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Penn Entertainment (NASDAQ: PENN) shared its second-quarter earnings with shareholders and stock analysts Thursday amid layoffs and rumors of a Boyd Gaming takeover.
The latter could have long-term ramifications for Hollywood Online Casino. Penn CEO Jay Snowden didn’t address a potential buyout during the earnings call or corresponding news release, instead focusing on Q2 financials.
Penn reported revenue of $1.66 billion. This was down just 0.7% from the same period last year.
Gaming revenue was the highlight for the quarter with a slight increase of 3% to $1.33 billion. Revenue from hotel rooms, food, beverage and others fell 13.4% during the quarter. Interactive revenue was also lower than a year ago.
Overall, adjusted EBITDA was $367 million, down 23% compared to last year. Penn reported a net loss of $27.1 million for the quarter. This is a big change from showing a $78.1 million profit in the second quarter of 2023.
Key Takeaways:
- Penn’s revenue and EBITDA were down during the quarter.
- The interactive division is still in the investment and growth phase.
- Changes coming for Penn’s online casino app.
- Major focus on ESPN Bet heading into football season.
Penn’s Interactive Revenue
Penn’s interactive division includes iGaming with Hollywood Online Casino, Social Gaming with Penn Play Casino and sports betting via ESPNBet. Penn doesn’t separate the contribution from each offering in its financial reports.
The interactive division saw lower revenue compared to last year and a greater loss. Revenue for the quarter fell 9.7% from $257.5 million during the second quarter last year to $232.6 million.
Overall, this sector’s adjusted EBITDA loss was $102.8 million during the quarter, compared to $12.8 million during the second quarter of last year.
The interactive division’s revenue was $440.3 million in the first six months of the year, down 10.3% from last year. The loss for this period now totals $298.8 million.
The interactive division is still in an investment and growth phase. Snowden doesn’t expect to see a profit until 2026.
Big Plans For iCasino
Penn has big plans for its iCasino the rest of the year and into 2025. There will be more games and promotions available for players.
At this time, Penn’s Hollywood Online Casino is available through the ESPN Bet app. The company notes that the average monthly users for its iCasino through the ESPN Bet is up 128% during the quarter.
Where online casino players find Penn’s online casino will change soon. Snowden delivered this news while speaking to investors during the earnings call:
“By early 2025, we expect to introduce our first standalone iCasino app, which will allow us to better leverage the strength of the Hollywood brand and robust casino database.”
Snowden didn’t elaborate on exactly when its new standalone online casino app will be available.
The company is planning to make more of its own online casino games using its Penn Game Studios. Penn will also increase the number of third-party games available for its online casino.
The PENN Play social casino database grew to 31 million during the second quarter. This is up 81% since the launch of ESPN Bet.
ESPN Bet Just Getting Started
While there are vague plans for a new standalone iCasino app, Penn is much more focused on turning around the sports betting part of its interactive division.
Football season is traditionally when land-based and online sportsbooks look to ramp up improvements. This holds true on both fronts for Penn.
The company is offering many new features for its ESPN Bet app. The app will be easier for players to use and will focus on numerous parlay options.
Parlays are fun for players and these wagers have a higher hold for the operator than straight bets. Ultimately the new parlay features should generate more revenue for Penn.
The app will also be integrated deeper into the ESPN and ESPN Fantasy apps. The Score Bet app will also see improvements.
There’s only one ESPN Bet retail sportsbook at its Hollywood Greektown casino in Michigan. Penn will convert eight more existing retail sportsbooks to promote ESPN Bet over the next two months.
There will be nine ESPN Bet sportsbooks inside Penn casinos before the year is over.
