On the company’s fourth-quarter earnings call on Thursday, February 27, Penn’s CEO focused on future prospects rather than past performances. He emphasized the emergence of “green shoots” across departments, though acknowledged more work is needed to fully leverage the partnership with ESPN.
For digital gaming, Penn reported $275 million in revenue for the fourth quarter. Despite an adjusted EBITDA loss of $109.8 million, this represented an improvement of $224 million compared to the same quarter in 2023, although the numbers still impacted overall performance and fell below analyst predictions.
Overall, the company exceeded Truist’s adjusted EBITDA forecast with $320.7 million, though this was still 1% shy of general expectations. Penn’s stock price dropped from $20 to $19.28 immediately after the call but closed at $20.39 by market end.
On the land-based side, $461.2 million of adjusted EBITDAR exceeded expectations, while digital losses matched projections at $110 million. Net revenue was mixed but closely aligned with Truist and general projections.
Snowden announced Penn’s plan to repurchase “at least” $350 million in stock in the next year as a demonstration of confidence.
## Growth slow and parlays not paying
Since ESPN Bet went live in November 2023, it has yet to break into the top tier of sports betting platforms. FanDuel and DraftKings hold dominant positions by market share, with BetMGM in third. While the aim was to achieve 20% market share by 2027, ESPN Bet currently holds under 5%, a figure executives aim to increase later this year.
A significant challenge for ESPN Bet—beyond football months favoring bettors—is its limited success with parlays, which comprise a substantial portion of bets on competing platforms. This is significant as parlays represent lucrative markets for operators.
## Snowden: More improvements coming
Snowden assured of more integrations and cross-selling for ESPN Bet, highlighting efforts like personalized experiences and new livestreaming features to attract consumers. He expressed optimism that Penn’s omnichannel strategy would be beneficial.
Penn is attracting a younger demographic and continues to open new retail locations. Hollywood Joliet, Illinois is set to open in the fourth quarter of 2025, with three more land-based locations anticipated in 2026. The company also recently launched online casino products in Michigan and Pennsylvania.
However, Snowden acknowledged ESPN Bet is being operated as a “scale player.” If targets are not met by year-end, operational changes may follow, particularly concerning marketing expenditures in the digital sector.
“We’ve got a cost structure built for a scale player because that’s where we expect to be, and that’s where ESPN expects us to be. But if trends are not favorable, operations will need to adjust accordingly.”
## What analysts are saying
Truist analyst Barry Jonas indicated that if an “inflection point” is not reached soon, Penn’s plans could involve reduced marketing, a leaner cost structure, and other adjustments approaching the agreement’s three-year mark in 2026, when opt-outs are possible.
Deutsche Bank’s Carlos Santerelli noted positive momentum on the online casino front and remarked on a shift in the tone from executives, highlighting the perceived value of digital assets. He interpreted this as a possible willingness to monetize if online sportsbook performance does not meet expectations.