Caesars' Q3 2025 Earnings Call: Contradictions Emerge on Las Vegas Demand, Digital Segment Growth, and Regional Promotional Strategies

Date of Call: October 28, 2025

Financials Results

• Revenue: $2.9B consolidated net revenues (Q3 2025); adjusted EBITDA $884M, hold-normalized EBITDA $927M

Guidance:

• Q4: Las Vegas trends improving sequentially with recovery driven by group/convention bookings and better leisure trends.
• Digital: on track to exceed 50% flow-through for the year; management reiterates capability to drive ~20% top-line growth with ~50% flow-through to EBITDA long-term.
• Tech rollout: universal digital wallet on proprietary TAM targeted early 2026; Missouri shared-wallet launch planned Dec 2025 (pending approval).
• Capital allocation: prioritize debt reduction and opportunistic share repurchases using free cash flow.
• Vegas: on track for a record EBITDA year in 2025 driven by strong Q4 bookings.

Business Commentary:

* Revenue and Earnings Performance: - Caesars Entertainment reported consolidated net revenues of $2.9 billion in Q3 2025, with adjusted EBITDA reaching $884 million. - On a hold normalized basis, the company reported $927 million in consolidated EBITDA. - The decline in revenue and EBITDA was attributed to poor table games hold and a difficult comparison to prior years that included WSOP results.

• Digital Segment Challenges:
• Caesars Digital delivered net revenue of $311 million, with an adjusted EBITDA of $28 million and hold normalized adjusted EBITDA of $40 million.
• The digital segment faced challenges due to incremental state taxes, higher acquisition marketing spend, and poor hold outcomes in sports.

• Despite these issues, the segment showed volume growth in sports and iCasino, with expectations for improved flow-through to EBITDA.

• Regional Segment Growth:

• The regional segment reported adjusted EBITDA of $506 million and hold normalized EBITDA of $517 million, driven by 6% net revenue growth.
• Early results from strategic customer reinvestments showed promising trends, with improved flow-through from marketing initiatives.

• The focus on refining marketing strategies and reinvesting in customer data drove positive returns.

• Las Vegas Segment Recovery:

• The Las Vegas segment reported same-store adjusted EBITDA of $379 million and hold normalized EBITDA of $398 million.
• Sequential improvement in operating trends was observed, with September delivering the strongest results of the quarter, driven by improved leisure and group demand.
• The anticipated recovery in the fourth quarter was due to a strong group calendar and improved occupancy levels.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted $2.9B Q3 revenue and sequential improvement in Las Vegas; said Digital is 'on track to exceed our 50% target flow-through' and 'capable of driving 20% top line growth with 50% flow-through.' CEO emphasized recovering trends into Q4 and expectation of a record 2025 EBITDA year in Vegas.

Q&A:

• Question from Brandt Montour (Barclays Bank PLC): Can you dig into the comments on leisure demand in Las Vegas and highlight metrics (bookings 4 weeks out, occupancy) to think about near-term sequential leisure recovery?
  Response: Leisure improved sequentially (July worst, August better, September best); group bookings drive most of Q4 improvement—leisure still softer YOY but trending up.

• Question from Brandt Montour (Barclays Bank PLC): On regionals, is the current hold-adjusted growth the type of flow-through we should expect from your promotional strategy across markets?
  Response: Marketing is being refined—dial back what's not working and expand what is—expect continued improved flow-through, not a promotional war.

• Question from Daniel Politzer (JPMorgan Chase & Co): How do you think about stimulating the leisure customer and any structural Las Vegas pricing issues; can you frame bouncing off Q3 into Q4?
  Response: No structural issue—pricing is actively managed across many items; small occupancy/rate improvements (driven by group) can quickly restore performance.

• Question from Daniel Politzer (JPMorgan Chase & Co): How do you weigh short-term promotions versus putting capital into properties to improve amenities in regionals?
  Response: We invested ~$3.1B in regionals; capital was spent to upgrade assets and promotions are used to reactivate customers so they see renovation benefits, driving organic follow-through.

• Question from Steven Pizzella (Deutsche Bank AG): September regional trends appeared to decelerate—did you see that and how should we think about Q4 comps?
  Response: September shift largely due to calendar (Labor Day timing); view August/September together and expect margin improvement as marketing is refined into Q4.

• Question from Elizabeth Dove (Goldman Sachs): High-level, how do the various puts and takes (capex, conferences, macros) play into Vegas next year?
  Response: Key variable is consumer leisure demand; mix improves via strong group calendar (helps 2026), but pace of leisure recovery dictates 2026 outcome.

• Question from David Katz (Jefferies LLC): Can you update on Digital progress toward the ~$500M run rate by Q4 and cadence into Q4?
  Response: Game/sports outcomes are the main swing factor; early Q4 weekends mixed—above last year but below budget—so it's too early to be determinative.

• Question from John DeCree (CBRE Securities): Eric, you mentioned higher acquisition marketing spend—was that expected and did it bring more customers?
  Response: Yes—incremental acquisition spend was planned into football season, drove materially higher customer acquisition but pressured near-term flow-through; payback expected over time.

• Question from Steven Wieczynski (Stifel): Given your history of cutting promotions, what gives you confidence this shift won't become a promo war?
  Response: Granular customer-level data guides targeted reinvestment; discipline is improved, intent is to close an excessive gap (not escalate a promo war), with flow-through improving.

• Question from Barry Jonas (Truist Securities): What is your view on prediction markets and have you seen any impact on sports?
  Response: No material impact yet; likely drawing volume from unregulated pools; actively monitoring regulatory developments and will avoid actions that risk licenses.

• Question from Shaun Kelley (BofA Securities): Thoughts on digital seasonality into Q4 and acquisition as wallet rolls out into next year?
  Response: Q4 is peak (football) making outcomes/partnership spend more impactful; marketing will normalize in Q4; wallet enables more top-funnel activity next year but not a large incremental spend.

• Question from Stephen Grambling (Morgan Stanley): What milestones are you watching for prediction markets; are customer balances being retained after big wins?
  Response: Legal clarity likely evolves through court rulings, potentially to the Supreme Court; customer balances rise after wins but typically don't persist long-term—volume remains driven by core growth.

• Question from Chad Beynon (Macquarie Research): Did the city's ad campaigns stimulate demand and could that continue into 2026?
  Response: Yes—participation in the city sale campaign lifted bookings; LVCVA intends ongoing campaigns, so expect continued messaging into 2026.

• Question from Jordan Bender (Citizens JMP Securities): Thoughts on potential Las Vegas asset sales and the Caesars Forum put/call agreement?
  Response: Not actively marketing Vegas assets; expect VICI to exercise its option near its timeline; open to discussions but not pursuing a sale now.

• Question from Daniel Guglielmo (Capital One Securities): OpEx pressures—what expenses outside marketing will you focus on in 2026 budgeting?
  Response: Labor is the largest focus; union contracts are manageable and we'll continue optimizing labor—no other major new cost pressures identified.

Contradiction Point 1

Las Vegas Leisure Demand and Recovery

It directly impacts expectations for leisure demand recovery in Las Vegas, which impacts tourism and revenue generation for Caesar's Entertainment.

Can you discuss the leisure demand trends in Las Vegas and the sequential recovery progress? - Brandt Montour (Barclays Bank PLC)

2025Q3: July was the worst month in terms of leisure demand, with August and September showing gradual improvement. The recovery is expected to continue into the fourth quarter. - Thomas Reeg(CEO)

What factors are impacting Las Vegas leisure demand this summer? - Brandt Antoine Montour (Barclays Bank PLC)

2025Q2: Vegas faces normal seasonality; international, particularly Canadian, demand is soft. The current market conditions, especially in leisure, are not alarming, and group bookings are expected to stabilize in the coming quarters. - Thomas Robert Reeg(CEO)

Contradiction Point 2

Digital Segment Growth and Targets

It involves changes in financial forecasts, specifically regarding digital segment growth and targets, which are critical indicators for investors.

Can you provide an update on the digital segment’s Q4 performance, considering sequential trends and recent sports outcomes? - David Katz (Jefferies LLC)

2025Q3: Fourth-quarter sports outcomes have not improved significantly from Q3, impacting the run rate. Despite this, Caesars remains confident in achieving a run rate of $500 million for the segment. - Thomas Reeg(CEO)

Can you provide more details on the Digital segment's acceleration and future outlook? - David Brian Katz (Jefferies LLC)

2025Q2: Digital's momentum is strong, with expected growth in the second half of 2025. The initial target of $500 million EBITDA by 2026 is achievable, and we anticipate exceeding this target in subsequent years. - Thomas Robert Reeg(CEO)

Contradiction Point 3

Regional Promotional Strategies and Customer Acquisition Costs

It involves the company's approach to regional promotional strategies and customer acquisition costs, which significantly impacts marketing and operational expenses, as well as revenue and competitiveness.

How are leisure demand trends in Las Vegas and sequential recovery progressing? Are current flow-through results from regional promotions sustainable across all markets? - Brandt Montour (Barclays Bank PLC)

2025Q3: Caesars is refining marketing efforts, early results indicate better flow-through. We have made some investments, but we have made them strategic rather than promotional. - Thomas Reeg(CEO)

How do you see OSB growth trends amid reduced reinvestment levels, particularly at the high and low ends? - Shaun Kelley (Bank of America)

2025Q1: We've reduced reinvestment in unprofitable customer segments, affecting overall volume growth... The core customer segments are growing high single digits to low double digits despite noise from events and new state launches. - Eric Hession(CPO)

Contradiction Point 4

Digital Segment Value and Strategic Options

It involves differing perspectives on the value and strategic options for the digital segment, which could impact investor decisions and company strategy.

Can you update the digital segment's Q4 performance considering sequential trends and recent sports outcomes? - David Katz (Jefferies LLC)

2025Q3: The digital segment is growing faster than peers, and we're well on track for our $500 million EBITDA goal. - Thomas Reeg(CEO)

How do you expect expenses for Las Vegas and regional markets to evolve in 2025, and how do you plan to monetize the digital segment? - Carlo Santarelli (Deutsche Bank)

2024Q4: It's a natural time to consider strategic options for the digital business. Operationally, keeping everything together makes the most sense, but if the dichotomy remains, we'll look at ways to create value for shareholders. - Thomas Reeg(CEO)