MGM Resorts signals $1B digital revenue opportunity and strategic asset sales while advancing international projects

Earnings Call Insights: MGM Resorts International (MGM) Q3 2025

MANAGEMENT VIEW

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CEO William Hornbuckle highlighted capital discipline, citing the decision to withdraw from the Yonkers, New York commercial license process and the sale of Northfield Park for $546 million in cash. Hornbuckle stated, “the sale of multiple of 6.6x represents a significant premium to MGM's current share price which values the opco business at less than 3x.” He emphasized MGM's geographic and channel diversity as a driver for consolidated net revenue growth this quarter.

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Hornbuckle described strategic adjustments in Las Vegas in response to guest feedback on value, including a “fabulous 5-day sale during which we sold over 300,000 room nights, nearly double our typical pace.” He noted, “several of our luxury properties generated record 3Q slot win.”

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The CEO said over 90% of target groups and conventions are contracted for 2026, and October is on pace to be the “strongest room night month ever for forward bookings originating from the Marriott channel.”

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Internationally, Hornbuckle reported Macau's “record 3Q EBITDAR” and market leadership in premium mass, as well as the successful opening of the Alpha Gaming Club at MGM Macau. He mentioned European BetMGM hitting a new all-time revenue high, strong growth in Brazil, and a disciplined approach to investment in digital markets.

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Regarding Japan, Hornbuckle noted, “all elements of this project were under construction” and referenced a $300 million credit facility to support MGM Osaka. He also confirmed progress in Dubai for an expected opening in the second half of 2028.

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CFO Jonathan Halkyard reported, “Las Vegas segment reported $601 million in EBITDAR, down $130 million year-over-year.” He attributed the shortfall to “$27 million in decreased business interruption proceeds together with an increase in insurance expense... $25 million in disruption from the MGM Grand Room renovation; and $78 million from the impact on operations, primarily related to occupancy and ADRs.” Halkyard mentioned cost containment efforts and noted, “FTEs... decreased by 7%.”

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Halkyard highlighted Macau’s “record market share of 15.5%” and a $85 million dividend paid from MGM China. He added North American BetMGM will begin distributing cash to MGM Resorts, expecting “at least $100 million in the fourth quarter.”

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Hornbuckle announced COO Corey Sanders will retire at year-end, recognizing his “dedication, your service and your leadership.”

OUTLOOK

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Hornbuckle projected “stabilization in the fourth quarter and growth in 2026 and beyond.”

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Halkyard stated, “2026 group and convention channel has the ability to drive growth. Currently, future bookings are pacing up in all outer years, while attrition and cancellations are in line with historical averages.”

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In digital, Hornbuckle said MGM Digital “has an opportunity for $1 billion in revenue with a significant margin, driving double-digit returns on those investments.”

FINANCIAL RESULTS

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The Las Vegas segment reported $601 million in EBITDAR, a year-over-year decrease of $130 million. Net revenue in Las Vegas declined 7%, with expenses managed down accordingly, including a 7% decrease in FTEs.

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Regional operations generated record slot win, and several properties achieved record 3Q total revenue and EBITDAR. Macau delivered record third quarter EBITDAR despite a $12 million typhoon impact, and market share reached 15.5%.

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MGM China paid an $85 million dividend to MGM Resorts in September. For October, Macau was pacing to a “16.5% market share and well over $100 million in EBITDA.”

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MGM Digital reported 23% revenue growth but a $23 million EBITDA loss this quarter, with full-year losses expected to approach $100 million due to Brazil investment.

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BetMGM North America will distribute at least $100 million in cash to MGM Resorts in Q4.

Q&A

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John DeCree, CBRE: Asked Hornbuckle about the decision to exit New York. Hornbuckle responded, “...the thing that concerned us probably the most was at the end when we thought we were buying for a 30-year license and were told it was 15... while we initially liked the return, it got tighter and tighter... we think it's capital best spent some other location and some other opportunity.”

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Shaun Kelley, BofA: Inquired about prioritizing digital growth. CFO Halkyard replied, “right now, our digital investments are cash generative as opposed to cash consuming... we're really just focused on growing the existing businesses.” Kelley followed up on Q4 stabilization. Hornbuckle stated, “It has been sequential. Obviously, July... was a rough month. The summer was rough, but it sequentially got better... there's a couple of weeks in December... we want to continue to push on to see how we fill. But sequentially, we feel better.”

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Brandt Montour, Barclays: Asked about Macau strategy amid competition. Xiaofeng Feng replied that MGM China focuses on “understanding our customers... fully launched our Alpha Villas and Alpha Clubs,” and is developing new high-end suites.

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Daniel Politzer, JPMorgan: Asked about Las Vegas performance between luxury and value segments. Hornbuckle said, “Bellagio, ARIA, Cosmopolitan have continued to maintain rates, continue to maintain ADRs... it's really Luxor and Excalibur, that probably have the biggest challenges of occupying rooms.”

SENTIMENT ANALYSIS

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Analysts pressed on the rationale for exiting New York, digital investment priorities, segment performance in Las Vegas, and Macau competition. Tone was neutral to slightly skeptical, especially regarding consumer value and Las Vegas softness.

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Management tone during prepared remarks was confident and forward-looking, emphasizing strategic discipline, international expansion, and digital growth. During Q&A, tone was factual and at times defensive, with statements like “we hope we believe and we price corrected” and “we think, we hope, we believe and we price corrected.”

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Compared to the previous quarter, management remained confident, but was more explicit in addressing operational headwinds and capital allocation decisions. Analysts continued to focus on Las Vegas demand, digital growth, and capital return.

QUARTER-OVER-QUARTER COMPARISON

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Guidance language shifted from highlighting record results and a robust pipeline to emphasizing stabilization and strategic capital allocation.

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Management’s confidence in digital and international opportunities remained strong, with a more cautious tone regarding Las Vegas. The decision to withdraw from New York and the sale of Northfield Park marked a notable shift in asset optimization.

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Analysts’ focus persisted on Las Vegas softness, digital growth, and international performance, with questions centering on value perception and competition.

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Key metric changes included a decline in Las Vegas EBITDAR, record Macau performance, and the initiation of cash distributions from BetMGM North America.

RISKS AND CONCERNS

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Management cited consumer value concerns in Las Vegas, airline capacity reductions, and international visitation softness as key challenges. Hornbuckle acknowledged, “We lost control of the narrative over the summer... we should have been more sensitive to the overall experience at a place like Excalibur to those customers.”

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Disruption from property renovations and weather events, such as a typhoon in Macau, also impacted results.

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Analysts questioned the sustainability of Las Vegas recovery and the competitive environment in Macau and regional markets.

FINAL TAKEAWAY

MGM Resorts management stressed disciplined capital allocation, a focus on digital and international expansion, and asset optimization through strategic divestitures. While facing softness in Las Vegas and exiting the New York license pursuit, the company delivered record results in Macau, expects significant growth from digital ventures, and projects stabilization ahead for its core markets. Investors are directed to ongoing international opportunities, a robust group and convention pipeline into 2026, and the commencement of cash distributions from BetMGM North America as key drivers for future performance.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/mgm/earnings/transcripts]

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