MGM Resorts International (NYSE: MGM) reported its third-quarter results today, emphasizing to investors its continuous share buyback initiatives and revenue increase from its BetMGM segment.
Aided by its MGM China division, the Bellagio operator reported record combined net revenue of $4.2 billion for the September quarter, marking a 5% rise compared to the previous year. Adjusted earnings per share fell to 54 cents compared to 64 cents the previous year.
Although analysts have pointed out challenging year-over-year comparisons for certain Las Vegas Strip operators, MGM reported that its third-quarter Strip revenue increased by 1% to $2.1 billion, as adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) grew from $714 million to $731 million. MGM is the biggest operator on the Strip.
To alleviate fears regarding weakness in certain regional markets, MGM reported that sales at its regional casinos increased to $952 million from $925 million as adjusted EBITDAR grew 2% to $300 million from $293 million.
BetMGM, a 50/50 collaboration between the casino behemoth and Entain Plc (OTC: GMVHY), continues to lag behind competitors like FanDuel and DraftKings (NASDAQ: DKNG) in market share, but it is advancing, and this was clear during the July to September timeframe.
"Accelerating growth at BetMGM with record 3Q net revenues increasing nearly 20% year-over-year, more than doubling the revenue growth achieved in 2Q,” said the gaming company in a statement.
The sports betting market in the US is primarily dominated by FanDuel and DraftKings, creating a duopoly, whereas iGaming represents a more accessible domain with greater margins and profit opportunities. That’s a field where BetMGM is increasingly striving to gain market share – an effort that could yield benefits in the long run.
The long-term growth potential of iGaming is crucial for operators like BetMGM. At present, only seven states — Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, Rhode Island, and West Virginia — allow that type of betting, but this number is anticipated to increase in the coming years as states seek new ways to generate revenue.
In recent years, MGM has consistently been one of the gaming sector's most committed repurchasers of its own stock, and this trend persisted in the third quarter.
“During the quarter, we returned over $300 million to shareholders through share repurchases, bringing our year-to-date total to approximately $1.3 billion,” said CFO Jonathan Halkyard in the press release.
Since 2021, the gaming firm has decreased its number of outstanding shares by 40% through share buybacks. MGM ended the third quarter with $944 million in free cash flow, and its manageable debt along with strong liquidity supports continued share repurchases.
