Racing, gaming, and entertainment company Churchill Downs (NASDAQ:CHDN) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 8.7% year on year to $683 million. Its non-GAAP profit of $1.09 per share was 10.9% above analysts’ consensus estimates.
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Churchill Downs (CHDN) Q3 CY2025 Highlights:
- Revenue: $683 million vs analyst estimates of $674.7 million (8.7% year-on-year growth, 1.2% beat)
- Adjusted EPS: $1.09 vs analyst estimates of $0.98 (10.9% beat)
- Adjusted EBITDA: $262.3 million vs analyst estimates of $245.9 million (38.4% margin, 6.7% beat)
- Operating Margin: 14.3%, down from 20% in the same quarter last year
- Free Cash Flow Margin: 18.7%, up from 7% in the same quarter last year
- Market Capitalization: $6.77 billion
Company Overview
Famous for hosting the Kentucky Derby, Churchill Downs (NASDAQ:CHDN) operates a horse racing, online wagering, and gaming entertainment business in the United States.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Churchill Downs’s 22.2% annualized revenue growth over the last five years was impressive. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Churchill Downs’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 10.1% over the last two years was well below its five-year trend. 
Churchill Downs also breaks out the revenue for its three most important segments: Horse Racing, Gaming, and TwinSpires, which are 43.9%, 38.8%, and 17.3% of revenue. Over the last two years, Churchill Downs’s revenues in all three segments increased. Its Horse Racing revenue (live and historical) averaged year-on-year growth of 17.2% while its Gaming (casino games) and TwinSpires (horse racing subsidiary) revenues averaged 5.4% and 5.5%. 
This quarter, Churchill Downs reported year-on-year revenue growth of 8.7%, and its $683 million of revenue exceeded Wall Street’s estimates by 1.2%.
Looking ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.
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Operating Margin
Churchill Downs’s operating margin has shrunk over the last 12 months, but it still averaged 24.8% over the last two years, elite for a consumer discretionary business. This shows it’s an well-run company with an efficient cost structure, and its top-notch historical revenue growth also suggests its margin dropped because it ramped up investments to capture market share. We’ll keep a close eye to see if this strategy pays off.
This quarter, Churchill Downs generated an operating margin profit margin of 14.3%, down 5.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Churchill Downs’s EPS grew at an astounding 61.4% compounded annual growth rate over the last five years, higher than its 22.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.
In Q3, Churchill Downs reported adjusted EPS of $1.09, up from $0.97 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Churchill Downs’s full-year EPS of $6.18 to grow 9.1%.
Key Takeaways from Churchill Downs’s Q3 Results
It was good to see Churchill Downs beat analysts’ EPS expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its . Overall, this print had some key positives. The stock traded up 1.7% to $98.10 immediately after reporting.
Churchill Downs may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.