PENN Entertainment, Inc. Q3 FY2025 earnings call

• Early termination of ESPN marketing agreement: Penn and ESPN mutually agreed to end the marketing agreement on December 1. Penn will reorient interactive focus to Score Bet, leveraging its customer database. • North America iCasino: Achieved highest quarterly gaming revenue to date, up nearly 40% year over year, driven by cross-sell from OSB and standalone apps. • Retail performance: Stable demand across gaming and non-gaming amenities, strong results in West segment; new Hollywood Casino in Joliet driving volumes and database growth. • Share repurchase: Board authorized new $750,000,000 share repurchase authorization starting 2026; repurchased $154.1M in Q3. • Development projects: Second hotel tower at M Resort opens Dec 1; Hollywood Columbus Hotel Tower and Aurora casino relocation scheduled for 2026; Council Bluff relocation in late 2027/early 2028.

Retail segment: Generated revenues of $1,400,000,000, adjusted EBITDAR of $465,800,000, and segment adjusted EBITDA margins of 32.8%. Interactive segment: Generated revenues of $297,700,000 including a tax gross up of $139,500,000 and adjusted EBITDA loss of $76,600,000.

• Interactive: Goal to be breakeven or better in 2026 remains unchanged. • Retail Q4 2025: Revenues expected to range from $1,410,000,000 to $1,430,000,000; adjusted EBITDAR range $455,000,000 to $475,000,000. • Share repurchase: New three-year $750,000,000 authorization commences 01/01/2026.

• Retail: Increased competition and promotional activity in some markets leading to potential short-term margin pressure. • Digital: Retention risks post-rebrand to Score Bet; uncertainty around market response to reorientation. • Industry: Prediction markets pose a potential threat to the sports betting and casino industry with lack of responsible gaming protections.

Q: With the ESPN exit, can you talk a bit more about any puts and takes for near term as well as maybe longer-term profitability for Interact and then maybe throw in omnichannel's contribution to retail in that as well?

A: Jay Snowden discussed the goals of digital business including top of funnel driver, cross-selling to land-based, preparing for future, and focusing on profitability in 2026 and beyond.

Q: The first one on digital, know, I know that we'll be waiting or we're gonna wait to hear more about your plans on profit. And I know that there's multiple moving pieces of profitability, including retention risk on the revenue side. But if you could just, Jay, focus on the cost side and talk about the fixed cost removal for ESPN, a $150,000,000 a year. And you said the word replace with the marketing you're gonna need to support the score. You know, is it fair to assume that sort of just looking at those two pieces that marketing score should, by definition, come in below what you were paying to ESPN?

A: Jay Snowden stated marketing spend with ESPN was significantly higher and that the new marketing spend on Score Bet will be more precise, targeting high-return markets like Canada and US iCasino states.

Q: I wanted to ask just a couple questions to refamiliarize myself with the Score Bet. Wondering, I guess, you know, maybe the updated share that you have in Ontario I assume, obviously, you'll launch in Alberta. And wondering, you know, for The US, customer database within the score, know, is there a concentration of adjacent markets in and around Ontario? Or is it like a wider distribution?

A: Jay Snowden said Score Bet has ~4,000,000 monthly active users, two-thirds in US (mostly in legal OSB states) and one-third in Canada, with potential in Alberta and US states.