PENN Entertainment Q3 Earnings Call Highlights

Key Points

• Retail performance lifted PENN’s outlook: Third-quarter retail revenue rose 5% to $1.5 billion and adjusted EBITDA increased 7.7% to $502 million. The company raised full-year 2026 retail revenue guidance to $5.89 billion and adjusted EBITDA guidance to $1.973 billion.
• Interactive segment is targeting profitability: PENN expects the segment to post adjusted EBITDA profit in Q4 and for full-year 2027, following a third-quarter loss of $18.3 million. Growth in iCasino and Canada was offset by weaker online sports betting results and customer-friendly outcomes.
• Debt reduction remains the capital priority: PENN ended the quarter with $2 billion in liquidity and lease-adjusted net leverage of 5.6 times. Share repurchases are under consideration, but deleveraging comes first; 2026 capital expenditure guidance was reduced to $390 million.

PENN Entertainment NASDAQ: PENN raised its 2026 retail guidance after reporting higher third-quarter revenue and earnings, as growth at existing casinos and contributions from recently completed projects helped offset higher gaming taxes and unfavorable table game results.

The company also expects its interactive segment to turn profitable in the fourth quarter, with Chief Executive Officer Jay Snowden forecasting a profit for the business for the full year in 2027. PENN plans to continue prioritizing debt reduction while considering share repurchases, he said.

Retail Growth Lifts Outlook

Third-quarter retail revenue rose 5% from a year earlier to $1.5 billion, while retail adjusted EBITDA increased 7.7% to $502 million, Chief Financial Officer Felicia Hendrix said. Same-store revenue grew approximately 1% and same-store adjusted EBITDA rose about 5%. The retail adjusted EBITDA margin expanded 84 basis points to 33.7%.

Hendrix said rated revenue, which tracks play by identified customers, grew for an eighth consecutive quarter. Snowden said the company also saw growth in unrated revenue and spending per visit across age segments.

PENN raised its full-year retail revenue guidance by $16 million to $5.89 billion and its retail adjusted EBITDA outlook by $10 million to $1.973 billion. Hendrix said the revision reflected better-than-expected third-quarter results and current trends.

Snowden said the fourth-quarter outlook assumes growth from both development projects and existing properties. He characterized the guidance as cautious, noting that weather could affect results at properties in the Midwest and Northeast.

Among completed projects, Hollywood Columbus posted record gaming volumes, revenue and adjusted EBITDA, with revenue up 18% year over year, Snowden said. At Aurora, revenue was twice its prior-year level and the active customer database grew 96%. At M Resort, the new hotel tower helped drive record third-quarter revenue and gaming volumes, he said.

Snowden said 2027 contracted group business revenue at M Resort was pacing 55% ahead of where 2026 bookings stood at the same point a year earlier. PENN’s next announced projects are the relocation of Hollywood Council Bluffs, expected in 2028, and a new Hollywood New Orleans property, expected in 2029.

Interactive Business Targets Profitability

Interactive revenue was $348.4 million in the third quarter, including $191.4 million from a skin tax gross-up, and the segment recorded an $18.3 million adjusted EBITDA loss. Growth in U.S. iCasino and Canada was offset by lower U.S. online sports betting and integrated iCasino volumes, along with customer-friendly sports betting outcomes, Hendrix said.

For the fourth quarter, PENN forecast interactive revenue of $445 million, including $242 million in skin tax gross-up, and adjusted EBITDA of $18.7 million. That would bring the segment’s full-year adjusted EBITDA loss to $20 million, including a $20 million investment in the Alberta launch.

Snowden said Alberta online sports betting market share was approaching PENN’s low-double-digit level in Ontario, while its Alberta iCasino share was about half its Ontario level. He added that the potential Alberta iCasino market appeared larger than the company had anticipated.

“2027 will be profitable for the year,” Snowden said of the interactive segment. He cautioned that an unusually low sports betting hold or investment in a new market could still affect individual quarters. He said iGaming now accounts for roughly half of interactive revenue excluding skin-related revenue.

Debt Reduction Leads Capital Priorities

PENN ended the quarter with $2 billion in liquidity, including $1 billion in cash and cash equivalents. Lease-adjusted net leverage stood at 5.6 times, while traditional net leverage was 2.3 times, Hendrix said.

Snowden said deleveraging remains the company’s first capital allocation priority. Share repurchases are under consideration as PENN heads into 2027, followed by internal development projects; acquisitions are a lower priority, he said. Hendrix added that no debt covenant prevents the company from buying back shares.

The company reduced its 2026 capital expenditure guidance to $390 million from $400 million, including $220 million in maintenance spending and $170 million for projects.

Pennsylvania Trends and 2027 Outlook

Snowden said PENN’s Pennsylvania gaming revenue posted its strongest year-over-year growth of 2026 in October, driven largely by the second half of the month. He attributed the improvement in part to enforcement against skill-based gaming machines following an Oct. 14 shutdown date, while cautioning that it was unclear how long the trend would last.

Looking toward 2027, Snowden said PENN does not expect significant new competitive openings or major expansions in its key markets. He expects recently completed projects to continue ramping, although he noted softer conditions in some markets, including Tunica, Mississippi.

About PENN Entertainment (NASDAQ:PENN)

PENN Entertainment, Inc is a North American provider of integrated entertainment, gaming and sports betting. The company operates casinos, racetracks and video gaming terminals, offering slot machines, table games, poker, sports wagering, hotel accommodations, restaurants, entertainment venues and other amenities.

PENN's portfolio includes regional gaming properties operating under brands such as Hollywood Casino, Ameristar, L'Auberge and M Resort. Its land-based operations serve customers across numerous U.S.

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