PENN Entertainment CEO Jay Snowden tried to remain upbeat on Thursday in spite of a disappointing quarter last fall when the company launched a transformative sports betting partnership with ESPN.
On one hand, the launch of ESPN BET in November resulted in a wave of registrations that far exceeded the company’s expectations. The addition of more than one million new customers over a six-week period enabled PENN to expand its digital database by approximately 50%, the company disclosed in a presentation. On the other, a spike in promotional intensity associated with the launch drove a considerable net loss over the company’s fourth quarter of 2023.
For the quarter, PENN Entertainment reported a net loss of $358.8 million, driven by an adjusted EBITDA loss of $333.8 million from PENN Interactive, the company’s digital segment. High customer acquisition rates pushed up the losses, well above PENN’s guidance of negative-$100 million to negative-$150 million. The losses from PENN Interactive more than doubled analysts’ expectations of negative-$151 million for the three-month period ended on Dec. 31, 2023.
“ESPN BET attracted significantly more first-time depositors (FTDs) than we anticipated, which drove higher than expected promotional expense,” Snowden wrote in an earnings release.