Net revenue for the three months to 31 March amounted to $2.29bn (£1.84bn/€2.28bn), up 27.9% from $1.79bn in the corresponding period last year.
Casino and pari-mutuel commissions revenue climbed 4.9% year-on-year to $1.29bn, while food and beverage revenue jumped 100.6% to $339.0m, hotel revenue increased 78.1% to $383.0m and other revenue 278.6% to $278.0m.
Breaking down this performance by vertical, Caesars said its regional operations remained the main source of revenue for the group, with revenue for this part of the business rising 14.4% to $1.36bn.
Las Vegas revenue hiked 83.9% to $914.0m, with managed and branded revenue increased by 8.2% to $66.0m.
However, the Caesars Digital business posted negative net revenue of $53.0m, compared to $39.0m in revenue last year. Corporate and other revenue halved to $2.0m.
However, despite revenue growth, Caesars also reported an upturn in spending during Q1, with total operating expenses rising 46.1% to $2.30bn. Much of this was down to casino and pari-mutuel commission costs rocketing 81.3% year-on-year to $1.06bn.
As spending outpaced revenue, this resulted in an operating loss of $10.0m for the quarter, in contrast to a $216.0m operating profit in Q1 of 2021. Caesars also accounted for $548.0m in finance costs, though this was 23.0% lower than in the previous year.
Higher overall spending left a pre-tax loss of $558.0m, compared to $496.0m in Q1 last year. Caesars received $107.0m in income tax benefits. However, it also reported a $229.0m net loss from discontinued operations, which meant it ended the quarter with a net loss of $680.0m, wider than the $423.0m net loss last year.
Breaking this net loss down by division, Caesars Digital was responsible for the majority of the loss, at $576m. Regional operations recorded a net profit of $124.0m, up 90.8% while Las Vegas net profit reached $168.0m. Managed and branded services recorded a net loss of $211.0m.
The corporate and other net loss was reduced from $428.0m to $185.0m.
In addition, higher spending during the quarter led to a 44.7% decline in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) from $535.0m to $296.0m.
“Our first quarter operating results reflect sequential improvement each month of the quarter in revenues and EBITDA,” Caesar’s chief executive Tom Reeg said.
“Our Las Vegas segment posted an all-time first quarter EBITDA record and our regional segment delivered solid EBITDA and margin growth. Consumer trends remain healthy, and we are optimistic for the balance of the year.”
Speaking on an investor call, Reeg addressed the losses within the digital business, as net adjusted EBITDA loss for the quarter reached $554.0m. Reed said Caesars had already taken steps to lower costs to help address this, particularly within marketing and advertising, with spending reduced by approximately $250.0m.
“Of the $553.0m of EBITDA loss in the quarter, a little over $400.0m is attributable to the launches in New York and Louisiana, with New York the lion’s share of that,” Reeg said. “We cut about a little over a quarter of a billion dollars of expected spend from when we started cutting in February. Through the end of this year we’ve seen no degradation in handle share, other than our planned retrenchment in New York.”
Reeg also noted that these losses began to reduce towards the end of the quarter, with digital EBITDA loss in March at approximately $44.0m, reflecting the normalising of business following the heavy launch period. He added that this expected to return to a positive figure when the new NFL season begins later in the year.
“We’ve had 1.4 million in Caesars reward signups, since we re-launched digital that came in through the digital channel; if you think about a typical Caesars property, we get about 50,000, on average, per property per year of new sign-ups a little more in destination properties a little less in regional properties,” Reeg said.
“If you think about a million for customers coming into the pipeline, in really a span of five months, it’s extraordinary. And now the work in front of us is to identify which are the most valuable customers there.
Reeg said that going forward, marketing spend would be more focused on customers it expected to be the most profitable.
“And what you’ve seen us do repeatedly in the brick-and-mortar business is target that spend to our most valuable players and not waste money on the unprofitable players,” he said. “That’s the task in front of us in digital. So you’re going to see us segmenting in terms of our marketing as we move forward and that’s going to be a dramatic improvement in profitability.”