MGM Resorts reported record group revenue and same-store regional revenue for the second quarter, despite concerns regarding the health of Las Vegas and Barry Diller's pending $48.30-per-share takeover bid through People Inc. These results were disclosed on Wednesday.
CEO Bill Hornbuckle began the analysts' call by mentioning that an independent committee is "continuing to evaluate" Diller’s offer put forth on June 1, shortly after Caesars Entertainment was acquired by Fertitta Entertainment.
Hornbuckle expressed confidence that the board would act in the best interests of the company and its shareholders but refrained from offering further details on the takeover.
MGM's Q2 group revenue hit $4.5 billion, marking a 1% increase compared to the previous year and setting a record for the quarter. Adjusted EBITDA reached $610 million, which was approximately 6% lower year-over-year. The net income, however, surged to $292 million compared to just $49 million a year earlier. By the end of the quarter, MGM had $2.5 billion in cash and $6 billion in long-term debt.
In Las Vegas, revenue was reported at $2.2 billion with an adjusted EBITDA of $735 million, reflecting 3% growth from the previous year. This performance did not shield MGM from analysts' questions about plans to enhance low-end player engagement.
COO Ayesha Molino noted the strong performance in the luxury market while acknowledging challenges at lower-end properties such as Luxor and Excalibur. In response to these challenges, MGM rolled out all-inclusive two-night packages at these locations priced at $330 in March, which Hornbuckle highlighted as a successful initiative that contributed to stabilizing occupancy.
The gambling segment in Las Vegas also thrived, generating $536 million, a 17% increase from last year. MGM reported slot and table hold rates of 9.6% and 29.6% respectively, exceeding the average hold rates reported by the Nevada Gaming Control Board.
Rumors of upcoming room renovations at Aria and the Cosmopolitan were mentioned by Hornbuckle and CFO Jonathan Halkyard, though no specific costs or timelines were provided.
On the regional front, MGM's same-store quarterly revenue reached a record of $904 million, but there was a 4% year-over-year decline in net revenue totaling $924 million, with adjusted EBITDAR decreasing by 9% to $280 million.
The recent $546 million sale of the Northfield Park racino operations in Ohio, finalized in April, followed MGM’s withdrawal from the New York casino license race last October. Currently, Hornbuckle indicated that there are no imminent mergers or acquisitions.
Beginning later this year, MGM will initiate renovations at the Borgata in Atlantic City and Beau Rivage in Mississippi, which had both been key contributors to the company's record revenue in the regional segment.
Hornbuckle addressed the new Sphere Entertainment venue under construction in Washington, DC, stating its proximity to MGM National Harbor makes MGM optimistic about the potential tourism it could attract.
In terms of MGM China, Q2 revenue was flat year-over-year at $1.1 billion and segment-adjusted EBITDAR decreased by 15% to $257 million. This downturn was partially due to the FIFA World Cup reducing the high-roller attendance in June. Kenneth Feng, CEO of MGM China, explained that their strategy focuses on optimizing returns rather than solely on promotions.
MGM Digital revenue grew by 20% year-over-year to $196 million, although adjusted EBITDAR losses expanded to $31 million from $26 million.
BetMGM achieved Q2 revenue of $711 million, up 3% from the previous year, with iGaming revenue increasing by 8% to $483 million. Sports betting revenue remained unchanged at $228 million. Despite some declines in adjusted EBITDA and contributions back to MGM, Hornbuckle dismissed ideas of restructuring the joint venture, stating it currently functions well with MGM providing the brand while BetMGM focuses on technology.
Following the report, analysts reacted positively to MGM's overall results. Despite adjusted earnings per share at $0.59 falling short of expectations of $0.63, the company's stock remained virtually unchanged at $45.66 by Thursday's close, reflecting a 22% increase over the last year. During the quarter, MGM repurchased 4 million shares, amounting to approximately $164 million, while $1.4 billion remains available from a stock repurchase plan initiated in April 2025.
Macquarie analyst Chad Beynon raised the target price to $54, praising MGM's Las Vegas presence and regional portfolio. Truist's Barry Jonas maintained a $55 target price, lauding solid regional performance and noting lagging results in Macau, while he recognized the strength of convention business in Las Vegas.
