Caesars targets $500M+ digital EBITDA in 2026 as digital momentum accelerates

Earnings Call Insights: Caesars Entertainment, Inc. (CZR) Q2 2025

Management View

• Anthony L. Carano reported consolidated net revenues of $2.9 billion and adjusted EBITDA of $955 million for the quarter, highlighting that “our Digital segment delivered its best quarter ever, producing $80 million of adjusted EBITDA, and our digital momentum continues to build towards the financial goals we originally laid out in 2021.”
• Carano noted that “our Las Vegas segment posted solid results in the face of softer market demand in our hospitality vertical,” while emphasizing forward group booking strength in Q4 and the first half of 2026.
• Regional revenues increased year-over-year, supported by new properties and growth from strategic reinvestment in the Caesars Rewards database. Carano said, “Early results from our strategic customer reinvestments are promising, driven by strong rated play trends in the quarter.”
• Eric Hession stated that Caesars Digital achieved “net revenues of $343 million, up 24% versus the prior year and set an all-time quarterly adjusted EBITDA record of $80 million, up 100% to last year.” Hession added, “Adjusted EBITDA margins grew by 880 basis points to 23.3%.”
• Hession highlighted the launch of a universal digital wallet and proprietary player account management system in Nevada, with plans for rollout across all jurisdictions by early 2026.
• Bret Yunker commented, “Q3 is off to a great start on the balance sheet front, as we fully redeemed our most expensive debt earlier this month using a mix of asset sale proceeds and our revolver. Annual free cash flow savings from the redemption will exceed $40 million.”
• Thomas Robert Reeg indicated, “Digital had a fantastic quarter… we remain on track to deliver $0.5 billion plus of EBITDA in ’26. The momentum in Digital is extraordinary, both from a volume and an EBITDA perspective.”

Outlook

• Reeg forecasted a “soft summer in Vegas” with expectations for third quarter performance to resemble the second quarter on a comparative basis, but described stabilization in forward bookings and a “very strong group calendar” for Q4 2025 and into 2026.
• Regional performance is expected to be “flat to up in EBITDA” for the full year, with growth anticipated in 2026.
• Digital segment is projected to maintain its strong trajectory, with Reeg stating, “We certainly expect that, that’s not an end game for us that we’re going to continue growing well past that as we move forward.”
• Reeg pointed to anticipated free cash flow savings from tax changes, estimating $80 million to $100 million less in cash taxes in 2026 and 2027.

Financial Results

• Consolidated net revenues were $2.9 billion and adjusted EBITDA was $955 million for the quarter.
• Caesars Digital delivered $343 million in net revenues and $80 million in adjusted EBITDA, with a margin of 23.3%.
• Las Vegas segment reported same-store adjusted EBITDA of $469 million, with 97% occupancy.
• Regional segment posted adjusted EBITDA of $439 million, with negative impact from several one-time items totaling $30 million.
• CapEx investments and strategic reinvestment in the Caesars Rewards database drove higher year-over-year gaming revenues.

Q&A

• Daniel Brian Politzer, JPMorgan: Asked about stabilization in Las Vegas bookings and the path to growth. Reeg explained, “You’re basically looking at the same forecast you were looking at a week ago… At the end of third quarter, on a year-over-year basis, our group business will be down year-over-year, we knew that was going to be the case. But we have an extremely robust fourth quarter group calendar.”
• Brandt Antoine Montour, Barclays: Inquired about promotional strategies and omnichannel efforts. Carano described leveraging analytics and the database for targeted opportunities, stating, “We’re really leaning on our database to fill rooms in Las Vegas.”
• David Brian Katz, Jefferies: Probed Digital segment targets. Reeg replied, “The much debated $500 million target looks like it’s going to arrive right on the schedule that we put out there 4 years ago.”
• Elizabeth Dove, Goldman Sachs: Asked about further investments in Las Vegas properties and digital sportsbook hold levels. Carano said, “We’ve got just our room remodels that we have coming up… the rest of our properties are in pretty in good shape right now.”
• Steven Donald Pizzella, Deutsche Bank: Questioned OpEx and labor in Las Vegas and Regionals. Reeg answered, “We’ve got union contract increases in Vegas that you’ve seen us lean into expenses so that our expenses were flat even though we have increased labor — increased union rates.”
• Chad C. Beynon, Macquarie: Asked about share repurchases. Reeg stated, “This quarter, the focus was taking out the [8%] our highest coupon debt. That’s why you didn’t see share repurchase during the quarter.”

Sentiment Analysis

• Analyst sentiment reflected a mix of cautious optimism and probing around the sustainability of growth, cost management, and promotional strategies, with several analysts focusing on margin outlook and digital momentum.
• Management maintained a confident tone during prepared remarks, emphasizing strategic execution and the strong performance of the digital segment. During Q&A, management was methodical and direct, with Reeg frequently reiterating confidence in forward bookings and digital growth, while addressing near-term softness in Las Vegas.
• Compared to the previous quarter, analyst tone became more focused on digital sustainability and competitive dynamics, while management continued to project confidence, notably using phrases such as “we are confident” and “we certainly expect.”

Quarter-over-Quarter Comparison

• Guidance for Las Vegas shifted from expectations of “growth” in Q1 to addressing “softer market demand” and forecasting a “soft summer” in Q2, though with stabilization and strong group bookings anticipated for later periods.
• Digital segment performance accelerated, with adjusted EBITDA rising to $80 million in Q2 from $43 million in Q1, and management reaffirming a $500 million target for 2026.
• Regional segment faced $30 million in one-time headwinds in Q2, while Q1 noted stable same-store trends and growth from new properties.
• Management’s confidence in digital growth increased, and analysts sharpened their focus on promotions, margin sustainability, and capital allocation decisions.

Risks and Concerns

• Management cited “softer market demand” in the Las Vegas hospitality vertical and anticipated continued softness into Q3.
• The Regional segment was impacted by one-time events, including construction disruptions, flooding, and a lawsuit settlement totaling $30 million.
• Analysts raised questions about promotional spending, margin outlook, and digital hold sustainability.
• Reeg addressed concerns on international softness, especially regarding Canadian visitation, but indicated it did not materially impact overall performance.

Final Takeaway

Caesars management emphasized the continued acceleration and outperformance of the digital segment, reiterating confidence in reaching and surpassing $500 million in digital adjusted EBITDA by 2026. While Las Vegas faced a softer summer with stabilized forward bookings and strong group business expected in late 2025 and into 2026, management highlighted the resilience gained through diversification across digital, Las Vegas, and regional segments. Strategic reinvestment in customer databases and technology enhancements, along with disciplined balance sheet actions, remain central to their forward strategy.

Read the full Earnings Call Transcript