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    PENN
    Earnings call· Jun 2026(Q2 FY26)

    PENN Entertainment Q2 FY26 earnings call PENN

    Aug 6, 2026 Source

    Executive summary

    PENN Q2 FY26 — Record Retail Revenue & Interactive Profitability Improvement

    PENN Entertainment delivered a strong second quarter, marked by record retail segment revenues and significant year-over-year profitability improvements in its Interactive segment, driven by strategic focus on U.S. iCasino and Canadian operations. The company is accelerating balance sheet deleveraging and remains disciplined in capital allocation, prioritizing internal growth projects and share repurchases over M&A. Management anticipates continued momentum into the second half of the year, with a focus on cash flow growth and operational efficiencies.

    Highlights

    5

    • Retail segment achieved record quarterly revenues of $1.5 billion and adjusted EBITDAR of $517.2 million.

    • Interactive segment delivered meaningful adjusted EBITDA improvement year-over-year, with a Q2 loss of $9.5 million.

    • U.S. Hollywood branded standalone casino app generated record revenues in Q2.

    • Balance sheet deleveraging is faster than expected, with total 2026 CapEx guidance refined to $400 million from $420 million.

    • New hotel tower at Hollywood Columbus generated an all-time net revenue record in July.

    Concerns

    3

    • Interactive segment revenue was negatively impacted by customer-friendly online sportsbook outcomes, particularly in June, and lower volumes due to reduced marketing spend on unprofitable segments.

    • Interactive segment revenue guidance for 2026 was fine-tuned to $1.57 billion from $1.6 billion.

    • Q3 is expected to be the largest quarterly loss for the Interactive segment due to a $20 million investment for the Alberta launch.

    Guidance & targets

    23
    CategoryTargetConfidence
    Full-year 2026 Adjusted EBITDAR growth
    More than 20%
    high materiality
    High
    Full-year 2026 Interactive segment Adjusted EBITDA
    Loss of $20 million
    high materiality
    High
    Full-year 2026 Retail Revenue
    $5.87 billion (midpoint)
    high materiality
    High
    Full-year 2026 Retail Adjusted EBITDAR
    $1.963 billion (midpoint)
    high materiality
    High
    H2 2026 Retail Adjusted EBITDAR Margin Improvement
    50 bps YoY improvement
    medium materiality
    High
    H2 2026 Retail Seasonality
    Normalized seasonality
    low materiality
    High
    Full-year 2026 Interactive Segment Revenue
    $1.57 billion
    high materiality
    High
    Full-year 2026 Interactive Segment Skin Tax Gross-up
    $830 million
    medium materiality
    High
    H2 2026 Interactive Segment OSB and iCasino Growth
    Modest YoY growth (iCasino higher than OSB)
    medium materiality
    High
    Q3 2026 Interactive Segment Adjusted EBITDA
    Largest quarterly loss of the year
    high materiality
    High
    Q4 2026 Interactive Segment Adjusted EBITDA
    Positive
    high materiality
    High
    Full-year 2026 Other Category Adjusted EBITDA
    Negative $119 million
    medium materiality
    High
    Full-year 2026 Maintenance CapEx
    $220 million
    medium materiality
    High
    Full-year 2026 Project CapEx
    $180 million
    medium materiality
    High
    Full-year 2026 Total CapEx
    $400 million
    high materiality
    High
    Full-year 2026 Cash Payments under Triple Net Leases
    $1 billion
    medium materiality
    High
    Full-year 2026 Cash Interest Expense (net of interest income)
    $150 million
    medium materiality
    High
    Full-year 2026 Cash Taxpayer Status
    Not a cash taxpayer
    medium materiality
    High
    Lease Adjusted Net Leverage Target
    Below 5x
    high materiality
    High
    Traditional Net Leverage Target
    Below 2x
    high materiality
    High
    Hollywood Council Bluffs Opening
    Open in 2028
    medium materiality
    High
    Hollywood Council Bluffs Construction Budget
    $180 million to $200 million
    medium materiality
    High
    Future Growth Projects Opening Timeline
    FY29 and FY30 openings
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Retail
    Achieved record quarterly revenues and adjusted EBITDAR. Strong performance across the portfolio, including contributions from 4 recently completed development projects. Flow-through improved quarter-over-quarter and year-over-year due to cost management.
    Same-store revenues growth: approximately 2%Same-store adjusted EBITDAR growth: approximately 4%
    		$1.5 billionApproximately 4%—Adjusted EBITDAR of $517.2 million, 34.4% margins
    Interactive
    Delivered meaningful adjusted EBITDA improvement year-over-year. Revenue growth in U.S. iCasino and Canadian operations was offset by customer-friendly online sportsbook outcomes and lower volumes due to reduced marketing spend on unprofitable segments.
    Skin tax gross-up: $185.5 million
    		$349.4 million——Adjusted EBITDA loss of $9.5 million

    Operational metrics

    56
    Adjusted EBITDAR growth
    More than 20%YoY
    FY26
    Adjusted EBITDA
    Loss of $20 million
    FY26
    Retail Revenue
    $5.87 billion
    FY26

    Midpoint of revised guidance.

    Retail Adjusted EBITDAR
    $1.963 billion
    FY26

    Midpoint of new guidance.

    Retail Adjusted EBITDAR Margin Improvement
    50 bpsYoY improvement
    H2 FY26

    Implied at the midpoint of new guidance.

    Interactive Segment Revenue
    $1.57 billion
    FY26

    Fine-tuned from prior guidance.

    Interactive Segment Skin Tax Gross-up
    $830 million
    FY26

    Up from prior guidance.

    Other Category Adjusted EBITDA
    Negative $119 million
    FY26

    Unchanged from original guidance.

    Total liquidity
    $1.9 billion
    Q2 FY26 end
    Revolver maturity
    2031
    Q2 FY26

    Refinanced in April.

    Term Loan A facility maturity
    2031
    Q2 FY26

    Refinanced in April.

    Term Loan B facility maturity
    2033
    Q2 FY26

    Repriced and extended in May.

    Convertible notes repaid
    $106.7 million
    May 2026

    Principal balance of 2.75% convertible notes due 2026.

    Funding from GLPI
    $225 million
    June 2026
    Nearest debt maturity
    $400 million
    January 2027
    Maintenance CapEx
    $220 million
    FY26

    Guidance reiterated.

    Project CapEx
    $180 million
    FY26

    Refined from prior guidance due to shift of some spend from 2026 into 2027.

    Total CapEx
    $400 million
    FY26

    Reduced from prior forecast.

    Total cash payments under triple net leases
    $1 billion
    FY26

    Expected.

    Cash interest expense (net of interest income)
    $150 million
    FY26

    Projected.

    Cash taxpayer status
    Not a cash taxpayer
    FY26

    Do not expect to be a cash taxpayer.

    Fully diluted weighted average common share count
    135 million
    Q2 FY26 end
    RSUs and stock options dilution
    2 million
    Annually
    Lease Adjusted Net Leverage Target
    Below 5x
    End of FY26 / Early FY27

    Goal for deleveraging.

    Traditional Net Leverage Target
    Below 2x
    End of FY26 / Early FY27

    Goal for deleveraging.

    Free cash flow yield
    Close to 20%
    2027 consensus

    Makes share buybacks attractive.

    OSB hold impact
    $3 million
    Q2 FY26

    Impact on Q2 Interactive segment adjusted EBITDA due to customer-friendly outcomes.

    Midwest segment Q2 FY26 accounting adjustment
    $2 million
    Q2 FY26

    One-time accounting adjustment.

    West segment Q2 FY26 accounting adjustment
    $2 million
    Q2 FY26

    One-time accounting adjustment.

    West segment Q2 FY25 accounting adjustment
    $2 million
    Q2 FY25

    One-time accounting adjustment in prior year.

    West segment margin change (adjusted)
    10 bpsYoY up
    Q2 FY26

    After adjusting for one-time accounting items.

    M&A CapEx investment criteria
    $400 million to $700 million
    null

    Not interested in acquiring assets that would require this level of CapEx for deferred maintenance.

    Rated revenue growth
    GrowthYoY
    Q2 FY26

    Supported by meaningful contributions from mid- and high-worth customer segments.

    Unrated revenue growth
    Growth
    Q2 FY26

    Increased in 5 of the last 7 quarters.

    Hollywood Columbus hotel cash revenue from outer market guests
    85%
    First 1.5 months of operations
    Hollywood Columbus rated guests average daily worth increase
    10%
    First 1.5 months of operations

    When staying at the hotel.

    Hollywood Aurora admissions growth
    Doubledvs prior year levels
    Early operations
    Hollywood Aurora slot volumes growth
    Doubledvs prior year levels
    Early operations
    Hollywood Aurora table volumes growth
    Doubledvs prior year levels
    Early operations
    Hollywood Aurora non-gaming revenues growth
    Doubledvs prior year levels
    Early operations
    Hollywood Aurora rated guests average daily worth increase
    21%
    Early operations

    When staying at the property.

    Hollywood Aurora new guests
    20%
    Since opening
    Hollywood Aurora reactivated customers
    25%
    Since opening
    Joliet year-over-year growth (early)
    55% to low 60%YoY
    Early operations

    When Joliet first opened.

    Joliet year-over-year growth (recent)
    75% to 80%YoY
    Recent months
    Interactive segment OSB and iCasino growth
    Modest YoY growthYoY
    H2 FY26

    Assumed in new guidance.

    World Cup wager participation (Sportsbook users)
    Approximately 70%
    World Cup
    First-time soccer wagerers (World Cup betters)
    Approximately 45%
    World Cup
    OSB hold rate
    Flat
    Year-over-year to date
    OSB net win rate
    Improved
    Year-over-year to date
    Alberta investment
    $20 million
    FY26

    Included in Interactive segment adjusted EBITDA guidance.

    M Resort top groups by revenue
    3 of top 5
    Q2 FY26

    Hosted during the quarter.

    M Resort rooms
    Just shy of 800
    Q2 FY26
    M Resort event attendance
    5,000 to 8,000
    Q2 FY26

    Per event by the pool.

    Future growth projects (number)
    3
    Future

    Currently analyzing, with potential 2029 and 2030 openings.

    Project capital annual estimate
    $180 million
    Annual

    Good proxy for future estimates, with some crossover between projects.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales compsApproximately 2%, Approximately 4%%
    Group booking pace booking window3 of top 5
    Net unit growth development pipeline—

    Product announcements

    1
    ProductTypeDetails
    Score Bet Sportsbook and Casino, Score Casino, Hollywood Casinolaunch

    Deals & partnerships

    1
    Toronto Blue JaysExclusive strategic partnership in Canada

    Partnership related to the Score Bet launch in Alberta.

    Risks & headwinds

    5
    Customer-friendly online sportsbook outcomesQ2 FY26, particularly June (NBA Finals and World Cup).

    Approximately $3 million impact on Q2 Interactive segment adjusted EBITDA.

    Lower volumes in Interactive segmentQ2 FY26

    Contributed to revenue being negatively impacted.

    Mitigation: Reduced marketing spend on lower value and unprofitable customer segments, improving marketing efficiency.

    Aggressive competitive environment in OSB for football seasonUpcoming football season (H2 FY26)

    Not quantified, but described as "very aggressive irrational marketing spend, advertising and new customer acquisition approach".

    Mitigation: PENN's strategy remains unchanged, having anticipated this and performed well in competitive markets like Michigan.

    Potential M&A requiring significant CapEx for deferred maintenanceFuture

    $400 million to $700 million CapEx investment.

    Mitigation: Not interested in acquiring such assets; high bar for M&A.

    Pennsylvania skill games regulatory uncertaintyOctober 2026 (legislative deadline)

    Not quantified, but potential impact on land-based casino performance.

    Mitigation: PENN is well-connected in Harrisburg and monitoring the situation.

    What to watch in Q3 FY26

    4

    Interactive segment Adjusted EBITDA

    Q3 FY26
    CurrentLoss of $9.5 million (Q2 FY26)
    TargetLargest quarterly loss of the year

    Why it matters

    Management guided Q3 to be the largest quarterly loss due to Alberta investment, impacting the path to Q4 profitability.

    As we have guided previously, the third quarter is expected to be the largest quarterly loss of the year given our investment in Alberta, and we expect the fourth quarter Interactive segment adjusted EBITDA to be positive.

    Q&A highlights

    5

    How did Interactive segment maintain its EBITDA guidance despite a revenue reduction?

    Maintained guidance through cost savings in labor, technology, third-party vendors, and reduced marketing expenses by focusing on profitable customer segments.

    “We continue to find efficiencies in our cost structure related to technology as well as we look at third-party vendors. And of course, our marketing expenses are down as well. So it's mainly marketing and cost structure improvements.”

    asked by Daniel Politzer · answered by Aaron LaBerge

    2 min read6 chapters

    Detailed Narrative

    01

    Retail Segment Strength

    PENN's retail segment achieved record quarterly revenues and adjusted EBITDAR in Q2 FY26, with 9 properties setting Q2 records. This performance was broad-based, supported by growth in rated revenue from mid- and high-worth customers, and unrated revenue increasing in 5 of the last 7 quarters. The company attributes this to internal growth drivers like the PENN Play loyalty program, omnichannel strategy, and strategic investments in amenities, alongside external tailwinds like limited new competitive supply.

    02

    Interactive Segment Strategic Shift

    The Interactive segment continued its profitability improvement, driven by a focus on U.S. iCasino and Canadian operations. The U.S. Hollywood branded standalone casino app saw record revenues. While overall revenue was impacted by customer-friendly online sportsbook outcomes and reduced marketing spend on lower-value segments, this disciplined approach is improving marketing efficiency and is expected to lead to positive adjusted EBITDA in Q4.

    03

    Development Project Momentum

    Recent development projects, including Hollywood Casino Joliet, M Resort's new hotel tower, Hollywood Columbus's new hotel tower, and Hollywood Casino Aurora, are delivering strong results. Hollywood Columbus generated an all-time net revenue record in July, with outer market guests accounting for 85% of hotel cash revenue. Hollywood Aurora has seen significant growth in admissions, slot volumes, table volumes, and non-gaming revenues, with 20% new guests and 25% reactivated customers.

    04

    Balance Sheet and Capital Allocation

    PENN is accelerating its deleveraging efforts, aiming for lease-adjusted net leverage below 5x and traditional net leverage below 2x by early 2027. The company refinanced its revolver and Term Loan A, extended its Term Loan B, and repaid convertible notes, eliminating 4.5 million potentially dilutive shares. Capital allocation priorities include deleveraging, share repurchases (given an attractive free cash flow yield), and internal growth projects.

    05

    Future Growth Projects

    Following the successful ramp-up of recent projects, PENN is planning for future growth, including the relocation of Hollywood Council Bluffs, expected to open in 2028 with a budget of $180 million to $200 million. The company is also analyzing 3 additional growth projects, potentially targeting 2029 and 2030 openings, with a focus on hotel expansions and water-to-land casino conversions in the South region and Illinois.

    06

    Competitive Landscape

    The regional gaming environment is described as very healthy, with no markets exhibiting irrational marketing reinvestment. In the interactive space, while competition is aggressive, particularly for the upcoming football season, PENN anticipates holding up well due to its disciplined approach and strong performance in competitive markets like Michigan. The company is not actively chasing M&A but would consider inbound opportunities that offer strategic value and superior returns compared to internal options.

    AI-generated summary of the company’s earnings call. Not investment advice.