**Penn’s Future Focus: CEO Highlights Optimism in Q4 Earnings**
During the company’s fourth-quarter earnings call on Thursday (27 February), Penn’s CEO emphasized optimism for the future while acknowledging past performance. Snowden highlighted “green shoots” throughout the company’s departments and stressed the ongoing efforts to unlock the potential value of their partnership with ESPN.
Overall digital gaming revenue for the company reached $275 million for the quarter. Although there was a $109.8 million adjusted EBITDA loss, it marked a $224 million improvement from the same period in 2023. Despite this progress, the numbers still fell short of expectations, impacting Penn’s overall performance.
Penn outperformed Truist’s adjusted EBITDA forecast with $320.7 million, though it was 1% below general expectations. The company’s stock price experienced fluctuations, opening at $20, dropping to $19.28 after the call, and closing at $20.39.
On the land-based side, the $461.2 million of adjusted EBITDAR exceeded expectations, while digital losses of $110 million were as anticipated. Net revenue was a mixed scenario, aligning closely with Truist and general projections.
Penn plans to repurchase “at least” $350 million in stock in the next year, demonstrating the company’s confidence.
## Challenges with ESPN Bet
Since launching in November 2023, ESPN Bet has struggled to capture a significant sports betting market share. FanDuel and DraftKings dominate the market, with BetMGM in third place. ESPN Bet aims for a 20% market share by 2027 but currently holds under 5%, a number executives hope to improve this year.
A significant hurdle for ESPN Bet is the difficulty in capitalizing on parlays, which are highly profitable. These multi-leg bets make up at least 50% of the wagers on DraftKings and FanDuel but only 30% on ESPN Bet.
## Promised Improvements
Snowden indicated plans for more integrations and cross-selling for ESPN Bet. The company recently introduced personalized experiences for bettors and new live streaming options, aiming to attract more consumers and leverage Penn’s omnichannel strategy.
Penn is also noticing a younger demographic trend and is expanding retail locations, with Hollywood Joliet in Illinois set to open in late 2025 and three more locations planned for 2026. The company launched online casino products in Michigan and Pennsylvania over the past year.
However, Snowden acknowledged that if ESPN Bet doesn’t meet its goals by the end of the year, operational changes would be considered, particularly in the marketing budget and potentially reducing costs if they don’t scale as expected.
## Analysts’ Perspectives
Truist analyst Barry Jonas suggested that if the platform doesn’t reach an “inflection point” soon, Penn may reduce marketing expenditures and consider structural changes as they approach the agreement’s three-year mark in 2026, which includes opt-out options for both parties.
Deutsche Bank’s Carlos Santerelli noted the growing momentum in Penn’s online casino sector and a change in tone towards the digital segment, indicating executives view it as a highly valuable asset. The comments may hint at a willingness to monetize if performance improves.