Bally’s revenue nearly doubles in Q2, but the company downgrades full-year forecasts

Casino-entertainment operator Bally’s Corporation announced its financial results for the second quarter of the year. For the period ended June 30, the business delivered $552.5 million in revenue, nearly 100% up from $267,733 million the prior year.

The business further posted an Adjusted EBITDA of 141.2 million, an increase from the $82.8 million the prior year. Bally's net income during the period was $59.5 million with a net income margin of 10.8%, down against a net income of $68.9 million and a net income margin of 25.8% in Q2 2021. 

The revenue boost was aided by the acquisition of UK-based online gaming business Gamesys during H2 2021, one of a slate of takeovers that year, which also included US daily fantasy sports (DFS) operator Monkey Knife Fight. Most of the quarter's recovery came from gaming, where revenue more than doubled to $455.1 million.

Meanwhile, hotel revenue was up by about 50% to $33.9 million, while revenue for food and beverage grew to $27.4 million. Retail, entertainment and other revenue also more than doubled to a total of $36 million.

On a per-share basis, the Rhode Island-based company said it had a net income of 98 cents, with earnings, adjusted for non-recurring gains, at 32 cents per share. Bally's shares have dropped 40% since the beginning of the year. The stock has dropped 52% in the last 12 months.

The results topped Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 25 cents per share, Associated Press reports. However, the $552.5 million of revenue fell short of Street forecasts, as five analysts surveyed by Zacks expected $601.9 million.

Lee Fenton, Chief Executive Officer, said: "Our second quarter results reflect continued strength in our Casinos & Resorts segment, record margins in our International Interactive segment, and continued growth in our North America Interactive segment particularly in BallyCasino.com in New Jersey, despite headwinds from significant FX volatility and challenges in Atlantic City." 

Breaking revenue down by division shows that Bally's land-based business was the largest segment, at $299.9 million; while the North American online segment brought in $18.1 million. While this roughly corresponds to a 3% market share, Fenton said this could increase, as the business is set to focus more on marketing once it has an optimized product by leveraging Gamesys technology in both the US and Canada.

Lee Fenton, Chief Executive Officer

The CEO said the company intends to "keep the marketing dollars back" until the product is at its best. Additionally, he explained the business is set to focus on online casino rather than sports betting, stating that "anywhere iGaming is legal is where we want to be.”

Meanwhile, the international interactive division contributed $234.6 million, mostly attributed to Gamesys. While there is no comparison point for the past year, Fenton admitted revenue had declined amid a drastic marketing spend reduction of about 30%.

While costs rose even more rapidly than revenue, at a whopping 149.6% to $467.2 million -including an increase in costs of sales for gaming of more than three times to $204.5 million-, the company still managed to post operating income up 6% to $85.3 million. After taxes, profit came at $59.5 million, down by almost 15%.

Based on the latest financial results pertaining to the first half of the year, Bally’s adjusted its full-year revenue outlook. For the full year, Bally’s expects revenue of $2.2 billion to $2.3 billion, and Adjusted EBITDA in the range of $535 million to $550 million.

This is down from prior forecasts. The company formerly expected revenue of between $2.4 billion and $2.5 billion, with an Adjusted EBITDA projected to be between $560 million and $580 million. Bally's cites adverse foreign exchange movements and lower expectations for its Atlantic City property among the major reasons.

"We are pleased with the company's record cash flow from operations in the quarter and are focused on continued incremental cash flow generation initiatives," the CEO concluded. The company is also set to advance projects including its upcoming venue in Chicago, for which it was chosen as the preferred bidder in Q2.

See Bally's Q2 presentation here.