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Higher costs offset revenue growth at Penn in FY22


Land-based and mobile gaming operator Penn Entertainment reported a year-on-year drop in net profit for its 2022 financial year after higher costs offset revenue growth across all core business segments.

The past year proved to be a transformational 12 months for the business, which rebranded from Penn National Gaming in August to, what the operator said, would better represent both its past and future.

The name change was announced alongside its first-half results, with which chief executive Jay Snowden outlined actions it may take – including potential layoffs – in the event that economic conditions hurt its business. The warning came shortly before Penn exercised an option to acquire all remaining shares of media brand Barstool Sports.

Though Snowden did not refer to any cuts during the full-year results announcement, he did allude to certain macroeconomic “headwinds” and how these impacted the business in 2022, adding that these would continue to prove challenging in the coming year.

Snowden also said, in anticipation of the expected continued impact of this, the operator has taken a cautious approach to revenue forecasts for 2023.

“2022 was a solid year for Penn despite ongoing macroeconomic headwinds,” Snowden said. “In 2023, we have numerous near-term growth opportunities, including the transition of the Barstool Sportsbook to our own proprietary technology platform in the US this summer.

“For 2023, we are guiding to a revenue range of $6.15bn to $6.58bn and an adjusted EBITDAR range of $1.88bn to $2.00bn. This outlook reflects our momentum in both our Retail and Interactive segments and the potential for further economic headwinds as well as increased supply in a few of our markets.”

Full year results

Comparing this forecast to figures published for 2022, revenue in the 12 months through to December 31 reached $6.40bn, up 8.4% on the previous year.

Breaking this down, operations in the Northeast segment contributed $2.70bn to revenue for the year, with $1.31bn coming from the South segment, $1.16bn the Midwest and $581.9m the West.

Interactive revenue amounted to $663.1m, which was 53.2% higher than last year, while other revenue – including standalone racing operations – reached $21.3m.

However, when looking at costs, total operating expenses were 12.0% higher at $5.43bn, with spending higher in all areas with the exception of general and administrative. The highest outgoing was gaming costs, which increased 12.7% to $2.86bn.

When including $798.7m in other costs, the majority of which were attributed to interest expenses, this left a pre-tax profit of $175.3m, down 67.5% on the previous year.

While Penn received $46.4m in tax benefits, net profit still fell 47.3% year-on-year from $420.5m to $221.7m. Adjusted EBITDAR also slipped 2.8% to $1.94bn.