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 [5][6] - Regional EBITDA grew by 4% on a hold-normalized basis during the quarter [8] - 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 [7][8] 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 [10] - iCasino saw a 29% net revenue growth driven by increased volume and average monthly active users [11] - The Las Vegas segment experienced a decline in average daily rate (ADR) by 5% due to city-wide visitation weakness [7] 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 [7] - The Las Vegas segment faced a decline in visitation, impacting occupancy and ADR, but showed sequential improvement as the quarter progressed [6][15] Company Strategy and Development Direction - The company is focused on reinvesting in its assets, with recent CapEx investments at the Flamingo Las Vegas exceeding return expectations [8] - Upcoming projects include a new Omnia Day Club at Caesars Palace and the rebranding of The Cromwell to the Vanderpump Hotel [8] - The company aims to drive 20% top-line growth with 50% flow-through to EBITDA, maintaining a focus on spending efficiency [12] 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 [15][18] - The company anticipates a record EBITDA year in 2025, supported by strong booking pace for Q4 [7][18] - Management expressed confidence in the regional segment's performance, with solid demand and improved marketing flow-through [19][20] Other Important Information - The company redeemed $546 million of senior notes and repurchased $100 million of stock during the quarter, reducing its share base by 6% [14] - The balance sheet remains strong, with a weighted average cost of debt just over 6% [14] 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 better than in Q3 [22][24] Question: Regional performance and promotional strategy - Management expects improved flow-through from marketing strategies as they refine their approach and focus on effective promotions [25][28] Question: Digital segment performance and customer acquisition - Management noted that higher acquisition marketing spend was expected and resulted in increased customer acquisition, although it impacted flow-through in the short term [51][52] Question: Future outlook for Las Vegas and capital investments - Management highlighted the importance of consumer demand recovery and the impact of upcoming conferences on performance in 2026 [46][47] Question: Impact of prediction markets on digital segment - Management has not seen significant impact from prediction markets yet and is monitoring the situation closely [60][62]