PENN Entertainment, Inc. (PENN) reported a narrower-than-expected loss in its second-quarter 2024 financial results, beating both revenue and earnings estimates despite a year-over-year decline. The company faced challenges in its performance, particularly in its South and Interactive business segments.
In particular, the Interactive segment showed significant improvements in top-of-funnel growth and risk management, along with more effective promotional strategies. These improvements helped generate unexpectedly strong revenue and adjusted EBITDA figures. PENN’s retail business maintained its stability, supported by consistent consumer behavior, a diversified portfolio and recent capital investments, which helped mitigate the effects of new market entrants.
The announcement of these results caused PENN’s stock price to rise 8.5% during trading on August 8.
PENN continues to prioritize expanding its customer base and improving user engagement by adopting new technologies, investing in both gaming and non-gaming, and forming partnerships in the food and beverage industry. The PENN Play database now boasts approximately 31 million members, marking an 80% growth since the introduction of ESPN BET, with cross-selling opportunities through ESPN BET playing a crucial role in this expansion. Additionally, PENN is making steady progress on four key development projects, remaining on budget and on schedule.
Earnings and Revenue Overview
For the quarter, PENN reported adjusted loss per share of 18 cents, which is an improvement over the Zacks Consensus Estimate of a loss of 27 cents. This compares to adjusted earnings per share of 38 cents in the same quarter a year ago.
The company posted total revenues of $1,633 million, slightly above the Zacks Consensus Estimate of $1,649 million, although it was a marginal decline of 0.7% from the prior year. This revenue decline was primarily due to underperformance in the South and Interactive segments.
Revenue performance in other geographic segments was more positive, with the Northeast, West and Midwest segments posting increases.
Financial indicators and future prospects
Adjusted EBITDAR for the quarter fell 23% year over year to $367 million, with margin declining to 22.1% from 28.5% a year earlier. The Interactive division suffered a significant Adjusted EBITDAR loss, worsening from the prior year.
As of June 30, 2024, PENN had cash and cash equivalents totaling $877.6 million and a net debt position of $1.74 billion. The company carries a Zacks Rank #3 (Hold), indicating a stable outlook with growth potential aligned with industry norms.
In the broader consumer discretionary sector, other companies such as Hyatt Hotels Corporation and MGM Resorts International also reported their second-quarter results, highlighting varying degrees of financial health and market challenges.
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