PENN(US:PENN)2025-11-06 15:00Financial Data and Key Metrics Changes - The retail segment generated revenues of $1.4 billion with adjusted EBITDA of $465.8 million, resulting in segment-adjusted EBITDA margins of 32.8% [13] - The interactive segment reported revenues of $297.7 million, including a tax gross-up of $139.5 million, and an adjusted EBITDA loss of $76.6 million [14] - Total liquidity at the end of Q3 was $1.1 billion, including $660 million in cash and cash equivalents [16] Business Line Data and Key Metrics Changes - The North America iCasino business achieved its highest quarterly gaming revenue to date, with a nearly 40% year-over-year improvement driven by record cross-sell from OSB of 62% [6][7] - iCasino monthly active users (MAUs) increased by 79% during Q3, with new all-time records for MAUs, gross gaming revenue (GGR), and net gaming revenue (NGR) set in October [7] - The transition to theScore Bet is expected to enhance digital business efficiency and profitability, with a focus on high-margin markets [5][8] Market Data and Key Metrics Changes - The company noted stable demand across gaming and non-gaming amenities, particularly in regions not impacted by new supply and increased competitor promotional activity [9] - The new Hollywood Casino in Joliet has driven impressive volumes and database growth, with a 42% increase in the active database since opening [10] Company Strategy and Development Direction - The company is realigning its interactive focus to prioritize digital assets in Canada and the Hollywood iCasino product, leveraging cross-sell opportunities across its ecosystem [4][5] - The early termination of the ESPN agreement will cease cash payments and marketing obligations, allowing for a more flexible marketing strategy focused on high-return markets [12][23] - The company plans to continue investing in growth capital while managing share repurchases as a key component of its capital allocation strategy [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate increased competition and promotional activity, emphasizing the importance of maintaining a strong value proposition [36] - The company is focused on achieving profitability in its digital segment by 2026, with a clear plan for retention and marketing strategies post-rebranding [8][43] - Management highlighted the importance of controlling the business's cost structure and marketing budget to enhance profitability moving forward [8][23] Other Important Information - The company repurchased $154.1 million of shares at an average price of $19.34 per share in Q3, with a total of $354 million repurchased as of November 5 [17] - The total CapEx for 2025 is now projected at $685 million, reflecting a shift of some project costs into the next year [20] Q&A Session Summary Question: Impact of ESPN exit on near-term and long-term profitability - Management discussed the strategic investments made in digital business and the importance of cross-selling to the retail segment, emphasizing the younger customer demographic acquired through digital channels [27][30] Question: Increased competition and promotional activity - Management acknowledged the impact of new competition and promotional activity on operations, noting that while there may be temporary increases in costs, the company remains committed to delivering best-in-market offerings [34][36] Question: Customer retention strategies post-rebranding - Management expressed confidence in retaining customers during the transition to theScore Bet, highlighting improvements in product quality and user experience [70][71] Question: Future growth opportunities in Canada - Management indicated that while there are limited retail property options in Canada, they remain open to opportunistic acquisitions that align with their omnichannel strategy [61] Question: Leverage targets for the business - Management stated that the optimal leverage level is below five times, with a focus on balancing share repurchases, growth investments, and debt reduction [62]