MGM Resorts International reported third-quarter net revenue of $3.4 billion in 2022, a 26% increase over earnings of $2.7 billion in the same period last year. Quarterly earnings were significantly boosted by the record-setting performance of its Las Vegas Strip hotels and casinos, which saw revenue rise 67% to $2.3 billion.
Quarterly Strip net revenue benefited largely from the inclusion of a full quarter of results from The Cosmopolitan, the luxury property MGM acquired in May 2022, and three-quarters of earnings from the Aria property it purchased in September of last year. MGM's Vegas results were also buoyed by increased overall business volume and tourist traffic on the Strip.
Adjusted Las Vegas property EBITDAR for Q3 soared to a record high of $846 million, a gain of 58% over the $535 million registered in the same prior year period.
"We're proud to report the best quarter in our Las Vegas Strip history, both on a revenue and adjusted property EBITDAR basis, driven by the continued appeal of our entertainment and meetings offerings," said MGM Resorts International CEO and President Bill Hornbuckle.
BetMGM greatly reduces quarterly loss
Another encouraging result reported in this week's earnings call was that BetMGM more than halved its Q3 YoY losses. BetMGM is the iGaming arm of MGM Resorts, which is a 50/50 joint venture with Europe-based Entain plc.
MGM Resorts's share of the quarterly shortfall came to only $23.6 million, compared to the $49 million in losses in the third quarter of 2021. The narrowing digital losses at BetMGM follow a similar pattern at Caesars Digital, which reported sharply reduced Q3 losses earlier this week.
During his opening remarks that followed the release of the Q3 earnings report, Hornbuckle alluded to how BetMGM had already earned $1 billion in the first nine months of 2022 and was on course to hit its full-year expected revenue target of $1.3 billion.
He noted that MGM "remains the clear leader in iGaming with a 29% market share," noting that BetMGM commands a 22% share in active U.S. markets when combining sports betting sites and online casinos.
"In the third quarter, BetMGM launched in Kansas, representing its 24th market to date and the eighth new market we have added since November of last year, and looking forward, we will add Massachusetts, Ohio, and Maryland to our online sports betting portfolio," said Hornbuckle. "As we hit the halfway point of the NFL season, we're encouraged by the preliminary metrics, reinvestment has remained within our expectations, and the market appears to be acting more rationally."
The positive prognosis prompted Chad Beynon, an analyst at Macquarie Research, to ask Hornbuckle whether he expected the digital division to go into profit earlier rather than later in 2023.
"I wouldn't go so far as to change our projections and our prediction that by this time next year, we should be in a profitable scenario," said Hornbuckle. "We've got two or three products coming out that are going to be exclusive, and we're excited by."
Accounting revision sees MGM post a net loss for Q3
However, not all the news coming out of the third quarter report was good. Despite the otherwise glittering revenue record set by its Las Vegas operations, MGM Resorts was saddled with a net loss of $1.05 billion — a stark year-over-year change from the net profit of $1.89 billion (on revenue of $2.71 billion) for the same period in 2021.
This translated to negative Q3 earnings per share of $1.45 as compared to a figure of $2.77 EPS for the third quarter of last year. These results fell short of street expectations that have seen MGM Resorts' share price tumble by more than 10% since the earnings report was released on Wednesday.
However, share prices are actually up 0.5% since the beginning of October.
The net loss is largely attributable to a required change in accounting practices under new Macau gaming laws governing the company’s two Macau resorts and casinos. This required MGM to add a $1.2 billion amortization expense to its books for the quarter.
Enthusiasm around Ontario
Hornbuckle noted that the BetMGM sportsbook in the Canadian province of Ontario was outperforming expectations.
Despite the fact that Ontario does not "publish" market share results, the MGM CEO said that "I know what we're doing" in the province.
"We've done exceptionally well. I think part of it is our Ontario/Detroit database, and we've had exposure to those customers for 20 years... and so, we have taken a real share," said Hornbuckle. "And if we're not leading, we're damn close in the context of iGaming."
