Caesars (NASDAQ:CZR) Entertainment Inc. reported its third-quarter 2023 earnings, posting the strongest consolidated adjusted EBITDA quarter in the company's history. The Las Vegas and regional segments experienced increased occupancy and higher revenues. Caesars Digital also reported positive adjusted EBITDA and improvements in online sports betting and iCasino handle. The company expressed optimism about ongoing union contract negotiations and highlighted the company's strong performance and future prospects.Key takeaways from the call include:- The company anticipates the opening of Harrah's Hoosier Park property expansion in Q4 and completion of various capital projects in 2024.- Caesars Entertainment is working on a significant construction project in New Orleans, expected to be completed before Super Bowl 2025.- The company's digital business is growing, with hold growing in excess of 30%.- The company is nearing the end of a significant capital cycle, expecting their project CapEx budget to decrease as New Orleans winds down.- The company expects to cover fixed costs and have a flow-through rate of around 50% for incremental dollars in the digital business.- The company remains confident in its goal of achieving $5 billion in EBITDA by 2025.- The company highlighted its ability to reduce promotional spending and maintain a steady tax rate.- The process for awarding a land-based casino license in New York is progressing slowly, with a potential license issuance by the end of 2024 or in 2025.- The company is working on developing certain functionality for its app, such as live same-game parlays for the NCAA and alternative line SGPs for the NBA.- The company's new app in Nevada has seen an increase in hold, volume, and average bets per user compared to the previous app.During the earnings call, CEO Tom Reeg discussed the company's ongoing projects and future prospects. The company is currently working on a significant construction project in New Orleans, which is causing disruptions but is expected to be completed before Super Bowl 2025. They also anticipate strong events such as F1 in Vegas and expect a lift in the quarter of around 5%.The company's digital business is growing, with hold growing in excess of 30%. They are pleased with the fourth quarter's performance in the digital sector. They are nearing the end of a significant capital cycle, so they expect their project CapEx budget to decrease as New Orleans winds down.In terms of future growth, they anticipate modest growth in both Vegas and regional segments, with significant growth in digital. They expect to cover fixed costs and have a flow-through rate of around 50% for incremental dollars in the digital business.The company also highlighted its ability to reduce promotional spending and maintain a steady tax rate. The marketing spend decreased by $50 million compared to the same quarter last year, and the company expects it to stabilize in the future, with the exception of long-term commitments.Regarding digital operations, the company expects hold rates to improve and aims to achieve a hold rate of 7.5% to 8% in the future. The company remains confident in its digital EBITDA target for 2025. The process for awarding a land-based casino license in New York is progressing slowly, with a potential license issuance by the end of 2024 or in 2025.Eric Hession, the CFO of Caesars Entertainment, mentioned that the company is working on developing certain functionality for its app, such as live same-game parlays for the NCAA and alternative line SGPs for the NBA. Hession also discussed the watch and bet streaming feature that Caesars launched for the NFL season, stating that the company is seeing an uptick in customer engagement but is still waiting for more data to determine changes in betting behavior.Finally, Tom Reeg, the CEO of the company, discussed the performance of their new app in Nevada. He stated that the app had seen an increase in hold, volume, and average bets per user compared to the previous app. The company is looking forward to cross-selling between their online and brick-and-mortar offerings.
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