Caesars Entertainment’s first quarter results were met with a negative market reaction, as the company’s bottom line fell short of Wall Street expectations despite revenue coming in as forecast. Management cited several factors behind the underperformance, including a tough comparison for its Las Vegas properties due to last year's Super Bowl, weather disruptions in regional markets, and a lack of one operating day compared to the prior year. CEO Tom Reeg noted, “Vegas was facing a very difficult comp versus Super Bowl last year,” and emphasized that, absent these unique challenges, Las Vegas would have shown year-over-year growth. Additionally, the digital segment delivered strong top-line growth, but sports betting held during March Madness and lower-than-expected operating leverage weighed on overall profitability.
Is now the time to buy CZR? Find out in our full research report (it’s free).
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)
- Operating Margin: 17.5%, in line with the same quarter last year
- Market Capitalization: $5.93 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Caesars Entertainment’s Q1 Earnings Call
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Carlo Santarelli (Deutsche Bank) asked about Las Vegas group booking visibility and operating levers in case of economic weakness. CEO Tom Reeg confirmed group bookings are strong and stated, “We are not having to do any [demand stimulation] at this point.”
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Brandt Montour (Barclays) inquired about weather and leap year impacts on regional results and cost savings in Las Vegas. COO Anthony Carano emphasized labor and vendor efficiencies, while Reeg estimated weather and calendar effects exceeded $10 million.
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Steve Wieczynski (Stifel) pressed on consumer behavior among lower-tier customers. Reeg replied, “Rated play across the enterprise is up mid-single-digits, unrated play is a little softer,” but saw no broader spending slowdown.
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David Katz (Jefferies) asked about digital segment growth drivers and the balance between iGaming and sports betting. Reeg and President Eric Hession highlighted iGaming as a faster-growing and more stable contributor, with sports betting expected to generate significant future EBITDA.
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Chad Beynon (Macquarie) probed on regional margin outlook as new properties ramp and the company’s approach to opportunistic share repurchases. Reeg said margin improvement is expected as competitive impacts anniversary and confirmed continued buybacks if the stock remains dislocated.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) the pace of digital revenue and EBITDA growth, particularly as new product launches and app features roll out; (2) margin improvement in regional markets as the effects of new property additions and competitive pressures normalize; and (3) convention and group booking trends in Las Vegas, which are key to offsetting any macro-driven softness. Execution on debt reduction and disciplined capital spending will also be important markers of management’s strategy.
Caesars Entertainment currently trades at $29.66, up from $27.95 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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