Caesars Entertainment(CZR) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported consolidated net revenues of $2.9 billion and adjusted EBITDA of $884 million for Q3 2025, with hold-normalized EBITDA at $927 million [4][5] - Regional EBITDA grew 4% on a hold-normalized basis during the quarter [7] - The Las Vegas segment reported same-store adjusted EBITDA of $379 million and hold-normalized EBITDA of $398 million, with occupancy at 92% compared to 97% last year [5][6] Business Line Data and Key Metrics Changes - The digital segment generated net revenue of $311 million and adjusted EBITDA of $28 million, with hold-normalized adjusted EBITDA at $40 million [9] - iCasino saw a 29% net revenue growth driven by increased volume and average monthly active users [10] - The Las Vegas segment faced challenges with a 5% decrease in average daily rate (ADR) due to city-wide visitation weakness [5][13] Market Data and Key Metrics Changes - Regional revenues increased year over year, particularly in Danville and New Orleans, contributing to same-store net revenue growth [5][8] - The Las Vegas market experienced a decline in visitation, impacting occupancy and ADR, but showed sequential improvement as the quarter progressed [5][13] Company Strategy and Development Direction - The company is focused on reinvesting in its assets, with recent CapEx projects exceeding return expectations and plans for new developments in Las Vegas [6][8] - The digital segment aims for a 20% top-line growth with a 50% flow-through to EBITDA, maintaining long-term growth targets [11][12] - The company is refining its marketing approach to enhance customer engagement and improve returns on investments [8][19] Management's Comments on Operating Environment and Future Outlook - Management noted a soft summer in Las Vegas but expects recovery in the fourth quarter, driven by group business and improved leisure trends [13][16] - The company anticipates a record EBITDA year in 2025, supported by strong booking pace for Q4 [5][6] - Management expressed confidence in the Las Vegas market's fundamentals, despite recent challenges [31][32] Other Important Information - The company redeemed $546 million of senior notes and repurchased $100 million of stock during the quarter, reducing the share base by 6% [12] - The weighted average cost of debt is just over 6%, with plans to use free cash flow for debt reduction and stock repurchases [12] Q&A Session Summary Question: Insights on Las Vegas leisure demand recovery - Management indicated that leisure demand is improving, with group activity helping to compress rates and occupancy [21][22] Question: Regional performance and marketing strategies - Management expects improved flow-through as marketing strategies are refined, focusing on effective promotions without entering a promotional war [24][25] Question: Future outlook for Las Vegas and capital investments - Management highlighted the importance of consumer demand recovery and upcoming conferences that could drive significant EBITDA [39][40] Question: Digital segment performance and customer acquisition - Management noted that Q4 is expected to be strong due to football season, with marketing spend returning to normal levels [58][60] Question: Regulatory environment and prediction markets - Management is monitoring the regulatory landscape for prediction markets and is prepared to act if opportunities arise [64][66]