Penn’s hits and misses
Penn Entertainment’s Q4 comes in below expectations, earnings in brief from EveryMatrix +More
Good afternoon. In today’s earnings extra:
Penn Entertainment misses consensus though online snagged a Q4 profit.
Earnings in brief features EveryMatrix.
Elys, GAN and the UK Tote provide some afternoon newslines.
Penn’s mixed bag
A miss on consensus caused by bad weather pre-Christmas was balanced out by news of online advances.
Storm advisory: CFO Felicia Hendrix said Penn normally wouldn’t blame the weather for an earnings miss, but she made an exception for the severe storm and freezing temperatures that hit key markets pre-Christmas.
Q4 revenues came in 0.8% up at $1.6bn with adj. EBITDAR of $468m was down 2.5%. FY22 revenues came in at $6.4bn with adj. EBITDAR at $1.94bn.
Snowden added that management had taken a prudent approach to 2023. The company’s guidance for the year ahead sees revenues of between $6.15-$6.58bn while the midpoint for adj. EBITDAR of $1.94bn is slightly below consensus.
“But going by what we see today then the midpoint of guidance will end up being too conservative,” he suggested.
He noted January had been stronger than last year.
⛔ Penn’s shares fall over 5% in early trading
Out of the park: Online produced a first-time quarterly EBITDA profit of $5m despite a $10m hit from Mattress Mack's antics during the World Series. Online revenue rose 31% QoQ and 17% YoY to $208m which the team at JMP noted was ahead of both BetMGM (+9%) and Caesars (+12%).
Snowden noted the transition of the Barstool sportsbook to the proprietary platform was on track for the summer. He said the move completed by theScore in Ontario had exceeded expectations.
He added that Ontario was now Penn’s best OSB and iCasino market. Market share had been maintained despite the influx of new entrants, with the group especially satisfied with the levels of OSB-iCasino cross-sell.
In the US, Ohio had been Barstool’s most successful launch to date and Snowden said the company had seen evidence of moderating promotional spend. “Ohio CPAs are very attractive compared to previous state launches.”
Youth drive: The launch of Barstool Sports’ retail outlets in Ohio also played a role in driving younger demographics to Penn properties during the launch of sports betting in January, said Todd George, EVP of operations.
“This was the most successful launch for Barstool Sports and one Ohio property had its biggest volume ever. Younger customers are having a great impact and all four Ohio properties exceeded expectations.”
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Penn instant takes
Puts and takes: Jefferies said the “modest” earnings miss and flatish guidance due to external factors would be neutral for the shares and added that the positive online result is an “incremental positive”.
They added that the severe weather effect on Penn’s regional estate would likely be reflected in upcoming results from peers.
Diary date: Boyd Gaming reports AMC later today.
School of realism: Deutsche Bank suggested the commentary from Penn was “realistic” though uninspiring. The team added that forward guidance for 2023 would be the focus of investors.
Earnings in brief
EveryMatrix: The provider said “strategic diversification” and a client list of more than 200 global customers enabled it to diminish the impact of German regulation on its casino vertical. Excluding Germany, gross profit increased 43% YoY having recorded its best-ever year for sales.
FY22 gross profits EBITDA rose 23% to €23.3m while Q4 EBITDA was up 81% to €6.9m. EBITDA margins were 36% in 2022.
M&A in brief
Elys Game Technology has announced the completion of its acquisition of a software engineering and IT development firm, Engage IT Services for an undisclosed sum. Engage offers sportsbook and gaming applications for cloud, web, and mobile platforms.
Newslines
GAN has announced the successful launch of its B2B sports-betting solution for the WynnBet Sportsbook at Encore Boston Harbor.
The UK Tote will offer its customer access to US horse racing thanks to a partnership with 1/ST Content, a distributor of North American horse racing content.
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What we’re writing
In Compliance+More today, 888 is likely to face further fallout from its VIP issues. Meanwhile, operators lobby New York for a better tax deal and New Hampshire eyes iCasino.
Earlier today, Earnings+More reported on DraftKings’ round of layoffs while Evolution continues to demonstrate its live casino dominance.
Calendar
Feb 2: Boyd Gaming
Feb 6-9: ICE London
Feb 7: The startup month, Red Rock Resorts
Feb 8: Kindred, MGM Resorts
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