Earnings Call Insights: PENN Entertainment (PENN) Q4 2025
Management View
- Jay Snowden, President, CEO & Director, stated that “PENN’s diversified retail portfolio delivered another solid quarter during which retail adjusted EBITDA grew year-over-year after adjusting for poor weather in December.” He highlighted the successful rebranding of the U.S. online sportsbook to theScore Bet and achieving positive adjusted EBITDA in December for the Interactive segment. Snowden announced, “2026 is an exciting year for us in which we expect to generate year-over-year segment adjusted EBITDAR growth of 20%.” He emphasized strategic investments, a focus on free cash flow generation, deleveraging, and returning capital to shareholders.
- Snowden detailed operational improvements including a new organizational structure aimed at becoming “a leaner and flatter organization,” with expected annualized run rate expense savings of over $10 million, most of which will phase in over the first half of the year. Maintenance CapEx levels have been reduced by $20 million, returning to near pre-COVID spending.
- Snowden reported that M Resort achieved record gaming volumes in December and record net revenue in January, while Hollywood Casino Joliet saw a nearly 130% year-over-year increase in active players. He reiterated confidence in development projects, anticipating “15% plus cash-on-cash returns.”
- Felicia Kantor Hendrix, Executive VP & CFO, reported, “Our Retail segment generated revenues of $1.4 billion, adjusted EBITDAR of $456.4 million and segment adjusted EBITDAR margins of 32.3%.” She noted December weather negatively impacted retail adjusted EBITDAR by $7 million. Hendrix forecasted 2026 retail net revenues of $5.7 billion to $5.85 billion and retail adjusted EBITDAR of $1.86 billion to $1.98 billion. For the Interactive segment, she reported Q4 revenues of $398.7 million (including $182.7 million tax gross-up) and an adjusted EBITDA loss of $39.9 million.
- Hendrix stressed, “We anticipate our marketing spend to come in approximately $150 million lower than in 2025 as we align spending with our revised regional strategy focused on iCasino and Canada.” She projected total 2026 CapEx of $445 million, with $225 million in project CapEx and $220 million in maintenance CapEx.
Outlook
- The company expects 2026 Interactive revenues of approximately $1.6 billion (including $760 million tax gross-up), with growth driven by iCasino and cross-sell. Hendrix stated, “We continue to expect our Interactive segment to generate breakeven adjusted EBITDA in 2026 and note that we will expect all components U.S. OSB, iCasino and our Canadian operations to generate positive contribution margin in 2026.”
- PENN projects to generate more than $3 per share of free cash flow in 2026 and aims to reduce lease-adjusted net leverage by over 1 turn. Management expects U.S. OSB MAUs to decline due to the transition from ESPN BET to theScore Bet, while U.S. iCasino and Canadian MAUs should increase.
Financial Results
- Retail segment revenue was $1.4 billion, with adjusted EBITDAR of $456.4 million and a margin of 32.3%. Interactive segment revenue was $398.7 million, with an adjusted EBITDA loss of $39.9 million. Hendrix reported ending the quarter with total liquidity of $1.1 billion, including $687 million in cash and cash equivalents. Project CapEx was $85 million for the quarter, primarily for four development projects.
- Hendrix stated that in 2025, PENN repurchased $354 million worth of shares, equating to 14% of shares outstanding for the year. Since 2022, $1.1 billion of stock has been repurchased, representing 25% of shares outstanding.
Q&A
- Brandt Montour, Barclays: Asked about drivers of the 20% Interactive segment revenue growth target. Snowden replied, “Certainly being driven primarily by growth in iGaming… Our product continues to get better on the stand-alone Hollywood app. We’re seeing really, really strong retention.”
- Barry Jonas, Truist: Inquired about guidance range assumptions for new supply and growth projects. Snowden explained, “We probably feel stronger about the second half of the year than the first half. There’s some weather impacts here in the first quarter… We’ve built that into our full year guide.”
- Jordan Bender, Citizens: Asked about future development pipeline and interactive segment profitability. Snowden indicated ongoing analysis of further projects in Louisiana, Mississippi, and Illinois, and cited “positive EBITDA in December,” but guiding to breakeven for the full year due to a conservative budget approach.
- Shaun Kelley, BofA Securities: Sought clarity on Alberta launch costs. Snowden estimated, “probably somewhere in that $15 million to $20 million range, but give us another quarter to fine-tune our marketing plans.”
- Multiple analysts focused on promotional environment, margin expectations, and capital allocation; management emphasized disciplined cost control and a balanced approach between buybacks, deleveraging, and investing in growth.
Sentiment Analysis
- Analysts were generally inquisitive, seeking details on revenue drivers, guidance assumptions, and capital allocation, with a neutral to slightly positive tone. Some skepticism arose regarding interactive segment profitability and market competition, but no overt negativity.
- Management maintained a confident and constructive tone in prepared remarks, using phrases such as “we feel pretty good,” “we’re right where we wanted to be,” and “feeling really good about M Resort.” During Q&A, management remained detailed and direct, sometimes reiterating prior points for emphasis.
- Compared to the previous quarter, both management and analysts exhibited increased confidence regarding execution of the new strategic direction and the anticipated benefits of restructuring and cost discipline.
Quarter-over-Quarter Comparison
- Guidance language shifted from breakeven or better for Interactive in 2026 to a reiteration of breakeven as a midpoint, referencing positive December EBITDA but remaining conservative for the full year.
- Strategic focus sharpened around cost optimization, capital returns, and a more regionally targeted digital strategy following the ESPN BET exit and rebrand to theScore Bet.
- Analysts continued to probe interactive profitability and competitive promotional environments, but with greater detail on the impact of recent strategic changes.
- Key metrics such as retail revenue and margin remained stable, though Interactive segment revenue and adjusted EBITDA improved quarter-over-quarter.
- Management’s tone signaled greater control over cost levers and optimism regarding the impact of new projects and restructuring.
Risks and Concerns
- Poor weather in December and early Q1 2026 negatively impacted retail EBITDAR, with $7 million and $5–$10 million effects respectively, though management indicated this was accounted for in guidance.
- Ongoing competitive and supply pressures in Louisiana and Midwest markets were noted, but management expects these impacts to diminish by mid-Q2.
- The launch timeline and investment requirements for new markets, such as Alberta, remain uncertain.
- Management emphasized a need to monitor labor negotiations and utility/insurance costs, but expressed confidence in managing inflationary pressures.
Final Takeaway
PENN Entertainment’s management outlined a year of strategic execution, emphasizing robust free cash flow generation, disciplined cost management, and a streamlined organizational structure. With the successful rebranding of its U.S. online sportsbook to theScore Bet, a reduction in marketing expenses, and targeted investments in high-return development projects, PENN aims to achieve 20% Interactive segment adjusted EBITDAR growth, generate over $3 per share in free cash flow, and deliver meaningful deleveraging in 2026. Management’s confidence in operational improvements and future growth opportunities is highlighted by a focus on shareholder returns and a readiness to capitalize on new market openings.