Executive Summary

PENN delivered Q3 results broadly in line on revenue but missed on EPS amid a large non-cash interactive goodwill impairment and softer digital performance; revenue was $1.72B vs S&P Global consensus $1.73B*, and Adjusted EPS was $(0.22) vs $(0.05)*. Customer-friendly sports outcomes and lower OSB volumes weighed on interactive profitability .
Strategic pivot: PENN and ESPN agreed to early terminate the U.S. OSB agreement effective Dec 1, 2025; PENN will rebrand U.S. OSB to theScore Bet, cease fixed ESPN media fees, and focus resources on iCasino and Canada. PENN will pay $38.1M in Q4 and $5M for transition media; ESPN retains vested warrants (~0.2% potential dilution) .
Core retail remained stable where not impacted by new supply/promotions; West, Ohio, St. Louis, and Illinois outperformed. Retail Q4 guide: revenue $1.41–$1.43B and Adjusted EBITDA $455–$475M .
Capital allocation: ~$354M repurchased YTD through Nov 5 (goal ≥$350M met) and a new $750M authorization starting 2026. Liquidity $1.1B; traditional net debt $2.19B .
Stock reaction catalysts: early end of ESPN alliance and brand reversion to theScore Bet; the $825M interactive goodwill impairment; Q4 retail guidance; and a shift to performance-based, regionally targeted digital marketing .

What Went Well and What Went Wrong

What Went Well
- Retail resilience where not impacted by new supply/promotional intensity; West, Ohio, St. Louis, and Illinois highlighted. “Demand was generally stable… particularly at our properties not impacted by new supply or increased competitor promotional activity” .
- iCasino momentum: “highest quarterly gaming revenue to date,” ~40% YoY growth, with record cross-sell from OSB of 62%; MAUs rose for the third consecutive quarter and set new October records (MAUs, GGR, NGR) .
- Strategic clarity: exit of ESPN OSB deal to shift to theScore Bet and iCasino-first approach. “We are realigning our digital focus to leverage the strength of our U.S. iCasino and Canadian operations” .
What Went Wrong
- Interactive underperformance: “Gaming revenues and Adjusted EBITDA… came in below expectations due to customer-friendly hold… and lower than anticipated OSB volumes”; Q3 interactive Adjusted EBITDA loss $(76.6)M .
- Large non-cash impairment: $825M in Interactive (plus $15M in Midwest), driving GAAP net loss $(865.1)M and diluted loss/share $(6.03); goodwill impairment in Canada is non-deductible, providing no tax benefit .
- Competitive/promotional pressure: management cited increased competition and higher promotional reinvestment and temporary labor cost spikes in supply-impacted markets; corporate expense also included $3.9M of activist-related legal/advisory costs in Q3 .

Financial Results

Consolidated results by quarter

Metric (USD)	Q1 2025	Q2 2025	Q3 2025
Revenues ($ Millions)	$1,672.5	$1,765.0	$1,717.3
Net Income (Loss) ($ Millions)	$111.5	$(18.3)	$(865.1)
Diluted EPS ($)	$0.68	$(0.12)	$(6.03)
Adjusted EBITDA ($ Millions)	$173.3	$236.1	$194.9 (Consolidated Adjusted EBITDA)
Adjusted EPS ($)	$(0.25)	$0.10	$(0.22)

Q3 2025 actuals vs S&P Global consensus

Metric	Actual	Consensus*	Surprise
Revenue ($ Millions)	$1,717.3	$1,726.8*	$(9.5)
Adjusted/Primary EPS ($)	$(0.22)	$(0.05)*	$(0.17)
EBITDA ($ Millions, S&P definition)	$163.6*	$384.5*	$(220.9)

Note: Asterisked values retrieved from S&P Global via GetEstimates.

Segment revenue and profitability (Q3 2025)

Segment (USD Millions)	Revenues	Segment Adj. EBITDAR
Northeast	$690.5	$197.9
South	$291.0	$97.7
West	$138.3	$51.1
Midwest	$298.3	$119.1
Interactive	$297.7	$(76.6)
Other	$4.1	$(36.2)
Intersegment Eliminations	$(2.6)	—
Total	$1,717.3	Consolidated Adjusted EBITDA: $194.9

Retail and Interactive KPIs (Q3 2025)

KPI	Q3 2025
Retail property-level Revenues ($B)	$1.4
Retail Segment Adjusted EBITDAR ($M)	$465.8
Retail Segment Adjusted EBITDAR Margin (%)	32.8%
Interactive Revenues ($M, incl. tax gross-up)	$297.7
Interactive Adjusted EBITDA ($M)	$(76.6)
iCasino YoY Gaming Revenue Growth	~40%
OSB-to-iCasino Cross-sell Rate	62%
Digital Users Acquired During ESPN Relationship	2.9M (incl. 300k this football season)
Shares Repurchased in Q3 ($M)	$154.1 at $19.34 avg; 7.97M shares
Shares Repurchased YTD through Nov 5 ($M)	$354.4
Liquidity ($B)	$1.1
Cash & Equivalents ($M)	$660.1
Traditional Net Debt ($B)	$2.19
Capital Expenditures in Q3 ($M)	$172.7
Cash Payments to REIT Landlords in Q3 ($M)	$241.9
Non-cash Impairment ($M)	$825 (Interactive) + $15 (Midwest)
Adjusted EPS Reconciliation – Impairment Impact	+$5.75 per share

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Retail Revenues	Q4 2025	—	$1.41–$1.43B	New
Retail Adjusted EBITDA	Q4 2025	—	$455–$475M	New
Interactive Adjusted EBITDA	Q4 2025	Earlier guide referenced; now superseded	Expect a loss smaller than Q3; precision difficult due to rebrand/retention	Updated/lowered vs earlier framework
Cash Payments under Triple-Net Leases	Q4 2025	—	~$246M	New
2025 Project CapEx	FY 2025	$490M (prior)	$430M	Lowered
2025 Total CapEx	FY 2025	$730M (prior)	$685M	Lowered
2025 Net Cash Interest Expense	FY 2025	—	~$160M	New/affirmed
2025 Cash Taxes	FY 2025	—	Not a cash taxpayer	New/affirmed
Share Repurchase Authorization	2026–2028	—	New $750M program effective Jan 1, 2026	New
ESPN Agreement Payments	Q4 2025	—	$38.1M for fees + $5M transition media	New one-time
Warrant Expense (non-cash)	Q4 2025	—	~ $14M	New one-time

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
Digital strategy/OSB brand	Record OSB/iCasino gaming revenue; product features (Player Insights, FanCenter)	Early termination of ESPN deal; rebrand U.S. OSB to theScore Bet; focus on iCasino and Canada	Pivot to owned brands and iCasino-first
iCasino momentum	Record online gaming revenue; standalone Hollywood iCasino expansion	Highest quarterly gaming revenue; 62% OSB cross-sell; 79% MAU lift; October records	Strengthening
Competitive/promotions	Stable demand; omnichannel engagement growth	Pressure in supply-impacted markets; higher promos and temporary labor costs	Mixed; headwinds where supply increases
Capital allocation	Ongoing buybacks; convertible note repurchase	$354M repurchased YTD; new $750M authorization	Aggressively returning capital
Development projects	Joliet opening Aug 11; projects on schedule	Joliet strong early trends; M Resort tower opens Dec 1; Aurora/Columbus late Q2’26	On track; incremental catalysts
Leverage targets	—	LT lease-adjusted leverage target somewhat below 5x	Deleveraging focus
Regulatory/prediction markets	—	Management sees prediction markets as major threat; urges industry “offense”	Elevated risk awareness

Management Commentary

“We are realigning our digital focus to leverage the strength of our U.S. iCasino and Canadian operations, while continuing to use OSB to drive… cross-sell… across PENN’s retail and digital assets.”
“Our North America iCasino business achieved its highest quarterly gaming revenue to date, an improvement of nearly 40% year-over-year, driven by record cross-sell from OSB of 62%...”
On cost structure post-ESPN: “Most of those [ESPN] dollars will take down to the bottom line. Some… will be redeployed to… highest returns, primarily… Canada [and] iCasino hybrid states in the U.S.”
On rebrand/retention: “There will be no new app to download or new registration… the current app [will] be automatically updated to theScore Bet… all account information… transfer over automatically.”
On interactive profitability: “Our interactive financial goals for 2026 of being break-even or better have not changed.”

Q&A Highlights

Cost & marketing post-ESPN: Fixed $150M/yr media obligation goes away; redeploy to high-ROI cohorts/geographies; expect spend “significantly below” prior ESPN fees .
Retention strategy: Seamless in-app brand switch, no re-registration; improved product and CRM personalization support retention through rebrand .
Competitive dynamics: Supply-driven competition and higher promos drove temporary cost and margin pressure; management expects normalization over time .
Capital allocation: Continued opportunistic buybacks; GLPI funding support for projects (e.g., M Resort tower at 7.79% cap rate; Aurora funding at 7.75% cap rate) .
Regulatory risk: Management framed prediction markets as an “existential” threat and urged industry to coordinate proactive responses with regulators/legislators .

Estimates Context

Relative to S&P Global consensus for Q3 2025, PENN slightly missed on revenue ($1,717.3M actual vs $1,726.8M consensus*) and missed on EPS (Adjusted/Primary EPS $(0.22) vs $(0.05)*), driven by weaker interactive performance and customer-friendly sports outcomes . Values with asterisk retrieved from S&P Global via GetEstimates.
S&P Global EBITDA series show $163.6M actual vs $384.5M consensus* for Q3, reflecting a large shortfall on S&P’s EBITDA basis. Company-reported Consolidated Adjusted EBITDA was $194.9M; the difference reflects definitional adjustments. Values with asterisk retrieved from S&P Global via GetEstimates .
Estimate revisions likely: interactive profitability expectations should reset lower near-term given rebrand/retention uncertainty and one-time Q4 costs, while retail outlook remains constructive with Q4 guidance brackets .

Key Takeaways for Investors

The decisive end of the ESPN alliance removes a large fixed cost, simplifies the brand, and should improve digital unit economics as marketing pivots to performance/regional channels .
Core retail trends are stable ex supply shocks; Q4 retail guidance brackets ($1.41–$1.43B revenue; $455–$475M Adj. EBITDA) provide near-term visibility .
iCasino is the growth engine (40% YoY gaming revenue growth; strong cross-sell), and theScore Bet rebrand centralizes North American OSB under owned IP .
GAAP optics are noisy from the $825M impairment (non-cash, no tax benefit) and Q4 one-time ESPN wind-down costs, but cash generation remains supported by retail and disciplined capex .
Capital returns are substantial: $354M repurchased YTD; new $750M authorization (2026–2028) signals confidence and flexibility alongside deleveraging targets below 5x lease-adjusted over time .
Watch retention KPIs through the Dec 1 rebrand, interactive losses narrowing in Q4, and 2026 path to break-even or better in digital as key narrative movers .
Regulatory overhang: management spotlighted prediction markets as a sector risk; any policy moves could affect competitive dynamics and sentiment .

Appendix: Additional Detail and Cross-References

Q3 Summary/Adjusted EPS reconciliation and impairment detail .
ESPN termination economics, warrants, and data ownership .
Share repurchase cadence and authorizations .
Liquidity, leverage, and capex .

Footnote: Asterisk-marked estimate figures are retrieved from S&P Global via GetEstimates.

PENN Entertainment, Inc. (PENN)·Q3 2025 Earnings Summary