Net Loss for PENN Entertainment Despite Revenue Growth in Q3

Consumer demand in company's retail business and interactive segment were positives, but PENN also reported net loss of $37.5 million for Q3.

Nov 7, 2024 • 12:08 ET • 4 min read

PENN Entertainment reported gross revenue of $1.6 billion (up by 1.2% year-on-year) in the third quarter of 2024, but a net loss was indicative of the challenges the company has faced over the quarter. 

PENN's interactive segment posted an adjusted EBITDA loss of $90.9 million, a considerable increase on the $50.2 million loss seen in Q3 of 2023. The reported net loss of $37.5 million for Q3 is an improvement on the $725.1M loss seen in Q3 of 2023, however. 

Mixed results follow a disappointing second quarter for the company, which saw a revenue loss of almost 10% from its interactive segment. Bosses have attributed some of the losses to the company's unfavorable hold in the Northeast and a decline in volume in the South, as a result of weather-related disruptions. 

Consumer demand in retail business remained stable during the quarter, with property revenues of $1.4 billion. The company also retains a strong liquidity position of $1.8 billion with $834 million in cash, and has continued to expand across the U.S. during the period. 

In the last three months, PENN has enjoyed a much-needed boost in engagement, which came thanks to new product enhancements and ESPN integrations to its ESPN BET offering. These improvements are believed to have been the key driving force behind the higher parlay mix and sportsbook hold seen during the third quarter. 

"PENN's third quarter results were consistent with the preliminary estimates we disclosed last month in connection with our investor event in Las Vegas," said Jay Snowden, CEO and president of PENN Entertainment. 

"Stable consumer demand in our retail business was offset by unfavorable hold in our Northeast segment and volume declines in our South segment associated with severe weather disruptions and accelerated hotel remodeling." 

Consumer demand stable in Q3 

PENN's consumer demand remained stable throughout Q3, with revenues of $1.4 billion, an adjusted EBITDAR of $471.7 million and adjusted EBITDAR margins of 33.8%.

October saw stable business trends, with PENN's retail sportsbooks keeping revenue up. The company admitted that it had been under growing pressure from new supply in Nebraska, Louisiana, and Chicagoland, and has begun reimagining several properties to improve customer experiences and loyalty in these areas. 

Q3 saw a complete rebrand of seven ESPN BET retail sportsbooks and the acceleration of planned hotel room renovations at L'Auberge Casino Lake Charles in Louisiana. PENN has reported improvements to value per customer figures from guests staying in the renovated rooms, with work expected to be complete by the end of January 2025. 

Hollywood Joliet in Illinois is now likely to open ahead of schedule during the second half of 2025. Along with three other development projects being undertaken by PENN at present, it remains on budget.

Share prices beat Wall Street predictions 

In terms of share prices, PENN reported a loss of 24 cents at the close of Q3. While the news could certainly be better for the company, it beats recent Wall Street predictions. Analysts surveyed by Zacks Investment Research had estimated a loss of 28 cents per share for Q3. 

ESPN BET NY launches after delays 

PENN's interactive segment grew year-on-year, despite the legislative challenges it has faced in recent weeks. Revenue for the segment was $244.6 million in Q3, a 24.6% increase year-on-year.

In September, PENN launched ESPN BET in New York, bringing its online sports betting footprint to 19 U.S. states. Scaling up has allowed the company to reach new customers, with customer acquisition strategies supported by ESPN's vast media reach. 

PENN had been planning to launch the New York sportsbook before the start of the football season of course, but licensing delays meant it wasn't to be. 

The New York sportsbook's opening was postponed until Sept. 27, meaning the company missed out on the lucrative first few weeks of the season. And that, too, may have impacted the company's results, given the fact that New York sportsbooks won a reported $91.5 million over the first two weeks of the NFL season. 

PENN plans new product enhancements, app launches 

Year-over-year performance improvements were seen across PENN's online sports betting and iCasino operations in October. 

In the coming months, the company is expected to launch additional product enhancements across its online offering, including a standalone iCasino app launch which (pending final regulatory approval) will debut in Pennsylvania early next year. 

"The fourth quarter is off to a stronger start, led by several markets including Michigan, Ohio, and St. Louis," said Snowden. "In the third quarter, our Interactive segment benefited from better-than-expected hold, driven by a higher parlay mix from our improving product and lower promotional expenses." 

"Additionally, on Oct. 30, we launched account linking between ESPN BET and ESPN, which is foundational for creating a personalized sports betting experience across the ESPN ecosystem." 

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