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Caesars Entertainment (CZR) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Apr 28, 2026

Source: earnings call transcript

Executive summary

Caesars Entertainment Q1 FY26 — Digital Growth and Improving Las Vegas Trends Drive Solid Start

Caesars Entertainment delivered a solid Q1 FY26, driven by record performance in its Digital segment and sequential improvements in Las Vegas operating trends, particularly in group and convention business. The company is transitioning into a free cash flow harvesting stage following significant regional CapEx, balancing debt reduction with share repurchases. Management remains optimistic about continued growth in Digital and the resilience of the regional consumer, while preparing for future competitive dynamics in Las Vegas.

Highlights

5

  • Consolidated net revenues increased $77 million or 3% year-over-year to $2.9 billion.

  • Adjusted EBITDAR improved by $3 million over the prior year to $887 million.

  • Digital segment delivered record Q1 net revenue of $374 million and adjusted EBITDA of $69 million, with EBITDA margins expanding 566 basis points to 18.4%.

  • Las Vegas experienced significant sequential improvement in hospitality, with occupancy of 95.3% and year-over-year ADR growth of 1%.

  • Regional segment net revenues increased 3% year-over-year to $1.4 billion, with improved EBITDA results excluding the prior year's Super Bowl impact.

Concerns

4

  • Las Vegas adjusted EBITDAR slightly declined to $426 million from $433 million in the prior year.

  • Regional segment adjusted EBITDAR was down $5 million from the prior year to $435 million, primarily due to the non-repeat of Super Bowl benefits in New Orleans.

  • Digital total volume declined 3%, with mobile sports volume declining 1%, though offset by higher hold.

  • April Las Vegas performance was softer than anticipated, largely due to hold, and is expected to be just short of last year's Q2.

Guidance & targets

CategoryTargetConfidence
Las Vegas operating trends
Sequential improvement
medium materiality
Medium
Digital top line revenue growth
20%
high materiality
High
Digital Adjusted EBITDA
$500 million or more
high materiality
High
Las Vegas Q2 YoY revenue
Just short of last year
medium materiality
Medium
Regional segment growth
Healthy grower
medium materiality
High
Lease-adjusted net leverage ratio
Sub-5x
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Consolidated
Consolidated net revenues increased $77 million year-over-year. Adjusted EBITDAR improved by $3 million over the prior year.
$2.9B3%—$887M Adjusted EBITDAR
Las Vegas
Adjusted EBITDAR was $426 million versus $433 million last year. Experienced significant sequential improvement in the hospitality vertical. Leisure trends improved versus H2 2025.
Occupancy: 95.3%ADR growth YoY: 1%Group occupied room mix: 19%
—Flat—$426M Adjusted EBITDAR
Regional
Net revenues increased year-over-year. Adjusted EBITDAR was down $5 million from the prior year, but improved after excluding the Super Bowl impact in New Orleans last year. Targeted marketing reinvestment strategy continues to deliver positive results.
$1.4B3%—$435M Adjusted EBITDAR
Digital
Delivered record first quarter net revenue and adjusted EBITDA. Flow-through during the quarter was strong at just over 66%. Continuous progress on technology driving net revenue growth in both sports and iCasino.
EBITDA margins: 18.4%EBITDA margin expansion: 566 bpsNet revenue growth (sports): 9%Total volume decline (sports): 3%Mobile sports volume decline: 1%Hold (sports): 8.3%Hold increase (sports): 100 bpsNet revenue growth (iCasino): 18%Total monthly unique players: 512,000Total monthly unique players growth: 2%Average revenue per monthly player: $219Average revenue per monthly player growth: 15%
$374M——$69M Adjusted EBITDA

Product announcements

ProductTypeDetails
OMNIA Dayclublaunch
Augustus Tower remodelmilestone
Category 10 by Luke Combslaunch
Harrah's Oklahomalaunch
Tahoe master plan renovationmilestone

Deals & partnerships

Caesars Windsor Acquisition of operations $54M USD

Closed on the acquisition of Caesars Windsor operations on March 3, 2026.

Ontario Lottery and Gaming Corporation 20-year operating agreement 20 years

Entered into a 20-year operating agreement in conjunction with the Caesars Windsor acquisition.

Risks & headwinds

Las Vegas Q2 performance softer than anticipated Q2 FY26

Likely just short of last year's Q2 revenue

Mitigation:Continued focus on group and convention business, stabilizing leisure trends.

Non-repeat of Super Bowl incremental EBITDA Q1 FY26

>$10M incremental EBITDA in Q1 FY25 not repeated in Q1 FY26

Mitigation:Regional segment expected to be a healthy grower for the rest of the year due to other factors.

Increased competition in Las Vegas from Hard Rock opening Late 2027

Increased competition in high-end market and entertainment space; increased cost of biggest acts

Mitigation:Shifting capital towards Caesars Palace and Paris renovations; strategy to combat opening; belief that Hard Rock could grow overall market visitation.

Union contract negotiations Summer 2026 (New Jersey)

New Jersey contract comes up this summer; Vegas not until 2028

Mitigation:No specific details provided, but ongoing negotiations.

What to watch in Q2 FY26

Las Vegas operating trends

Next quarter (Q2 FY26)
Current Sequential improvement in Q1, but April softer than anticipated
Target Continued sequential improvement, stabilizing leisure trends

Why it matters

Key to overall company performance and recovery of the Vegas market.

For the remainder of 2026, we continue to forecast sequential improvement in Las Vegas operating trends driven by strong group and convention mix and stabilizing leisure trends.

Find out whether CZR delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you elaborate on the signs of stabilization in the Las Vegas leisure category, including midweek, weekend, high-end, and low-end trends?

Leisure market is healthier than last summer, with typical seasonality expected. Strong weeks are driven by significant group/sporting events, while other weeks can be soft. Group business is expected to be a record. Center Strip properties have held up best, with high-end performing better than low-end, but overall performance is fairly uniform across Caesars' properties.

“I'd say leisure market has continued to get healthier from the kind of the lows of last summer. We'd expect to see typical -- back to typical Vegas seasonality as we get into the hot months. But that leisure customer does feel a little bit firmer than it did kind of each quarter since third quarter of last year.”

asked by Dan Politzer · answered by Thomas Reeg

2 min read 5 chapters

Detailed narrative

Las Vegas Market Dynamics and Outlook

Las Vegas showed significant sequential improvement in Q1 FY26, with occupancy reaching 95.3% and ADR growing 1% year-over-year. This was largely driven by a strong group and convention lineup, which accounted for 19% of occupied room mix. While leisure trends were still down year-over-year, they improved compared to the second half of 2025. Management expects continued sequential improvement for the remainder of 2026, supported by strong group business and stabilizing leisure, despite April being softer than anticipated due to hold.

Regional Segment Investments and Performance

The Regional segment delivered a 3% year-over-year net revenue increase to $1.4 billion, with improved EBITDA results when excluding the prior year's Super Bowl impact. The company highlighted the completion of its $200 million Tahoe master-planned renovation by summer 2026, marking the end of major regional CapEx projects since the 2020 merger, totaling over $3 billion invested in the regional portfolio over the last five years. The segment is positioned for healthy growth for the rest of the year, benefiting from these investments and strategic marketing.

Digital Segment Achieves Record Performance

Caesars Digital reported record Q1 net revenue of $374 million and adjusted EBITDA of $69 million, with EBITDA margins expanding 566 basis points to 18.4%. This was driven by 9% net revenue growth in sports (despite a 1% decline in mobile sports volume, offset by a 100 bps increase in hold to 8.3%) and 18% net revenue growth in iCasino. Total monthly unique players increased 2% to 512,000, and average revenue per monthly player was up 15% to $219. The universal wallet and proprietary PAM system are now live in 27 jurisdictions, with full rollout expected by end of April.

Capital Allocation and Deleveraging Strategy

The company is now in a free cash flow harvesting stage, with capital expenditures coming down. Management aims to balance debt paydown and stock repurchases, noting that Q1 was a heavy cash outflow quarter (bonus payments, interest, Windsor acquisition) which precluded buybacks. They expect to resume a balanced approach in Q2-Q4. The long-term leverage target remains sub-5x on a lease-adjusted basis.

Competitive Landscape and Future Developments in Vegas

Management discussed the competitive environment in Las Vegas, particularly regarding the upcoming Hard Rock opening in late 2027. They anticipate increased competition in the high-end market and entertainment space, potentially driving up costs for major acts. However, they also believe Hard Rock's investment could expand market visitation rather than just reallocate existing demand, benefiting Caesars due to its adjacent properties like Caesars Palace and Paris, which are also receiving capital investments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.