MGM Resorts released its second-quarter results on Wednesday, revealing record group revenue and same-store regional revenue. Nevertheless, concerns remain regarding the Las Vegas market and a potential takeover bid from Barry Diller's People Inc., made on June 1, shortly after Caesars Entertainment was acquired by Fertitta Entertainment.
During the earnings call, MGM CEO Bill Hornbuckle reported that an independent committee is "continuing to evaluate" Diller's offer of $48.30 per share. He expressed confidence that the board will determine the best course for the company and its shareholders but declined to provide further comments on the potential acquisition.
MGM's total revenue for the second quarter reached $4.5 billion, marking a 1% increase compared to last year, while adjusted EBITDA was reported at $610 million, a decline of about 6% year-over-year. Notably, net income surged to $292 million, a significant jump from $49 million during the same quarter last year. The company's cash reserves totaled $2.5 billion, with long-term debt standing at $6 billion.
In Las Vegas, MGM earned $2.2 billion in revenue and adjusted EBITDA of $735 million, both showing a 3% growth from the previous year. Despite these improvements, analysts expressed concerns about the company's strategies to enhance low-end gaming. Hornbuckle noted that luxury segments are strong, but properties like Luxor and Excalibur continue to face challenges. COO Ayesha Molino mentioned that MGM had introduced all-inclusive offers for lower-end players, hinting at a more favorable response to these initiatives.
In March, MGM launched two-night packages at Luxor and Excalibur for $330. Hornbuckle has emphasized Las Vegas as a "value" destination, especially as travelers express dissatisfaction with rising costs, highlighted by a controversial $26 bottle of water sold at Aria last year. He stated that their all-inclusive promotion has stabilized occupancy, leading to over 30,000 room nights booked so far and positively altering the value perception.
The casino segment in Las Vegas reported $536 million in revenue, a 17% increase from last year, with slots and table hold rates at 9.6% and 29.6% respectively. This growth exceeded the average hold rates for the Strip, which were approximately 8% for slots and 16% for tables, according to data from the Nevada Gaming Control Board.
Looking ahead, Hornbuckle and CFO Jonathan Halkyard mentioned potential room renovations at Aria and the Cosmopolitan later this year, but details regarding costs and timelines are yet to be announced.
In regional markets, MGM's same-store quarterly revenue reached a record $904 million, though net revenue dipped 4% year-over-year to $924 million. Adjusted EBITDAR decreased by 9% to $280 million. MGM recently completed a $546 million sale of its Northfield Park racino in Ohio and hinted at upcoming renovations at Borgata in Atlantic City and Beau Rivage in Mississippi.
Regarding the new Sphere Entertainment venue under construction near Washington, D.C., Hornbuckle expressed excitement about the potential tourism boost it could provide to MGM National Harbor. Sphere CEO James Dolan mentioned a target opening in 2030, but no update was shared regarding the completion timeline.
In Macau, MGM China's results for the second quarter were less impressive, with revenue remaining flat at $1.1 billion and adjusted EBITDAR down 15% to $257 million. This decline was linked to high-roller attendance impacted by the Fifa World Cup. CEO Kenneth Feng affirmed that their strategy focuses on optimizing yield across their operations rather than merely increasing promotions.
Meanwhile, MGM Digital's revenue rose by 20% year-over-year, totaling $196 million, although adjusted EBITDAR losses expanded to $31 million from $26 million in the prior year. This segment includes results from the LeoVegas subsidiary, separate from the BetMGM joint venture with Entain.
BetMGM reported revenues of $711 million for Q2, a 3% increase driven by an 8% rise in iGaming revenue to $483 million. Online sports betting revenue remained unchanged at $228 million, and adjusted EBITDA declined 15% to $74 million. Contributions from BetMGM to MGM dropped by 11% to $171 million. When asked about maximizing BetMGM under the joint venture, Hornbuckle downplayed the notion, reiterating the current successful collaboration with Entain.
Analysts had a positive reaction to MGM's overall results, even though adjusted earnings per share of $0.59 fell short of the $0.63 estimate. Despite the stock price closing virtually unchanged at $45.66, MGM shares appreciate by around 22% over the last year. The company repurchased 4 million shares for approximately $164 million this quarter, leaving about $1.4 billion available from its April 2025Stock repurchase plan.
Analyst Chad Beynon from Macquarie raised MGM’s target price to $54, praising the company's Las Vegas and regional performance. Barry Jonas of Truist maintained a buy rating, noting solid regional results but acknowledging the underperformance in Macau. Both analysts highlighted the strength of MGM's convention business in Las Vegas.
