PENN Entertainment NASDAQ: PENN reported record second-quarter retail revenue and raised its full-year outlook for the segment, while management said its interactive business continued to narrow losses through lower marketing spending, cost efficiencies and growth in online casino operations.
Chief Executive Officer Jay Snowden said the company remains on track to deliver more than 20% year-over-year adjusted EBITDA growth in 2026. He said stronger retail results, improvement in interactive profitability and corporate overhead optimization are supporting cash-flow growth and allowing PENN to reduce leverage faster than previously expected.
Retail Segment Sets Revenue Record
PENN's retail segment generated record quarterly revenue of $1.5 billion, up about 4% from a year earlier, and adjusted EBITDA of $517.2 million, up approximately 6%, according to CFO Felicia Kantor Hendrix. Adjusted EBITDA margin was 34.4%.
Same-store revenue grew about 2% in the quarter, while same-store adjusted EBITDA increased approximately 4%. Hendrix said the results reflected cost management across labor, marketing and general and administrative expenses. Nine properties set second-quarter records for both revenue and adjusted EBITDA, Snowden said.
The company raised its 2026 retail outlook. The midpoint of revised full-year retail revenue guidance is now $5.87 billion, while the adjusted EBITDA midpoint is $1.963 billion. The updated outlook implies mid-single-digit year-over-year retail EBITDA growth and about 50 basis points of margin expansion in the second half, management said.
Snowden told analysts the company expects second-half retail revenue growth of roughly 4% and adjusted EBITDA growth of about 6%, similar to the second-quarter performance. He said the fourth quarter remains the lightest seasonal period for revenue, EBITDA and margins, but the company still expects comparable year-over-year growth rates.
Management cited continued growth in both rated and unrated revenue. Snowden said growth among mid- and high-worth customers supported rated revenue, while unrated revenue has increased in five of the past seven quarters.
Development Projects Drive Growth
PENN highlighted contributions from four recently completed development projects. Hollywood Casino Joliet, which opened in August 2025, continued to post strong results into early third quarter, Snowden said.
M Resort generated record net revenue and adjusted EBITDA after opening a new hotel tower in December. The property hosted three of its five largest groups by revenue during the quarter, according to management.
Hollywood Columbus opened its hotel tower on June 12 and reported an all-time monthly net revenue record in July, its first full month with the hotel in operation. Outer-market guests accounted for 85% of hotel cash revenue during the first month and a half of operations, while rated guests who stayed at the hotel increased their average daily worth by 10%, Snowden said.
Hollywood Aurora opened on June 24. Snowden said admissions, slot volume, table volume and non-gaming revenue were approximately double prior-year levels in its first full month. He added that rated guests staying at the property's hotel generated 21% higher average daily worth, while 20% of guests since opening were new to the property and 25% were reactivated customers.
Looking ahead, PENN expects to relocate Hollywood Council Bluffs in 2028, converting its riverboat casino license into a land-based casino connected to an existing 444-room hotel. The project is expected to cost $180 million to $200 million and will have programming and design similar to Hollywood Casino Joliet.
Snowden also said the company is evaluating additional internal growth opportunities, including a hotel project, water-to-land conversions in the South region and another potential Illinois project. However, management said it intends to stagger project spending rather than begin several developments simultaneously.
Interactive Loss Narrows as Company Focuses on Casino and Canada
PENN's interactive segment reported second-quarter revenue of $349.4 million, including a $185.5 million skin-tax gross-up, and an adjusted EBITDA loss of $9.5 million. The company lowered its full-year interactive revenue outlook to $1.57 billion from $1.6 billion, while maintaining its forecast for a $20 million adjusted EBITDA loss.
Management said revenue was affected by customer-friendly sportsbook outcomes, particularly during the NBA Finals and World Cup in June, as well as lower volumes related in part to reduced marketing expenditures on lower-value and unprofitable customers. Snowden quantified the sportsbook hold impact at approximately $3 million for the quarter.
The company said it is offsetting the lower revenue outlook through marketing reductions and efficiencies in labor, technology and third-party vendor expenses. Hendrix said PENN expects the third quarter to be its largest interactive loss of the year because of investment in Alberta, followed by positive interactive adjusted EBITDA in the fourth quarter.
PENN launched theScore Bet sportsbook and casino, along with theScore Casino and Hollywood Casino standalone iCasino apps, in Alberta on July 13. Management said early Alberta user and handle volumes on a per-capita basis have been encouraging, and PENN continues to expect to invest about $20 million in the province this year.
Snowden said PENN's Ontario operations gained momentum during the quarter, aided by World Cup engagement and cross-selling sportsbook users into iCasino. Approximately 70% of the company's sportsbook users placed a World Cup wager, and about 45% of those bettors placed a soccer wager for the first time.
Management said standalone casino products continued to generate growth, even as casino activity connected to sportsbook cross-selling was softer due to lower sportsbook volumes. CTO Aaron LaBerge said customer acquisition costs for the Hollywood Casino brand have been attractive and the company plans to continue investing in standalone casino growth.
Balance Sheet and Capital Allocation
PENN ended the quarter with $1.9 billion of liquidity, including $887 million of cash and cash equivalents. The company refinanced its $1 billion revolver and $447 million term loan A facility in April, extending both maturities to 2031, and extended its term loan B maturity to 2033 in May.
In May, PENN repaid the remaining $106.7 million principal balance of its 2.75% convertible notes due in 2026, eliminating 4.5 million potentially dilutive shares associated with those notes. Its nearest debt maturity is now $400 million of 5.625% notes due in January 2027.
Hendrix said total second-quarter capital expenditures were $98 million, including $58 million of project spending. PENN reduced its 2026 project-capital-expenditure forecast to $180 million from $200 million because some spending shifted into 2027. Total 2026 capital expenditure guidance was lowered to $400 million from $420 million, while maintenance capital expenditure guidance of $220 million was unchanged.
Snowden said debt reduction remains a major capital-allocation priority, though the company also sees potential for share repurchases and internal development projects. He said any acquisition would need to offer a compelling return relative to those alternatives and provide strategic value, such as entry into a new market or an expanded position in an existing market.
About PENN Entertainment (NASDAQ:PENN)
PENN Entertainment, Inc NASDAQ: PENN is a leading operator of gaming and racing facilities in the United States. The company's business activities encompass land-based casinos, pari-mutuel racetracks, off-track wagering, and ancillary amenities such as hotels, restaurants and entertainment venues. In August 2022, the company rebranded from Penn National Gaming to PENN Entertainment to reflect its expanding footprint across digital and traditional segments of the gaming industry.
The company's portfolio includes well-known properties under the Hollywood Casino and Ameristar Casino brands, located across multiple states including Pennsylvania, Ohio, Missouri and West Virginia.
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