Caesars Entertainment reported its first quarterly earnings following its acquisition by Fertitta Entertainment in late May, revealing mixed results with significant declines in its Las Vegas operations. The company did not hold an analyst call this quarter due to the acquisition process, which is anticipated to finalize in spring 2027. Both Caesars and Fertitta have been tight-lipped about the $17.6 billion acquisition deal; recently, two executives from Fertitta received Nevada licenses, yet no long-term strategies have been disclosed. Caesars declined to comment on the deal as of last week.
In terms of performance, Caesars saw a 3% year-over-year increase in group net revenue, which reached $2.99 billion for the quarter. For the first half of the year, revenues totaled $5.9 billion, also reflecting a similar increase, surpassing analysts’ expectations of $2.96 billion for Q2.
However, adjusted EBITDA fell by 4% year-over-year to $920 million for the quarter and decreased by 2% to $1.8 billion for the half-year. Within its financials, Caesars reported a net loss of $62 million for the quarter, though this was an improvement from the $82 million loss reported in the same period last year. The net loss for the first half of the year was $160 million, down from a $197 million loss in the previous year.
Las Vegas proved challenging for Caesars, with net revenues falling 3.5% in Q2 to $1 billion and slipping 2% for the half-year to $2 billion. Net income in the Las Vegas market fell 26% to $156 million for the quarter and declined 15% to $332 million for the half-year. Adjusted EBITDA also dropped significantly, down 13% to $410 million in Q2 and down 7% to $836 million for the first six months of the year.
Despite these setbacks in Las Vegas, there was notable growth in regional operations. Caesars reported a nearly 10% revenue increase in its regional segment for Q2, totaling $1.5 billion, and a 6% increase for the half-year, reaching $3 billion. Adjusted EBITDA in regional operations increased by 11% to $488 million in Q2 and rose by 5% to $923 million for the half-year. However, net income for the regional segment was only $23 million for Q2 and just $3 million for the half-year, marking a dramatic 66% decrease year-over-year.
Fertitta’s impending acquisition may lead to significant changes within Caesars’ regional assets, especially as Fertitta’s Golden Nugget brand competes in multiple markets, including Lake Tahoe, Laughlin, Atlantic City, Lake Charles, and Biloxi. In anticipation of regulatory scrutiny, Fertitta has submitted a Hart-Scott-Rodino antitrust application to the Federal Trade Commission, with state regulators likely to impose restrictions, similar to the asset divestitures required during Caesars' acquisition by Eldorado Resorts in 2020.
The digital segment, on the other hand, reported a decline in Q2, marking an unusual downturn amidst a generally upward trend over the past two years. Quarterly net revenue from Caesars Digital reached $351 million, up 2% year-over-year, yet adjusted EBITDA fell 15% to $68 million, and net income tumbled by 31% to $27 million. For the first half of the year, revenue grew by 7% with adjusted EBITDA rising 11% to $137 million, while net income increased 25% year-over-year to $49 million.
Truist analyst Barry Jonas remarked that regional operations appeared to be a positive segment for Caesars, while concerns lingered over the performance in Las Vegas. He highlighted a decrease in online sports betting hold impacting results but noted that iGaming performed well during the quarter. Although the Fertitta acquisition is confirmed, its closing date remains uncertain. Jonas maintained a hold rating on Caesars shares, which stagnated around $30 on trading platforms, reporting an EPS loss of $0.30 and failing to meet the expected loss of $0.05 per share.
