Penn Interactive triples Q4 revenue as CEO salutes “lowest customer acquisition costs in the industry”

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Penn Interactive tripled its revenue year-on-year to $157.6m in Q4 2021 as parent company Penn National Gaming reported a 53.1% rise in quarterly revenue to $1.57bn.

While digital division Penn Interactive was unquestionably the fastest growing segment during the quarter, the vast majority of revenue still came from the US operator’s land-based casino and racetrack properties at $1.41bn.

The remaining $157.6m was generated by Penn Interactive, which includes the company’s Barstool-branded online sports betting and iGaming products. It also includes Canadian sports betting and media brand theScore, which Penn acquired in October 2021.

Penn Interactive’s revenue climbed 200% on 2020, when it delivered $52.6m. Compared to 2019, during which the subsidiary generated just $13.5m, the business has increased its revenue more than tenfold.

The online segment generated negative EBITDAR of $5.9m during the quarter, although Penn said this result exceeded its expectations given the costs associated with increasing the scale of the business, launching sports betting operations in Iowa and West Virginia and iGaming in West Virginia, as well as the integration of theScore.

For the full-year 2021, Penn Interactive generated $432.9m in revenue, up 257.5% from just $121.1m in 2020. 

This figure represents 7.3% of Penn National Gaming’s overall full-year revenue of $5.91bn.

Penn’s overall net income for the year came to $420.5m, a massive swing from 2020’s $669.1m net loss.

Notably, Penn’s land-based property results exceeded not only those recorded in 2020, a year during which forced closures due to the Covid-19 pandemic had a negative impact upon revenue, but also 2019 by a significant margin.

This suggests the business has outgrown its pre-pandemic earning levels. 

Looking ahead to 2022, Penn adjusted its earnings guidance for the coming year. It now expects the Interactive business to make an EBITDA loss of around $50m as it continues to scale its operations and infrastructure.

The subsidiary is anticipated to generate meaningful EBITDA in 2023, as the operator seeks to integrate its newly acquired brands and transition to a wholly owned tech stack.

For 2022, the whole Penn National Gaming business anticipates a net revenue range of $6.07bn to $6.39bn and an adjusted EBITDAR range of $1.85bn to $1.95bn.

“As we expand, we will continue to focus on sustainable growth, organic customer acquisition and targeted marketing and promotional spend,” said Penn National Gaming president and CEO Jay Snowden.

“Our growth has been fuelled by organic customer acquisition from both the Barstool Sports audience and mychoice database, leading to what we believe are the lowest customer acquisition costs and best return on investment timelines in the industry.”

Looking closer at Penn Interactive’s customer acquisition strategy, the operator said it spent 17.6% on marketing as a percentage of GGR, compared to a competitor average of 63.7%.

The competitor figure was based on Q3 data from Rush Street Interactive, DraftKings and PointsBet.

“We didn’t change the way we market in Q4,” Snowden elaborated on a Q4 conference call. “It was as irrational as you could ever imagine, the amount of money being burned that I’m sure we’ll hear about during future earnings calls this quarter.”

Talking about the wider business, he added: “Looking ahead, we anticipate achieving a number of milestones in 2022, including mobile launches in several new jurisdictions: Louisiana (which launched 28 January), Ontario, where theScore is the number one app for sports content, Maryland and Ohio, where we have a large database of mychoice customers,” Snowden concluded.

As a further demonstration of the operator’s confidence, it also announced today that its board of directors has authorised a $750m share repurchase programme lasting for three years.

Penn’s occupied a total liquidity position of $2.5bn at the end of 2021, including $1.9bn in cash.

About the author

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Conor Mulheir

Conor entered the gaming industry in 2018 producing high-level live event content for audiences in London, Amsterdam and São Paulo. From 2020, he went on to report news and commission exclusive content for various gaming media brands before joining iGaming NEXT as editor in January 2022.

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