MGM pushes on

MGM on track with Vegas and online, LeoVegas down, Rush Street’s ‘unusual’ fall, Melco and SJM report Macau declines +More

Earnings+More

Nov 3

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Good morning. On today’s agenda:

MGM Resorts boasts of its best-ever quarter in Las Vegas.
“Substantial” declines in Finland hit revenues at LeoVegas.
Rush Street says it saw “unusual” margin slippage in iCasino.
Melco and SJM join the chorus of Q3 woe in Macau.
In analyst takes, Roth sees likelihood of “meaningful” beats in online.

Tell me when the boys get here.

MGM tops the bill

Las Vegas helps MGM Resorts boost revenues by 26% to $3.42bn, but adj. EBITDA falls 20% to $949.8m on Macau writedown.

They’re packed pretty tight in here tonight: Talking about the extent that Las Vegas now benefited from a new paradigm of leisure travel, CEO Bill Hornbuckle noted how the Allegiant Stadium – where Elton John played on Tuesday night – fuelled business at MGM properties.

“He put 50,000-plus in Allegiant Stadium; the south end of the strip is absolutely benefiting,” Hornbuckle said.

Programming “remains an exceptional story”, he said, noting that MGM was now opening its bookings calendar for Formula 1’s Vegas debut this time next year.
While MGM remains vigilant about any potential consumer slowdown, Hornbuckle said the operational teams have “become exceptionally nimble in the last few years”. The company echoed Caesars the day before about a strong October.
“What we are doing is working,” he said about Las Vegas revenues, which rose 67% to $2.3bn with adj. EBITDA up 58% to $846m.
Not working out quite so well is Macau, where revenues fell 70% to $87m. Regional revenues rose 5% to $974m.
Too shy, shy: Analysts at JMP said MGM “continued to outpace expectations”, although the team at Deutsche Bank suggested the “solid” results “fell a bit shy” of expectations.

About as oiled as a diesel train: MGM’s share of BetMGM losses more than halved in Q3 to $23.6m. Hornbuckle noted that BetMGM revenues had hit $1bn for the first nine months of the year and was on track to hit its target of $1.3bn.

Asked whether he believed BetMGM might hit profitability earlier than planned, Hornbuckle demurred, suggesting he “wouldn’t go so far as to change our predictions of projections”.
“I don’t want to get ahead of ourselves,” he added. “We continue to invest in the business and we want to see it grow.”
He acknowledged the likely failure of the ballot measure in California. “The point is well taken,” he said.
One surprise for Hornbuckle had been the performance of Ontario where BetMGM was “either leading or close to leadership” in igaming.

I may use a little muscle to get what I need: The $556m LeoVegas acquisition closed over the period and Hornbuckle said it would be pursuing an “aggressive expansion” internationally, with mention given to Brazil. LeoVegas “has all the tools”, said Hornbuckle. See below for its Q3s.

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LeoVegas decline

Revenue falls 1% to €98.7m and adj. EBITDA falls by 35% to €7.5m as revenues and profit are hit by a Finnish fall off.

He’s not Finnish, he’s only 28: Revenues from Finland “declined substantially” due to regulatory changes dating back to the beginning of the year, while western European revenues fell 19% due in part to the exit from the Netherlands. This was partly countered by a “good quarter” in Sweden.

Rush Street’s iCasino dip

Unusual hold levels in iCasino mean adj. EBITDA losses widen by 2.5% to $12.5m, while revenue rises 20% YoY to $148m.

Hard luck story: CFO Kyle Sauers said the volatility in iCasino hold levels was unusual and the first time it had happened. Despite usually low volatility in RNG products, “there is still luck involved and in this case the luck was with the players”.

CEO Richard Schwartz pointed to Q3 losses in OSB halving to $5m as a sign of what the group was achieving in that vertical.
He said Rush Street hoped that Q4 seasonality in iCasino means it will be able to allocate more spend in its key northeastern markets “where we have large casino share”.
This will coincide with a BetRivers rebrand in New Jersey.
International focus will remain on OSB and iCasino jurisdictions in Ontario, Colombia and Mexico, where RSI has soft launched and hopes to emulate the 20% share it has achieved in Colombia.
The timeline for profitability was maintained at FY23; Schwartz said fewer state launches and easing of competitive intensity meant advertising prices had reduced.
Analysts noted the FX headwinds in the quarter from the Colombian and Canadian operations, which will persist into Q4. Wells Fargo said RSI was “striking a balance” between growth and profits.

Powerball jackpot

Unexpected windfall: For the second time in history the Powerball jackpot later this week will top $1bn, following 38 draws without a winner, and analysts expect this to provide some unexpected cash flow for provider IGT.

IGT receives between 1-2% of sales, this will earn it an estimated $30m-$40m of revenue in Q4, suggested the team at Macquarie.

Macau earnings in brief

Melco Resorts: Revenues fell 46% to $248.1m, while adj. EBITDA fell to a $34.9m loss compared with a positive $31.9m in the prior-year period. The company said it was “cautiously optimistic” that the granting of e-visas and group visas as of November 1 will lead to a “gradual increase” in visitation.

SJM: Revenue fell 57.4% YoY to HK$1.03bn while adj. EBITDA slumped to HK$968, more than double the losses in the prior-year period. The company opened its IR on Cotai in July, the Grand Lisboa Palace. In June the company completed a HK$19bn refinancing.

Analyst takes

Caesars: The team at CBRE said the consensus-beating performance in regionals was down to a “lack of noise in the quarter” from various markets. They noted “plenty of catalysts” for the future including the completion of capital projects in Atlantic City.

On digital, they added that Caesars was “beginning to see results” from improvements in analytics, segmentation and targeted promotional activity.

Online sector: Roth Capital’s analysts believed any “meaningful” Q3 beats – particularly at DraftKings – could be enough to “reinvigorate” investor interest in the sector. They were more negative, however, on Penn Entertainment, which reports later today. “Penn's market share has been flattish/lower in recent months,” they added.

Newslines

Playtech said it has “mutually agreed” that CFO Andrew Smith will step down on 28 November due to personal reasons. He will be succeeded by Chris McGinnis, who is currently the deputy CFO.

Zeal Network will make a public repurchase offer to shareholders for up to 714,285 shares or approximately 3.2% of the current share capital of the company.

The Hall of Fame Resort & Entertainment Company has been granted a sportsbook license by the Ohio Casino Control Commission. The company has 10-year market access partnerships with Rush Street Interactive and betr.

Geolocation provider XPoint has gone live with its Verify product with Mojo in New Jersey.