PENN Entertainment, one of the largest gaming providers in North America, published its first quarter financial results for the first three months of the year, ending on March 31.
The results revealed a loss of $114.7 million in the first quarter, along with a loss of 76 cents per share. When adjusted for non-recurring gains, the loss was 79 cents per share.
Prior to the announcement of the company’s first quarter results, Wall Street analysts had predicted losses. However, predictions hovered around 59 cents per share, so the real results have fallen short of expectations.
Zacks Investment Research analysts also predicted the revenue of the company at $1.63 billion. Thursday’s results revealed that the revenue was slightly lower, at $1.61 billion in the three month period.
Core business highlights
Property level highlights for PENN Entertainment include:
- Revenues of $1.4 billion;
- Adjusted EBITDAR of $479.0 million
- Adjusted EBITDAR margins of 34.1%.
PENN Entertainment reported a lower revenue than expected, but cited the impact of weather events at the beginning of the year.
Following the poor weather of January and February, the company experienced a rebound in visitation and spending volumes, a trend that remained stable until the end of the three-month period.
Despite relative softness in the company’s lower worth and unrated customer segments, mid-worth and VIP customer segments experienced considerable growth during the first quarter. PENN attributed some of this success to its customer loyalty program, PENN Play and its sportsbook offerings.
“Across the portfolio, we continue to capitalize on cross-sell opportunities from our retail sportsbooks, which has helped sustain our momentum in our Ohio properties and re-energize properties such as Plainridge Park in Massachusetts and Hollywood Casino at Kansas Speedway," a spokesperson for PENN Entertainment said. "And with winter now behind us, we are seeing great progress with our four growth projects, all of which remain on budget and on schedule.”
Growth on the horizon for ESPN BET
The highlights for PENN Entertainment’s interactive segment are:
- Revenues of $207.7 million (including tax gross up of $116.6 million); and
- Adjusted EBITDA loss of $196.0 million.
ESPN BET, PENN Entertainment’s newly-branded online sportsbook is positioned for growth, despite some disappointing results in the first quarter. The sportsbook attracted a wealth of new users during the period, but hold and spend per user were lower than had been previously forecast.
March saw the sportsbook officially launched in North Carolina, the impact of which we can expect to see more of in the publication of the company’s next financial results.
ESPN BET is expected to build on initially encouraging engagement results in the coming months.
“Our focus heading into this football season will be on enhancing our product offerings, including a refreshed home screen and expanded parlay offerings," a spokesperson for the brand said.
“Simultaneously, with our partners at ESPN, we will reveal additional ESPN BET media integrations within their digital media app and industry leading fantasy product. We believe our enhanced product offering and media integrations will result in superior experiences for our customers, leading to higher retention, share of wallet, and spend per user.”
ESPN BET-owner PENN says it "released parlay repricing functionality to account for parlay bet legs that push or void" during the first quarter of 2024. That was a pain point for bettors who, say, hit 3/4 legs of parlay, but then fourth would void and the whole wager would void. pic.twitter.com/QZ2pmNpHfj
— Geoff Zochodne (@GeoffZochodne) May 2, 2024
CEO Jay Snowden comments on first quarter results
Commenting on the results, PENN CEO and president Jay Snowden said the company's property-level performance showed resilience in the quarter and he anticipates stable trends continuing into April.
"ESPN BET continues to drive strong top of funnel demand due to the reach and affinity for the ESPN brand, which led to record online sports betting handle and iCasino gross gaming revenue in the quarter," Snowden said.
"However, interactive segment results were negatively impacted primarily by unfavorable hold from major sporting events. We look forward to unveiling additional product enhancements and unique media integrations with ESPN ahead of the 2024 football season."
The company's hope is that improved product offering will lead to an engaged and reactivated database that will result in a "highly differentiated experience" for customers and bettors.
PENN Entertainment, Inc. operates in 20 states, with online sports betting in 19 jurisdictions and iCasino in five jurisdictions. The brand encompasses names like Hollywood Casino, L’Auberge, ESPN BET and theScore Bet Sportsbook and Casino. ESPN BET branded sportsbooks launched in April, with its first retail sportsbook in Detroit.
