Caesars Entertainment posted a net loss of $692m (£568.6m / €679.4m) in its digital division in the first half of financial year 2022, despite an improved performance in the second quarter. did.
In the first quarter of 2022, the operator posted a net loss of $576 million in its digital business and a negative net income of $53 million.
At the time, Caesars Chief Executive Officer Tom Reeg took steps to address the problem by cutting costs by about $250 million, especially in the areas of marketing and advertising. He said he was already teaching.
This appears to have started to have an impact in Q2, when digital revenue was positive at $152 million, a significant improvement from Q1 and up 29.9% year-over-year.
However, Caesars posted a net loss of $116 million for the division during the quarter. This, combined with the loss in the first quarter, means the division generated his $692 million net loss in the first half.
Reeg warned on a conference call with investors that more losses were likely to be reported in the third quarter. This is because operators continue to work to transform this segment into a smaller but more profitable business.
“The question is how do you get positive,” Lee said. “The key factor in the third quarter is that no significant new sites will come online, so the business will be dominated by previous customers, not new customers.
“It cannot be overemphasized that the cost of acquisition and the cost of retention are dramatically different. There will be acquisition activity, but it won’t be in a new scale state until January in Ohio.
“We don’t lose money when we need it, and we have a long track record of turning brick-and-mortar, heavily subsidized businesses into much more profitable businesses.” It’s the same thing we do digitally.
“When we started going digital, we didn’t have the ability to segment our customers. .”
Looking at the overall results for the second quarter, revenues were up 10.6% to $2.82 billion. This was driven by Las Vegas revenues up 33.6% to $1.14 billion and regional revenues down 4.1% to $1.45 billion.
Total operating expenses of $2.22 billion increased 16.1%, with cost of goods sold rising faster than revenues, while other expenses, primarily interest expense, increased 5.1% to $514 million.
This resulted in pre-tax income of $88 million, down 12.9% from last year. After accounting for taxes and losses from discontinued operations, net loss attributable to Caesars was $123 million and 2021 earnings were $71 million.
Caesars also said fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $978 million, down 3.3% from the year-ago quarter.
“Our second quarter results were a record quarterly EBITDA record in Las Vegas and consolidated EBITDA for brick-and-mortar properties driven by continued strength in the regional market when compared to 2019. It reflects the record,” Reeg said.
“Our digital segment’s operating performance improved dramatically compared to the first quarter, and we are optimistic about the segment’s trends for the rest of the year.”
Looking to the first half, total revenue increased 15.0% to $5.11 billion. This was largely due to Las Vegas revenues he increased 52.1% to $2.06 billion and regional revenues increased 3.7% to $2.81 billion. Digital revenue decreased 61.9% to $99 million, primarily due to high promotional spending that led to the negative revenue in the first quarter. Managed and branded revenue increased 30.8% to $140 million.
Operating expenses increased 29.6% to $4.52 billion and other expenses decreased 11.6% to $1.06 billion, while pre-tax loss increased 19.0% to $470 million.
Although Caesars received tax benefits of $55 million, after accounting for discontinued operations such as William Hill’s non-U.S. operations, the net loss of half attributable to Caesars was $803 million. , more than double the $352 million loss recorded in the first half of 2021.
Additionally, Adjusted EBITDA for the first half was $1.27 billion, down 16.8% year over year.
However, after the end of the first half, the successful completion of the sale of William Hill’s non-U.S. assets to 888 on July 1 gave Caesars a net profit of $730 million as of July 22. was able to be used for debt reduction. .
Meanwhile, Caesars also announced that its sportsbook app is live in Wyoming.
Consumers can download the app and bet on a variety of sports from anywhere in the state. Bettors can also earn credits for each wager. Credits can be redeemed for Caesars Rewards experiences and bonus cash in the app.
Eric Hession, co-president of Caesars Digital, said: “The unforgettable experience by Caesars Rewards and our upgraded mobile sports betting app is a special combination that we are excited to bring to the market.”
Caesars Sportsbook is currently available in 24 states and jurisdictions, 18 of which are mobile betting.
