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Penn expects Barstool acquisition to build on Q1 growth


Penn Entertainment said its acquisition of Barstool Sports in February will build on success in the first quarter and help it achieve further growth, with the operator having increased its full-year guidance.

Q1 marked the start of a new chapter for Penn, which completed the acquisition of Barstool Sports part-way through the quarter. At the time, the operator said this would strengthen the customer acquisition and cross-selling opportunities in its interactive division.

While the full impact of the acquisition is yet to be felt, Penn said the deal would lead to long-term growth for the group, and in turn raised its full-year revenue guidance to reflect these expectations.

Penn now expects to post between $6.37bn and $6.81bn in revenue for the year, neutral to adjusted EBITDAR. As such, the previous guidance range of $1.88bn to $2.00bn for adjusted EBITDAR remains unchanged.

“We are pleased to report that Penn delivered another solid quarter in what remains an uncertain macroeconomic environment,” Penn’s president and chief executive Jay Snowden said. “Strong performance in the Northeast mostly offset softer year-over-year results in the South.

“In addition, our proprietary sports betting and icasino technology platform, which is live in Ontario, continues to drive compelling results and market share.”

Revenue growth

Looking at results for the quarter, revenue in the three months to March 31 amounted to $1.67bn, an increase of 7.0% from $1.56bn in the previous year. This included $1.32bn in gaming revenue and $348.7m from food, hotel, beverage and other activities.

As referenced by Snowden, the Northeast segment led the way in revenue terms, generating $700.5m during the quarter, up 6.4% on the previous year. Midwest revenue also increased, but the operator noted declines across its South and West segments.

Interactive revenue was 65.0% higher year-on-year at $233.5m, helped by the launch of its sports betting offerings in both Massachusetts and Ohio during the quarter, as well as the initial impact of the Barstool deal.

Other revenue reached $5.8m and intersegment eliminations totaled $6.3m.

“Our mobile launches on January 1 in Ohio and March 10 in Massachusetts highlight the advantages of our organic, omni-channel customer acquisition strategy, as we leveraged our Penn Play database and the Barstool Sports audience to drive incremental revenue both online and at our retail properties,” Snowden said.

“Additionally, during March Madness, top Barstool personalities performed live streams from our market leading retail sportsbooks in Ohio and Louisiana, leading to increased brand awareness and digital engagement.”

Profit rise

In terms of spend, operating costs for Q1 were 15.9% higher at $1.47bn, though a $500.8m gain on REIT transactions and an $83.4m gain on the Barstool acquisition more than offset interest income, meaning net finance income amounted to $483.2m.

As such, pre-tax profit was $682.3m, up 587.8% year-on-year, while after paying $167.9m in income tax, net profit reached $514.4m, up 896.9% increase on last year. Penn also noted a $100,000 loss attributable to non-controlling interest, meaning net profit attributable to the group was $514.5m.

However, the operator did report a 3.3% decline in adjusted EBITDAR to $478.2m, with a margin of 28.6%, while adjusted EBITDA fell 23.6% to $332.2m.