MGM Resorts reported its highest-ever quarterly revenue in Q2, achieving $4.5 billion in group revenue, up 1% year-over-year. However, concerns about the gaming market in Las Vegas and a potential takeover bid from Barry Diller's IAC were prominent during the company's earnings call on Wednesday. CEO Bill Hornbuckle confirmed that an independent committee is evaluating Diller's offer of $48.30 per share, which was presented on June 1, shortly after Caesars Entertainment was bought by Fertitta Entertainment. He assured analysts that the board will act in the best interests of the company and its shareholders but did not elaborate further on the bid.
For the quarter, MGM's adjusted EBITDA totaled $610 million, reflecting a 6% decrease compared to the previous year, while net income surged to $292 million from just $49 million last year. At the close of the quarter, MGM held $2.5 billion in cash against long-term debt totaling $6 billion.
In Las Vegas, the company saw revenue reach $2.2 billion and adjusted EBITDA grow to $735 million, both marking a 3% increase from the prior year. Despite this positive performance, analysts inquired about MGM's strategy to enhance play among lower-end customers. COO Ayesha Molino acknowledged that while the luxury segment is thriving, properties like Luxor and Excalibur are facing challenges. To attract more visitors, MGM has implemented all-inclusive packages that have garnered favorable responses, with over 30,000 room nights booked since the promotion's launch.
In March, MGM introduced two-night packages at Luxor and Excalibur for $330, and Hornbuckle emphasized that Las Vegas remains a value destination, addressing growing concerns over rising costs. He referenced a viral incident involving a $26 bottle of water at Aria, admitting that the company had misstepped with pricing strategies. The new all-inclusive offering, he stated, aims to shift the perception of value.
On the casino front, Las Vegas saw a revenue increase of 17% year-on-year to $536 million, with slot and table hold rates of 9.6% and 29.6%, respectively. These figures surpassed the average hold rates reported for the Strip by the Nevada Gaming Control Board. Both Hornbuckle and CFO Jonathan Halkyard indicated plans for renovations at the Aria and Cosmopolitan properties, although specific costs and timelines have yet to be determined.
Regionally, MGM's same-store quarterly revenue reached a record $904 million, but net revenue slipped 4% to $924 million, with segment-adjusted EBITDAR declining by 9% to $280 million. The company recently completed the $546 million sale of its Northfield Park racino in Ohio and has no immediate plans for mergers and acquisitions according to Hornbuckle. He did acknowledge upcoming renovations planned for Borgata in Atlantic City and Beau Rivage in Mississippi, both significant contributors to the regional performance last quarter.
Hornbuckle was also asked about the new Sphere Entertainment venue under construction near Washington, DC. He expressed optimism about the potential tourism this venue could generate for MGM National Harbor, particularly as construction progresses toward a 2030 opening.
In Macau, MGM China's Q2 revenue remained flat at $1.1 billion, with segment-adjusted EBITDAR dropping 15% to $257 million due to the FIFA World Cup's impact on high-roller attendance. Kenneth Feng, CEO of MGM China, emphasized a focus on optimizing yield rather than purely increasing promotional activity.
MGM's digital segment saw a 20% revenue increase to $196 million, although adjusted EBITDAR losses grew to $31 million from $26 million. BetMGM, MGM's joint venture with Entain, reported Q2 revenue of $711 million, up 3% year-over-year, largely driven by an 8% increase in iGaming revenue. Despite flat online sports betting revenue, Hornbuckle rejected concerns about maximizing BetMGM under the current joint venture structure, affirming a solid operational relationship.
MGM's adjusted earnings per share were reported at $0.59, slightly below the anticipated $0.63. Nonetheless, analysts responded positively to the overall performance. The company’s stock held steady at $45.66, marking a 22% increase over the last year. MGM also repurchased 4 million shares valued at approximately $164 million during this quarter. As of June 30, about $1.4 billion remains available for stock repurchase under an April 2025 plan.
