Q4 2024 Earnings Summary
- MGM's digital business is expected to generate over $1 billion in revenue with healthy double-digit margins going forward, supported by strategic investments in Europe (the U.K., the Netherlands, and Sweden) and Brazil, indicating significant future growth potential.
- Record-setting performance in Las Vegas properties during January 2025, including occupancy at 94%, record slot handle, and mid-single-digit growth in ADRs, demonstrating strong demand and pricing power in both gaming and non-gaming segments.
- Strong slot business performance driven by capital investments in high-limit slot areas across properties like ARIA, MGM Grand, and The Bellagio, as well as regional properties, indicating successful strategies leading to robust growth in gaming revenues.
- MGM faces a significant $65 million year-over-year headwind in Q1 2025 due to the absence of the Super Bowl in Las Vegas, making it difficult to grow earnings in the first quarter. Jonathan Halkyard stated: "It's going to be pretty difficult in the first quarter with a $65 million year-over-year headwind".
- There is uncertainty in achieving the $150 million operational EBITDA opportunities that MGM is counting on to offset earnings headwinds, as this is a company-wide target and not specific to Las Vegas. Jonathan Halkyard mentioned: "We have 2 things to overcome the Super Bowl. We talked about quite a lot. I mentioned the impact of the renovation of the MGM Grand...". These challenges may impact the company's ability to meet its objectives.
- The ongoing renovation of MGM Grand introduces execution risk due to the lack of quantified expected uplift from these renovations, which could affect earnings. When asked about ROI expectations, Corey Sanders stated: "To quantify the uplift, we'll raise our minimum rates there, but I don't think we'd put a pencil to that paper quite yet".
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | –0.7% (from $4.376B to $4.347B) | The modest decline in total revenue reflects a mixed performance across segments. While Regional Operations (up 6.6%) and MGM China (up 3.7%) provided modest boosts, these were not enough to offset declines driven by the Las Vegas Strip Resorts (–6%) and a dramatic reversal in Corporate and Other revenue (swung from +$149.1M to –$378.9M). |
Operating Income | –30% (from $419.3M to $291.6M) | A 30% drop in operating income resulted largely from increased operating expenses—including higher payroll costs, gaming taxes, and promotional expenses—which were not fully mitigated by modest revenue growth in some segments. This situation continued challenges noted in previous periods where operational disruptions and expense pressures were evident. |
Net Income | –37% (from $379.6M to $237.9M) | The 37% decline in net income is driven by the lower operating income and an especially severe impact from the Corporate and Other segment, which reversed from +$149.1M in Q4 2023 to –$378.9M in Q4 2024, thereby heavily weighing on overall profitability. |
Basic EPS | –43% (from 0.92 to 0.52) | A sharp 43% drop in Basic EPS directly reflects the deterioration in net income and underlying operational challenges. The decrease in earnings per share is compounded by the significant revenue and expense issues, echoing previous period trends where profitability markers were sensitive to both revenue mix and expense pressures. |
Las Vegas Strip Resorts Revenue | –6% (from $2,370.5M to $2,223.3M) | The decline in Las Vegas Strip Resorts revenue can be attributed to operational challenges such as decreased casino revenues prominently impacted by factors like cybersecurity incidents and asset divestitures seen previously, which continued to weigh on this key segment. |
Regional Operations Revenue | +6.6% (from $873.4M to $931.2M) | The 6.6% increase in Regional Operations revenue is mainly driven by higher casino performance—particularly increased slot handle and slot win—along with a contribution from $15M in business interruption insurance proceeds, reflecting a rebound in this segment from previous pressures. |
MGM China Revenue | +3.7% (from $982.5M to $1,018.3M) | A modest 3.7% growth in MGM China revenue indicates stabilization following the earlier explosive recovery (over 800% increases in Q3 2023) due to the removal of COVID-19 restrictions. This period represents a normalization in the Chinese market with continued recovery albeit at a lower growth rate than previously observed. |
Corporate and Other | Reversal from +$149.1M to –$378.9M | A dramatic swing in Corporate and Other revenue from a positive figure to a significant deficit signals major challenges in this segment. Losses here, likely from reduced contributions from sources such as LeoVegas and other corporate operations that had fueled prior period gains, placed substantial downward pressure on overall profitability. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
EBITDA | FY 2025 | expects to improve EBITDA, targeting $200 million in cost savings | aspires for positive EBITDA | raised |
Revenue Initiatives | FY 2025 | no prior guidance | implemented revenue initiatives amounting to tens of millions of dollars | no prior guidance |
Operational EBITDA Opportunities | FY 2025 | no prior guidance | approximately $200 million in operational EBITDA opportunities, expecting to capture about $150 million | no prior guidance |
Las Vegas Operations | FY 2025 | no prior guidance | optimism for growth in Las Vegas operations | no prior guidance |
MGM Digital | FY 2025 | no prior guidance | FY 2025 EBITDAR losses expected to remain consistent with FY 2024 due to increased spending | no prior guidance |
Super Bowl Impact | FY 2025 | $60–70 million revenue impact that will not recur | $65 million year-over-year impact | no change |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
F1 Event EBITDA Headwind (approx. via EBIT) | Q4 2024 vs Q4 2023 | $30 million EBITDA headwind year-over-year | Year-over-year Operating Income↓: 419,344(Q4 2023) – 291,565(Q4 2024) = 127,779 difference (USD, Thousands) | Missed |
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MGM Digital Business Outlook
Q: What's the scale and return outlook for MGM's digital investments?
A: Management stated they've invested about $1 billion in MGM Digital, completing their capital deployment program. The core business, including Leo and Push Gaming, generates over $0.5 billion in revenue and would be highly profitable with high double-digit margins if operated stand-alone. They're aiming for the digital business to reach $1 billion-plus in revenue with healthy double-digit margins going forward. -
Las Vegas Revenue Initiatives
Q: What revenue measures are in place amid demand concerns?
A: Management noted January 2025 was "anything but flat," with strong performance. They implemented revenue initiatives totaling tens of millions of dollars, mostly executed in December to give a head start for the year. -
Super Bowl Impact and Outlook
Q: How will the Super Bowl's $65 million impact be managed?
A: The Super Bowl had a $65 million year-over-year negative impact. Management aims to overcome this through revenue initiatives and organic growth. Additionally, the renovation at MGM Grand will have a similar financial impact over the year. -
January Performance and ADR Growth
Q: Can you provide details on January's performance and ADR trends?
A: January set records with 94% occupancy, record ADR, slot handle, and restaurant revenue. Excluding February, they are seeing mid-single-digit growth in ADRs in other months. -
Share Repurchase Intentions
Q: What are your plans for share repurchases in 2025?
A: Management believes the shares represent compelling value and plans to continue aggressive repurchases. They repurchased $120 million in Q4 and nearly $300 million in January, accelerating the pace due to share valuation. -
MGM Grand Renovations
Q: What's the expected impact of MGM Grand's room renovations?
A: The renovated rooms are a complete uplift to the property. They expect to raise minimum rates and see a lift in both ADR and casino perspectives, though they haven't quantified the uplift yet. -
Slot Business Strength
Q: What's driving the strength in your slot business?
A: Strong slot performance is attributed to the casino mix, proficient management of the product portfolio, and capital investments in high-limit slot areas across properties like ARIA, MGM Grand, and Bellagio. -
Marriott Partnership Impact
Q: How is the Marriott partnership affecting room bookings?
A: In the past four weeks, they've booked over 85,000 room nights through Marriott, aiming for 900,000 this year. This significantly enhances their room booking dynamics and supports yielding strategies. -
State Tax Concerns
Q: Are you concerned about states increasing gaming taxes?
A: Management acknowledged ongoing challenges but feels it's manageable. They resolved issues in Maryland and believe they've communicated effectively with states about what's at stake. -
Macau Performance During Chinese New Year
Q: How did Macau perform during Chinese New Year?
A: Macau properties saw strong traffic, about 18% higher than Chinese New Year in 2024. Gaming volume was also higher, and they maintained mid-teens market share. -
MGM Digital and BetMGM Relationship
Q: How aligned is MGM Digital with BetMGM in the U.S.?
A: MGM Digital assists BetMGM mainly through content creation and development. However, the businesses operate largely independently due to the nature of the joint venture agreement. -
Market Share Goals in Digital Expansion
Q: What's your market share target in new digital markets?
A: They calibrate targets based on market maturity and competition but aim for at least a 5% market share in any market they enter.
Research analysts covering MGM Resorts International.