Churchill Downs Incorporated reported fourth‑quarter 2025 results that beat expectations on both revenue and earnings. Revenue rose 6.7 % to $665.9 million, surpassing consensus estimates of roughly $660 million. Adjusted earnings per share for the quarter were $0.97, a beat of about $0.08–$0.12 over the majority of analyst estimates. Full‑year revenue reached $2.93 billion, up 7 % from $2.73 billion in 2024, and full‑year adjusted diluted EPS climbed to $6.13, a 3.7 % increase from $5.91 in 2024. Adjusted EBITDA for the year grew $62.4 million to $1.205 billion, driven largely by gains in the Historical Racing Machine and wagering services segments.
The revenue beat was largely driven by a 7 % year‑over‑year increase in Live and Historical Racing, supported by the expansion of HRM venues in Kentucky and Virginia and the successful hosting of the Kentucky Derby. Wagering services and solutions also contributed to the top‑line growth, while the Gaming segment saw a decline due to the cessation of HRM operations in Louisiana and roadwork affecting Mississippi properties. The mix shift toward higher‑margin racing and wagering helped offset the weaker gaming performance.
The EPS beat can be attributed to disciplined cost management and a favorable operating‑margin profile. Operating margin fell to 18.5 % from 20.3 % in the same quarter last year, reflecting higher operating costs and a shift toward lower‑margin gaming revenue, but the company maintained profitability through efficient expense control. Net income attributable to CDI fell 28 % year‑over‑year to $51.3 million, largely because of a valuation allowance for deferred tax assets and increased transaction expenses, which were not reflected in adjusted earnings.
Margin compression in the quarter was driven by increased operating costs and a mix shift toward lower‑margin gaming revenue, but the company’s adjusted EBITDA margin improved, reflecting the strong performance of its racing and wagering businesses. The company’s ability to grow revenue while keeping adjusted earnings above expectations signals effective execution, even as it navigates headwinds in its legacy gaming operations.
Management highlighted the results in its earnings call. CEO William C. Carstanjen said, “2025 was another very strong year for Churchill Downs. We delivered record net revenue and record adjusted EBITDA, exceeding our prior record set in 2024.” He also noted plans to invest $180 million to $200 million to develop Rockingham Casino in Salem, New Hampshire. CFO Marcia Dall added, “Our team delivered record fourth‑quarter net revenue and adjusted EBITDA from our diversified portfolio, continued organic growth and returns from our recent property investments.” She also mentioned a record $700 million of free cash flow or $9.75 per share, following a record year in 2024.
Market reaction to the results was mixed. While the company beat revenue and earnings expectations, investors expressed caution over the decline in net income, margin compression, and the company’s guidance, which did not include a significant upside. The mixed sentiment reflects the balance between strong operating performance and the challenges posed by the legacy gaming segment and capital‑intensive expansion plans.
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