PENN Entertainment reported its Q2 earnings on Thursday, showing some progress with revenue at $1.77 billion, ahead of an expected $1.73 billion. The company’s interactive segment reported record quarterly revenue in both online sports betting and casino, with further growth targeted through ESPN Bet during the new football season.
The majority of revenue, $1.4 billion, came from the company’s land-based operations, which was a 1% improvement from last year’s figure. PENN operates 42 retail properties and 32 retail sportsbooks across 19 US states, and continues to expand, with the Hollywood Casino Joliet opening in Chicago later this month.
Revenue from the interactive segment grew by 35.9% to $316.1 million, which amounts to $178 million after adjustments for revenue sharing agreements with local operators.
The results failed to inspire investors, and the company’s share price continues to decline, dropping to $16.92, which represents a 7.59% decrease over the last month and a 9.62% decline from this time last year.
PENN’s Interactive Segment Shows Growth, Slowly Improving
Growth in the interactive segment is still not as explosive as PENN would have liked at this stage in its ESPN Bet venture. President and CEO Jay Snowden and Chairman David Handler noted that sports betting “has not met our expectations” earlier this year.
Hollywood Casino’s gaming app showed strong numbers, however, with online revenue up 133% in Pennsylvania, and 242% in Michigan. Snowden commented: “Our standalone Hollywood iCasino app is continuing to expand its reach with over 70% of its gaming revenue life-to-date (through June 30) generated by users that are newly acquired, retail native, or reactivated.”
On the results of the interactive segment, he said: “Record gaming revenues and operational discipline contributed to another quarter of strong year-over-year flow-through.”
He also noted that the segment had to pay around $2.9 million in severance packages to staff this quarter, which will reduce costs in the future. In June, PENN laid off 75 workers at theScore, the company’s sports media and betting arm in Canada.
Adjusted EBITDA remained negative at a loss of $62 million, but this was an improvement of 39.7% from the $102.8 million loss in Q2 last year. The company is targeting revenue of between $295 million and $335 million in Q3, with an adjusted EBITDA loss of between $45 million and $65 million.
New NFL-ESPN Deal an Expected Boon for ESPN Bet
The interactive segment aims to turn losses into profits in Q4 this year and carry that momentum into next year, with profits expected for the full year 2026.
A lot of hope rests on the recent deal between the NFL and ESPN to finally make the ESPN Bet investment pay off. ESPN Bet will launch FanCenter in time for the new football season, integrating odds with NFL fantasy football data.
Snowden commented: “In addition to fantasy related markets within Fan Center, a new Find a Bet icon on the ESPN Fantasy app will allow players to view ESPN bet markets related to their roster and add selections directly to their ESPN bet slip. Last year, ESPN Fantasy Football set an all time mark with more than 13,000,000 playing the game.”
There had been rumors that PENN was set to pull the plug on ESPN Bet with the deal up for review next year. Still, Snowden indicated that the partnership will continue for the foreseeable future, stating: “Opportunities like this to leverage the nation’s number one fantasy app is a big part of why we did the deal with ESPN. And we look forward to continuing to work together to unleash the full value of this partnership.”
Additional Retail Developments on Track for 2026 and Beyond
PENN confirmed that three more retail developments are on track to open in the first half of next year, with one more relocation project scheduled for late 2027/early 2028. The projects include hotels at casino resorts in Las Vegas and Ohio, a relocation of a hotel in Illinois, and a land-based property to replace a riverboat casino in Iowa.
Snowden commented: “Customer demand in our core business was stable as properties not impacted by new supply grew revenue by nearly 4% year-over-year.”
The company will need to show higher levels of growth in the latter part of the year to satisfy disgruntled investors. Snowden, however, still believes there is value to be had for shareholders.
Snowden said during the earnings call: “Our focus for the balance of this year and going forward remains operational execution and transforming our strategic investments into consistent long term returns and value creation for our shareholders. We believe our share price is undervalued and will be even more active in buying back shares and returning capital to shareholders in the second half of the year.”
There remains plenty of opportunity for investors who share Snowden’s faith to back the company to turn things around.
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