$MGM MGM Resorts Q1 2026 Earnings Conference Call

Thank you, Howard, and thanks again to all of our employees. Their continued dedication and execution drove another gold-plus MPS record-breaking quarter, reinforcing the strength and sustainability of our business and our ability to deliver unique and lasting experiences that people find incredibly exciting. MGM Resorts once again delivered consolidated net revenue growth in the first quarter, driven by strengths in digital and China. Net revenue for Las Vegas in Q1 grew on a year-over-year basis for the first time in over a year despite an exceptionally strong leisure comparative. We achieved this with solid group and convention business in the first quarter and we expect this to carry into the second quarter. The first quarter is typically our seasonally strong group and convention quarter of the year and we experienced robust business related to both city-wide conventions like CES and KAG as well as in-house programs at Mandalay and MGM Grand. We achieved record 1Q convention ADRs and catering banquet revenue and drove increased production from our strategic relationship with Marriott. Importantly, we expect this momentum to continue in the second quarter with convention room night mix up two percentage points year-over-year to 20%. As the city evolves, we're making sure we are leaders in innovation. The MGM gaming streaming lounge, which opened at Park MGM and received all regulatory approvals during the quarter, is another exciting step. We developed a premium creator environment where gaming stories can come to life with plans to integrate celebrities into both the content and the broader guest experience. Another theme in our Las Vegas business has been our value. MGM has always offered opportunities for our guests seeking value experiences. This quarter, we challenged ourselves to be even more creative and launch an all-inclusive experience that bundles hotel, dining, entertainment, and all parking and resort fees. Guests can now choose to stay at Luxor or Excalibur with access to a wide range of dining options across five MGM properties. The feedback we're getting from guests is very positive and roughly one-third of the bookings are from first-time Las Vegas visitors. The program enhances our ability to convey our value proposition in innovative ways that resonate with our guests. Ultimately, Las Vegas's true value lies in delivering iconic one-of-a-kind experiences. We look forward to welcoming the Super Bowl back at Allegiant Stadium in 2029, particularly given our proximity to the venue, which drove outsized benefits during the 24 Super Bowl. In the near term, Allegiant will host the College Football Playoff National Championship in 2027 and the Final Four in 2028. That same year, the A's are set to begin their inaugural season in Las Vegas. During the quarter, Las Vegas has also been named a target city for an NBA expansion team, and we are actively engaged in discussions with the league and respective team owners. If successful, no US city will have assembled all four major professional sports leagues faster than Las Vegas. The ability to attract professional sports franchises and tentpole events exemplifies Las Vegas's structural resilience. The city consistently advances through challenging operating environments by evolving alongside customer demand. Today's consumers are decisively gravitating towards live events and experiential travel in Las Vegas, and MGM is capturing that momentum. Las Vegas's ability to adapt its mix, its pricing, and entertainment continues to differentiate the market and reinforce its resilience through economic cycles. Our regional operations have maintained steady market share. Strong casino volumes supported solid results for the quarter, reflecting the premium positioning of these properties and their ability to drive consistent reliable performance. At MGM China, we grew net revenues by 9% while segment adjusted EBITDAR was impacted by our new brand fee. Jonathan will remind you of those details in his section. Our market share for the quarter was 15.4%, and while February was negatively impacted by hold, we concluded the quarter in the month of March with a share of 17.3 which has held steady into April. We continue to invest in our competitive advantages and premium mass to support future growth, and the suite conversion and renovated premium gaming areas at MGM Cotai were recently completed ahead of the upcoming Golden Week holiday. The next capital projects will involve renovating the suite product in Macau as we want to ensure our offerings stay fresh and ahead of market growth. While we will continue with targeted capital spending, we believe our operating expenses are appropriately sized and scaled to match our growth profile and our margins are sustainable. At BetMGM North America venture, Adam and Gary reported first quarter results a few weeks ago. We continue to prioritize the iGaming segment where underlying fundamentals are healthy and growing and we are approaching two billion in annual revenue from operators. We are moderating spend in sports to focus on returns while our online sports business also continues to grow and we remain focused on driving profitable growth and margin. Our core strengths remain unchanged: iGaming, multi-product states, omni-channel presence in Nevada, and a focus on premium mass sports players. We remain disciplined and focused on executing our strategy in areas where we have a competitive advantage. MGM Digital reported another quarter of double-digit revenue growth as it continues to make progress towards profitability. Sweden and the UK continue to drive our LeoVegas B2B and B2C business where the top line grew over 30%. These are also the next two stops for our sportsbook integration, further validation of our acquisition of Tipico's US sportsbook technology. We're continuing to invest in Brazil and plan to leverage our global marketing assets and in-house sportsbook capabilities on the significant World Cup opportunity later this year. And in Japan, over 40% of the foundation piles have been installed or completed. The first concrete floor has been poured and the first structural steel has been erected. I recently visited the site and approved our mockup rooms which I found exceptional, and we are as opportunistic as ever, keeping in mind we expect to be the sole licensee and operator in Japan upon opening. The population and visitation metrics are massive as we've discussed. Japan has over 120 million residents and hosts over 40 million international visitors annually. MGM Osaka remains on time and on budget for 2030 opening. With the first quarter of 2026 complete, our optimism across all various business segments continues to hold firm, especially in Las Vegas, which will remain on track for growth this year. With that, I'll now hand it over to Jonathan to provide additional details on performance this quarter.

Thanks, Jonathan. Before we go to questions, maybe I'd like to reiterate just a couple things that were said. Obviously, our diversification strategy is proving successful. Consolidated revenues again showed growth over 4%. 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. Obviously, we have the benefit now of the MGM rooms for the entire year. We have easier leisure comparatives coming up. And the high-end continues to demonstrate itself not only in gaming, but in non-gaming spend. Event-driven to be sure and live entertainment to be sure, but absolutely shows up and shows up often. And regionally, despite headwinds and the ones that were mentioned in the overall economy, we've seen a solid performance and we expect to continue to see through the balance of the summer. MGM Macau continues to hold on to a major market share. We're very proud of what's been created and what they're doing there. And we do believe costs and our margins are sustainable now throughout the year. And Japan is off to a great start, albeit early, but we're excited by our progress, we're excited by the design, and ultimately the market that it will provide. And then BetMGM continues to track itself along and you've seen additional and tremendous growth in Gary's overall digital business for rest of world. So with that, Howard, I will turn it open to questions.

Yeah, thank you, David. I'll kick it off and then Kenny, turn it over to you. Look, I think we feel really good about the balance of the year. We brought on many things last year in terms of capital enhancements and just the overall product, and we're excited by that. We've got some more to go. So, we're adding some more suites which will be beneficial because I think everybody understands we're still undersuited and that'll be beneficial. It's always difficult to say Macau is quote stable, but I feel good about it. I feel very good about our market position and what we're doing and how we're doing it. And so, Kenny, I don't know if you wanted some more color there.

Yeah, I'll start it, John. I think we'll kick it off. Look, we had interestingly in the quarter, we had an amazing January last year. So, we had a tough kickoff and mostly in gaming. But as the quarter progressed and obviously I think you heard yesterday, you heard from us, KAG was tremendous, and so as the quarter progressed, each month got successively better. March being obviously for us the best month yet. The market's changed, consumer has changed. And we're very, obviously we're focused on, luckily for us, we have a lot of luxury product and brands that can cater to that. And it's going to continue. Despite many headwinds, whether they be air, gas, etc., we have yet to see a slowdown. That doesn't mean over summer that can't happen because booking cycles still remain short. But I feel resilient about it. We feel good about it. We look at air traffic coming into the community. Half of the traffic that was lost when Spirit went bankrupt has been picked up. We see a couple additional international flights coming into the market. It's a little early to tell what gas will mean to all of it, but to date we feel good about it. Our April is fine. We just had a very successful Baccarat tournament come through here last weekend. May will be a good month and so we like the second quarter, but it's early. It's just the end of April and so time to tell on these short-term bookings and where leisure will ultimately go.

Yeah, thank you, Steve, for the question. Look, the one comment you did make, I want to be clear about the leisure customer at the lower end of the spectrum. So for us, obviously it's luxury caliber midweek is

Still a challenge. Now the good news is, it's like those two properties represent about 6% of our overall EBIDA on the weekends we are fine. The balance of the portfolio is performing from fine to good. And to answer the core question, we do see growth through the balance of the year. It's got to be tempered modestly, and it's got to be tempered with, you know, it's a crazy world out there right now, but based on what we see, particularly in advanced bookings, etc., we still remain optimistic that we will have growth by year end.

Well, at 40,000 feet, yes, we're involved. Gary Fritz, who's sitting next to me, is on the board. So we have been and will continue to be active. Look, I think you know this about our business: remembering we have over 4 million square feet of our own convention group space. We're big into tech; that sector continues to grow and is looking exciting. We've got some really good groups lined up for the summer. We got Google coming back, and a few others. Cisco is coming in with a massive group this summer. So the question becomes, because KAG rotates, are there other groups in the world like KAG? And the answer is yes, there are. And yes, we have been cooperative and we'll go on with them from time to time, field trips to go pursue some of this stuff. I think you heard yesterday, it is true that some of it's, quote unquote, political in that these groups mean a lot for each one of these communities that they're currently in, whether it's San Francisco or Dallas, you pick the community. And so they're not as easy just to pick up by some value proposition; there's generally more to it than that. But no, we are active. We completely agree with the sentiment that was laid out yesterday, and we'll continue to pursue it.

I think the core thing to remember about first-time visitors is, I can remember in Las Vegas where the visitor profile would indicate that 20% of the visitors were first-time, and I think over recent years that number has been in the mid to low teens. It dropped below eight, it dropped to eight or nine percent last year. I think all the noise around Canada, which is a place many of them came from, is real. Our general Canadian business is down 30% to 40%. Obviously, we hope to improve that. We've had a couple missions up into Canada, both through the convention center and ourselves to help that. I think we have one planned later this summer that I'm actually going on. In terms of behavior, international has always been a big play there. Mexico opened up a few years ago meaningfully with air traffic. And it's interesting: the majority of first-time visitors actually come through conventions, and they come because they have to or they're told to, and then they learn about this place and they go, 'This looks interesting and fun, I want to come back.' So they come back with family, friends, etc. I think the only real differentiator for now is that internationally is hurting that number. To see it grow again through this package has been great, because it's important obviously for the future growth of Las Vegas as we continue down the road here. I know Aisha, if you want to add anything...

Yeah, Sean, thanks for the question. Aisha is probably best suited to start this off. So go ahead.

No, please go ahead. Just remembering, MGM we've got about 54,000 more room nights in the bucket this year because obviously they were offline. So just as pure math, that's going to help.

Yes, Sean. Appreciate the question. Fun question. I will start by saying I'm already under three NDAs. So the good news is the NBA has clearly earmarked Las Vegas and Seattle. We have had huge interest, and obviously whether Las Vegas becomes the ultimate site or not, time will tell. That'll be up to the board of governors sometime next year. That said, we're excited by it. How could we not be? We've all seen the success and what it means to Las Vegas with these sports teams coming. T-Mobile is part of that conversation, whether it's short-term or long-term. All roads lead to it for now, because the league has expressed interest to host a team as early as 2028. So we're intimately involved in many of those conversations. I hope and believe if the answer is yes or no, we'll know hopefully by this time next year. A process is beginning to start. We've been asked how we would position T-Mobile for any and all bidders, and we're beginning to do that with our partner at AEG and Bill Foley. We're open to all commerce, and there has been extensive interest in Las Vegas. So it's exciting, very exciting actually.

Barry, let me handle it. It hasn't impacted the ultimate timing, i.e. construction. For now, China State, who is building the project, continues, and the project remains on schedule. We have not heard yet, nor do I think we will given the environment for a while, on whether gaming will be permitted or not. Reminding the balance of the group who may not be as familiar with that project: they are allowing us to hold a quarter of a million square feet of space for a potential casino on one of the podium floors there. So it could be very exciting. For us, that is our key focus, not Abu Dhabi, to answer that part of the question. Right now, their business is struggling; the tourism business in that particular neck of the world is down to like 15% give or take. Occupancies are down to that level. So it'll take some recovery time no matter what happens over the next couple of months. But long term, we remain very excited. The project is fascinating and fabulous. So we're going to be all over it to continue to push both the agenda, the initiative, and the opening.

On the second question, no, not yet. Although like everybody in the world, we're subject to cost inflation and cost of goods. A lot of our concrete and steel has been contracted, so that's the goodness. But there's obviously a long way to go; we still have four years to go there. What was the first part of the question?

They have started the process. They put some dates out. I think it runs through next spring. Time will tell. Given the scale and scope and what we all went through, there are only two or three markets that could actually accommodate something that would make sense and be successful. Whether there's the political will at the end of the day to do that or not, time will tell. We've all witnessed first time around that there was not. And knowing Japan as well as we do — I'll remind everybody we're in our 17th year of this — I don't think it would impact us too quickly no matter what happened. And frankly, if they were able to get better terms and/or conditions, that would only work to our betterment. With 120 million people to share, I'm not overly concerned, to the contrary.

Well, I'll make one comment, let Kenny comment. There's a lot of prop bets now. Some baccarat tables have as many as six prop bets on them, and that has changed the game, the nature of the game, and frankly the odds of the game. Ken, I don't know if you want to comment a little further.

Chad, thanks for the question. Look, I would say yes, to a limited degree. Obviously, the very nature of what's happened with our core Far East business and China and the restriction of capital leaving that marketplace has not been eradicated or changed back to where it was. We do see Mexico more often than ever. I mentioned earlier in my comments we had a tremendous baccarat tournament this last weekend in April. It was as always full of international play and players. So the good news is, despite the overall traffic decline internationally, mostly driven by Canada when it comes to rated play and particularly premium rated play, it's very healthy and that hasn't changed. I don't think there's anything out there other than an outright war that would change that anytime soon.

Thank you, operator, and thank you all for listening in. I hope if nothing we've shown that we're resilient, that this market is resilient, that people — and this weekend's another good example. I think we have Morgan Wallen here at Allegiant. People are still excited by what we do, and despite all the noise in the world, and we all know there's a lot, we're pleased who we are and we're excited for the future. So thank you all.