MGM Q4 Deep Dive: Revenue Growth, Margin Pressure, and Strategic Focus on Digital Expansion

Hospitality and casino entertainment company MGM Resorts (NYSE:MGM) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 6% year on year to $4.61 billion. Its non-GAAP profit of $1.60 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

MGM Resorts’ fourth quarter results were mixed, as the company delivered revenue and non-GAAP earnings per share above Wall Street expectations, but posted adjusted EBITDA well below consensus. Management attributed revenue growth to a rebound in Macau operations, strong performance in high-end gaming segments, and incremental gains from capital projects like the MGM Grand room renovation. CEO William Hornbuckle noted, “Our diversity supported consolidated growth in 2025 and has proven to support our growth in almost any environment.” However, the market responded negatively, reflecting investor concerns about margin pressures and the significant EBITDA shortfall.

Looking ahead, MGM Resorts’ outlook is anchored in anticipated stabilization and growth in its Las Vegas operations, continued momentum in Macau, and expansion of digital ventures such as BetMGM and international online gaming. Management highlighted the full-year benefits of recently completed renovations, an improving group and convention business, and the launch of new luxury offerings. CFO Jonathan Halkyard emphasized, “We anticipate another year of solid top line growth and an improvement in 2026 EBITDAR that we expect to be approximately half the losses that we had in 2025,” while also cautioning on cost control and competitive pressures in core markets.

Key Insights from Management’s Remarks

Management pointed to the strength of its Macau business, ongoing investments in digital gaming, and operational efficiencies as key contributors to quarterly performance, while also flagging areas of margin pressure and cost management.

• Macau outperformance: MGM China delivered record quarterly and annual segment EBITDAR, driven by premium mass customer growth and a stable competitive environment. CEO Kenneth Feng noted a strong booking trend for Lunar New Year and confidence in maintaining mid-to-high 20% margins.
• Digital and BetMGM momentum: The BetMGM North America joint venture achieved a $470 million EBITDA turnaround, and MGM Digital posted 35% net revenue growth, particularly in Brazil and Sweden. Management plans further investment in sportsbook integration and international expansion.
• Las Vegas recovery and high-end focus: The return of renovated MGM Grand rooms and continued investment in luxury offerings contributed to stabilization in Las Vegas. High-end gaming and events, such as exclusive tournaments and major city-wide conventions, drove segment resilience.
• Operational efficiency and cost controls: Management highlighted the use of technology to manage labor costs, digital check-ins, and AI-powered concierge services, helping to offset wage inflation and improve guest experience. CFO Jonathan Halkyard stated expense growth would remain in the "very, very low single digits."
• Capital allocation and asset sales: The company completed significant share repurchases, reallocated capital from discontinued New York license pursuits, and expects to close the Northfield Park operations sale in the first half of 2026, enhancing liquidity for growth and returning value to shareholders.

Drivers of Future Performance

MGM Resorts’ outlook is driven by expectations for Las Vegas stabilization, digital expansion, and sustained strength in Macau, with a focus on margin discipline and capital deployment.

• Las Vegas stabilization and group business: Management expects improved results in Las Vegas, citing easier future comparisons, a full year of renovated room inventory, and increased group and convention bookings. CEO William Hornbuckle emphasized that "the convention authorities are expecting 1 million more visitors," and highlighted ongoing efforts to attract high-end and value-conscious customers through targeted events and marketing.
• Digital and international growth: MGM plans continued investment in BetMGM and its international digital businesses, especially in Brazil and Sweden. The integration of new sportsbook platforms and entry into additional markets are expected to support revenue and margin expansion, though management acknowledged competitive and regulatory risks.
• Cost discipline and capital allocation: The company aims to maintain low single-digit expense growth, leverage technology to manage labor, and deploy capital toward high-return projects, including MGM Osaka and targeted share repurchases. Management also cited macro catalysts, like potential interest rate declines and consumer stimulus, as possible tailwinds.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be monitoring (1) the pace of Las Vegas recovery, including group and convention business growth and stabilization in value customer segments; (2) continued margin trends and cost discipline as technology and operational changes are implemented; and (3) international expansion progress, especially in Macau and digital markets like Brazil. Success in capital allocation and execution of high-profile events will also be key signposts.

MGM Resorts currently trades at $36.38, in line with $36.28 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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