MGM Resorts International (MGM) Q1 2025 Earnings Call Highlights: Strong Growth in Digital and ...

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Thu, May 1, 2025, 1:19 AM 4 min read

Net Revenue from Operations: Increased by 34% for BetMGM.
EBITDA: $22 million for BetMGM, an improvement of over $150 million from the prior year.
iGaming Net Revenues: Grew 27%.
Online Sports Net Revenues: Grew 68%.
Las Vegas Strip Resorts: Record hotel month expected for April; record first quarter slot win up 7%.
Regional Properties: Record March in RevPAR and slot win; segment adjusted EBITDA margins at or above 30%.
MGM China Market Share: 15.7% with margins at 28%.
Share Repurchase: Nearly 15 million shares repurchased for about $494 million in Q1; additional 8 million shares in Q2 for $215 million.
Equity Commitment in Japan: JPY428 billion, with JPY392 billion remaining for a 43.5% ownership stake.
EBITDA Enhancement Plan: $200 million plan in motion, with more than $150 million expected in 2025.

Warning! GuruFocus has detected 4 Warning Signs with MGM.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

MGM Resorts International (NYSE:MGM) reported a strong financial quarter, highlighted by a significant turnaround at BetMGM, with net revenue from operations increasing by 34% and achieving a positive EBITDA of $22 million.
The MGM Rewards program reached a milestone of 50 million members, representing a growth of over 50% since 2020, showcasing the strength of MGM's brand and customer loyalty.
MGM's partnership with Marriott is performing exceptionally well, contributing to record first-quarter occupancy and driving significant room bookings.
MGM China maintained a mid-teens market share, ending the quarter at 15.7%, and is expanding its offerings with new villas and suites to cater to premium gaming customers.
MGM's digital business, including the launch in Brazil, is showing early traction with healthy retention rates, and the company is focused on executing its marketing strategy to support growth.

Negative Points

MGM faced a year-over-year impact of about $65 million related to the Super Bowl last year, affecting Las Vegas performance.
Regional operations experienced a modest decline in revenue due to inclement weather, impacting overall financial results.
The MGM Digital segment faced challenges due to adverse regulatory effects in the Netherlands and tough comps in Sweden, impacting revenues.
MGM's equity commitment in Japan increased to JPY428 billion, driven by updated spend estimates, which could impact future financial planning.
The company is still in active discussions regarding business interruption insurance claims, with expectations of receiving further proceeds being uncertain and potentially lumpy.

Q & A Highlights

Q: Can you provide more details on the performance of Las Vegas in April and which key performance indicators (KPIs) are showing strength? A: Jonathan Halkyard, CFO, noted that April is shaping up to be a record month for MGM in Las Vegas, driven by strong hotel occupancy and rates. The Marriott partnership has been particularly beneficial, with over 440,000 room nights booked through their channel. Group and event performance has also been strong, contributing to the positive outlook.

Q: How is MGM managing labor costs, and is this part of the $150 million cost-saving initiative? A: Jonathan Halkyard, CFO, confirmed that managing labor costs is part of their continuous efforts to control expenses. The company has seen a reduction in full-time equivalents (FTEs) across regions, including Las Vegas and corporate offices, contributing to the cost-saving initiative.

Q: What is the status of the business interruption insurance claims, and how are they impacting financials? A: Jonathan Halkyard, CFO, explained that the business interruption insurance is recorded in EBITDAR, not revenue. MGM has collected over $100 million so far, with more claims pending. However, future collections are expected to be less significant and more sporadic.

Q: Can you elaborate on the progress and financial commitment for the Japan project? A: Jonathan Halkyard, CFO, stated that MGM's equity commitment for the Japan project is JPY428 billion, with a 43.5% ownership stake. The project is fully designed, minimizing scope changes, and over half of the equity commitment is hedged against currency fluctuations. The project is on track to open in 2030.

Q: How is the BetMGM venture performing, and what are the expectations for the digital segment? A: William Hornbuckle, CEO, highlighted that BetMGM reported a positive EBITDA of $22 million, a significant improvement from the previous year. The focus on iGaming and strategic customer acquisition has driven this turnaround. MGM Digital is also progressing well, with a strong start in Brazil and plans to ramp up marketing efforts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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