 2024
Caesars also has the luxury of patience. Revenue leaders DraftKings and FanDuel, which each have roughly 33% national market share, don’t have the physical assets of a brick-and-mortar casino operator such as Caesars. Company officials have seen Caesars Digital as an overall customer acquisition tool, not the baseline revenue driver for the aforementioned online operators.
Digital begins to complement retail assets
Caesars’ record-setting digital quarter comes after a stagnant overall start to the calendar year.
Caesars Las Vegas, regional, and branded properties all saw slight quarter-over-quarter and half-over-half net revenue declines. Though Las Vegas Strip property AEBITDA increased slightly from Q2 2023 to Q2 2024, the company saw more significant drops across its regional and branded divisions.
During the earnings call announcing the results, Caesars officials remained bullish about the company’s established and new brick-and-mortar properties for the rest of the year.
The company opened Harrah’s Colombus (Nebraska) in May. That also included new opportunities with the recently completed $430 million renovation and rebranding of Harrah’s New Orleans into Caesars New Orleans in October, as well as the pending opening of a permanent casino in Danville, Virginia in December.
