Churchill Downs' Q2 2025: Diverging Views on International Growth, Capital Strategy, and Market Dynamics

Record Financial Performance:
- Churchill Downs Incorporated reported an all-time record net revenue of $934 million and record adjusted EBITDA of $451 million for the 2025 second quarter.
- This marks the fifth consecutive second quarter with record financial performance.
- Growth was driven by strong performance across their Live and Historical Racing segment and successful expansion of the Kentucky Derby into a week-long celebration.

Kentucky Derby Growth Catalysts:
- Ticketing revenue is expected to drive Derby Week growth, with a focus on unique premium experiences and strategic pricing.
- Broadcast rights with NBC contributed to growth, with a new 7-year contract starting in 2026, including prime-time coverage for the Kentucky Oaks.
- Wagering records were set, with an 11% increase in Derby race wagering, driven by consistent growth in the event's cultural relevance.

HRM Segment Growth:
- The Live and Historical Racing segment delivered record revenue, with a significant contribution from growth in Kentucky and Virginia HRM properties.
- In Virginia, growth was driven by expansion in Northern Virginia, Richmond, and Emporia properties, despite a higher handle tax rate.
- The growth is attributed to strategic capital investments and strong consumer trends in these markets.

Capital Management and Share Repurchase:
- The company generated $455 million in free cash flow in the first half of 2025 and spent $250 million on stock repurchases in the second quarter.
- The Board approved a new share repurchase program of up to $500 million, reflecting confidence in the company's growth prospects.
- These moves are supported by the expectation of reduced bank covenant net leverage below 4.0x in 2026, fueled by investments in Virginia and Kentucky.