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PENN Entertainment, Inc. (PENN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $1.77B, up 6.1% YoY and 5.5% QoQ, and above S&P Global consensus of $1.73B; Adjusted EPS was $0.10 vs consensus of -$0.02, while reported diluted EPS was -$0.12, reflecting non‑GAAP adjustments and litigation/pre‑opening costs . Values retrieved from S&P Global.*
  • Adjusted EBITDA was $236.1M vs $212.1M YoY and $173.3M QoQ; S&P Global EBITDA consensus was $392.4M, indicating a miss on that definition versus consensus, while company-reported Adjusted EBITDA improved sequentially and YoY . Values retrieved from S&P Global.*
  • Retail properties not impacted by new supply grew revenue nearly 4% YoY; property-level EBITDAR margins were 33.8%, with headwinds from new supply (notably Bossier City) and elevated industry promo spend; management reiterated 2025 retail guidance unchanged .
  • Digital: record quarterly gaming revenue in OSB and iCasino; hold rates ~9.8% in Q2, with sequential improvement since spring; Interactive Adjusted EBITDA loss narrowed to -$62M (incl. $2.9M severance); Q4 Interactive expected to turn positive ($5M) .
  • Catalysts: Aug. 11 opening of new Hollywood Casino Joliet (on budget, ~6 months ahead), ESPN BET’s FanCenter launch with ESPN Fantasy integration, and an accelerated buyback plan (≥$350M in 2025) supported by updated cash tax outlook (no cash taxpayer in 2025) .

What Went Well and What Went Wrong

What Went Well

  • Retail resilience: “For the second quarter… retail revenue of $1.4 billion and adjusted EBITDAR of $490 million and adjusted EBITDAR margins of nearly 34%” .
  • Omnichannel lift: Online‑to‑retail player count +8% YoY and online‑to‑retail theoretical revenue +28% YoY; Hollywood iCasino cohorts in PA and MI showed strong cross‑channel spend increases .
  • Product and hold: “Record quarterly gaming revenue for both OSB and iCasino” with improved hold; July marked highest ever iCasino GGR in PA and MI; FanCenter ties ESPN Fantasy into ESPN BET to drive top‑of‑funnel and retention .

What Went Wrong

  • New supply headwinds: Bossier City cannibalization weighed on margins, with table game hold challenges at larger properties; elevated promos in competitive markets pressured flow‑through .
  • Interactive profitability still negative: Interactive Adjusted EBITDA was -$62.0M, including ~$2.9M severance costs, though narrowing YoY/QoQ; consensus EBITDA definition implied a miss .
  • Litigation/advisory costs: Corporate expense included $9.4M related to activist AGM; ongoing litigation remains a forecasting challenge for “Other” segment .

Financial Results

Consolidated Performance vs Prior Quarters

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,669.0 $1,672.5 $1,765.0
Adjusted EBITDA ($USD Millions)$165.2 $173.3 $236.1
Adjusted EBITDAR ($USD Millions)$320.7 $329.2 $392.1
Diluted EPS ($USD)-$0.88 $0.68 -$0.12
Adjusted EPS ($USD)-$0.44 -$0.25 $0.10

Year-over-Year Comparison (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$1,663.0 $1,765.0
Net Income (Loss) ($USD Millions)-$27.1 -$18.3
Adjusted EBITDA ($USD Millions)$212.1 $236.1
Adjusted EBITDAR ($USD Millions)$367.0 $392.1
Diluted EPS ($USD)-$0.18 -$0.12
Adjusted EPS ($USD)-$0.18 $0.10

Q2 2025 Actual vs S&P Global Consensus

MetricConsensusActual
Revenue ($USD Billions)$1.73*$1.765
Primary EPS ($USD)-$0.02*$0.10
EBITDA ($USD Millions)$392.4*$236.1 (Adj. EBITDA) / $204.2*

Values retrieved from S&P Global.*

Property-Level KPIs and Cash/Liquidity

KPIQ2 2025
Retail property revenues ($USD Billions)$1.4
Retail Adjusted EBITDAR ($USD Millions)$489.6
Retail EBITDAR margin (%)33.8%
Interactive revenues ($USD Millions)$316.1 (incl. $137.9 gross-up)
Interactive Adjusted EBITDA ($USD Millions)-$62.0
Corporate overhead ($USD Millions)$38.7 (incl. $9.4 legal/advisory)
Liquidity ($USD Billions)$1.2
Cash & cash equivalents ($USD Millions)$671.6
Share repurchases Q2 ($USD Millions)$90.3 (avg. $15.47)
2025 YTD repurchases ($USD Millions)$115.3
Convertible notes repurchase ($USD Millions)$233.5; ~9.6M dilutive shares eliminated
Capital expenditures Q2 ($USD Millions)$159.4
Cash rent payments Q2 ($USD Millions)$240.0
Sportsbook hold rate (Q2)~9.8%

Segment Breakdown (Revenue and Segment Adjusted EBITDAR)

SegmentRevenue Q1 2025 ($MM)Revenue Q2 2025 ($MM)Segment Adj. EBITDAR Q1 2025 ($MM)Segment Adj. EBITDAR Q2 2025 ($MM)
Northeast$680.9 $711.6 $194.2 $209.5
South$288.3 $302.2 $103.3 $104.8
West$129.7 $137.7 $45.7 $53.5
Midwest$282.9 $297.0 $113.8 $121.8
Interactive$290.1 $316.1 -$89.0 -$62.0
Other$5.3 $5.7 -$38.8 -$35.5
Intersegment Elims-$4.7 -$5.3 N/AN/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Retail segment guidanceFY 2025Ranges provided in Feb (not changed) Unchanged; Joliet opening now included Maintained
Interactive revenueQ3 2025N/A$295–$335M incl. ~$125M tax gross-up Updated/New
Interactive Adjusted EBITDAQ3 2025N/ALoss of $65M to $45M Updated/New
Interactive Adjusted EBITDAQ4 2025N/A~+$5M assuming normal hold Improved/Clarified
OSB handle share (ex-NY)Q3/Q4 2025Prior assumptions revised3.4% (Q3); 4.0% (Q4) Updated (lower volumes)
iCasino GGR shareQ3/Q4 2025Prior assumptions revised3.0% (Q3); 3.2% (Q4) Updated
Sportsbook hold rateQ3/Q4 2025Prior ~9%Mid-9% modeled Slightly raised
CapExFY 2025$730M $730M; project CapEx $490M Maintained
Net cash interest expenseFY 2025~$160M $160M Maintained
Cash taxesFY 2025~$70M cash tax liability Not a cash taxpayer in 2025 (benefits from Big Beautiful Bill, bonus depreciation) Lowered
Cash taxesFY 2026/2027Baseline prior~$50M lower cash taxes each of 2026 and 2027 Lowered
Share repurchasesFY 2025≥$350M commitment ≥$350M; increased activity planned in H2 Maintained (execution accelerating)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
ESPN BET product and holdParlay mix and SGP adoption improved; record online gaming revenue Hold ~9.8%; FanCenter fantasy integration; D2C ESPN integration upcoming; first-time betters/deposits up Y/Y Improving engagement/hold; deeper ESPN integration
iCasino performanceRecord quarterly gaming revenue; standalone app momentum in PA/MI Record quarterly gaming revenue; July highest ever iCasino GGR in PA/MI; cross-sell from OSB robust Accelerating
Supply/cannibalizationNew supply noted; retail resilience in non-impacted markets Bossier City cannibalization; mitigations via relocations (Aurora/Joliet) and Council Bluffs plan Headwinds moderating as projects open
Retail projectsJoliet targeted Q4’25 Joliet opening Aug 11 on budget, ~6 months early; Aurora, M Resort, Columbus on schedule Execution ahead of schedule
Promotional disciplineDisciplined spend Elevated market promos; Penn stayed disciplined; expects rationalization Rationalizing
Tax legislationN/A“Big Beautiful Bill” materially lowers 2025 cash taxes; sustained benefits into 2026-27 Favorable tailwind
Governance/complianceProxy/activist activity in Q1 New board members (Hartnett, Ruisanchez); Ronnie Jones added to Compliance Committee Enhanced governance/compliance
MacrosN/AEmployment strong; low gas prices; stable consumer confidence aiding regional gaming Supportive

Management Commentary

  • “Our diverse portfolio of retail properties delivered another solid quarter… retail revenue of $1.4 billion and adjusted EBITDAR of $490,000,000 and adjusted EBITDAR margins of nearly 34%” — Jay Snowden .
  • “Record quarterly gaming revenue for both OSB and iCasino… hold rates have continued to improve, and we expect this trend to continue” — Jay Snowden .
  • “Our 2025 retail guidance is unchanged… We continue to expect sequential quarter over quarter adjusted EBITDA improvement… with the fourth quarter inflecting positive” — Felicia Hendrix .
  • “We now do not expect to be a cash taxpayer this year… benefits free cash flow before project CapEx by 40%… anticipate ~$50,000,000 less in cash taxes in each of 2026 and 2027” — Felicia Hendrix .
  • “FanCenter… leverages our connectivity with the ESPN ecosystem to enable players to bet on their favorite teams, players, and fantasy lineups” — Jay Snowden ; product details in press release .

Q&A Highlights

  • Hold and mix: Management confirmed mid‑to‑high 9% hold in Q2 (9.8% vs ~9% modeled) and ongoing improvements from risk/trading and parlay/in‑play products; focus on reducing friction from ESPN integrations to registration/deposit .
  • ESPN DTC/NFL assets: Deep betting integration planned with ESPN’s upcoming D2C offering and Fantasy platform; expected top‑of‑funnel boost around NFL; retention is a key focus .
  • Interactive path to profitability: Still targeting full-year profitability in 2026 contingent on exiting 2025 with improved share and Q4 positive EBITDA (~$5M) .
  • Retail margins: Bossier City new supply and elevated promos weighed on flow‑through; table game hold softness at larger properties; expect more rational promo environment and margin accretion as new Illinois land‑based assets and hotel towers ramp .
  • Financing: Chose GLPI funding for Joliet at 7.75% cap rate vs revolver/cash; revolver draw covered buybacks/convert repurchase; optionality remains for M Resort Tower and Hollywood Columbus .

Estimates Context

  • Revenue beat: $1.765B vs $1.732B consensus. EPS beat: Adjusted EPS $0.10 vs -$0.02 consensus. EBITDA (S&P’s definition) implied a miss ($392.4M consensus vs $204.2M actual on S&P’s definition; company Adjusted EBITDA was $236.1M) . Values retrieved from S&P Global.*
  • Implications: Street may raise near‑term EPS/revenue forecasts on retail resilience and iCasino momentum, while recalibrating EBITDA assumptions to reflect definition differences and continued digital investment/litigation costs; interactive guidance updates (lower volumes, higher hold, Missouri launch costs, tax increases) may temper near‑term digital contribution expectations .

Key Takeaways for Investors

  • Retail strength outside new-supply markets and near-term project catalysts (Joliet Aug. 11, Aurora relocation, M Resort/Columbus hotel towers) support margin accretion and free cash flow trajectory into 2026 .
  • Digital KPIs improving: higher hold (~9.8%), record iCasino revenue, and FanCenter integration should drive top‑of‑funnel and cross‑sell; watch Q3/Q4 handle/GGR share targets and hold realization .
  • Cash tax outlook materially improved (no cash taxpayer in 2025; ~$50M lower in 2026/27), boosting FCF before project CapEx by ~40%; supports accelerated buybacks (≥$350M in 2025) .
  • Estimate dynamics: Strong beats on revenue/Adjusted EPS vs consensus; EBITDA definition differences matter—anchor comps to company Adjusted EBITDA and monitor Street revisions . Values retrieved from S&P Global.*
  • Watch headwinds: New supply (Bossier City) and litigation/advisory spend; management expects promo rationalization and margin accretion as projects ramp and supply anniversaries .
  • Strategic optionality: 2026 digital profitability remains target; ESPN D2C/ Fantasy integration is a differentiator; management remains “laser focused” on profitability and optionality if conditions change .
  • Near-term trading catalysts: Joliet opening (marketing ramp, early opening wash in FY guide), FanCenter launch around NFL season, and buyback execution could drive narrative/stock reactions .