PENN (PENN) Q2 FY26 earnings call: guidance and Q&A

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

Clarify iCasino growth given reported numbers and quantify the OSB hold impact.

Standalone iCasino product shows strong growth, but overall iGaming softness is due to reduced cross-sell from the sportsbook app. OSB hold impact was approximately $3 million, meaning the loss would have been $6.5 million without it.

“The quick math, easy math on that is it's roughly $3 million impact hold for the quarter. So we would have been closer to a $6.5 million loss had we come in flat year-over-year on hold.”

asked by Brandt Montour · answered by Jay Snowden

Compare Aurora's ramp to Joliet's, expected ROI for Council Bluffs, and how PENN's interactive strategy might change given competitor reinvestment.

Council Bluffs is expected to mirror Joliet's ramp and ROI. Aurora shows strong early KPIs, almost doubling business in its first month, driven by a new hotel attracting higher-worth customers. PENN anticipated aggressive OSB competition for football season and its strategy remains unchanged, having performed well in competitive markets like Michigan.

“I would say, yes, with regard to the similarities between Council Bluffs and Joliet, budget, programming, design. And I think even from a ramp perspective, we would expect, just like we did for Joliet to sort of get those margins where you would expect them to be maybe by month 12 to month 15.”

asked by Barry Jonas · answered by Jay Snowden

Is any benefit from the PA skill games ruling built into guidance? Can PENN achieve similar market share in Alberta as in Ontario?

No benefit from PA skill games is built into guidance; waiting to see how legislation plays out. Missouri's crackdown on skill games has benefited PENN's properties there. PENN aims for similar market share in Alberta as Ontario, with aggressive spending due to the competitive market.

“We are not building any of that in, Joe. We -- the way that we guided, we basically guided the beat in Q2 and then an incremental $10 million for the second half of the year is the quick math there.”

asked by Joseph Stauff · answered by Jay Snowden

What is PENN's temperature on M&A, including Vegas, given current capital allocation priorities? How is iGaming customer acquisition focused (direct vs. cross-sell)?

M&A is a low priority compared to deleveraging, share repurchases, and internal growth projects, which offer more predictable returns. PENN would only consider inbound M&A that checks strategic boxes (geographic location, omnichannel potential) and offers superior returns. iGaming acquisition focuses on standalone casino product due to attractive CACs, while cross-sell from sportsbook continues as that business grows.

“So it's not to say that we wouldn't look. It's just to say that we're probably, in that case, going to wait for an inbound, and it's going to have to check several boxes for us. It's going to have to, with a high level of confidence, deliver a better return than what we can do in some of these other capital allocation categories.”

asked by Jordan Bender · answered by Jay Snowden