Penn National Gaming ((PENN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Penn National Gaming’s recent earnings call presented a mixed bag of outcomes, reflecting both promising growth and notable challenges. The company reported significant advancements in its iCasino business and digital channels, alongside a successful casino launch in Joliet. However, it also faced hurdles such as the early termination of its ESPN partnership and losses in the interactive segment, exacerbated by heightened competition in certain markets.
North America iCasino Business Growth
Penn National Gaming’s iCasino business achieved its highest quarterly gaming revenue to date, marking an impressive nearly 40% year-over-year improvement. This growth was largely driven by a record cross-sell rate of 62% from its Online Sports Betting (OSB) and robust performance from standalone Hollywood and the Score Bet iCasino apps.
Digital Channels Driving Customer Growth
Digital channels have been a significant driver of customer growth for Penn National Gaming, accounting for 64% of the total player database growth since 2019. This shift has attracted a younger demographic, creating substantial cross-sell opportunities across the company’s offerings.
Successful Joliet Casino Launch
The launch of Hollywood Casino in Joliet has been a success, with impressive volumes and a 42% increase in database growth. This success is attributed to enhanced offerings and the reactivation of previously inactive customers.
Share Repurchase Program
In 2025, Penn National Gaming repurchased $354 million worth of shares. Looking ahead, the company has authorized a new three-year $750 million share repurchase program set to commence on January 1, 2026.
Early Termination of ESPN Partnership
Penn National Gaming and ESPN mutually agreed to terminate their marketing agreement early, as ESPN Bet failed to establish itself as a scale player. This decision has prompted a strategic realignment and a rebranding effort for the company.
Interactive Segment Losses
The interactive segment reported an adjusted EBITDA loss of $76.6 million, with gaming revenues and adjusted EBITDA falling short of expectations. This was due to customer-friendly hold and lower OSB volumes.
Increased Competition and Promotional Activity
Penn National Gaming cited increased competition and promotional activity as factors impacting its operations, particularly in markets with new supply. This has led to increased marketing and labor costs.
Forward-Looking Guidance
Looking forward, Penn National Gaming is implementing strategic changes to enhance its performance. The company plans to rebrand its U.S. and Canadian OSB brands to the Score Bet, aiming to improve unit economics and profitability. Despite the challenges in the interactive segment, Penn aims for digital breakeven or better by 2026. The retail segment remains stable, with fourth-quarter retail revenue expected to range from $1.41 billion to $1.43 billion, and adjusted EBITDAR projected between $455 million and $475 million.
In summary, Penn National Gaming’s earnings call highlighted both growth and challenges. The company is making strategic moves to capitalize on its strengths in the iCasino and digital channels while addressing the hurdles in its interactive segment and competitive landscape. Investors will be keen to see how these strategies unfold in the coming quarters.