Caesars’ digital operation posts a profit but Las Vegas misses forecasts
Digital Operation Profit: Caesar’s digital operation, which includes the new standalone iCasino app Caesars Palace and the transition of the Nevada sportsbook to the Liberty platform, has posted its first profit since the rebranding of the Caesars Sportsbook. The digital revenue rose by 42% to $216m.
Las Vegas Segment: However, the Las Vegas segment of the business, traditionally the driving force, fell short of financial expectations, dropping 1% year-on-year (YoY) to $1.28bn.
Overall Revenue and EBITDA: Despite the Las Vegas shortfall, total revenue was up 2% to $2.88bn, and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose 3% to $1bn. However, Las Vegas adjusted EBITDA fell by 6.4% to $512m.
CEO’s Comments: CEO Tom Reeg emphasized that while the recent performance was not ideal, he remained confident in the company’s future. He mentioned upcoming events like F1 in November and the Super Bowl in February which are expected to bring strong results. He expressed confidence in achieving the target of $500m in digital profit by 2025, but he noted that the short-term profitability of the unit in Q3 was uncertain.
Product and Platform Advancements: Reeg praised the Caesars Palace offering and mentioned that the transition to the Liberty platform in Nevada was a significant technological advancement for the company. He compared the change to upgrading from a Commodore 64 computer to a much more advanced system.
Potential M&A: Reeg suggested that mergers and acquisitions (M&A) might be a part of the company’s future strategy, particularly as the company is “not short on cash”. This sentiment was echoed by analysts at Wells Fargo who noted Caesar’s strong track record and preference for accretive M&A over share buybacks.
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