PENN Q2 2026 Earnings: Interactive Loss Reduction Drives EBITDA Growth

PENN Entertainment (Nasdaq: PENN) reported Q2 2026 revenue of $1.86 billion, up 5.2% from $1.77 billion a year earlier, while GAAP diluted EPS improved to $0.24 from a loss of $0.12. Net income turned positive and consolidated adjusted EBITDA rose 32.4%, with most of the increase coming from a narrower Interactive loss alongside higher Retail earnings.

Core Earnings Data

Revenue increased by $92.4 million year over year, while operating expenses rose by a more modest $38.2 million. This widened operating income and moved PENN from a net loss to a quarterly profit despite higher interest expense and increased pre-opening and transaction-related costs.

Non-GAAP results also improved. Adjusted EPS reached $0.44, while consolidated adjusted EBITDA increased by $76.5 million to $312.6 million.

Adjusted EPS and consolidated adjusted EBITDA are non-GAAP measures. Consolidated adjusted EBITDA includes rent expense associated with PENN’s triple-net operating leases.

Business and Segment Performance

PENN’s four Retail regions generated combined revenue of approximately $1.51 billion, up about 3.9%, and Segment Adjusted EBITDAR of $517.2 million, up 5.6%. The resulting Retail margin increased to 34.4% from approximately 33.8% a year earlier.

Interactive revenue grew on a reported basis, while its adjusted EBITDA loss narrowed substantially. Performance varied across the Retail regions, with West recording the fastest revenue growth but more limited EBITDAR growth.

Retail figures use Segment Adjusted EBITDAR, while the Interactive result is discussed by the company as adjusted EBITDA. Nine properties set second-quarter records for revenue and Adjusted EBITDAR, and management attributed the broader Retail performance to demand across mid- and high-worth customers as well as unrated play.

PENN opened a new hotel tower at Hollywood Columbus and the new Hollywood Casino Aurora in June. Management said early visitation at both projects was encouraging, including activity from VIP customers.

The Interactive segment benefited from record quarterly revenue at the standalone Hollywood iCasino and growth in Ontario sports betting and iCasino activity. However, its reported revenue included a $185.5 million tax gross-up, up from $137.9 million a year earlier. The $47.6 million increase in that gross-up exceeded the segment’s total reported revenue increase of $33.3 million, so reported revenue growth should not be viewed as a direct measure of underlying customer gaming growth.

Interactive Loss Reduction Drove Most of EBITDA Growth

Consolidated adjusted EBITDA increased by $76.5 million year over year. The Interactive segment contributed $52.5 million of that improvement by reducing its adjusted EBITDA loss to $9.5 million from $62.0 million, representing about 69% of the consolidated increase.

The four Retail regions added another $27.6 million of Segment Adjusted EBITDAR, while the Other category improved by $3.7 million. These gains were partly offset by a $7.3 million increase in triple-net operating lease rent expense. The quarter’s profitability improvement therefore came more from Interactive loss reduction and Retail earnings growth than from revenue growth alone.

Profitability, Cash Flow and Balance Sheet

Margins and expenses

Total operating expenses increased 2.3%, slower than the 5.2% rise in revenue. As a result, operating margin expanded to 7.1% from 4.4%. Gaming operating expenses declined even as gaming revenue increased, helping offset higher food, beverage, hotel and other expenses as well as increased general and administrative costs.

Pre-opening expenses rose to $23.0 million from $4.4 million. Other expenses included transaction costs and non-recurring restructuring charges, primarily severance associated with PENN’s new corporate organizational structure. Corporate overhead declined to $29.5 million from $38.7 million, although the prior-year figure included $9.4 million of legal and advisory costs related to shareholder activist activity.

Net interest expense increased to $100.9 million from $95.9 million, absorbing a substantial portion of operating income despite the improvement in operating profitability.

Liquidity and leverage

PENN ended June with $1.9 billion of total liquidity, including $887.2 million in cash. Compared with the end of 2025, higher cash and lower debt reduced traditional net debt by $290.0 million and lowered both reported leverage measures.

Second-quarter capital expenditures declined to $97.5 million from $159.4 million. Cash payments to REIT landlords increased to $247.1 million from $240.0 million, highlighting the continuing cash burden associated with PENN’s leased casino properties.

During the quarter, PENN extended the maturities of its revolving credit facility and Term Loan A to April 2031 and its Term Loan B to May 2033. It also repaid the remaining $106.7 million of convertible notes due in 2026, eliminating approximately 4.6 million potentially dilutive shares associated with those notes.

Management View

CEO Jay Snowden said Retail demand remained broad-based and that the company continued to focus on Segment Adjusted EBITDAR growth, lower corporate overhead, cash flow and balance-sheet deleveraging. Management also said favorable Retail and Interactive trends continued through July, although it did not quantify those trends.

After the quarter ended, PENN launched theScore Bet, theScore Casino and standalone Hollywood iCasino applications in Alberta on July 13, expanding its Interactive operations in Canada.

Risks Investors Need to Watch

• Interactive remains unprofitable: The segment’s loss narrowed considerably, but it still recorded a $9.5 million adjusted EBITDA loss. Continued profitability progress remains important to consolidated earnings growth.
• Tax gross-up affects revenue comparability: More than half of reported Interactive revenue consisted of a tax gross-up, and its increase was larger than the segment’s total revenue increase. Investors should separate this accounting effect from customer-driven gaming trends.
• Lease and interest obligations remain material: Quarterly cash payments to REIT landlords reached $247.1 million, while net interest expense was $100.9 million. These obligations continue to consume cash despite lower leverage.
• Retail growth was not uniform: South revenue was essentially flat, while West revenue growth did not translate into comparable EBITDAR growth. Sustaining portfolio-wide margin improvement will depend on performance across all regions.
• New projects carry execution costs: Pre-opening expenses increased sharply as PENN completed developments. The returns and operating contribution from the new Columbus and Aurora assets will be important after the initial opening period.

Conclusion

PENN’s Q2 2026 results showed a clear improvement in profitability, led by the narrowing Interactive loss, higher Retail earnings and slower growth in operating expenses than in revenue. The balance sheet also improved through lower net debt and extended maturities. The main issues to monitor are whether Interactive can move from a smaller loss to sustained profitability, whether new Retail projects support continued growth, and how lease and interest obligations affect future cash generation.