MGM Resorts International posted second-quarter revenue that exceeded the average analyst forecast, buoyed by a rebound in its Las Vegas operations anchored by an increase in business-related events.
On the companys post-earnings conference call, Chief Executive Bill Hornbuckle noted a shift in the Las Vegas business environment, saying, "Vegas, for the first time in six quarters, showed top line growth." That improvement coincided with the company hosting an uptick in business events, including summer gatherings for large technology companies such as Google and Cisco, which MGM said it is using as a template as it seeks to attract additional corporate meetings.
Management described business travel as a smaller but rapidly growing segment, driven by corporate conferences and trade conventions. The company said this element of demand has provided an important boost to its casinos and hospitality operations amid otherwise uneven leisure travel patterns in Las Vegas.
Quarterly results and segment performance
- Total revenue for the quarter was $4.45 billion, up from $4.40 billion a year earlier and above analysts average estimate of $4.42 billion, according to data compiled by LSEG.
- Sales at Las Vegas strip resorts rose 3% to $2.2 billion in the second quarter.
- The companys regional segment, which includes properties in markets such as Detroit and Atlantic City, saw sales fall 4% to $924 million.
- Adjusted quarterly earnings per share were 59 cents, above the analyst estimate of 57 cents.
Those results reflect a mixed pattern across MGMs portfolio: gains concentrated on the Las Vegas Strip contrasted with a decline in regional revenues. Company management highlighted convention and corporate-event demand as a key contributor to the Las Vegas improvement.
Implications and context
MGM is actively targeting increased business events from technology and other corporate clients as part of its growth strategy in Las Vegas, citing the hosting of Google and Cisco events over the summer as examples. While leisure demand was described as uneven, the company emphasized that business travel is rapidly expanding and is helping support hospitality and gaming revenue in its core Las Vegas market.
The mixed results across segments underscore differing market dynamics between the Strip and regional properties, with Las Vegas showing top-line growth for the first time in six quarters while regional sales declined.
Bottom line
MGM beat consensus revenue and adjusted EPS estimates for the quarter, driven by strength on the Las Vegas Strip and a rise in business events. At the same time, the company faces softer trends in regional markets, leaving a varied outlook across its portfolio.