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Caesars expects digital revenue and earnings growth in Q4

| By Robert Fletcher
Caesars Entertainment is estimating year-on-year revenue and earnings growth for its digital business in Q4, with preliminary results also suggesting a slight rise in group revenue.
Caesars Q4

Revealed in a Form 8-K filed with the US Securities and Exchange Commission, the early set of figures cover the three months to 31 December 2023. Caesars has published both lower and higher estimates for several key figures and business segments.

Group revenue for the period is set to be between $2.82bn (£2.22bn/€2.60bn) and $2.84bn. Both would be above the $2.77bn adjusted revenue posted in Q4 of 2022.

Caesars noted the adjusted 2022 total reflects the subtraction of operations for Rio All-Suite Hotel & Casino in Las Vegas prior to divestiture in October 2023. Actual revenue in 2022 was $2.82bn, towards the lower end of the Q4 2023 estimated results.

Digital success set to offset Las Vegas decline

Breaking this down, Las Vegas operations revenue is forecast to be between $1.08bn and $1.09bn. This suggests Q4 revenue will be behind the adjusted $1.10bn posted in the previous year. Subtracted Rio revenue in Las Vegas during Q4 of 2022 was $54m, with the unadjusted 2022 total at $1.15bn.

Elsewhere, revenue from regional operations will likely range from $1.34bn to $1.37bn. As Caesars highlights, this would be ahead of the $1.36bn total in 2022.

Turning to the digital business, this is where Caesars anticipates the most revenue growth. For Q4 of 2023, Caesars said digital revenue will be between $303m and $305m. The $304m midpoint of this would be 27.0% higher than 2022.

As for other revenue, managed and branded revenue will likely be between $67m and $69m, compared to $72m in 2022. Caesars also expects to post a corporate and other loss of $2m. This is in contrast to the $2m revenue in the previous year.

Digital set to be EBITDA-positive for Caesars again in Q4

Going into further detail on segmental performance, Caesars published forecasts for adjusted EBITDA and net income.

While total adjusted EBITDA is likely to fall from $949m to between $920m and $940m, there is reason for positivity when it comes to digital.

The early figures suggest Q4 will be the first consecutive quarter in which the digital division will be EBITDA-positive. This follows positive results in both Q2 and Q3 of 2023, whereas in Q4 2022, the business posted a $5m adjusted EBITDA loss.

In contrast, adjusted EBITDA for almost all other segments is likely to be lower. The largest decline is set in Las Vegas, where Caesars expects to post between $486m and $492m – lower than both the adjusted 2022 figure ($529m) and actual result ($537m).

Caesars may narrowly miss out on Q4 profit

As for group net loss, Caesars expects a loss of between $157m and $4m, suggesting it could be close to turning a profit if it reaches the higher end of these estimates.

Las Vegas operations will remain in the black and between $246m and $254, but this will be down from the adjusted $287m in 2022. In the best-case scenario, regional operations may post a $13m profit, whereas the lower end of the estimate suggests a $54m loss. In 2022, regional operations generated a $17m loss.

The digital business will almost certainly remain at a net loss, with this set to be between $9m and $7m. However, this would be a marked improvement on the $35m loss posted in the previous year.  

Caesars said the figures published here represent only preliminary results for the business. The operator is due to publish both its Q4 and 2023 full-year results on 20 February. 

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