Q4 2023 PENN Entertainment Inc Earnings Call

Operator: Please continue to stand by. Your conference will begin momentarily. Thank you for your patience. Greetings and welcome to the Penn Entertainment fourth quarter 2023 results conference call. During the presentation, all participants will be in a listen-only mode.

Please continue to stand by your conference will begin momentarily we thank you for your patience.

[music].

Operator: Afterward, we will conduct a question-and-answer session. At that time, if you have a question, please press the one-fall-button 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. I would now like to turn the conference over to Mr. Joe Jaffoni, Investor Relations. Please go ahead. Thanks, Frank. Good morning, everyone.

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Speaker Change: Greetings and welcome to the Pan Entertainment fourth quarter 2023 results conference call.

Speaker Change: During the presentation, all participants will be in a listen only mode.

Afterwards, we will conduct a question and answer session.

Speaker Change: At that time, if you have a question. Please press the one fall back to more on your telephone if at any time during the conference you need to reach an operator. Please press star Zero I would now like to turn the conference over to Mr. Joe <unk> Investor Relations. Please go ahead.

Joseph N. Jaffoni: And thank you for joining Penn Entertainment's 2023 fourth quarter conference call. We'll get to management's presentation and comments momentarily as well as your questions and answers. During the Q&A session, we ask that everyone please limit themselves to one question and one follow-up.

Joe: Thanks, Brian Good morning, everyone and thank you for joining Penn Entertainment's 2023 fourth quarter conference call, we'll get to management's presentation and comments momentarily as well as your questions and answers during the Q&A session. We ask that everyone. Please limit themselves to one question and one follow up now I'll review the Safe Harbor disclosure.

Joseph N. Jaffoni: Now we'll review the safe harbor disclosure. Today's discussion contains forward-looking statements. Forward-looking statements involve risks, assumptions, and uncertainties that could cause actual results to differ materially. For more information, please see our press release for details on specific risk factors. With that, it's now my pleasure to turn the call over to the company CEO, Jay Snowden. Jay, please go ahead.

Joe: Today's discussion contains forward looking statements forward looking statements involve risks assumptions and uncertainties that could cause actual results to differ materially.

Joe: For more information please see our press release for details on specific risk factors with that it's now it's it's it's now my pleasure to turn the call over to the company's CEO Jay Snowden Jay. Please go ahead.

Jay A. Snowden: Thanks, Joe. Good morning to everyone on the call. As usual, I'm joined here in explaining why I'm missing by our CFO, Felicia Hendrix, and our head of operations, Todd George, as well as other members of the executive team. We will provide a link to our investor presentation along with our earnings release this morning. If you haven't already opened or printed it out, I would suggest you do that now as our prepared remarks will reference several of those slides as we go along. At a high level, 2023 was another transformational year for Penn Entertainment. We are the only company in the industry that has a fully integrated sports media and sports betting platform, along with an omnichannel base of assets with which to drive cross-play and synergies as the database continues to grow at a rapid pace.

Jay A. Snowden: Thanks, Joe and good morning to everyone on the call as usual I'm joined here and why I'm missing by our CFO, Felicia Hendricks and our head of operations, Todd George as well as other members of the executive team, we provided a link to our investor presentation, along with our earnings release. This morning, if you haven't already opened or printed it out.

Jay A. Snowden: I suggest you do that now as our prepared remarks will reference several of those slides as we go along.

Jay A. Snowden: At a high level 2023 was another transformational year for Pan Entertainment. We are the only company in the industry that has a fully integrated sports media and sports betting platform, along with an omni channel base of assets with with which to drive cross play and synergies as the database continues to grow at a rapid pace the future.

Jay A. Snowden: The future looks very promising given our unique position and long-term strategic advantages. On the retail side of the business, we generated more than $2 billion in property-level EBITDAR in 2023 from our industry-leading portfolio of regional gaming assets and impressively delivered on our property-level margin goals despite an uncertain macroeconomic environment thanks to our best-in-class operators and leaders across the country. We also broke ground on four exciting new retail growth projects in Illinois, Ohio, and Nevada, which we expect to complete by the first half of 2026. As a reminder, we anticipate these will deliver a 15 plus percent return on the aggregate investment. The continued strength of our retail business provides a solid foundation as we continue to invest in our high-growth digital business, which will create significant long-term shareholder value. Speaking of the digital business, earlier this month, we announced that the founding family behind the score, John, Benji, Aubrey, and Noah Levy, will be transitioning from their leadership of the score and Penn Interactive. John departed earlier this week, while Benji, Aubrey, and Noah will be leaving in early April.

Jay A. Snowden: Very promising given our unique position and long term strategic advantages.

Jay A. Snowden: On the retail side of the business, we generated more than $2 billion in property level EBITDAR in 2023 from our industry, leading portfolio of regional gaming assets and impressively delivered on our property level margin goals. Despite an uncertain macroeconomic environment. Thanks to our best in class operators and leader.

Jay A. Snowden: Across the country.

Jay A. Snowden: We also broke ground on for exciting new retail growth projects in Illinois, Ohio, and Nevada, which we expect to complete by the first half of 2026.

Jay A. Snowden: As a reminder, we anticipate these will deliver a 15 plus percent return on the aggregate investment.

Jay A. Snowden: The continued strength of our retail business provides a solid foundation as we continue to invest in our high growth digital business, which will create significant long term shareholder value speaker.

Jay A. Snowden: Speaking of the digital business earlier this month, we announced that the founding family behind the score John Benji, Aubrey and Noel Levy will be transitioning from their leadership of the score and Penn Interactive Jon departed earlier this week, while Benji Aubrey I know I will be leaving in early April.

Jay A. Snowden: We have been working closely with the Levees over the last several months on this plan and timing to ensure a smooth operational transition. Their departure comes at a natural inflection point for our interactive business. We've achieved a lot over the last several years, including the completion of our proprietary tech stack, the successful launch of SCOREbet in Ontario, the migration of our tech stack into the US, and now the launch of ESPNbet. Even more importantly, we have developed an incredibly deep bench across Penn Interactive, and we have several talented leaders ready to step up and take on more responsibility in the coming months. I want to extend my sincere thanks to John, Benji, Aubrey, and Noah for all of their hard work and contributions to Penn Interactive's success. We are near the conclusion of the month-long search process for the new head of Interactive, and look forward to sharing an update on that with you in the near future.

Jay A. Snowden: We have been working closely with the levy's over the last several months on this plan and timing to ensure a smooth operational transition their departure comes at a natural inflection point for our interactive business. We've achieved a lot over the last several years, including the completion of our proprietary tech stack. The successful launch of the score bet in Ontario.

Jay A. Snowden: The migration of our tech stack into the U S and now the launch of E. S. P N bet.

Jay A. Snowden: Even more importantly, we have developed an incredibly deep bench across Penn interactive and we have several talented leaders ready to step up and take on more responsibility in the coming months.

Jay A. Snowden: Want to extend my sincere thanks to John Benji, Aubrey and Noah for all their hard work and contributions to Penn Interactive success. We are near the conclusion of the months long search process for the new head of interactive and look forward to sharing an update on that with you in the near future.

Jay A. Snowden: Turning to slide six in our investor presentation, on November 14, we successfully and seamlessly launched ESPN bet simultaneously in 17 states across the US, a first in the industry and no doubt a testament to the strength of our technology teams. Bolstered by the number one brand in sports media, the launch resulted in much higher than expected registrations, generating over 1 million new signups to our industry-leading Penn Play Rewards program and expanding our digital database by over 50%. In fact, we acquired as many first-time depositors and bettors in the first two months as we had anticipated we would generate in the first full year post-launch. Importantly, approximately one-third of these customers are located within 50 miles of one of our more than 43 retail properties, which sets up well for cross-selling and monetization as part of our omni-channel strategy. In addition, we saw our monthly active users grow from nearly 190,000 in the third quarter to more than 770,000 in the fourth quarter.

Jay A. Snowden: Turning to slide six in our Investor presentation on November 14th we successfully and seamlessly launched E. S. P. N bat simultaneously in 17 states across the U S. A first in the industry and no doubt a testament to the strength of our technology teams.

Jay A. Snowden: Bolstered by the number one brand in sports media. The launch resulted in much higher than expected registrations generating over 1 million new sign ups to our industry, leading Penn player rewards program and expanding our digital database by over 50% in.

Jay A. Snowden: In fact, we acquired as many first time depositors and betters and the first two months as we had anticipated we would generate in the first full year post launch.

Jay A. Snowden: Importantly, approximately one third of these customers are located within 50 miles of one of our more than 43 retail properties, which sets up well for cross selling and monetization as part of our Omnichannel strategy.

Jay A. Snowden: In addition, we saw over we saw our average excuse me monthly active users grow from nearly 190000 in the third quarter to more than 770000 in the fourth quarter. Our early success bodes well for our planned launches in North Carolina, and New York This year, which I'll talk about in a moment.

Jay A. Snowden: Our early success bodes well for our planned launches in North Carolina and New York this year, which I'll talk about in a moment. Given our early success in customer acquisition and retention, we now expect the digital segment to inflect to roughly break even in 2025 and start generating meaningful EBITDA and free cash flow in 2026 and beyond. Turning to slides 7 and 8, you'll see that strong early retention and consistent user acquisition have led to steady month-over-month increases in cash handle, even as our promotional expenses have started to normalize. Our January cash handle was 289% higher than pre-launch cash handle in October 23, while our promotional expenses as a percentage of handle went down from 32.2% in November to 2.8% this January.

Jay A. Snowden: Given the early success in customer acquisition and retention, we now expect the digital segment to inflect to roughly breakeven in 2025 and start generating meaningful EBITDA and free cash flow in 2026 and beyond.

Jay A. Snowden: Turning to slide seven and eight Youll see that strong early retention and consistent user acquisition have led to steady month over month increases in cash handle even as our promotional expenses have started to normalize our January cash handle was 289% higher than prelaunch cash handle in October.

Jay A. Snowden: Twenty-three, while our promotional expenses as a percentage of handle went down from 32.2% in November to two 8%. This January.

Jay A. Snowden: According to the latest Sensor Tower data, which is similar to other data sources you may have seen, such as Apptopia, we have consistently held the number three ranking and share of weekly active users amongst our top peers, providing a foundation for even greater handle and GGR share gains as we grow our share of wallets and monetization per user. The ESPN bet numbers on the chart on slide eight show steady acquisition and retention across the board, even as our promotional expenses began to taper. Our initial promo offer at launch was right in line with our competitors, and we lowered that offer by 50% in advance of the Super Bowl, given the more recreational play surrounding the game.

Jay A. Snowden: According to the latest sensor tower data, which is similar to other data sources you may have seen such as App Topeka, we've consistently held the number three ranking and share of weekly active users amongst our top peers, providing a foundation for even greater handle and G. G. L. G. G. R share gains as we grow our share of wallets and monetized.

Jay A. Snowden: <unk> and per user.

Jay A. Snowden: The ESPN bat numbers on the chart on slide eight show steady acquisition and retention across the board even as our promotional expense began to taper on our initial promo offer at launch was right in line with our competitors and we lowered that offer by 50% in advance of the Super Bowl given the more recreational play surrounding.

Jay A. Snowden: The game.

Jay A. Snowden: Meanwhile, the total time spent on ESPN bet, according to the sensor tower data, also continues to ramp nicely as we add new features and integrations, which will only accelerate now that we can focus more of our product and engineering teams' energy on product improvements, especially in the areas of same-game parlays, player props, and live betting, as opposed to time-consuming migrations and launches, something we are all very excited about. All of this is very promising as it relates to both top of the funnel demand for ESPN bet and early retention success. The important takeaway here is the ESPN app is proving to be sticky in the early days as a result of our strong brands and UI UX, which will improve from here with product enhancements and deeper integrations with ESPN in the coming quarters.

Jay A. Snowden: Meanwhile, the total time spent on ESPN bed. According to the sensor tower data also continued to ramp nicely as we added new features and integrations, which will only accelerate now that we can focus more of our product and engineering teams energy on product improvements, especially in the areas of same game parlays player props.

Jay A. Snowden: And live betting as opposed to time consuming migrations and launch it is something we are all very excited about.

Jay A. Snowden: All of this is very promising as it relates to both top of funnel demand for E. S. P N debt in early retention success.

Jay A. Snowden: The important takeaway here is the E. S. P N that app is proving to be sticky in the early days as a result of our strong brands and UI, UX, which will improve from here with product enhancements and deeper integrations with E. S. P N in the coming quarters.

Jay A. Snowden: As you'll see on slides 9 and 10, ESPN BET has helped us reach new demographics of sports fans that are incremental to our digital database, resulting in a 63% greater year-over-year parlay mix and higher volumes for non-NFL games, particularly the NBA. While these parlay results are a clear improvement from where we were pre-launch, we still have a long way to go in this area, and you'll see significant improvements throughout We also saw a 35% increase in the percentage mix of females in our digital database.

Jay A. Snowden: As you'll see on slides nine and 10 E. S. P. N bet has helped us reach new demographics of sports fans that are incremental to our digital database, resulting in a 63% greater year over year, partly mix and higher volumes for non NFL games, particularly the N B E.

Jay A. Snowden: While these parlay results are a clear improvement from where we were a prelaunch, we still have a long way to go in this area and you'll see significant improvements throughout 2024.

Jay A. Snowden: We also saw a 35% increase in our percentage mix of females in our digital database. These data points demonstrate the potential for E. S. P N debt to help broaden the appeal of sports betting to the more casual better and grow the overall market an important goal of ours from day one.

Jay A. Snowden: These data points demonstrate the potential for ESPN Bet to help broaden the appeal of sports betting to the more casual bettor and grow the overall market, an important goal of ours from day one. Notably, before the launch of ESPN Bet, overall market handle grew by more than 17% year-over-year from January to October 2023 in the states with publicly available data in our market analysis. After ESPN Bet, overall market handle is up nearly 30% year-over-year from November through December 2023, and it's up over 25% even when you exclude ESPN Bet. ESPN Bet has and continues to bring new sports fans and bettors into the sports betting ecosystem.

Jay A. Snowden: Notably before the launch of E. S. P. N bet overall market handle grew by more than 17% year over year from January to October 2023 in the states with publicly available data and our market analysis.

Jay A. Snowden: After E S. P. N bet overall market handle was up nearly 30% year over year from November through December 2023, and it's up over 25%, even when you exclude E. S. P. N bet ESPN bet has and continues to bring new sports fans and betters into the sports betting ecosystem.

Jay A. Snowden: ESPN bet has also helped to boost our Hollywood branded casino business, which has seen a nearly 280% increase in monthly active users providing a platform for future growth with new proprietary content continuing to rollout from our pen game Studios.

Jay A. Snowden: ESPN BET has also helped boost our Hollywood-branded iCasino business, which has seen a nearly 280% increase in monthly active users, providing a platform for future growth, with new proprietary content continuing to roll out from our Penn Game Studios. As we've emphasized in the past, when customers engage with us across multiple channels, their value goes up more than six times over those who engage via only one channel, and we continue to see a lot of upside as we improve our iCasino offerings. As illustrated on slide 13, in connection with the launch, ESPN implemented an initial wave of exclusive bet mode integrations across the ESPN ecosystem, which includes our six-pack odds integration. This provides for a seamless click-through from the ESPN GameCast to a customer's desired bet on the ESPN Bet app.

Jay A. Snowden: As we've emphasized in the past when customers engage with us across multiple channels their value goes up more than six times over those who engage via only one channel and we continue to see a lot of upside as we improve our casino offerings.

Jay A. Snowden: As illustrated on slide 13 in connection with the launch E. S. P. N implemented an initial wave of exclusive that moat integrations across the ESPN ecosystem, which includes our six pack odds integration. This provides for a seamless click through from the E. S. P N gamecast to our customers.

Jay A. Snowden: I would bet on the E S. P N bet App.

Jay A. Snowden: This is very powerful as there are over 28 million monthly active users on the E. S. P. N media App you should expect more of that mode integrations throughout 2024.

Jay A. Snowden: This is very powerful, as there are over 28 million monthly active users on the ESPN media app. You should expect more of that mode integration throughout 2024. I said at the outset of our partnership with ESPN that we'd be getting significant value for our marketing dollars by allocating our $150 million per year to the single best brand and platform in the U.S. to reach sports fans and potential bettors. We're already seeing that with the robust menu of promotion and integration across all of ESPN's platforms, including traditional linear advertising, digital media, in-program integration, odds attribution, database marketing opportunities, and access As I mentioned, we have just scratched the surface on these integrations, and there's substantially more to come, all included as part of our deal that we will unveil throughout 2024 and into 2025. Our initial ESPN bet advertising campaign was headlined by SportsCenter anchors Scott Van Pelt and Al Duncan. We then added spots with NBA legend Kendrick Perkins, the host of Get Up, Mike Greenberg, followed by our most recent commercial with sports betting analyst Aaron Dolan that launched during Super Bowl week.

Jay A. Snowden: I said at the outset of our partnership with E. S. P N that we'd be getting significant value for our marketing dollars by allocating our $150 million per year to the single best brand and platform in the U S to reach sports fans and potential betters, we're already seeing that with a robust menu of promotion and integration across all of the S. P.

Jay A. Snowden: <unk> platforms, including traditional linear advertising digital media and program integration odds attribution database marketing opportunities and access to some of the biggest personalities and sports media for special events promotions and social media engagement as I mentioned we.

Jay A. Snowden: We have just scratched the surface on these integrations and they're substantially more to come all included as part of our deal that we will unveil throughout 2024 and into 2025.

Jay A. Snowden: Our initial E. S. P. N bet advertising campaign was headlined by Sports Center anchors, Scott Van Pelt and L. Duncan. We then added spots with NBA legend Kendrick Perkins the host of get up Mike Greenberg, followed by our most recent commercial with sports betting analyst Aaron Dolan that launched during Super Bowl week.

Jay A. Snowden: This campaign with Aaron is our first product and integration-focused campaign, which we expect will help drive continued awareness of ESPN Vets and our direct integration with the ESPN media app. Meanwhile, Al Duncan and Aaron Dolan hosted a Super Bowl party at the M Resort on our property in Las Vegas, and I'm happy to announce we'll be rebranding Greek Town's market-leading sportsbook to ESPN BET just in time for the NFL draft in Detroit. In addition, ESPN Regional Radio Talent will be hosting events throughout the year on our retail sports bus. We look forward to additional ESPN bet retail launches at key properties as we continue to create meaningful cross-sell opportunities. Looking ahead to the rest of 2024, we are excited to introduce ESPN Bet in North Carolina, which is expected in March, and New York, expected prior to the football season. In each case, of course, subject to regulatory approvals. While the economic model in New York is indeed challenging, we look forward to bringing ESPN VET to the largest regulated online sports wagering market in North America. These two new jurisdictions will be extremely efficient for us.

Jay A. Snowden: This campaign with Erin is our first product and integration focused campaign, which we expect will help drive continued awareness of E. S. P N bet and our direct integration with the E. S. P N media App.

Jay A. Snowden: Meanwhile, L Dunkin' and Aaron Dolan hosted a Super Bowl party at the M resort at our property in Las Vegas.

Jay A. Snowden: And I'm happy to announce we will be rebranding greektown market, leading sports book to E. S. P. N bet just in time for the NFL draft in Detroit.

Jay A. Snowden: In addition E S. P N regional radio talent will be hosting events throughout the year and our retail sports books.

Jay A. Snowden: We look forward to additional E. S. P N bet retail launches at key properties as we continue to create meaningful cross sell opportunities.

Jay A. Snowden: Looking ahead to the rest of 2024, we are excited to introduce E. S. P. N bet in North Carolina, which is expected in March and New York expected prior to football season, and each case of course subject to regulatory approvals.

Jay A. Snowden: While the economic model in New York is indeed challenging we look forward to bringing E. S. P N bat to the largest regulated online sports wagering market in North America.

These two new jurisdictions will be extremely efficient for us as highlighted on slide 16, our E. S. P. N annual national marketing spend per capita will be reduced by 20% with the addition of North Carolina and New York.

Jay A. Snowden: As highlighted on slide 16, our ESPN annual national marketing spend per capita will be reduced by 20 percent with the addition of North Carolina and New York, which will take our addressable online sports betting U.S. population from 37 percent to 46 percent and significantly expand our reach and scale. Very important for us as most of our ESPN and off-channel marketing spend is nationally focused. As noted in the release this morning, the interactive segment EBITDA losses for the fourth quarter were higher than expected.

Jay A. Snowden: Which will take our addressable online sports betting U S population from 37% to 46% and significantly expand our reach and scale very important for us as most of our E. S. P N and off channel marketing spend is nationally focused.

Jay A. Snowden: As noted in the release this morning, the interactive segment EBITDA losses for the fourth quarter were higher than expected. The majority of that mess was driven by the high volume of customers acquired through E. S. P N debt, which resulted in elevated promo expense that negatively impacted net revenues and to a lesser extent.

Jay A. Snowden: The majority of that mess was driven by the high volume of customers acquired through ESPN Bet, which resulted in elevated promo expenses that negatively impacted net revenues and, to a lesser extent, unfavorable hold due to customer-friendly sports results. The first two weeks following the launch of ESPN Bet in November happened to be two of the lowest hold percentage weeks of the entire NFL season. Looking ahead, we expect that first quarter 2024 interactive EBITDA losses will be roughly half of our fourth quarter 23 interactive EBITDA results and for Q1 to be the largest EBITDA loss quarter of the year for us in 2024. For the entire year of 2024, on a same-store basis, we anticipate an EBITDA loss commensurate with what we saw in Q4 at around $330 million, demonstrating top-line momentum and efficiencies on the cost side.

Jay A. Snowden: Will hold due to customer friendly sports results. The first two weeks following the launch of E. S. P. N bet in November happen to be two of the lowest hold percentage weeks of the entire NFL season.

Jay A. Snowden: Looking ahead, we expect that first quarter 2020 for interactive EBITDA losses will be roughly half of our fourth quarter twenty-three interactive EBITDA results and for Q1 to be the largest EBITDA last quarter of the year for us in 2024.

Jay A. Snowden: For the entire year of 2024 on a same store basis, we anticipate an EBITDA loss commensurate with what we saw in Q4 at around 330 million demonstrating the topline momentum and efficiencies on the cost side.

Jay A. Snowden: Due to the two state launches this year in North Carolina, and New York, which we announced on Tuesday, we are forecasting a total EBITDA loss in 2024 of approximately 400 million as mentioned earlier, we now anticipate 2025 being around breakeven and 2000 twenty's sex to deliver meaningful positive EBITDA.

Jay A. Snowden: Due to the two state launches this year in North Carolina and New York, which we announced on Tuesday, we are forecasting a total EBITDA loss in 2024 of approximately $400 million. As mentioned earlier, we now anticipate 2025 being around break-even, and 2026 to deliver meaningful positive EBITDA and free cash flow. Before turning it over to Felicia, I'd like to thank our property leaders and all of our team members for delivering another quarter of really solid property level performance. Notably, 10 properties spread across our portfolio achieved their highest ever fourth quarter revenue. These outperformers helped offset the impact of supply pressures in a few of our key markets, as well as continued softness in our South region.

Jay A. Snowden: And free cash flow.

Speaker Change: Before turning it over to Felicia I'd like to thank our property leaders and all of our team members for delivering another quarter of really solid property level performance, notably 10 properties spread across our portfolio achieved their highest ever fourth quarter revenue.

Speaker Change: These outperformers helped offset the impact of supply pressures in a few of our key markets as well as continued softness in our south region.

Jay A. Snowden: This further demonstrates the benefits of our geographic diversity and unique omni-channel strategy. The introduction of new technologies and our ongoing reimagination of our properties, while providing a best-in-class customer experience, is continuing to drive demand for Penn. As you know, our industry-leading customer loyalty program, Penn Play, is supported by our 3Cs technology, which is now deployed at 21 properties, collectively representing approximately 70% of our retail EBITDA. During the quarter, we've also grown our total Penn Wallet customers to 110,000, and we've received $300 million in total Penn deposits.

Speaker Change: This further demonstrates the benefits of our geographic diversity and unique Omnichannel strategy.

Speaker Change: The introduction of new technologies, and our ongoing re imagination of our properties, while providing a best in class customer experience is continuing to drive demand for Penn.

Speaker Change: As you know our industry, leading customer loyalty program. Penn play is supported by our three CS technology, which is now deployed at 21 properties collectively representing approximately 70% of our retail EBITDAR.

Speaker Change: During the quarter. We've also grown our total Penn wallet customers to 110000, and we've received $300 million in total Penn deposits.

Jay A. Snowden: As we've often said, those guests who use the digital wallet demonstrate superior loyalty through increased visitation, time on device, and total theoretical and. Our property level segments reported another solid year; fourth quarter 23 EBITDA results of $476 million exceeded the implied guidance we provided on our third quarter call, despite headwinds of roughly $10 million from the Detroit union negotiations and road closures. And, as Jay highlighted, our interactive segment is showing early signs of strong momentum. As usual, you will find on page 12 of our earnings release a table that summarizes our cash expenditures in the quarter, including cash payments to our REIT landlords, cash taxes, cash interest, and total CAFX. Of our total $152 million in CapEx in the quarter, $16 million was project CapEx, primarily related to our four retail growth projects.

Speaker Change: As we've often said those guests who use the digital wallet demonstrates superior loyalty through increased visitation time on device and total theoretically.

Speaker Change: Our property level segments reported another solid year fourth quarter 'twenty three EBITDAR results of 476 million exceeded the implied guidance, we provided on our third quarter call despite headwinds of roughly $10 million from the Detroit.

Speaker Change: Negotiations and road closures and as Jay highlighted our interactive segment is showing early signs of strong momentum.

Speaker Change: As usual you will find on page 12 of our earnings release, a table that summarizes our cash expenditures in the quarter, including cash payments to our REIT landlords cash taxes cash interest and total capex of our total $152 million in capex in the quarter 16 million.

Speaker Change: With project Capex, primarily related to our for retail growth projects.

Felicia R. Hendrix: We ended 2023 with total liquidity of $2.1 billion, inclusive of $1.1 billion in cash and cash equivalents. We expect our liquidity to remain strong throughout 2024, and we have no debt maturities until 2026, the last of which is our $330 million convertible notes. As we previously guided on our third quarter earnings call, we continue to expect our lease-adjusted net leverage to peak in the third quarter of 24. While third quarter leverage will be higher than initially anticipated, given the demand-based strength of our ESPN bet launch in the fourth quarter, 23, this increase is temporary, and we will also delever more quickly. By year-end 2025, we will return to pre-ESPN bet leverage levels, and in 2026, we will generate meaningful EBITDA and free cash flow from the Interactive Division. Thinking about this another way, our path to record free cash flow is very clear.

Speaker Change: We ended 2023 with total liquidity of $2.1 billion inclusive of $1.1 billion in cash and cash equivalents, we expect our liquidity to remain strong throughout 2024, and we have no debt maturities until 2026, which are our $330 million convertible note.

Speaker Change: As we previously guided on our third quarter earnings call. We continue to expect our lease adjusted net leverage to peak in the third quarter of 24, while third quarter leverage will be higher than initially anticipated given the demand base strength of our E. S. P N that launch in the fourth quarter 'twenty three if any.

Speaker Change: Kris is temporary and we will also delever more quickly by year end 'twenty 'twenty five we will return to pre ESPN that leverage levels and in 2026, we will generate meaningful EBITDA and free cash flow from the interactive Division <unk>.

Speaker Change: Thinking about this another way our path to record free cash flow is very clear following a year of investment in 'twenty 'twenty, four and Delevering and 25 2026 will be an exciting inflection point for us given the high EBIT that a free cash flow conversion of our interactive business, which when combined with the free cash flow.

Felicia R. Hendrix: Following a year of investment in 2024 and delevering in 2025, 2026 will be an exciting inflection point for us, given the high EBITDA of free cash flow conversion of our interactive business, which when combined with the free cash flow generated by the existing core business, plus the four retail growth projects that will be coming online in early 2026, will position us extremely well to drive shareholder value. I will now provide guidance for our retail and interactive segments. For the full year 2024, we expect retail revenues to range from $5.6 billion to $5.75 billion and adjusted EBITDA to range from $1.905 billion to $2.025 billion.

Speaker Change: Generated by the existing core business plus the four retail growth projects that will be coming online in early twenties, 26 will position us extremely well to drive shareholder value.

Speaker Change: I will now provide guidance for our retail and interactive segments for the full year 'twenty 'twenty four we expect retail revenues to range from $5 6 billion to $5 $75 billion and adjusted EBITDAR to range from one point now.

Speaker Change: <unk> zero $5 billion to 2.0 to 5 billion our guidance factors in extreme January weather, new supply in Nebraska, Illinois, and Louisiana Road construction in a couple of markets and moderate upward wage pressure.

Felicia R. Hendrix: Our guidance factors in extreme January weather, new supply in Nebraska, Illinois, and Louisiana, road construction in a couple of markets, and moderate upward wage pressure. For the interactive segment, in 2024, we expect to generate revenues of $1.28 billion to $1.415 billion and an adjusted EBITDA loss range of $420 million to $380 million. These ranges include our launches in North Carolina and New York. On a same-store basis, we anticipate an adjusted EBITDA loss of around $330 million.

Speaker Change: For the interactive segment in 'twenty 'twenty four we expect to generate revenues of 1.28 billion to one point for one 5 billion and an adjusted EBITDA loss range of $420 million to $380 million. These ranges include our launches in north.

Speaker Change: Carolina, and New York on a same store basis, we anticipate an adjusted EBITDA loss of around $330 million.

Felicia R. Hendrix: To help you with modeling the interactive segment revenues, you should assume that our 2023 tax gross up of roughly $400 million remains flat year over year in 2024, and other revenues, inclusive of skins, social gaming, and media, are roughly $200 million in 2024. As Jay mentioned earlier, in the first quarter of 2024, we expect the Interactive Segment Adjusted EBITDA loss to be roughly one half of our fourth quarter Interactive EBITDA results and for the first quarter of 2024 to be the largest EBITDA loss quarter of the year. We expect 2024 corporate expenses of roughly 105 million dollars, inclusive of our cash-settled stock-based awards. Total CapEx for 2024 is approximately $500 million, inclusive of $275 million of Project CapEx for our four development projects. For cash interest expense, we forecast $170 million for the full year, after roughly $13 million of interest income.

Speaker Change: To help you with modeling the interactive segment revenues you should assume that our 2023 tax gross up of roughly $400 million remains flat year over year in 'twenty 'twenty four and other revenues inclusive of skins, social gaming and media is roughly 200 million a 'twenty 'twenty four.

Speaker Change: As Jay mentioned earlier in the first quarter of 'twenty 'twenty four we expect the interactive segment adjusted EBITDA loss to be roughly one half of our fourth quarter interactive EBITDA results and for the first quarter 'twenty four to be the largest EBITDA last quarter of the year.

Speaker Change: We expect 2020 for corporate expense of roughly $105 million inclusive of our cash settled stock based awards.

Total capex for 'twenty 'twenty four is approximately 500 million inclusive of $275 million of project Capex for our four development projects for cash interest expense, we forecast $170 million for the full year after roughly 13 million.

Speaker Change: Interest income.

Felicia R. Hendrix: For cash taxes, we are projecting to be in a refund position of roughly $15 million. And as you think about our share count for 2024, our basic share count as of the end of 2023 was $152 million, and we typically have roughly $15 million of diluted shares, inclusive of the $14 million share dilution from the converts. All right, thanks, Felicia.

Speaker Change: For cash taxes, we are projecting to be in a refund position of roughly $15 million and as you think about our share count for 'twenty 'twenty four our basic share count as of the end of 'twenty, two 'twenty three with $152 million and we typically have roughly $15 million of diluted share diluted.

Speaker Change: Shares inclusive of the 14 million share dilution from the converts and with that I'll turn it back to Jay.

Jay A. Snowden: Alright, Thanks, Felicia as you saw in our release, we're continuing to expand on our corporate social responsibility efforts.

Jay A. Snowden: As you saw in our release, we're continuing to expand on our corporate social responsibility effort. As we look back on the year, I'm very proud of the continued growth of our diversity, equity, and inclusion initiatives, which are deservedly gaining a lot of attention. Newsweek named Penn one of America's greatest workplaces for diversity, and Forbes named us for the third straight year as one of America's best employers for diversity.

Jay A. Snowden: As we look back on your on the year I'm very proud of the continued growth of our diversity equity and inclusion initiatives, which are deservedly, gaining a lot of attention.

Jay A. Snowden: Newsweek named Pen one of America's greatest workplaces for diversity and Forbes named Us for the third straight year as one of America's Best employers for diversity time magazine went so far as to name US one of the world's best companies for 2000 and twenty-three mean.

Jay A. Snowden: Time Magazine went so far as to name us one of the world's best companies for 2023. Meanwhile, on the community front, we provided more than $7 million in support to local charities and veterans-focused organizations and more than $17 million in economic development grants in 2023, in addition to the more than 8,000 volunteer hours from our team members to help those in need. On the environment and on the environmental side, we completed our inaugural Scope 3 Greenhouse Gas Inventory and established carbon abatement targets for 2024 and beyond. You can read more about all of these initiatives in our 2023 CSR report, which is scheduled to be published in April in conjunction with our proxy filing. In closing, we're continuing to see a stable consumer environment and healthy operating trends in our retail businesses.

Jay A. Snowden: Meanwhile, on the community front, we provided more than 7 million in support to local charities and veterans focused organizations and more than $17 million in economic development grants in 2023. In addition to the more than 8000 volunteer hours from our team members to help those in need.

On the <unk> and on the environmental side, we completed our inaugural scope three greenhouse gas inventory and establish carbon abatement targets for 'twenty 'twenty four and beyond you can read more about these all of these initiatives in our 2023 CSR report, which is scheduled to be published in April in conjunction with our proxy.

Jay A. Snowden: Filing.

Jay A. Snowden: In closing, we're continuing to see a stable consumer environment and healthy operating trends in our retail businesses and on the digital side I want to reiterate that our partnership with E. S. P. N is not your typical media sports book commercial agreement ours is an exclusive strategic long term alliance that as I mentioned has the potential.

Jay A. Snowden: And on the digital side, I want to reiterate that our partnership with ESPN is not your typical media sportsbook commercial agreement. Ours is an exclusive, strategic, long-term alliance that, as I mentioned, has the potential to deliver unique products, experiences, and integrations that are unmatched. And, of course, with that will come attractive returns for our shareholders. We had three primary goals for ESPN BET for the first several months post-launch. Number one, execute on a successful launch, both in terms of top of the funnel demand and app stability, competitiveness, and performance. Number two, grow the market given the strong brand equity and reach of ESPN, along with media integration. And number three, provide a differentiated experience and value proposition to ensure lasting relationships and product retention.

Jay A. Snowden: To deliver unique products experiences and integrations that are unmatched and of course with that will come attractive returns for our shareholders.

Jay A. Snowden: We had three primary goals with E. S. P. N bet for the first several months post launch number one execute on a successful launch both in terms of top of funnel demand and app stability competitiveness and performance.

Jay A. Snowden: To grow the market given the strong brand equity and reach of ESPN, along with the media integrations.

Jay A. Snowden: And number three provide a differentiated experience and value proposition to ensure lasting relationships and product retention. So far we're off to a great start on all three and have built a tremendous foundation for our upcoming launches and New York, North Carolina and beyond.

Operator: So far, we're off to a great start on all three and have built a tremendous foundation for our upcoming launches in New York, North Carolina, and beyond. So with that, Frank, we'll open it up for questions. Thanks. If you would like to register a question, please press the 1-4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3.

Jay A. Snowden: So with that Frank will open it up for questions.

Frank: Thank you.

Frank: If you would like to register a question. Please press the one four on your telephone you will hear a three pronged technology request.

Frank: If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three we ask that you limit to one question and one follow up only one moment. Please for the first question.

Operator: We ask that you limit to one question and one follow-up only. One moment, please. The first question comes from Joe Greff with J.P. Morgan. Please proceed. Good morning, everybody. Jay, I have two questions, not surprisingly, on Interactive. First, maybe an easier one.

Frank: Our first question comes from Joe Greff with Jpmorgan. Please proceed.

Joseph Greff: Good morning, everybody.

Joseph Greff: Jeff two questions not surprisingly on an interactive.

Joseph Greff: First maybe an easier one can you talk about the search for for leading interactive and maybe why one hasn't been announced because I don't I don't think the levy's, leaving.

Joseph Greff: Can you talk about the search for leading Interactive and maybe why one hasn't been announced? Because I don't think the lead is leaving, and the timing wasn't all that surprising. Maybe what was surprising was that there wasn't someone named to head it upon their news that they were planning to depart.

Joseph Greff: And the timing was all that surprising or maybe what was surprising was that there wasn't someone named.

Speaker Change: Got it.

Upon the news that they were planning to depart and then.

Joseph Greff: And then a second question, it looks like right now your share, maybe in January, is sort of in this 7% range. I know the goal is to grow beyond 7%, 10%, and higher. But if we look at two years from now, OSB and iCasino will be 25%, 30% higher in two years than what they are now. What its run rating is presently. If you're at a 7% market share level two years from now, it's obviously a bigger market. Can your digital business be EBITDA positive?

Speaker Change: Question.

Speaker Change: I mean, it looks like right now your share maybe in January is sort of in the 7% range.

Speaker Change: I know the goal is to grow beyond 710 and higher.

Speaker Change: But if we look at two years from now.

Speaker Change: OSB and I casino will be 25% to 30% higher than two year than what it was what it's run rating presently if you're at a 7% market share level. Two years now, it's obviously a bigger market can your digital business be EBITDA positive and and and and you can share with us how you think of <unk>.

Jay A. Snowden: And you can share with us how you think of profitability, a bigger market, 7% share, and what that margin range would be. Hopeful looking at things a couple years out versus the investment that people are focusing on this morning. Yeah. Good questions, Joe.

Speaker Change: The ability bigger market, 7% share what that margin range would be I think that would be <unk>.

Speaker Change: Forward looking at things kind of a couple of years out versus.

Speaker Change: The investment that people are focusing on this morning. Thank you.

Speaker Change: Yeah, Good question, Joe and starting off with the the search for the new head of interactive look we've been working with the levy's per months really throughout 2000, <unk> fourth quarter of 2024.

Jay A. Snowden: And starting off with the search for the new head of Interactive, look, we've been working with the Levees for months, really throughout the fourth quarter of 2024, thinking about whether we have a very deep bench at Penn and who can step up as they leave within the team. And we feel like we've got some great answers to that question. We actually spent a lot of time in Toronto a couple of weeks ago, and we've got such a deep bench on the engineering side and on the product side, great marketers in the business. So a lot of this is that we needed the time to make sure that we had a plan in place that by the time the Levees depart, people are already communicating with each other and stepping up. We also started a quiet search in the fourth quarter because we didn't want this to get out in advance and create uncertainty.

Speaker Change: Thinking through we have a very deep bench at Penn and who can step up as they exit.

Speaker Change: Within the team and we feel like we've got some great answers to that question. We actually spent a lot of time in Toronto, a couple of weeks ago, and we've got such a deep bench on the engineering side and on the product side, great marketers in the business. So a lot of this is that we needed the time to make sure that we have a plan in place that by the time the levy's depart that people are all.

Speaker Change: Already communicated too and stepping up we also started a a.

Speaker Change: Quiet search in the fourth quarter, because we didn't want this to get out in advance and create uncertainty and we're very far along in that process.

Jay A. Snowden: And we're very far along in that process. I can't comment on exactly where we are, but you should rest assured that we're very deep in the process. We're very close, and we're very excited. The level of talent that we are considering is incredible.

Speaker Change: I can't comment on exactly where he already but you should rest assured that we've worked very deepen the process. We're very close and we're very excited on the level of talent that we are considering is incredible and I think the market will see it that way when we announce what we're doing but I just can't I can't communicate any further on that today, we feel good about the timeline.

Jay A. Snowden: And I think the market will see it that way when we announce what we're doing, but I just can't communicate any further on that today. We feel good about the timeline with the Levees leaving in April and that we should have something announced, obviously, before that. And we're working to have this be a super seamless transition where the new head of interactive would be there at that time, maybe a little sooner, maybe a little later, but not have a gap in leadership. So that's the plan right now, and we'll continue to communicate when we can publicly more about that. The second part of your question is a good one.

Speaker Change: And with the Levy, leaving in April that we should have something announced obviously before that and we're working to have this be a super seamless transition where the new head of interactive would be there at that time, maybe a little sooner maybe a little after but not.

Speaker Change: Not have a gap in leadership. So that's that's the plan right now and we'll continue to communicate when we can publicly more about that.

Speaker Change: The second part of your question is a good one the 7% share of that we're seeing currently and what does that look like a couple of years out now I'll I'll take a step back for a second because I think there's you know as we as we sit here today and how we're thinking about the business. We're three months into this E. S. P N bet post launch.

Jay A. Snowden: The 7% share that we're seeing currently and what does that look like a couple of years out? Now, I'll take a step back for a second because I think there are, you know, as we sit here today and how we're thinking about the business. We're three months into this ESPN bet post-launch, and there are a lot of positives that you can see in those first three months. First, obviously, ESPN and the strength of that brand are on full display, and they've been amazing partners. They've continued to under-promise and over-deliver. We think we're getting something in February; it shows up in December.

Speaker Change: <unk>.

Speaker Change: And there's a lot of positives that you can see in those first three months.

Speaker Change: First obviously E S. P N and the strength of that brand is on full display and they have been amazing partners. They've continued to under promise over deliver we think we're getting something in February it shows up in December.

Speaker Change: They gave us a lot of extra value add beyond what they are required to and our $150 million marketing partnership which is great.

Jay A. Snowden: They give us a lot of extra value add beyond what they're required to in our $150 million marketing partnership, which is great. We saw really strong app performance and stability, and we've had very good early ratings in the iOS app store. We launched in 17 states simultaneously, the first time that's ever been done. And we also just went through our first Super Bowl with a tremendous load. And we got through there, knock on wood because the teams did such an amazing job preparing, and we had no hiccups, 100 percent uptime. So I feel really good about those two things.

Speaker Change: We saw really strong app performance and stability and we've had very good early ratings in the iOS App store, we launched in 17 states simultaneously. The first time that's ever been done.

Speaker Change: And we also just went through our first Super Bowl with tremendous load and we got through there knock on wood because the teams did such an amazing job preparing and we had no hiccups, 100% uptime. So feel really good about those two things obviously, we shared in the number of slides that our customer acquisition has been.

Jay A. Snowden: Obviously, we shared in the number of slides that our customer acquisition has been very, very strong. That's what drove the promo cost being so much higher than we anticipated with over a million downloads, deposits, and bettors in the first two months. We thought it would take us a year to get to that. That speaks to very, very efficient customer acquisition costs in those first two months, something that we never could have imagined. And then, of course, on the retention side.

Speaker Change: Very very strong and that's what drove the promo cost being so much higher than we anticipated with over 1 million downloads and deposits and betters and the first two months, we thought it would take us a year to get to that that speaks to very very efficient customer acquisition costs in those first two months something that we never could have imagined.

Speaker Change: And then of course on the retention side.

Jay A. Snowden: We're in a great spot. If you look at slides seven and eight in our presentation, you can see that we're already in a very, very strong position, a very firm number three position with regard to weekly active users in online sports betting. And obviously, we've picked up significant MAUs in online casino as well. And so what we're seeing there also is that our cash handle as a percentage of total handle has grown month over month over month from November to December to January, which means that people are weaning off of those early promos. They're dipping into their wallets, making deposits, and continuing to play with us. And we're growing the market. We have a couple of slides on that as well.

Speaker Change: We're we're in a great spot if you look at our slides.

Speaker Change: Seven and eight in our presentation you can see that we're already in a very very strong position a very firm number three position with regards to weekly active users.

Speaker Change: And online sports betting and obviously, we've picked up significant M. A use an online casino as well and so.

Speaker Change: What we're seeing there also is that our cash handle as a percentage of total handle has grown month over month over month from November to December to January which means that people are weaning off of those early promos, they're dipping into their wallets, making deposits and continuing to play with us.

Speaker Change: And we're growing the market and we have a couple of slides on that as well and I think as we sit here today. The opportunity of course is to close the gap of the market share handle market share that you referenced of 7% and what we're seeing on our share of weekly active users, which is more like double that number and so the fact that.

Jay A. Snowden: And I think as we sit here today, the opportunity, of course, is to close the gap between the market share that you referenced of 7% and what we're seeing on our share of weekly active users, which is more like double that number. And so the fact that we're seeing weekly active users at a very stable level means that we've got a lot of people that have downloaded, deposited, and bet. They really like the app.

Speaker Change: We're seeing weekly active users at a very stable level means that we've got a lot of people that have downloaded deposited in bet. They like the app, they're coming back to the App on a regular basis, but we just don't have R.

Jay A. Snowden: They're coming back to the app on a regular basis, but we just don't have our fair share of the market yet in terms of how much time they spend on the app. But I view that as a positive because we know that our ability to grow our share of wallet and improve the monetization of our users is going to come from two things, which are product enhancements. We're very well on our way. We've been so busy, as I mentioned in our initial opening comments with launches and migrations, that our teams haven't had the ability to really focus on features and functionality. And now we can, because we've got most of that behind us. We get North Carolina's launch, but we've done so many state launches; that's not going to be as time-consuming.

Speaker Change: Our ferrous fair share of the market yet in terms of how much time, they're spending in the app.

Speaker Change: But I view that as a positive because we know that our ability to grow our share of wallet and improve the monetization of our users is going to come from two things, which is product enhancements were very well on our way we've been so busy as I mentioned in our initial opening comments with launches and migrations that our teams have it.

Speaker Change: The ability to really focus on features and functionality and now we can't because we've got most of that behind US we get North Carolina launch, but we've done so many state launches that's not going to be as time consuming.

Jay A. Snowden: So, we need to enhance our same-game parlay offerings, player props, live betting, in-game betting, and, of course, deeper integrations with ESPN. And that's happening and will continue to happen, more with the ESPN Media app, and more with the Fantasy app. So, that's what's in front of us. And we believe that if we can be at 7% of the handle market share in the early days, with these things that we know are sort of at the first inning or second inning of a game, we feel really good about where those are going to take us over the course of the next 12 months, 18 months, 24 months. So, we don't anticipate that 7% is going to be as good as it gets by any means.

Speaker Change: So we need to enhance our same game, partly offerings player Pops live betting in game betting and of course deeper integrations with ESPN and that's happening and will continue to happen.

Speaker Change: More and more with the E. S. P N media at more of a fantasy App. So that's what's in front of us and we believe that if you can if we can be at 7% handle market share in the early days with these things that we know are sort of at first Indian or second inning of a game, we feel really good about where those are going to take us over the course of the.

Speaker Change: Next 12 months 18 months 24 months. So we don't anticipate that 7% is going to be as good as it gets by any means we think that the market share is going to be growing steadily as we continue to make product improvements and add more deeper integrations with E. S. P N S.

Jay A. Snowden: We think that market share is going to be growing steadily as we continue to make product improvements and add more deeper integrations with ESPN. And to your question, if we were to be at 7% a couple of years out, would we be profitable? The answer to that is yes.

Speaker Change: And to your question is if we were to be at 7% a couple of years out could we be profitable the answer that is yes what.

Jay A. Snowden: What we don't know as we sit here today is how many more states will legalize sports betting and online gaming. But you should feel as though 7% and above is a level at which we could definitely generate a profit. Obviously, we would want to have our iCasino market share close to those levels as well. So, that's the way that, as we sit here today, that's the way that we view things after the first three months. It's really early, obviously.

Speaker Change: What we don't know as we sit here today is how many more states will legalize from a sports betting and online gaming perspective.

But you should feel as though 7% and above is a level that we could definitely generate a profit obviously, we would want to have our eye casino market share close to those levels as well.

Speaker Change: So that's the way that we as we sit here today, that's the way that we view things. After the first three months, it's really early obviously, but the number one focus was all of the things I mentioned and we're thrilled to see that retention looks really good after three months.

Jay A. Snowden: But the number one focus was all the things I mentioned, and we're thrilled to see that retention looks really good after three months. Our next question comes from Joel Stauff with Susquehanna. Please proceed. Thank you. Good morning.

Speaker Change: Okay.

Speaker Change: Our next question comes from Joe Stauff with Susquehanna. Please proceed.

Joseph Greff: Thank you good morning.

Joel Stauff: Jay, I wanted to ask about... kind of the media integrated offering, you know, especially with ESPN's media app, the six-pack link out, I think, was available kind of mid-January. You know, how long do you expect before that really is, you know, like a kind of a relevant source of new incremental customers for you? And I know, you know, it's obviously early, but in Ontario, I think approximately 72%, in terms of what you said, of your customers in real betting in Ontario come from the app. What's the right way to think about, you know, again, through that conversion?

Joseph Greff: Jay I wanted to ask about.

Joseph Greff: Kind of the media integrated offering.

Joseph Greff: Specialty with ESPN media.

Joseph Greff: The.

Joseph Greff: The six pack link out I think it was available kind of mid January.

Joseph Greff: How long do you expect.

Joseph Greff: Before that really is.

Joseph Greff: Like a kind of a relevant source of new incremental customers for you.

Joseph Greff: And I know.

Joseph Greff: It's obviously early but in Ontario, I think.

Joseph Greff: <unk>, 72%.

Joseph Greff: Terms of what you said.

Joseph Greff: Of your customers and real bedding, and Ontario come from the App, what's the right way to think about again sort of that conversion.

Speaker Change: Yeah. The way, we think about it Joe is that if we can get the level of integrations between media and sports betting in the U S. Between E. S. P N and the fantasy App of course and and into E. S. P. N bet that we should be able to get those percentages to be about.

Jay A. Snowden: Yeah, the way we think about it, Joe, is that if we can get the level of integration between media and sports betting in the U.S. between ESPN and the Fantasy app, of course, and into ESPN bet, we should be able to get those percentages to be about the same here. So we're on it. There's really no disagreements or lack of alignment between us and ESPN on what those integrations will be. Obviously, we're looking forward to bet slip integrations. We're looking forward to Fantasy integrations.

Speaker Change: Same here so we're on it there's really there there aren't disagreements or.

Speaker Change: Lack of alignment between us and ESPN on what those integrations will be obviously, we're looking forward to bet slip integrations. We're looking forward to a fantasy integrations. We think we'll have a lot of that complete by the time, we get to football season, it's hard to peg today, if it's all going to be done by September some of it is going to be in the fourth.

Jay A. Snowden: We think we'll have a lot of that completed by the time we get to football season. It's hard to peg today if it's all going to be done by September. Some of it's going to be in the fourth quarter, but we feel really good, and we have a lot of alignment with ESPN on just how important it is. I continue to be really impressed at how many resources that they are putting against us. This is a big part of a growth opportunity for ESPN, and they're as excited about it as we are, but we should be able to duplicate here in the U.S. the stats that you're referencing in Ontario, Joe. Thanks.

Speaker Change: Quarter, but we feel really good and we have a lot of alignment with ESPN on just how important it is.

Speaker Change: We continue to be really impressed at how many resources that they are putting against E. S. P. N that this is a big part of our growth opportunity for ESPN and they're as excited about as we are but we should be able to duplicate here in the U S. What the stats that you're referencing in Ontario, Joe.

Speaker Change: Thanks.

Carlo Santarelli: Our next question comes from Carlo Santarelli with Deutsche Bank. Please proceed. Hey, everyone.

Speaker Change: Our next question comes from Carlo Santarelli with Deutsche Bank. Please proceed.

Carlo Santarelli: Hey, everyone. Thank you.

Jay A. Snowden: Jay, as you think about, you know, the guidance parameters you set forth within Interactive for 2024, obviously, if we put the two launches, New York and North Carolina aside, what is the kind of underlying assumption in terms of promo reinvestment? To the extent you could answer that, but where do you kind of imagine promotion as a percentage of handle, as a percentage of GDR, however you choose to think about it? What's kind of embedded in that assumption at this point?

Carlo Santarelli: As you think about the guidance parameters you set forth with them interactive for 2024, obviously with if we put the two launches in New York, New York and North Carolina. Aside what is kind of underlying that assumption in terms of promo reinvestments.

Carlo Santarelli: As to the extent you could answer that but where do you kind of imagine promo as a percentage of handle as a percentage of G. G or however, you choose to think about it where what's kind of embedded in that assumption at this point.

Carlo Santarelli: Yeah, I would say Carlo without giving exact detail that we anticipate promo as a percentage of handle going forward to be really at market levels, we're not anticipating being the highest we're not anticipating being the lowest it probably will fluctuate a little bit month to month, depending on what we have going on round.

Jay A. Snowden: Yeah, I would say Carlo, without giving exact detail, that we anticipate promo as a percentage of handle going forward to be really at market levels. We're not anticipating it being the highest, we're not anticipating it being the lowest. It probably will fluctuate a little bit month to month depending on what we have going on around March Madness integrations with ESPN. Because remember, a lot of that is driven by top of the funnel.

Carlo Santarelli: March Madness integrations with ESPN, if we because it because remember a lot of that is driven by top of funnel and so the more successful you are in driving people into the ecosystem youre going to youre going to peak in that particular month, and so there's probably not going to be a lot of volatility during the late spring and summer months with basically M. L.

Carlo Santarelli: And so the more successful you are in driving people into the ecosystem, you're going to peak in that particular month. And so there's probably not going to be a lot of volatility during the late spring and summer months with basically MLB. But I think it depends on, you know, how successful we are in North Carolina could drive that number higher. Of course, in March, when we launch in New York, I would expect it to bump, of course, but pretty steady, otherwise to be right at market. We're not, you know, our goal is not to be higher or lower than where most others are, which is, you know, depending on the state, right around 3%, two and a Great, thank you.

Carlo Santarelli: But I think it depends on you know how how successful we are in North Carolina could could drive that number higher of course in March when we launch in New York I would expect it to bump of course.

Carlo Santarelli: But it pretty steady otherwise to be right at market. We're not you know our our goal is not to be higher or lower than where most others are which as you know depending on the state right around 3%, two and a half 335% right in that range.

Speaker Change: Great. Thank you and then if I could just just two questions on clarifications on things you guys said relating to the brick and mortar business first Jay you talked about.

Jay A. Snowden: And then, if I could, just two questions on clarifications on things you guys said relating to the brick and mortar business. First, Jay, you talked about the four projects that are currently underway, the first half of 26. Will there be, I think, you know, late 2025 is the expectation for some. Is that all of them will now be in the first half of 26? Or will you complete the fourth in the first half of 26? Yeah, and we didn't mean to be confusing there, but we'll have all four done and open in the first half of 26. Could one or two of them hit late in the 25?

Speaker Change: The four projects that are currently underway first half of 'twenty six will there be I think.

Speaker Change: Late twenties 25 is the expectation for some is that all of them will now be first half of 'twenty six or you will complete the fourth and the first half of 'twenty six.

Speaker Change: Yeah, and we didn't mean to be confusing there, but we will have all four done and opened in the first half of 'twenty sex could could one or two of them hit late twenty-five yes. So we really haven't changed we just thought it would be clearer to say you should expect all four to be open and operating in the first half of 'twenty sex, but it'll be opening the floor.

Jay A. Snowden: Yes. So we really haven't changed. We just thought it would be clearer to say you should expect all four to be open and operating in the first half of 26, but we'll be opening the four of them between late 25 and mid-26. Our next question comes from Shaun Kelley with Bank of America. Please proceed. Hi, good morning, everyone.

Of them between late 'twenty, five and mid 'twenty six.

Speaker Change: Sure.

Speaker Change: Our next question comes from Shaun Kelly with Bank of America. Please proceed.

Shaun C. Kelley: Hi, good morning, everyone.

Shaun C. Kelley: Jay, I'm hoping you could just help us break down maybe the implied revenue forecast for 2024 a bit more granularly. If we back into it on the digital side, it seems to imply roughly, and again, it'll depend on everybody's camera here, but maybe 6% to 7% OSB market share. So that's pretty consistent with where we're at today, albeit on a national level, so probably including New York and maybe North Carolina.

Shaun C. Kelley: Jay I'm, hoping you could just help us break down maybe the implied revenue forecast for 2020 for a bit more granularly. If we if we back into it on the digital side.

Shaun C. Kelley: It seems to imply roughly and again it will depend on everybody's Tam here, but maybe 6% to 7%.

Shaun C. Kelley: OSB market share so that's pretty consistent with where we're at today, albeit on a national level, So probably including New York in maiden North Carolina. So I guess the question is.

Jay A. Snowden: So I guess the question is, is that right? Is that kind of like a run rating about where you are on a same state basis all you need to be successful and hit your revenue target in 2024 on digital? Or do you need, you know, a pickup or materially better monetization or product mix as we move through the year? So I think your back of the envelope math is right, Shaun.

Shaun C. Kelley: Is that right is that kind of like run rating about where you are in the same state basis, all you need to be successful and hit your revenue target in 2024 on digital or do you need a pick up a materially better monetization our product mix as we move through the year from here.

Speaker Change: No I think your back of the envelope math is right Shawn that's a level that gets us to this interactive result on the EBITDA line.

Jay A. Snowden: And that's a level that gets us to this interactive result on the EBITDA line. We anticipate that it's going to continue to ramp as we get toward the end of the year and the football season. We've got a lot of product enhancements and deeper integrations with ESPN planned over the course of the next three, four, five, six months, really targeting September to be ready for football season. So I would expect that, you know, the fourth quarter should be a quarter that you see things start to really come together. And I think we would be exiting 2024 with real momentum from a handle market share perspective, given the enhancements to the overall experience that I mentioned earlier. So that's the math. We're we're not really.

We anticipate that it's going to continue to ramp as we get towards the end of the year and football season from.

Speaker Change: We've got a lot of product enhancements and deeper integrations with E. S. P. N planned over the course of the next 3456 months are really targeting September to be ready for football season. So I would expect that fourth quarter should be a quarter that you see that start to really come together and I think we're at.

Speaker Change: We would be exiting 2024 with railroad with real momentum from a handle market share perspective.

Speaker Change: Given the enhancements to the overall experience that I mentioned earlier, so that's the math.

Speaker Change: We're not really super focused on where we are today on market share, it's where are we going to be in September and beyond I think it'll probably fluctuate around where we're at now given the stability that we've seen in daily weekly and monthly active users, we make more enhancements to the products I think it becomes more sticky you start to get more share of wallet.

Jay A. Snowden: Super focused on where we are today in terms of market share, it's where are we gonna be in September and beyond. I think it'll probably fluctuate around where we're at now, given the stability that we've seen in daily, weekly, and monthly active users. If we make more enhancements to the products, I think it will become more sticky. You start to get more share of wallet from some of the newer players you've brought into the ecosystem. I think they spend more time on the product.

Speaker Change: Some of the newer players you brought into the ecosystem I think they spend more time on the product. They go from betting once a week twice a week and so we think that's really going to ramp up and we picked up so many new users. We covered that a couple of times that it takes the pressure off of us to feel like we need to.

Jay A. Snowden: They go from betting once a week to twice a week. And so we think that's really gonna ramp up. And we've picked up so many new users. We covered that a couple of times that it takes the pressure off of us to feel like we need to continue at that pace. It's probably not possible, but we have two great state launches, 9% of the US population.

Speaker Change: Continue at that pace, that's probably not possible, but we have two great state launches, 9% of the U S. Population, we can continue to be sort of at market with regards to our new <unk>.

Jay A. Snowden: We can continue to be sort of at the market with regard to our new player, new deposit signup. We're not looking to lead the market, but certainly be in it. And let the ESPN brand and all the integrations take care of the rest.

Speaker Change: New player New deposit signed up we're not looking to lead the market, but certainly be at market and let the ESPN brand and all the integrations take care of the rest. That's a recipe that we think makes a lot of sense and it's tremendously efficient as we go but you're correct in your back of the envelope, although we expect to be ramping towards the end of the year into 25.

Shaun C. Kelley: That's a recipe that we think makes a lot of sense and it's tremendously efficient as we go. But yeah, you're correct in your back of the envelope, although we expect to be ramping up toward the end of the year to 25. Super, and then sort of maybe drilling down a layer, you know, probably the best way for us to gauge some of your success and improvement on the product side is gonna be watching some of your implied, you know, bet mix and really your theoretical or your hold rate improve as we move through the year. Could you just talk a little bit about where your theoretical sits today? Kind of, you know, we hear numbers, obviously, for the best of breed guys now, you know, easily approaching double digits, maybe even low teens.

Speaker Change: Super and then sort of maybe drilling down a layer.

Speaker Change: Probably the best way for us to gauge some of your success and improvement on the product side is going to be watching hitting your implied that next and really your theoretical or your hold rate improve as we move through the year could you just talk a little bit about where your theoretical sits today kind of we hear numbers, obviously for the best of breed guys now.

Speaker Change: Approaching double digit maybe even low teens, where are you today, just given sort of your mix of customers your casual better and kind of how do you expect when do you expect us to kind of start to see some more measurable improvement in that.

Jay A. Snowden: Where are you today, just given sort of your mix of customers, your casual better? And, you know, kind of how do you expect, you know, when do you expect us to kind of start to see some more measurable improvement in that? You know, again, I'm putting this in context of some of the data we've even received where some of the state level hold rates in January have been really, really low relative to the market. So maybe just help us put those pieces together.

Again I'm, putting this in context with some of the data we didnt received where some of the state level hold rates in January have been really really low relative to market. So maybe just help us put those pieces together.

Jay A. Snowden: Yeah, I'll talk about kind of the high level where we think we are and where we want to be. And then I'll let Todd jump in on sort of what's been happening in the last couple of months because a lot of that's been, you know, done with focus and intention as we continue to drive top of funnel demand. I think today, based on the mix, we're seeing a higher parlay mix today than we've ever seen, which is great, but we're still below market.

Speaker Change: Yeah, I'll talk about kind of high level, where we think we are and where we want to be and then I'll, let todd jump in on sort of what's been happening in the last couple of months because a lot of that's been you know.

Todd George: <unk> done with focus and attention as we continue to drive top of funnel demand I think today based on the mix, we're seeing a higher parlay mix today than we've ever seen which is great.

Todd George: But we're still below market and we know that our parlay mix, though it's it's continuing to get better we've got a little ways to go on pre packaged pre populated parlay offerings and sort of a parlay lounge that you can go to and much like the top the top competitors of ours have today.

Jay A. Snowden: And we know that our parlay mix, though, is continuing to get better. We've got a little ways to go on pre-packaged, pre-populated parlay offerings and sort of a parlay lounge that you can go to, much like the top competitors of ours have today. That's something that we actually feel like is all upside from here. So we're probably more at that, you know, seven to eight percent kind of theoretically today

Todd George: That that's something that we actually feel like is all upside from here. So we're probably be more at that 7% to 8% kind of theoretically today.

Jay A. Snowden: But we'll be continuing to gradually build that up to double digits. I think it's just a matter of time, Shaun, before we get that parlay mix and especially on the same game side, which is where we're not as strong today, but we're going to continue to put a lot of focus and energy there from a product enhancement standpoint between now and the football season, so we should be able to catch the others over time. But, you know, it may not be done in 2024, but I don't think it's going to go beyond 2025, given that we can now focus so many of our resources on product enhancements and features and UI, and UX, as opposed to just deploying, you know, state launches, deploying resources around state launches and migrations. Todd, would you like to speak a little bit about what we've seen so far? Yeah, thanks, Jay. And thanks, Shaun.

Todd George: But we'll be continuing to gradually build that up to double digit I think it's just a matter of time, Sean before we get that parlay mix and especially on the same game side, which is where were not as strong today, but we're going to continue to put a lot of focus and energy there from a product enhancement standpoint between now and football season that we should be able to catch.

Todd George: The others overtime, but it may not be done in 'twenty 'twenty four but I don't think it's going to go beyond 2025, given that we can now focus so many of our resources on product enhancements and features and UI UX as opposed to just deploying state launched deploying resources around state launches and migrations tied you wont speak a little bit about what we see.

Speaker Change: Yeah, Thanks, Jay and thanks, Sean the only thing I would add to that as we are going out there and drawing our database that we touched on multiple times you've got this mix of promo spend that that everybody does but you also have you know.

Todd George: The only thing I would add to that, as we are going out there and drawing up our database that we touched on multiple times, you've got this mix of promo spend that everybody does, but you also have, you know, odds boosts at your disposal that become a great acquisition tool and get people into the ecosystem. So what we were able to do through the use of odds boosts is bring people in, especially during the playoffs, and then carry that over through the Super Bowl and get people into the ecosystem. Also, I would say that the trends right now are looking a lot like the early years for some of the competitive sets.

Speaker Change: Ards boosts at your disposal that that become a great acquisition tool and get people into the ecosystem. So what we were able to do through use of Ards boost is bring people in during.

Speaker Change: During the especially during the playoffs, and then carry that over through the Super Bowl and get people into the ecosystem also I would say that the trends right now.

Speaker Change: Looking a lot like our early years for some of the competitive set so we're very comfortable with the progress we're making in and expect going into next year with a lot of the work that's being done as we sit here today.

Todd George: So we're very comfortable with the progress we're making and expect, going into next year with a lot of the work that's being done as we sit here today, that we'll see that same progress. The number of people that are taking advantage of the parlays and finding those to be really attractive is encouraging for us as we move into the next phase. Our next question comes from Barry Jonas with Truist Securities. Please proceed. Hey guys, good morning.

Speaker Change: That we'll see that same progress.

Speaker Change: The number of people that are taking advantage of the parlays in finding those to be really attractive is encouraging for us as we move into the next phase.

Speaker Change: Our next question comes from Barry Jonas with Trust Securities. Please proceed.

Barry Jonas: Hey, guys. Good morning, ESPN, just announced plans with Fox and discovery for a new streaming service JV any sense, yet if and how ESPN that could participate.

Barry Jonas: ESPN just announced plans with Fox and Discovery for a new streaming service, JB. Any sense yet if and how ESPN vets could participate? Yeah, Barry, the way we've gotten that question quite a bit, the way to think about that is, You know, this is the way it was described by Disney. I'm not speaking for them, but just repeating what they said on their call. This is really about content distribution. It's about getting content into more households and on more devices as people have continued to move away from cable. This is another option to have a streaming package that would include ESPN and ESPN content. So you should anticipate that if you're watching ESPN today, whether that's, you know, digitally streaming or you're watching it on linear, that as you see integrations in the shows on ESPN, that that would carry over to this new streaming platform as well. SportsCenter is still SportsCenter, and GetUp is still GetUp. And the integrations in those shows would be as they are today.

Barry Jonas: Yes, Barry the way, we've gotten that question quite a bit the way to think about that is.

Barry Jonas: This is the way it was described by Disney I'm not speaking for them, but just repeating what they said on their call. This is really about content distribution, it's about getting in and more households, and on more devices. As people have continued to move away from cable. This is another option to have an E. A streaming package that would include ESPN ESPN content.

Barry Jonas: So you should anticipate that if youre watching E. S. P. N today, whether that's digitally streaming or you're watching that on linear that as you see integrations in the shows on E. S. P. N that that would carry over to this new streaming platform as well as sports centers still sports center and get up is still get up in the integrations and those shows.

Barry Jonas: Would be as they are today, it's just a matter of providing more access to E. S. P N to more people in the country.

Jay A. Snowden: It's just a matter of providing more access to ESPN to more people in the country. That's great. And then I just wanted to ask one on the land-based business. Curious to get your thoughts on expanding the land-based portfolio, whether that's M&A or Greenfield. In the past, we've talked about interest in the strip. And I believe some new jurisdictions are looking at legalization.

Speaker Change: That's great and then I just wanted to ask one on the on the land based business curious to get your thoughts on expanding the land based portfolio, whether that's M&A or greenfield in the past we've talked about interest in the strip and I believe some are new Jersey jurisdictions are looking at legalization. Thanks.

Barry Jonas: Thanks. Yeah, I mean, look, our position is that we'll continue to be looking at opportunities, whether those are acquisitional opportunities or greenfield as those opportunities present themselves. And that hasn't changed.

Speaker Change: Yeah, I mean look our position is we'll continue to be.

Speaker Change: Looking at opportunities, whether those are acquisition opportunities or greenfield as those opportunities present themselves in.

Speaker Change: That hasn't changed that won't change if there's a great opportunity and we think we can generate value in an investment then that's something we're going to strongly consider sometimes that's easier said than done Las Vegas strip, there's very limited opportunities and nothing really hot at the moment if theres a new state then that's something that we would be taking and have been taken up.

Jay A. Snowden: That won't change. If there's a great opportunity, and we think we can generate value in an investment, then that's something we're going to strongly consider. Sometimes that's easier said than done. For example, on the Las Vegas Strip, there are very limited opportunities and nothing really hot at the moment.

Brent Montour: If there's a new state, then that's something that we would be taking and have been taking a hard look at. Obviously, nothing is imminent at the moment, but we're continuing to kick the tires. That won't change. Our next question comes from Brent Montour with Barkley. Please proceed. Hey, good morning, everybody.

Speaker Change: Hard look at obviously nothing is imminent and the moment at the moment, but we're continuing to kick the tires that that won't change.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Brian mature with Barclays. Please proceed.

Brian Mature: Hey, good morning, everybody. Thanks for taking my question.

Jay A. Snowden: Thanks for taking my question. The first question is on the non-ESPN marketing spend budget that we heard about from you three months ago. Has that, the outlook for that spend bucket changed at all based on what's happened with ESPN and sort of your efficacy there in the first few months? And what have you baked in, in that 24 guidance? So you should assume, Brant, that what we said previously is consistent with how we feel today. It's going to be roughly matching the on-channel spend with ESPN.

Brian Mature: First question is on the non ESPN marketing spend budget that we heard about from you three months ago has that is the outlook for that spend bucket changed at all based on what's happened with ESPN and sort of your efficacy there in the first few months and what have you baked in in that 24 guidance.

Brian Mature: So you should assume Brandt that what we've said previously is consistent with how we feel today, it's gonna be roughly matching the on channel spend with ESPN. That's a number that obviously, we can flex, but we think that's a good target that's sort of what's built into our modeling for two.

Brent Montour: That's a number that obviously we can flex, but we think that's a good target. That's sort of what's built into our modeling for 2024. It gives us plenty of dry powder to utilize for state launches. You should think about that spend as being much more performance-based marketing spend. And probably more targeted. Obviously, the ESPN spend is almost entirely national, and some of the off-channel is national as well.

Brian Mature: And in 'twenty for.

Brian Mature: It gives us plenty of dry powder to utilize for state launches.

Brian Mature: You should think about that spend is being much more performance based marketing spends and probably more targeted obviously the E. S. P. N spend is almost entirely national and some of the off channel is national as well, but a lot of it is performance and more local and regional focus.

Jay A. Snowden: But a lot of it is performance-related and more local and regional focused. Thanks for that. And then just to follow up, good to see, obviously, cash handle moving upward. I think one of the things that people are concerned about out there is third-party data providers suggesting that deposit share hasn't moved up and is tracking below your handle share. And so I guess the question is, are you seeing, you know, similar improvements in cash deposit? Yeah, I think the deposit information that you're referencing goes back to what I mentioned.

Speaker Change: Thanks for that and then and then just a follow up good to see obviously cash handle moves.

Speaker Change: Moving upward I think one of the things that people are concerned about out there is.

Speaker Change: Third party data providers, suggesting that deposit share hasnt moved up and is tracking below your handle share and so I guess the question is are you seeing.

Speaker Change: Similar improvements in cash.

Speaker Change: Cash deposits.

Speaker Change: Yeah, I think the deposit information that you're referencing goes back to what I mentioned I mean, you you can see in the weekly active user numbers monthly active user numbers. We've got engagement. That's that's not an issue and we've got really good ratings on the iOS store App.

Jay A. Snowden: I mean, you can see in the weekly active user numbers, the monthly active user numbers, we've got engagement, that's not an issue. And we've got really good ratings on the iOS store app. So we feel really good about that. I think our job is to continue to improve the product and get deeper integrations with ESPN and eliminate friction so that we can get people more seamlessly from the ESPN ecosystem, whether that's media, fantasy, and the like, over to ESPN bet when they're ready to engage in betting. So I think the deposits are really a function of us not having our share of wallet yet, but we're getting the deposits. We're probably not getting the same size of deposits as we are with maybe the top competitors. But I'm confident in saying that we're one of three or maybe four apps on their phone, and they're on our app, and they're placing wagers. I think they're waiting for more enhancements.

Speaker Change: So we feel really good about that I think our job is to continue to improve the products and get deeper integrations with E. S. P N and eliminate friction so that we can get people more seamlessly from E. S. P N ecosystem, whether that's media fantasy and the like over to ESPN that when they're ready to engage in and <unk>.

Speaker Change: Heading.

Speaker Change: So the I think the deposits is really a function of we don't have our share of wallet, yet we're getting the deposits for probably not getting the same size of deposits as we are with maybe the top competitors, but I'm confident in saying that we're one of three or maybe four apps on their phone and they're on our app and they're placing wagers I think they are waiting for more enhanced.

Jay A. Snowden: And I think that that's okay. You know, our ability to keep people engaged is taking care of itself now. And I think that any that have gone well will have gotten dormant.

Speaker Change: <unk> and I think that that's okay.

Speaker Change: Our ability to keep people engaged is taking care of itself now and I think that any of that have gone well that will have gotten doormats.

Jay A. Snowden: By the time we get to football season next year, we can reactivate quickly because of our relationship with ESPN, and the product is going to continue to get better and better. So we feel great. I mean, we have over a million new people in our database, and most of them are engaged with us on a regular basis, as you can see on slide eight. And we just have to build out the relationship, the loyalty, and earn more share of wallet as we go. And I think you'll see deposit growth come along with that. Our next question comes from Chad Beynon with Macquarie. Please proceed. Morning, thanks for taking my question. First one on the bricks and mortar business. So the margin guidance of 34 to a little bit over 35 assumes some slippage from what you produced in 2023. Felicia, you called out some competition and, obviously, the weather. As we think about kind of same store margins, is it safe to assume that properties that aren't, you know, being hit by competition could drive the same margins, or is there a major reason why, you know, you would expect margins to decline in 24? Thanks. Hey, this is Todd.

Speaker Change: By the time, we get to a football season next year, we can reactivate quickly because of our relationship with ESPN and the product is going to continue to get better and better. So we feel great. I mean, we have over 1 million new people in the database are most of them are engaged with us on a regular basis as you can see on slide eight and we just have to build out the.

The loyalty and earn more share of wallet as we go and I think you'll see deposit growth come along with that.

Speaker Change: Our next question comes from Chad Beynon with Macquarie. Please proceed.

Chad Beynon: Good morning, Thanks for taking my question first one on the bricks and mortar business. So the margin guidance of 34 to a little bit over 35.

Chad Beynon: Assumes.

Chad Beynon: Some some slippage from from what you produced in 2023, Felicia you called out some competition and obviously the weather as we think about kind of same store margins is it safe to assume that properties that arent.

Chad Beynon: Being hit by competition could drive the same margins or is there more.

Chad Beynon: The reason why.

Chad Beynon: You would expect for margins to decline in 2024.

Hey, this is Todd I'll take that yeah. That's that's basically everything thats modeled in there from a same store basis, putting January behind us looking at a very strong stable margins I think the variables that Felicia provided our everything thats modeled in there, but we.

Chad Beynon: I'll take that. Yeah, that's basically everything that's modeled in there from a same store basis, putting January behind us, and looking at very strong, stable margins. I think the variables that Felicia provided are everything that's modeled in there, but we don't see that changing. Okay, thanks. And then for 24, in terms of stock buybacks, can you remind us what's left in the program? And if there could be opportunities, given where the stock is right now, to buy back shares at these levels? Thanks. Yeah, thanks, Chad. We do have $750 million remaining on our stock repurchase authorization.

Todd George: We don't see that changing.

Speaker Change: Okay. Thanks, and then for 'twenty four in terms of stock buybacks can you remind us what's left on the program and if there could be opportunities given where the stock is right now to buy back shares at these levels. Thanks.

Speaker Change: Yeah. Thanks, Chad, we do have $750 million remaining on our stock repurchase authorization, but.

Felicia R. Hendrix: But, you know, look, as Jay and I talked about in our prepared remarks, this is a year of investment as we focus on growing and building out ESPN VET. So, you probably won't see share repurchases in 2024. But, you know, as we transition from the growth phase of our interactive segment towards profitability and a free cash flow phase, we'll have plenty of opportunities to consider return of capital to shareholders. But again, this year, we're focused on investment. Yeah, I mean, look, we have a pretty recent history of buying back shares when it makes sense for us, and that's the best use of capital allocation. And right now, as we've covered in this call, we're investing in a high-growth business that's going to generate a lot of value for our shareholders over the long term. So that's the priority. It doesn't mean that you can't do or won't do anything else.

Speaker Change: Look as Jay and I talked to that in our prepared remarks. This is this is a year of investment as we focus on growing and building out ESPN that so you probably won't see share repurchases in 2024, but as we transition from the growth phase of our interactive segment towards profitability and our free cash.

Speaker Change: Flow phase, we'll have plenty of opportunities to consider a return of capital to shareholders, but again. This year. We're focused on investment yeah. I mean look we have a pretty recent history of buying back shares when it when it makes sense for us and that's the best use of capital allocation and right now as we've covered in this call where we're investing.

Speaker Change: In a high growth business, that's going to generate a lot of value for our shareholders long term. So that's the priority. It doesn't mean that you can't do or won't do anything else. It just means that right now that is the number one priority.

Jay A. Snowden: It just means that right now, that is the number one priority. Our next question comes from Steve Wozinski with Stifel. Hey guys, good morning.

Steven Wieczynski: Our next question comes from Steve was in ski with Stifel.

Steve: Hey, guys good morning.

Steve: So when we think about the the 1.2 million new members to your database that you called out.

Steven Wieczynski: Jay, so we think about the 1.2 million new members to your database that you called out. You know, you talked about 90% of those are ESPN bed customers. I know it's still early.

Steve: You talked about 90% of those are ESPN bad customers.

Steve: I know, it's still early but can you give us any indication of how many of those.

Jay A. Snowden: But can you give us an indication of how many of those new members have visited one of your brick and mortar casinos or have used your iGaming platform? I guess, you know, what we're trying to figure out here is kind of what that cross-traffic, you know, play has looked like as this, you know, as your ecosystem continues to grow? Sure. I mean, look. Todd will have some comments on this as well. We're in the very early stages, as you referenced. I mean, we're three months here.

Steve: New members have visited one of your brick and mortar casinos <unk> be used your gaming platform I guess, what we're trying to figure out here is kind of what that cross traffic.

Play has looked like as this ecosystem continues to grow.

Speaker Change: Sure I mean look we're Todd will have some comments on this as well we're in the very early stages as you referenced three months here. So we've built up a really nice database, we know where they live we know how the proximity as we talked about one third of them within 50 miles of one of our retail businesses. So.

Jay A. Snowden: So we've built up a really nice database. We know where they live. We know how important proximity is. We talked about one-third of them being within 50 miles of one of our retail businesses. So we're going to start working on that now. That's not something that we've had a lot of time to get going on, but we're very excited about the cross-sell opportunities. It's added a lot of new people to the database. Our overall database is now approaching 30 million people. It feels like just yesterday we were at 25. So that's a big opportunity for us. Todd, anything that you want to add overall? Yeah, Jay.

Speaker Change: We're gonna start working on that now that's not something that we've had a lot of time to get going on but we're very excited.

Todd George: Cited about the cross sell opportunities, it's a lot of new people into the database. Our overall database is now approaching 30 million people. It feels like just yesterday, we were at 25. So that's a that's a big opportunity for us.

Speaker Change: Anything that you want to add overall Jay.

Todd George: The only few items I would add, and Jay gave the data point around how many people are so close to our property. When you expand that kind of concentric circle around our properties, that number grows significantly. And then just based on what we did through some promotions at year end with some of our properties, moving these people to a property, we see such a great multiple, especially on that low to mid customer that's engaging with us online. When they get to a property, we're seeing great play, great engagement, as well as additional spend on the other amenities. So that will be in the playbook as we move forward, and it will be a key component this year and all the years as we move forward. And I think just your other part of the question on cross-sell to iCasino. You can see from the monthly active user slide that we have on Hollywood Casino that cross-sell has been great. Again, it's one of those, our product today, I would say it's good, but it's got to be great.

Speaker Change: The only the only a few items I would add and Jay gave the data point around how many people are so close to our property when you expand that kind of concentric circle around our properties at that number grows significantly and then just based on what we did through some promotions at year end with some of our properties.

Speaker Change: Moving these people to a property we see a.

Speaker Change: It's such a great multiple especially in that low to mid customer that's that's engaging with us online when they get to a property, we're seeing great play great engagement as well as additional spend on the other amenities. So that will be in the playbook as we move forward and it will be a key component of this year and all of the years as we move forward.

Speaker Change: And I think just to your other part of the question on cross sell the I Casino you can see from the <unk>.

Speaker Change: Monthly active user slide that we have on our Hollywood Casino that cross sell has been grade again, it's one of those are our product today I would say is good.

Speaker Change: But it's got to be great and we're working on that diligently as well with our product team and we think that we can see our market share from our handle perspective continue to grow probably to what our daily active in monthly active user shares.

Todd George: And we're working on that diligently as well with our product team. And we think that we can see our market share from a handle perspective continue to grow probably to what our daily active and monthly active user share is. Okay, gotcha. Thanks for that.

Speaker Change: Okay got you. Thanks for that and then just this is probably for Todd going back too.

Steven Wieczynski: And then this, this is probably for Todd going back to, you know, your embedded guidance on the top line for the brick and mortar side of the business. You know, you know, I guess Todd, can you maybe give us a little bit of color of kind of how you guys are thinking about your core customer this year in terms of, you know, spend levels and maybe what gets you to the low end of that range versus the high end of that range? Yes, Steve, a great question.

Todd George: Your embedded guidance on the topline for the brick and mortar side of the business.

I guess, how can you maybe give us a little bit of color of kind of how you guys are thinking about your core customer this year in terms of.

Spend levels and maybe what gets you to the low end of that range versus the high end of that range.

Speaker Change: Yes, Steve Great question, so for us.

Todd George: So for us, especially this last quarter, maybe the last two quarters, we did see tremendous engagement return from that 65 plus customer, which has traditionally always been strong for us, but just took quite some time to come back into our property. So looking at those positive trends, those will continue into this year. And then our core customer, you know, looking at that mid-range, high-frequent customer. We are still seeing a little bit of elevated spend per trip and a slight increase in trips in Q4. So looking at how that continues through this year in almost every region, that remains strong. So I would say that there is a slight fall off maybe in the 21 to 34 age group, which has been running hot for a long time, but we make that up in the 65 plus.

Steve: Especially this last quarter.

Steve: Maybe the last two quarters, we did see tremendous engagement return from that 65, plus customer which has traditionally always been strong for us, but just took quite some time to come back into our properties. So looking at those positive trends those continue into this year and then our core customer we're looking at that mid <unk>.

Steve: Range high frequent customer.

Steve: We are still seeing a little bit of elevated spend per trip and slight increase in trips in Q4. So looking at how that continues through this year in almost every region.

Steve: That remains strong so I would say that slight fall off maybe in the 21 to 34, which has been running hot for a long time, but we make that up in the 65 plus.

Todd George: Frank, why don't we have one more question, please? We have a question from Bernie McTernan with Needham & Company. Please proceed. Great. Thanks for taking the questions. Good morning.

Steve: Frank why don't we have one more question. Please.

Steve: We have a question from Bernie Mcternan with Needham and company. Please proceed.

Bernie Mcternan: Great. Thanks for taking my questions. Good morning, just wanted to ask on that slide eight the weekly active users.

Bernie Mcternan: Just want to ask on slide eight, the weekly active users. And I know the commentary in terms of what the embedded guidance is for market share this year. But do you think there's a structural difference in terms of what your weekly active users would be verse what your, you know, handle or GGR share would be? Just trying to get at if it's a more casual user, if there should be that difference, maybe if they're lower spenders or if it's, you know, right now you're a second or third app, and the goal is to migrate that to the Yeah, Bernie, we think it's both.

Bernie Mcternan: And I know the commentary in terms of what the embedded guidance is from market share. This year, but do you think there is a structural difference in terms of what your weekly active users would be versus what youre handler and <unk> share would be just trying to get at if it's a more casual user if there should be that difference maybe if their lower spend or if it's right now Europe second or third.

Bernie Mcternan: Third app that someone's using and the goal is to migrate that to the primary app over time, and just how you're thinking about navigating that customer journey.

Speaker Change: Yeah, Bernie I, we think it's both.

Jay A. Snowden: We definitely have a lot of new users, and we think we feel strongly that we've grown the market. And so that's going to take a little bit of time for their play to be commensurate with maybe somebody that's been betting on online sports betting for the last three or four years. I think most of it, however, though, is a share of wallet because we are one of the apps people have on their phone. They're using the app, they're on the app, we see all that in the data, and we're getting a smaller portion of their wallet than we are of how many people are actually using the app.

Speaker Change: We definitely have a lot of new users that we think we feel strongly we've grown the market and so that's going to take a little bit of time to grow their play to be commensurate with maybe somebody that's been betting on online sports betting for.

Speaker Change: For the last three or four years I think most of it. However, though is a share of wallet that we are one of the apps people have on their phone they are using the app or on the App, we see all of that in the data and we're getting a smaller portion of their wallet than.

And then we are of how many people are actually using the app and so on a percentage basis I think you know this.

Jay A. Snowden: And so on a percentage basis, I think this is exciting for us. Slide eight, I think, says a lot about where we think we can get to. And it's not going to take us a really long time; that's not a five-year journey. We think that's something that we can accomplish in the next couple of years if we really get our product to where it needs to be. And of course, deeper integrations with ESPN. We think integrations with the Fantasy app with ESPN is going to be a huge shot in the arm. We anticipate that happening before the end of the year, obviously targeting the football season. We'll see if we can get there. But it's a combination of the two.

Speaker Change: This is exciting for us slide eight I think it says a lot about where we think we can get to and it's not going to take us a really long that's not a five year journey. We think that's something that we can accomplish in the next couple of years, if we really get our product to where it needs to be and of course, the deeper integrations with ESPN, we think integrations with the fantasy apps with.

Speaker Change: E. S. P N is going to be a huge shot in the arm, we anticipate that happening before the end of the year, obviously targeting football season, we'll see if we can if we can get there, but it's a combination of the two.

Bernie Mcternan: But the fact that people have the app, they're using the app, we just need to build more loyalty with those users over time. Thanks, Jay. Thanks, Bernie. Thank you everybody for joining us, and we look forward to sharing more with you next quarter. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone. Subs by www.zeoranger.co.uk

Speaker Change: But the fact that people have the app, they're using the App, we just need to build more loyalty with those with those users over time.

Speaker Change: Great. Thanks, Jay.

Jay A. Snowden: Thanks, Bernie Thanks, everybody for joining us and we look forward to sharing more with you next quarter. Thanks.

Speaker Change: That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your line have a great day everyone.

Speaker Change: [music].

Speaker Change: Okay.

Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].