MGM Resorts International reported first-quarter revenue of $4.45 billion, a 4.2 percent year-over-year increase that surpassed analyst expectations, though earnings per share fell short of consensus estimates. The company's diversified portfolio showed strength in its Macau and digital operations, while its Las Vegas segment saw revenue growth for the first time in over a year.
"Our diversification strategy is proving successful," CEO William Joseph Hornbuckle said in the earnings call. "Consolidated revenues again showed growth of over 4 percent. Vegas, for the first time in six quarters, also showed growth at the top line, and as I think about the balance of the year, our group and convention business looks strong."
The company's performance was mixed across key metrics. While consolidated revenue beat the Zacks Consensus Estimate of $4.36 billion, its adjusted earnings of $0.49 per share missed the forecast of $0.56. The earnings miss was attributed to increased self-insurance expenses totaling $46 million across its U.S. operations.
Shares of MGM were largely flat in after-hours trading. The results were impacted by what the company termed "frivolous litigation" costs, which obscured stronger underlying performance, particularly in Las Vegas, where convention and group business is expected to remain a tailwind into the second quarter.
China and Digital Segments Drive Growth
MGM China was a standout, posting net revenue of $1.12 billion, a 9.2 percent increase from the prior-year quarter. According to a CLSA research report, the subsidiary's property EBITDA of HKD2.46 billion beat market expectations by 5 to 6 percent when excluding new branding license fees. While the unit's market share for the full quarter was 15.4 percent, it rebounded to 17.3 percent in March and held steady into April, indicating strong momentum. The improved performance was supported by newly renovated premium suites and gaming areas at MGM Cotai.
The company's digital operations also delivered significant growth. The LeoVegas business in Sweden and the UK saw revenue climb over 30 percent. Meanwhile, the BetMGM venture in North America is approaching $2 billion in annual revenue as it moderates sports betting spending to focus on profitability in its core iGaming segment.
Las Vegas Rebounds on Convention Strength
In Las Vegas, net revenues grew 0.2 percent to $2.18 billion, marking the first year-over-year increase in six quarters. The growth was driven by a robust convention and group meeting calendar, which management expects to continue into the second quarter with a 2 percentage point increase in convention room night mix. A new all-inclusive package offered at the Luxor and Excalibur properties has also been successful, attracting first-time visitors to the city.
Despite the top-line growth, segment adjusted EBITDAR in Las Vegas declined by $62 million, a drop fully explained by a $37 million increase in self-insurance expenses and a $31 million decrease in prior-year business interruption proceeds.
The results highlight the success of MGM's strategy to diversify its revenue streams, with strength in Macau and digital helping to offset significant one-time cost headwinds in the U.S. Investors will be watching to see if the strong convention booking pace and recovering leisure demand in Las Vegas can drive margin improvement through the rest of the year. The company's next major catalyst will be its second-quarter earnings report, which will provide insight into the crucial summer season.
This article is for informational purposes only and does not constitute investment advice.
