CZR Q1 Earnings Call: Digital Growth and Regional Recovery Offset Profit Shortfall

May 13, 2025 at 07:13 AM EDT

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Hotel and casino entertainment company Caesars Entertainment (NASDAQ: CZR) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 1.9% year on year to $2.79 billion. Its non-GAAP loss of $0.54 per share was significantly below analysts’ consensus estimates.

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Caesars Entertainment (CZR) Q1 CY2025 Highlights:

Revenue: $2.79 billion vs analyst estimates of $2.79 billion (1.9% year-on-year growth, in line)
Adjusted EPS: -$0.54 vs analyst estimates of -$0.18 (significant miss)
Adjusted EBITDA: $845 million vs analyst estimates of $874.8 million (30.2% margin, 3.4% miss)
Operating Margin: 17.5%, in line with the same quarter last year
Free Cash Flow was -$5 million compared to -$184 million in the same quarter last year
Market Capitalization: $6.26 billion

StockStory’s Take

Caesars Entertainment’s first quarter results were shaped by steady performance in its core Las Vegas and regional casino businesses, alongside continued momentum in its digital segment. Management attributed the stable revenue trends to strong group and convention bookings in Las Vegas, growth from recently completed capital projects in New Orleans and Danville, and disciplined cost controls. CEO Tom Reeg noted that while the company faced headwinds from challenging year-over-year comparisons, weather disruptions, and a one-day calendar difference, the business demonstrated resilience across its main markets.

Looking ahead, leadership maintained a positive outlook on continued growth in digital gaming and ongoing stability in brick-and-mortar operations, while emphasizing caution around potential macroeconomic pressures and policy changes. Management stated that forward bookings in Las Vegas remain solid and that the company has not observed any material signs of consumer weakness. Reeg remarked, “We still do not see any of the consumer softness that investors seem to be worried about,” but also acknowledged that the company is prepared to adjust operating levers if broader economic conditions deteriorate.

Key Insights from Management’s Remarks

Caesars Entertainment’s management focused on the interplay between Las Vegas, regional, and digital performance, noting how each area contributed to the quarter’s outcomes and will shape the company’s trajectory this year.

Las Vegas stability and group business: Las Vegas delivered flat year-over-year results despite a tough comparison with last year’s Super Bowl, aided by strong convention and group bookings. Management said group room nights accounted for 20% of the quarter’s mix, with expectations for a record year in group business.
Regional segment improvement: The regional casino segment saw a notable sequential improvement, driven by the full-quarter contribution from the New Orleans and Danville properties. Both locations, recently completing their elevated capital expenditure cycles, are expected to provide steady cash flow moving forward.
Digital segment acceleration: Digital net revenue rose 19%, fueled by robust iCasino growth (up 53%) and a higher mix of parlay bets in sports betting. Management highlighted new app features and product enhancements, with the Caesars Palace Online app leading growth and the Horseshoe app already contributing 7% of digital gaming revenue.
Cost discipline and margin management: Operating expenses in Las Vegas fell 3% year-over-year, reflecting ongoing efforts to optimize labor, vendor contracts, and operational efficiency. The company also reported successful cost controls in the digital segment, resulting in an EBITDA flow-through rate above internal targets.
Capital allocation and free cash flow priorities: With major capital projects completed, Caesars is transitioning into a “free cash flow harvesting mode,” prioritizing debt reduction while remaining opportunistic about share repurchases if valuation conditions are favorable.

Drivers of Future Performance

Management expects digital expansion, ongoing cost control, and stable consumer demand to drive performance for the remainder of the year, while remaining alert to economic uncertainty and industry policy shifts.

Digital growth momentum: The company expects continued double-digit growth in online gaming, especially in iCasino, driven by product enhancements, new game launches, and expansion of the shared wallet system across states.
Regional and Las Vegas bookings: Forward bookings for Las Vegas and regional properties remain healthy, with management expecting group and convention business to offset any potential leisure softness. Recent investments in regional properties are also expected to support modest growth.
Macroeconomic and policy risks: Management identified inflation, tariffs, and potential policy changes as headwinds, but stated that no consumer weakness or material impact from tariffs has appeared in current results. The company is prepared to activate cost levers or leverage its real estate portfolio if macro conditions worsen.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will watch (1) whether digital growth—particularly in iCasino and new app features—remains at elevated levels, (2) the extent to which group and convention bookings in Las Vegas can offset any emerging softness in consumer leisure demand, and (3) whether regional property investments, especially in New Orleans and Danville, lead to sustained margin improvement. We will also monitor management’s capital allocation between debt reduction and opportunistic share repurchases as free cash flow increases.

Caesars Entertainment currently trades at a forward EV-to-EBITDA ratio of 1.6×. At this valuation, is it a buy or sell post earnings? Find out in our free research report.

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