Caesars Digital Achieves Profitable First Quarter
Response to Caesars Entertainment's (NASDAQ: CZR) second-quarter results was disappointing, evidenced by a 2% decline in Tuesday's evening trading session. However, a positive aspect emerged from the report: Caesars Digital experienced profitability in the June quarter.
Caesars Digital, incorporating Caesars Sportsbook, recorded an adjusted, same-store earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of $11 million in the second quarter, contrasting a $69 million loss in the previous year's period.
Caesars Digital has documented its initial quarter with positive adjusted EBITDA since its renaming to Caesars Sportsbook in Q3 2021, according to CEO Tom Reeg in a statement.
Additionally, the gaming company recently launched an independent iGaming platform, a move experts anticipate will prove beneficial long-term. In Nevada, where Caesars dominates the mobile sports betting market, the William Hill app will transition to Caesars' technology later this year.
A Pivotal Move for Caesars Digital
While the core Caesars investment narrative revolves around land-based casinos, net income in the online gaming space should not be undermined.
This is even more salient when competitors forecast profitability or are nearly there. Caesars Sportsbook was among the first operators to trim advertising budgets, and the effect is becoming noticeable.
Competitor FanDuel is on track for profitability for all of 2023, while BetMGM turned EBITDA-positive in Q2 and expects to maintain this status in the latter half of 2023.
Paring down to Caesars Digital, the gaming company posted Q2 adjusted EBITDA of $1 billion, an improvement from $978 million the year before. Income climbed to $2.9 billion from $2.8 billion.
"The second quarter of 2023 represented sustained strength in our business. Demand continues in both Las Vegas and our regional markets," remarked Reeg. "Our recent property openings are generating better-than-anticipated returns."
Caesars' Continued Debt Reduction
Despite Caesars Digital's profitability, investors and analysts might be preoccupied with Caesars' ongoing efforts to alleviate its massive debt load, one of the biggest in the gaming industry. These endeavors are bearing fruit.
On June 30, the gaming company's debt stood at $12.7 billion, down from $13.2 billion at the end of Q1. The company also had $1.1 billion in cash, not including $205 million in restricted accounts.
"On July 17th, we repaid the $250 million Baltimore Term Loan, priced at SOFR plus 4.0%, due in Q4 2024, following our acquisition of the remaining 24% equity stake in the property," noted CFO Bret Yunker in the statement. "Our net leverage under our bank credit facility was 4.2x as of June 30, 2023, and we plan to continue reducing debt and leverage in the second half of 2023."
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Source: www.casino.org
