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SEC filingPENN's Q3 2025 revenue grew 4.8% YoY, driven by Interactive segment growth, but a $825M goodwill impairment led to a net loss.
For the three months ended September 30, 2025, PENN Entertainment reported total revenues of $1.72 billion, a 4.8% increase compared to $1.64 billion in the prior year period. The growth was primarily driven by a 21.7% surge in Interactive segment revenues, which reached $297.7 million, fueled by iCasino growth and product enhancements. Gaming revenue increased 2.9% to $1.33 billion, while food, beverage, hotel, and other revenue rose 11.6% to $392.1 million, partly due to gaming tax reimbursement amounts related to third-party online sports betting partners.
Despite the top-line growth, the company reported a net loss of $865.1 million, compared to a net loss of $37.5 million in Q3 2024. This was primarily due to a non-cash goodwill impairment charge of $825.0 million in the Interactive segment, triggered by the realignment of digital strategy following the early termination of the ESPN BET agreement. Operating expenses surged 58.7% to $2.49 billion, largely reflecting this impairment. Excluding impairment and other non-recurring items, Consolidated Adjusted EBITDA increased slightly to $194.9 million from $193.5 million, indicating underlying operational stability.
Segment performance was mixed. The Northeast segment saw a modest 0.8% revenue increase to $690.5 million, but Adjusted EBITDAR margin contracted 40 bps to 28.7% due to higher labor costs. The South segment faced headwinds from new supply, with gaming revenue declining 2.3%, though total revenue rose 1.0% on non-gaming strength; Adjusted EBITDAR margin fell 330 bps to 33.6%. The West segment was a bright spot, with revenue up 4.9% and margin expanding 90 bps to 36.9%, driven by gaming revenue growth. The Midwest segment reported a 2.1% revenue increase but margin declined 70 bps to 39.9% due to labor costs and competitive pressures.
The Interactive segment was the key growth driver, with revenue up 21.7% to $297.7 million. Adjusted EBITDA loss narrowed to $76.6 million from $90.9 million, reflecting improved revenue and lower marketing expense. The segment's margin improved to -25.7% from -37.2%. The company highlighted growth in its Hollywood-branded iCasino and theScore Bet iCasino apps, as well as higher slot product mix improving hold rates.
Management provided a cautious but strategic outlook. The company is realigning its digital focus following the early termination of the ESPN BET agreement, planning to rebrand its U.S. OSB offering to theScore Bet by December 1, 2025. This shift aims to leverage the strength of its iCasino and Canadian operations while using OSB for customer acquisition and cross-sell opportunities. The company expects to pay ESPN $38.1 million in Q4 2025 to settle all remaining fees.
On the development front, the Joliet Project opened on August 11, 2025, and the M Resort hotel tower is expected to open on December 1, 2025. The Aurora and Columbus projects are expected to open in Q2 2026. For FY 2025, management anticipates capital expenditures of $255 million and capital project expenditures of $430 million, primarily for these development projects. The company also announced a new $750 million share repurchase program commencing January 1, 2026, and repurchased $85 million in shares subsequent to Q3 2025. Management believes operating cash flow and available credit will be sufficient to meet liquidity needs.
PENN's cash and equivalents decreased to $660.1M from $706.6M at Dec 2024, while marketable securities (available-for-sale and held-to-maturity) totaled $38.2M. Total debt (net) stood at $2,834.5M, up from $2,797.3M, partly due to $510M drawn on the revolver and $223.8M convertible repurchase. Stockholders' equity fell sharply to $1,952.8M from $2,862.7M, driven by a $770.2M net loss and $269.4M in share repurchases. Deferred revenue was $37.6M, primarily from Interactive market access agreements.
The Notes disclose no material purchase commitments beyond lease obligations. Lease maturities total $5.5B in operating lease payments (undiscounted), with $3.9B present value, plus finance leases and financing obligations. The ESPN Sportsbook Agreement termination requires $38.1M in Q4 2025 and $5.0M post-termination, settling all obligations. A $39.5M tax indemnification liability remains.
PENN repurchased 15.2M shares for $269.4M YTD through Sep 2025 (avg $17.70). Post-quarter, 4.9M shares were bought for $85.0M, leaving $395.4M under the old authorization. A new $750M program begins Jan 2026. No dividends are paid. Debt activity included $510M revolver draw, $223.8M convertible repurchase, and $11.8M loss on extinguishment. Capex totaled $457.3M (8.9% of revenue), with heavy investment in the Joliet and M Resort projects ($130M and $150M from GLPI leasebacks).
Revenue by segment (Q3 2025 vs Q3 2024): Northeast $690.5M (+0.8%), South $291.0M (+1.0%), West $138.3M (+4.9%), Midwest $298.3M (+2.1%), Interactive $297.7M (+21.7%). Segment Adjusted EBITDAR: Northeast $197.9M (28.7% margin), South $97.7M (33.6%), West $51.1M (36.9%), Midwest $119.1M (39.9%), Interactive -$76.6M (negative). The Interactive segment includes a $825M goodwill impairment, reflecting the ESPN brand termination and strategic pivot to theScore Bet.
Operating cash flow of $401M was $1.17B higher than the net loss of $772M, reflecting significant non-cash charges: $840M impairment, $333M depreciation, $266M non-cash lease expense, and $43M warrant expense. These were partially offset by a $215M gain on financing arrangement. Working capital provided a modest $5.4M net inflow, with notable decreases in accounts payable ($7.5M) and operating lease liabilities ($254.6M) being offset by other items.
Capital expenditures jumped to $457M (up 75% YoY), driven by development projects. Free cash flow (CFO minus capex) was negative $56.3M, a deterioration from negative $5.3M in the prior period. Despite the cash burn, the company funded $269M in share repurchases and $224M in debt repurchases, primarily through $510M net borrowings on its revolving credit facility.
Anomalies include the $215M gain on financing arrangement (non-cash) and the $840M impairment, which significantly distort the net loss. Operating cash flow would be lower without the large non-cash add-backs. The company's cash position declined $31.7M to $692.1M.