PENN Entertainment affirms igaming profitability aim after ‘strong’ Q3

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PENN Entertainment has heaped praise on an omnichannel strategy that “continues to drive growth” as well as strong year-on-year interactive gains after the company reported a Q3 that represented “another solid quarter”.

Set against an uncertain economic environment, Jay Snowden, Chief Executive Officer and President, cited a “successful” Kansas retail and online sports betting launch and early Ontarian success as Q3 high points.

The former, said Snowden, “underscores the advantage of our leading omnichannel strategy,” with the Canadian province said to be “benefitting from theScore Bet’s seamless transition to our own fully-integrated, proprietary tech stack”.

Coming almost a month after the company outlined a four-part $850m growth project that spans Illinois, Nevada and Ohio, PENN has reported Q3 revenue of $1.62bn, up 7.5 per cent YoY from $1.51bn.

With net income increasing 43 per cent during the July to September time frame to $123.2m (2021: $86.1m), adjusted EBITDA followed suit courtesy of a 20.8 per cent uptick to $440.4m (2021: $364.3m).

In contrast to the past quarter, all four of the casino and entertainment operator’s core retail reporting segments tracking revenue rises through the three month period.

This saw the land-based divisions of northeast, south west and midwest increased to $685.4m (2021: $672.4m), $328.8m (2021: $318.2m) $156.5m (2021: $145.7m), and $298.4m (2021: $285.7m), respectively.

“Our strong retail results were highlighted by ongoing database growth and stable margin performance, which continued through October,” Snowden noted.

As the company reported “strong growth” of the mychoice rewards program and maintained progres on property enhancements, PENN also detailed a further roll-out of its cashless, cardless and contactless tech into Kansas. This becomes the tenth property to utilise the tech.

On the interactive front, where the group continues to target 2023 profitability, revenue increased 70.64 per cent YoY to $158.7m (2021: $93m), with adjusted EBITDA widening during the period to a loss of $49.3m (2021: -$32m).

Snowden commented: “Our interactive segment experienced strong year-over-year revenue and user growth in the quarter and was profitable in October. 

“Results for the quarter included costs associated with the launch of Kansas, our first football season in Ontario and Louisiana, the $12.5m lobbying expense for the California sports betting initiative and a payment processing fee adjustment of $7.9m. 

“Given our strong revenue growth and disciplined approach to marketing, we remain confident in our ability to deliver profitability in 2023.”

Adding: “We are also seeing continued icasino momentum as we introduce additional content from third parties as well as from Penn Games Studios, which developed its first in-house multi-line slot game set to launch next month. 

“We are particularly excited about our initial icasino results and retention KPIs in Ontario, which highlights the advanced promotional capabilities of our player account management system that we will bring to the Barstool Casino next year.”

For the year-to-date, group-wide revenue an reported increase to $4.81bn (2021: $4.33bn), however, net income and AEBITDA both slid YoY to close at $200.9m (2021: $375.7m) and $1.47bn (2021: $1.51bn).

Furthermore, based on the company’s third quarter results and “continued consistent performance”, PENN has reiterated its 2022 full-year revenue and AEBITDAR guidance range of $6.15bn to $6.55bn and $1.875bn to $2bn, respectively.