PENN Entertainment has stated that it expects to launch a standalone Hollywood online casino app by early 2025 as part of plans to help deliver positive cash flow for its Interactive segment by 2026.
The announcement came as part of PENN’s financial results for the second quarter of 2024, in which it stated that overall revenue and adjusted EBITDA were down in comparison to the same period last year, while the operator also suffered a net loss.
Q2 decline
Publishing its Q2 results, PENN declared a slight revenue drop year-over-year to $1.66bn (Q2 2023: $1.67bn). However, it also reported a net loss of $27.1m (2023: $78.1m net income), an adjusted EBITDA of $212.1m (2023: $330.4m) and an adjusted EBITDAR of $367m (2023: $476.8m).
Gaming revenue at the end of the quarter stood at $1.33bn (2023: $1.29bn) while food, beverage, hotel and other revenue came in at $330.7m (2023: $382m).
The operator diagnosed its retail business as “healthy” with revenues of $1.4bn and while its Interactive business was described as benefiting from operational improvements, revenue was down YoY to $232.6m (2023: $257.5m).
Retail operations – Northeast, South, West and Midwest – had an adjusted EBITDAR of $496.6m with margins of 34.8%.
Meanwhile, Interactive’s record quarterly gaming revenue of $232.6m included tax gross up of $82.1m, while adjusted EBITDA came in at a loss of $102.8m (2023: $12.8m loss).
Jay Snowden, CEO and President of PENN, stated: “Our retail properties delivered solid results this quarter as our best-in-class team of operators continues to execute across our diverse portfolio of market-leading assets.
“In our Interactive segment, top-of-funnel growth, improved risk and trading execution and refined promotional strategies contributed to better-than-expected revenue and adjusted EBITDA results.”
Standalone Hollywood icasino app in 2025
During PENN’s earnings call accompanying the results, Snowden expressed optimism for its Interactive segment, noting that the operator has plans to launch a standalone Hollywood icasino app in the early part of next year, contributing alongside other growth projects to help deliver positive cash flow for Interactive by 2026.
Snowden said on the call: “We are continuing to improve our icasino product offering by adding exciting new game titles from PENN Game Studios, while increasing the breadth of our third-party content and expanding our promotional capabilities.
“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 also noted within PENN’s financial report that Q2 Interactive revenue was “driven by enhanced risk and trading processes and deliberate reinvestment strategies”, which will be maintained when ESPN BET goes live in New York in late August.
“We will maintain our disciplined approach to customer engagement when we launch ESPN BET in New York in late August, where we will benefit from ESPN’s extensive linear and digital reach,” he stated.
“We recently began the rollout of our ESPN BET product enhancements and will launch the remaining key upgrades prior to the start of college football and our launch in New York.
“In parallel, our partners at ESPN are expanding our unique ESPN BET media integrations, including those with ESPN’s leading fantasy football product which boasts over 12 million active users.”
Stable retail
Across retail, Snowden stated that the business “remained stable” as consistent consumer trends, its portfolio and recent capital investments offset “known, new supply in certain markets”.
Regarding revenue per segment, Northeast rose in comparison to the same period the previous year to $696.3m (2023: $688m), South fell to $298.2m (2023: $308.3m), West improved to $135.3m (2023: $130m) while Midwest grew to $298.1m (2023: $293.3m).
As for adjusted EBITDAR, Northeast fell YoY to $204.7m (2023: $217.3m), South declined as well to $111.4m (2023: $120.9m), West improved to $50.6m (2023: $49.6m) while Midwest grew to $129.9m (2023: $127.1m).
Snowden said: “We remain focused on database growth and driving engagement through new technology, continued investment in our gaming and non-gaming offerings and local and national partnerships related to our food and beverage offerings.
“Cross-sell opportunities from our ESPN BET customers remain a key growth driver for us, as our PENN Play database has grown to approximately 31 million members, including 3.8 million in our digital database, which is an increase of more than 80% since the launch of ESPN BET.
“We are also making solid progress on our four development projects, all of which remain on budget and on schedule.”
As of 30 June, PENN’s total liquidity stood at $1.9bn, inclusive of $877.6m in cash and cash equivalents. Traditional net debt was $1.7bn.