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Caesars Entertainment, Inc. (CZR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest top-line growth with GAAP net revenues of $2.907B (+2.9% YoY) and a narrower GAAP net loss of $82M; however, consolidated same‑store Adjusted EBITDA fell to $955M (−4.1% YoY), reflecting softness in Las Vegas hospitality and one‑time regional headwinds .
  • Versus S&P Global consensus, revenue was a slight beat (actual $2.907B vs $2.862B*), but EPS was a material miss (−$0.39 vs +$0.05*) and EBITDA was below expectations (reported Adjusted EBITDA $955M vs EBITDA consensus $965M*; S&P actual EBITDA registered $924M*). Bold misses on EPS/EBITDA driven by Vegas softness and regional one‑offs .
  • Caesars Digital posted a record quarter: net revenues $343M (+24% YoY) and Adjusted EBITDA $80M (+100% YoY), with sportsbook hold rising 170 bps to 8.9% and margin expanding to 23.3%, underpinned by product upgrades (universal wallet in Nevada; branded live dealer studio in Michigan) .
  • Balance sheet actions: redeemed $546M of 8.125% notes due 2027, cutting annual run‑rate interest by $44M; cash taxes as % of EBITDAR cut from ~5% to ~3–4% due to legislative changes—supporting FCF to fund debt reduction and opportunistic buybacks .
  • Near‑term stock reaction catalyst: management’s acknowledgment of a soft Las Vegas summer and Q3 likely similar to Q2, offset by stabilization in bookings, robust Q4/Q1 group calendars, and accelerating Digital momentum toward the 2026 $500M EBITDA target .

What Went Well and What Went Wrong

What Went Well

  • Digital strength: “one of its strongest quarters ever” with Adjusted EBITDA of $80M (+100% YoY); sportsbook hold hit a record 8.9% as parlay mix and cash‑out mix improved; iCasino net revenues grew ~51% with new proprietary content and live dealer expansions (quote: “momentum continues to build toward the financial goals… laid out in 2021”) .
  • Balance sheet optimization: redemption of $546M 8.125% notes reduces run‑rate interest by $44M annually; nearest maturity now January 2028; weighted average cost of debt ~6.35% (CFO quote: “We expect to use free cash flow to both reduce debt and opportunistically repurchase our stock”) .
  • Regional revenue growth: segment net revenues +3.6% YoY, aided by Caesars Virginia and New Orleans and strategic reinvestment into Caesars Rewards; management views full‑year Regional EBITDA flat to up, with July trends improving post Q2 one‑offs .

What Went Wrong

  • Las Vegas softness: segment net revenues declined 3.7% YoY and Adjusted EBITDA fell 8% YoY; occupancy slipped to 97% from 99%, with weaker high‑end gaming due to entertainment timing and softer leisure demand; booking window contracted (analyst concern: Q3 Vegas EBITDAR likely down high single digits YoY) .
  • Consolidated margins: same‑store Adjusted EBITDA declined to $955M (−4.1% YoY) and Corporate & Other moved more negative (−$50M vs −$40M), while interest expense remained elevated (−$579M), driving a GAAP net loss and EPS miss vs Street .
  • Regional one‑time headwinds: ~$30M in Q2 impacts from Tahoe construction (lost ~50K room nights), Metropolis flooding, and a Baltimore lawsuit settlement weighed on Regional EBITDA; management expects improvement starting July as disruptions abate .

Financial Results

Consolidated Performance vs Prior Periods and S&P Consensus

MetricQ2 2024Q1 2025Q2 2025Consensus (Q2 2025)
Net Revenues ($USD Billions)$2.830 $2.794 $2.907 $2.862*
Adjusted EBITDA ($USD Millions)$996 $884 $955 $965*
GAAP Net Income (Loss) ($USD Millions)$(122) $(115) $(82) —
Diluted EPS ($USD)$(0.56) $(0.54) $(0.39) $0.05*

Notes: Values marked with * retrieved from S&P Global.

Segment Net Revenues (YoY comparison)

Segment Net Revenues ($USD Millions)Q2 2024Q2 2025YoY
Las Vegas$1,101 $1,054 −4.3%
Regional$1,385 $1,435 +3.6%
Caesars Digital$276 $343 +24.3%
Managed & Branded$70 $74 +5.7%
Corporate & Other$(2) $1 n/m
Total$2,830 $2,907 +2.7%

Segment Adjusted EBITDA (YoY comparison)

Segment Adjusted EBITDA ($USD Millions)Q2 2024Q2 2025YoY
Las Vegas$514 $469 −8.7%
Regional$469 $439 −6.4%
Caesars Digital$40 $80 +100.0%
Managed & Branded$17 $17 0.0%
Corporate & Other$(40) $(50) n/m
Total$996 $955 −4.1%

KPIs

KPIQ2 2024Q2 2025Commentary
Las Vegas Occupancy (%)99% 97% Flat rates; weaker high‑end gaming volume/hold
Sportsbook Hold (%)7.2% est. baseline8.9% +170 bps YoY; parlay and cash‑out mix improved
Caesars Digital EBITDA Margin (%)~22.5% est.23.3% +80 bps YoY, efficiency gains
iCasino Net Revenue Growth YoY (%)—~51% Volume, hold, MAUs, proprietary content

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Las Vegas EBITDAR/Earnings cadenceQ3 2025Not quantifiedQ3 expected soft; “looks like Q2 on a comparative basis”; Q3 Vegas EBITDAR down high single digits YoY (analyst framing confirmed) Lowered/Conservative
Regional EBITDAFY 2025Flat to up“Remain comfortable” that Regional FY EBITDA flat to up; July revenue/EBITDA up vs prior Maintained
Digital EBITDA TargetFY 2026~$500M target (set in 2021)Reaffirmed; tracking to ~$500M+ in 2026 (and continuing beyond) Maintained
Cash Taxes (% of EBITDAR)FY 2025–2027~5%3–4% post tax legislation; implied $80–$100M annual cash tax reduction in 2026–2027 Lowered (positive)
Interest ExpenseRun-rate—−$44M annually from 8.125% notes redemption; nearest maturity Jan 2028; WACD ~6.35% Lowered (positive)
Capital Allocation2025–2026Debt reduction focusBalance of share repurchase and debt repayment; opportunistic buybacks ahead of Digital value recognition Clarified mix

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Current Period (Q2 2025)Trend
Las Vegas demand/booking windowGroup mix ~20%; record group year expected in 2025/2026; April in line with Q1 Booking window compressed; summer leisure soft; bookings stabilizing; robust Q4/Q1/Q2‑26 group calendar Near‑term soft, improving into Q4/Q1
Regional promotions & competitive openingsReinforcement vs competitive markets; weather headwinds; growth from New Orleans/Danville ~$30M one‑offs; marketing/test‑and‑learn being pruned; July up; FY flat to up Normalizing post one‑offs
Digital product & holdStrong iCasino growth (+53% YoY); rollout of single wallet; proprietary game to launch Record EBITDA; hold 8.9%; universal wallet live in NV; live dealer Michigan; proprietary games expanding Accelerating
Balance sheet & FCFCapex ~$600M; cash interest ~$775M; April $100M buyback $546M redemption; −$44M interest; WACD ~6.35%; opportunistic buybacks Improving
Tax policy impact—Cash taxes as % of EBITDAR down to 3–4% from ~5% Positive tailwind
Asset‑light initiatives—OLG Windsor 20‑yr agreement in 2026; Indian mgmt contracts; ~$50M incremental EBITDA asset‑light Building pipeline
NY casino (Manhattan)—Confident if Manhattan awarded; strong local support Ongoing process

Management Commentary

  • CEO on Digital momentum: “The momentum in digital is extraordinary… we remain on track to deliver 500,000,000 plus of EBITDA in 2026” .
  • CEO on Vegas: “Make no mistake, the summer is soft in Vegas… bookings have stabilized… strong group calendar for us” .
  • CFO on interest and taxes: “Annual free cash flow savings from the redemption will exceed $40,000,000… cash taxes as a percentage of EBITDAR down from 5% to 3% to 4%” .
  • COO on database reinvestment: “We’re working with our marketing and analytics team to… drive profitable revenues… leaning on our database to fill rooms in Las Vegas” .
  • Digital President on sportsbook hold: “We wouldn’t change our long‑term target of getting to 10% hold… achieving almost 9% this quarter was inflated by good sports outcomes” .

Q&A Highlights

  • Vegas trajectory: Management expects Q3 to resemble Q2 and confirmed analyst framing of high‑single‑digit YoY EBITDAR decline for Q3 Las Vegas; stabilization evident in forward cash room expectations .
  • Regional margins: ~$30M one‑time headwinds in Q2; promotional pruning underway; margins should improve as reinvestment normalizes and disruptions abate .
  • Digital separation: Team will consider spinning Digital in 2026 if value not reflected in CZR equity; internal “plumbing” aligned to hitting targets .
  • Asset‑light growth: OLG Windsor transition and new tribal management contracts could add ~$50M incremental EBITDA with high FCF conversion .
  • Capital returns: Expect balanced approach between debt reduction and opportunistic buybacks, with strong conviction in CZR share value ahead of Digital recognition .

Estimates Context

  • Revenue: Actual $2.907B vs consensus $2.862B* — slight beat.
  • EPS: Actual −$0.39 vs consensus +$0.05* — significant miss (non‑GAAP adjustments and higher interest burden remained headwinds).
  • EBITDA: Reported Adjusted EBITDA $955M vs S&P EBITDA consensus $965M* — miss; S&P tracked actual EBITDA at $924M*, implying definitional differences vs company’s Adjusted EBITDA .
    Values retrieved from S&P Global.

Where estimates may adjust:

  • Near‑term Vegas earnings likely reset lower for Q3 given management commentary; Regional EBITDA path firmer post July improvement; Digital revisions likely trending higher given margin and product momentum .

Key Takeaways for Investors

  • Expect continued summer softness in Las Vegas with Q3 similar to Q2, then an inflection as robust group calendars drive Q4/Q1 rate leverage; watch group mix trajectory and booking stabilization data points .
  • Regional earnings trajectory is resilient post one‑off impacts; July trends and pruning of promotions should support margin improvement into H2 .
  • Digital is the structural growth engine: rising hold, proprietary content, live dealer studios, and universal wallet underpin accelerating EBITDA toward the $500M 2026 target; monitor state rollout and partnership expense roll‑offs .
  • Balance sheet optionality improved: −$44M annual interest savings and lower cash taxes (3–4% of EBITDAR) enhance FCF, enabling debt reduction and opportunistic share repurchases; this is a key support for equity value .
  • Estimate dispersion likely widens in the near term (EPS/EBITDA misses vs consensus), but narrative should shift as Vegas group demand materializes and Digital momentum sustains; traders should focus on Q4/Q1 catalysts and Digital KPIs .
  • Asset‑light wins (OLG Windsor, tribal contracts) add high‑conversion EBITDA and diversify earnings streams without heavy capex .
  • Watch for potential Digital separation in 2026 if value gap persists; management is prepared to act to crystallize shareholder value .

Notes: All document‑based figures and statements are cited. Values marked with * retrieved from S&P Global.