Tuesday, April 28, 2026 at 5 p.m.
ET CALL PARTICIPANTS President and Chief Operating Officer — Anthony CaranoChief Financial Officer — Bret YunkerChief Executive Officer — Thomas ReegPresident, Caesars Digital — Eric Hession Consolidated Net Revenue -- $2.9 billion, up $77 million or 3% year over year, reflecting growth across segments.Adjusted EBITDAR -- $887 million, increasing $3 million from last year, with notable performance in digital operations.Las Vegas Adjusted EBITDAR -- $426 million, a decrease of $7 million year over year, on flat revenues, as disclosed by management.Las Vegas Occupancy -- 95.3% with year-over-year ADR growth of 1%, indicating sequential improvement in hospitality trends.Regional Segment Net Revenue -- $1.4 billion, representing a 3% gain compared to the previous year.Regional Segment Adjusted EBITDAR -- $435 million, down $5 million year over year, with Super Bowl impact excluded as a one-time event.Caesars Entertainment (CZR 2.57%) Windsor Acquisition -- Closed for $54 million on March 3, with results included in regional reporting.Digital Segment Net Revenue -- $374 million, achieving a record high for the first quarter.Digital Segment Adjusted EBITDA -- $69 million, with EBITDA margins expanding 566 basis points to 18.4% driven by 66% flow-through.Digital Sports Net Revenue -- Increased by 9%, while total volume declined 3% and mobile sports volume fell 1%; hold improved by 100 basis points to 8.3%.iCasino Net Revenue -- Grew 18%, attributed to higher volume and increased average monthly active users.Monthly Unique Digital Players -- Rose 2% to 512,000, with average revenue per player up 15% to $219.Digital Tech Adoption -- Proprietary account management system is live in 27 jurisdictions, targeting full rollout by April’s end.Total Regional CapEx Last 5 Years -- Over $3 billion invested, with major projects concluding after the Tahoe Master Plan’s June completion.Free Cash Flow Forecast -- Management expects "strong free cash flow in 2026" due to operating momentum, lower interest expense, and decreased CapEx.Capital Allocation Update -- No share repurchases occurred in the first quarter; outflows driven by bonus, interest, and Windsor acquisition payments.Digital Long-Term Targets -- Management reaffirmed "a business capable of achieving 20% top line revenue growth with 50% flow-through to EBITDA."VICI Lease Coverage -- Management acknowledged prior quarters' concerns but provided no further update, stating, "when the 2 of us have something to report, I’ll come back to you." Need a quote from a Motley Fool analyst? Email [email protected] CEO Reeg noted that April Las Vegas performance was "a little softer than we anticipated," primarily due to hold rates, and expects second quarter results to be just short of last year’s comparable period.Regional margin decline observed in the first quarter, as management cited the absence of Super Bowl-related gains and indicated revenue growth would be needed for margin recovery.
Management delivered a clear outline of segment-level performance, pinpointing digital as the principal driver of quarterly growth and highlighting significant digital KPI improvements.
The company executed strategic capital deployment, including the Caesars Windsor acquisition and completion of multi-year regional CapEx, with the transition now toward cash flow harvesting.
The call addressed evolving group and convention trends in Las Vegas and provided direct insight on anticipated challenges impacting near-term Vegas results, reaffirming a disciplined approach to capital returns and balance sheet management.
Management directly stated, "group business this year should be another record for us on top of last year's record," reinforcing focus on convention-driven growth in Las Vegas.Reeg clarified, "there was no meaningful shift in casino rooms" in achieving high occupancy, attributing changes to higher group bookings rather than increased promotional activity.Digital customer acquisition costs have remained "pretty steady," with leadership attributing competitive advantage to the Caesars Rewards database rather than promotional spending intensity.Future digital growth is projected to be supported by new jurisdiction launches, as indicated by the completed technology rollout plan and upcoming Alberta app launch.Capital strategy entering the remainder of the year prioritizes debt reduction and share buybacks as free cash flow normalizes post-acquisition and seasonal outflows.Regional margin challenges are linked to event-driven volatility, with management pointing to normalized growth prospects beyond non-recurring Super Bowl contributions.
INDUSTRY GLOSSARY ADR (Average Daily Rate): The average revenue earned per occupied hotel room per day, a standard hospitality metric.Handle: Total amount wagered by customers in sports betting before deductions for winnings or other adjustments.Hold: Percentage of total wagers retained by the operator after payouts.EBITDAR: Earnings before interest, taxes, depreciation, amortization, and rent; metric used for assessing core profitability adjusted for rent expenses.Flow-through: The percentage of incremental revenue converted into EBITDA, measuring operational efficiency.iCasino: Online casino gaming vertical, separate from sports betting (OSB).OTA (Online Travel Agency): Third-party platforms distributing and booking hotel inventory online.VICI Lease: Real estate lease agreement between Caesars Entertainment and VICI Properties, referenced in regards to portfolio asset coverage and risk.
Full Conference Call Transcript Anthony Carano: Thank you, Brian, and good afternoon to everyone on the call.
Caesars delivered solid results for the first quarter of 2026 as consolidated net revenues of $2.9 billion increased $77 million or 3% year-over-year.
Adjusted EBITDAR of $887 million improved by $3 million over the prior year.
Highlights for the quarter include continued sequential improvements in operating trends in Las Vegas, revenue and EBITDAR growth in the regional segment after excluding the impact of the Super Bowl in New Orleans last year and record Q1 revenues and EBITDA in our Digital segment.
Starting in Las Vegas.
The company delivered adjusted EBITDAR of $426 million versus $433 million last year.
on flat revenues.
We experienced a significant sequential improvement in the hospitality vertical in Q1 with occupancy of 95.3% in the quarter and year-over-year ADR growth of 1%.
This marks a dramatic improvement versus the second half of 2025.
Occupancy and rate trends benefited from a strong group and convention lineup with group occupied room during the quarter.
While leisure trends were still down on a year-over-year basis versus the second half of 2025.
We remain focused on elevating our product offerings in Los Vac.
Our newly renovated villas at Caesars Palace guest room product and casino floor remodels continue to generate excellent feedback from our guests.
Looking ahead, I'm excited for the opening of the Omnia day club at Talison May 15.
The full remodel of the Augustus Tower at Ceasars Palace for completion by early 2027 and the opening of Category 10 by Luke Combs later this year.
For the remainder of 2026, we continue to forecast sequential improvement in Las Vegas operating trends driven by group and convention mix and stabilizing leisure trends.
Moving to our regional segment.
The company reported net revenues of $1.4 billion, a 3% increase year-over-year and adjusted EBITDAR of $435 million, down $5 million from the prior year.
The regional segment delivered improved EBITDAR results versus last year after excluding the benefit of the Super Bowl New Orleans last year.
Our targeted marketing reinvestment strategy within our regional segment continues to deliver positive results, driving increases in rate play in Q1.
On March 3, we closed on the acquisition of Caesars Windsor.
Results of Ceasars Windsor are now included in our regional segment.
Additionally, on April 9, we opened our newest managed property, Harris Oklahoma, which expands Ceasars Rewards to a new market.
As we look ahead to 2026 in our regional segment, we expect to benefit from a group mix in Arena, the inclusion of Caesars Windsor, the completion of our $200 million Taco Master Plan renovation this month, hosting of select property events around the World Cup and continued return on investment on recent strategic marketing reinvestment.
With the completion of our Tahoe Master Plan scheduled in June 2026, we will have successfully completed all major large planned regional CapEx projects since the completion of the merger back in 2020.
in total, we have invested over $3 billion in CapEx into our regional portfolio over the last 5 years.
Our regional portfolio is positioned to benefit from these investments moving forward.
I want to thank all of our team members for their hard work this quarter.
Their dedication to exceptional guest service continues to be the driving force behind our company's achievements.
With that, I will now turn the call over to Eric for some insights into the first quarter performance of our Digital segment.
Eric Hession: Thanks, Anthony.
Caesars Digital delivered record first quarter net revenue and adjusted EBITDA of $374 million and $69 million, respectively.
Flow-through during the quarter was strong at just over 66% and EBITDA margins expanded 566 basis points to 18.4%.
Our results were driven by the following underlying KPIs during the quarter.
On the sports side, net revenue was up 9%.
Total volume declined 3% with mobile sports volume declining 1% with the declines more than offset by hold, which increased 100 basis points to 8.3%.
In addition, parlay mix, average like per parlay and cash out mix all increased versus the prior year period.
In iCasino, we delivered 18% net revenue growth driven by strength in volume and average monthly active users.
We continue to elevate our product offering during the quarter to include new in-house games, improved bonusing capability and incented cross-play with brick-and-mortar through our remote exclusive product launches and customer events.
Overall, in Q1, our total monthly unique players increased approximately 2% to 512,000 and average revenue per monthly player was up 15% to $219.
From a tech perspective, we continue to convert new jurisdictions to our universal wallet and proprietary player account management system, which is now live in 27 jurisdictions and should be live in all jurisdictions by the end of April this year.
As we look ahead, I'm pleased with the significant progress on the technology side of the business is driving net revenue growth in both sports and iCasino.
The continuous progress we're making is showing up in our consolidated digital top line results.
The revenue growth, combined with our efficient customer acquisition spend and our focus on operational excellence drive solid flow-through to EBITDA.
We continue to see a business capable of achieving 20% top line revenue growth with 50% flow-through to EBITDA, which keeps us on track to achieve our long-term financial goals.
I'll now pass the call over to Brett for some comments on the balance sheet.
Bret Yunker: Thanks, Eric.
As Anthony mentioned, on March 3, we acquired the operations of Caesars Windsor for USD 54 million and entered into a 20-year operating agreement with the Ontario Lottery and Gaming Corporation.
We are excited to add Caesars Windsor to our regional portfolio.
Our first quarter consolidated results demonstrated the stability of our Las Vegas and regional segments and the continued growth in digital.
We expect to deliver strong free cash flow in 2026 during the balance of the year as a result of continued operating momentum, lower cash interest expense and lower CapEx.
Over to Todd.
Thomas Reeg: Thanks, Brett, and thanks, everybody, for joining.
Happy with the start to the year, strong quarter for us.
Vegas is obviously in a much healthier spot than it was kind of middle of last year.
Starting the summer, still a tale of a very, very strong market when big events and groups are in town and softness when that isn't the case.
I'd tell you, the ConAg week here was spectacular across the market have talked to our peers that saw the same.
That's really a spectacular event and those types of groups, the entire city gets to participate.
So we love those weeks, and we want to find more of them, we're working with the LVCVA to find more prospects that look like that.
As we look into second quarter, when I told -- when we met on our last earnings call, I told you I'd expect second quarter to be up slightly year-over-year.
I'd tell you, April was a little softer than we anticipated, largely because we didn't hold like we did last year.
So I'd say we'll still likely be just short of last year, but again, much healthier than it's been.
And then we cycle into comps versus last summer as everybody remembers that was a tough summer in Vegas.
Vegas is the FIT business continues to improve.
Our bookings feel good.
It just feels like a healthier market than it did say, 10 months ago for us.
So we feel good there.
Regionals, if you recall, last year, we had the Super Bowl in New Orleans.
That was a little over $10 million of incremental EBITDA that obviously didn't repeat with Super Bowl, not in one of our regional markets.
But absent that, Regionals had a growing quarter, are off to a very strong start in April.
So we feel good about regionals, the rest of the year.
As Anthony said, our Tahoe redevelopment will be complete by the beginning of the third quarter.
It's less disruptive than it was last year right now.
We have the largest group of bowlers.
Recall, that's a 3-year cycle with this year being the largest.
So group business sets up well in region.
We feel very good about Regional.
Eric talked about digital highlights, pleased with that quarter.
I know others have pointed to prediction markets as an impact on customer acquisition costs.
Recall that the bulk of our customer acquisition comes from our Caesars Rewards database.
That's a particular advantage now.
We're not swimming in those same pools that where production markets are making acquisition costs higher.
So you can see in our numbers, we had a very strong quarter, and we're off to a good start in second quarter as well.
Also remember that we have some significant partnership expenses that roll off in '26.
The bulk of those benefits will flow to us in the third and fourth quarter of this year and then into the first quarter of '27.
So digital looks very strong.
We're still on the path that we laid out a long time ago toward $500 million or more of EBITDA.
With the completion of our capital cycle, we're in a free cash flow harvesting stage now.
You've seen our capital expenditures come down we have been balanced between buying back stock and paying down debt.
You'll see in the first quarter, we didn't buy back stock.
First quarter for us is a heavy cash outflow quarter with our bonus payments, interest payments and then in this year's quarter, we spent the $50 million plus to buy out the Windsor contract.
So you should expect, as we move forward through the year through our having free cash flow quarters, second through fourth then we'd be back to a balance between debt paydown and stock repurchase.
And with that, I'll open up the floor to questions.
Operator: [Operator Instructions] Our first question comes from Dan Politzer with JPMorgan.
Daniel Politzer: First, I wanted to talk about Las Vegas a bit.
Tom, you said the market feels a bolter than maybe 10 months ago.
Can you maybe talk about what specifically you're seeing? Is there signs of stabilization in that leisure category, mid weekend, high and low end just kind of parse out the market a bit in more detail? Thomas Reeg: Yes, I'd say leisure market has continued to get healthier from the kind of the lows of last summer.
We'd expect to see typical -- back to typical Vegas seasonality as we get into the hot months.
But that leisure customer does feel a little bit firmer than it did kind of each quarter since third quarter of last year.
As I said, it's a tale of weekends, weeks when the market has significant group events, significant sporting events, significant attractions, those are exceedingly strong, and we still do have weeks that are software weeks in April that were soft, where we just didn't have a great calendar in the market.
But group business this year should be another record for us on top of last year's record.
We're excited in May, the State Farm Conference comes back.
for us, that will be a nice lift for us.
And we feel better each quarter about how Vegas is performing.
And I think the quarters of there's a downdraft that we're trying to catch up to our in the rearview mirror.
I think it should be pretty stable going forward.
And in terms of high end versus low end, I think it's -- as I've said before, I think Center Strip in general, has held up the best.
Either end of the strip has held up less well.
High-end has held up better than low end but Center Strip has kind of trumped high end versus low and we don't have a big bifurcation between, say, Caesars Palace and Heras in terms of performance, it's all fairly uniform for us.
Daniel Politzer: Got it.
And then more of a kind of high level one.
Certainly you said you're going to be back in the market on share repurchases in the coming quarters.
As you guys think high level philosophically about the value of the equity, can you just remind me or remind us of how you think about the proposition there? What do you think public equity investors are missing or overlooking as it comes to the stock valuation as you think about going back into the open market? Thomas Reeg: I mean we're looking at the returns we can get through buying our stock.
There's obviously a free cash flow yield associated with that.
Paying down debt, we are still more levered than we would -- then would be our preference.
So there's continuing an active desire to delever.
And then we have returns on growth capital projects.
And as free cash flow comes in, we design which is the most attractive use of that cash flow.
And as has been the case in the last year or so, the answer has typically been some mix of share repurchase and debt repayment, and that's what we'd expect going forward.
Operator: Our next question comes from [ Brent Montour ] with Barclays.
Unknown Analyst: Hello, everybody.
Maybe starting with regional, Tom, I was wondering if you could give us some comments on that customer and how they're sort of faring in this environment with slightly higher gas prices.
Obviously, we have stimulus that started coming in better.
But the March data industry-wide did seem to slow and now there are some calendar issues just Sort of how do those sort of puts and takes sort of net out for you guys and what you're seeing on the ground? Thomas Reeg: I would say the consumer in general, but particularly the regional consumer has been remarkably resilient through the noise that we've seen in the last couple of months.
Regional business in general feels firm, we feel very good about what we're seeing there and what we see going forward.
We do have some idiosyncratic stuff in Northern Nevada, in particular.
That's a tailwind for us.
But across the board, regionals feel pretty good for us.
Unknown Analyst: Okay.
And then maybe for Eric, you said, Eric, that the digital is still capable of doing 20% top line.
You guys reported in top line, the low teens in the first quarter.
but you gain share and sort of beat the industry on the iGaming side.
So how do you get back to that 20% overall net revenue in the current environment? Eric Hession: Yes.
I think the first quarter, our sports volumes being down 1% lower than we would expect for the long term.
I think it's just annualizing some of the effects from last year with the Super Bowl being in New Orleans, and the teams may be being not as exciting for people for the Super Bowl caused some of that.
And then in addition, the high hold increases offset some of the handle growth.
But I think if you have mid-single-digit handle growth and then the iCasino side continuing to grow like it is, that's how we can get to that 20% range.
As you saw, we grew much faster than the 50% from a flow-through perspective.
So some months and quarters will have a flow-through that's going to be higher like we did this quarter.
And we don't need to get that 20% revenue growth to get the bottom line growth that we're targeting.
Operator: Our next question comes from Lizzie Dove with Goldman Sachs.
Elizabeth Dove: Just going back to Vegas for a second.
There was a lot of talk last year about bringing value back to Vegas, and we've seen one of your peers bring out these all-inclusive packages and whatnot to kind of stimulate that leisure consumer.
I'm curious where you are in that kind of process of any kind of pricing changes or how you think about that in terms of bringing back the leisure consumer more in the remainder of the year? Anthony Carano: Yes.
The team is doing a great job here in Vegas looking at all of our properties and welcoming guests at every price point, we've got the all you can eat drink at a number of our properties on the east side.
We've taken a look at price up and down all of our properties.
And I think we're in a pretty good spot to attract every guest to Las Vegas.
Thomas Reeg: And Lizzie, keep in mind, I know that narrative has been out there quite a while.
We were over 95% occupancy this quarter.
So we feel very good about where we are in terms of price value.
Elizabeth Dove: Got it.
