MGM Resorts International

Good day and welcome to the 2025 VET MGM Q1 2025 Financial Update. Joining from the company today are Adam Greenblatt, Chief Executive Officer, and Gary Deutsch, Chief Financial Officer. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a 30-minute question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to Adam Greenblatt. Please go ahead.

Good morning, everyone. Thank you for joining us today. 2025 is off to a strong start for BetMGM as our financial performance followed the course we had charted coming into the year. The strategy Gary and I outlined during our 2024 fiscal year results in February was the blueprint for achieving profitable and sustainable growth. As you'll remember, we started to deploy the strategy in the second half of 2024. To summarize the key elements, in iGaming, we will continue to invest assertively, and in sports, we're taking a more targeted and capital efficient approach to player acquisition and management. We are pleased to report that momentum coming out of 2024 has continued into 2025, with Q1 growth accelerating from Q4 levels, as well as delivering significant profitability. Q1 net revenue grew 34% year over year, reaching $657 million, and importantly, delivered EBITDA of $22 million, up approximately $154 million from the prior year. While Q1 2024 EBITDA was impacted by a number of headwinds, Our Q1 2025 result highlights the strength of our current strategy. The business is as healthy as it's ever been, and our year-to-date performance gives us increased confidence in achieving and potentially exceeding guidance. However, as we are still early in the calendar year, we are reaffirming our previously stated guidance at this point. One note on our positive Q1 EBITDA of $22 million. While there were some one-time accounting benefits, they were offset by the impact of poor sports results, so the net reported result is broadly representative of our underlying performance. Going deeper into the first quarter, both sides of the business experienced strong top line and underlying growth in player engagement and retention KPIs that exceeded our internal projections. In iGaming, our juggernaut continues to perform. with $443 million of net revenue, up 27% over last year, and delivered $133 million of contribution. Robust player metrics drove financial results, with average monthly actives up 44%, active player days up 27%, as well as improving our cross-sell from online sports to iGaming by an impressive 13 percentage points. We believe these levels of growth are ahead of the market, underpinned by successful key initiatives such as elevating our unparalleled library of content. Our players enjoy content that only BetMGM can offer through exclusive partnerships with iconic franchises such as The Wizard of Oz, which is one of our top performing slot titles and is offered both digitally and at MGM properties. we're creating the destination for all iGaming players, one that is unmatched in the U.S. regulated online gaming ecosystem. In online sports, net revenue surged 68% year over year, and we achieved positive contribution for the quarter despite customer-friendly results in March that impacted revenue to the tune of a little over $30 million. Our strong growth speaks to the work we've done to enhance the product, improve pricing, and target and retain higher value premium mass players. All key metrics are up, including handle, handle per active, bets per active, active player days, and bet mix from parlays. We significantly improved our NGR margin by over a full percentage point year over year, we are utilizing our unique position with MGM to build and deepen relationships with our most valuable players, rewarding our players with unrivaled premium experiences. Consistent with our plan, we are focused on the value of our players rather than just quantity. As planned, Q1 had fewer monthly sports actives than last year, but importantly, each active had significantly higher revenue. This outcome was driven by refinements to our player segmentation and management. Finally, in OSB, our Q1 results give us increased confidence of achieving full year contribution positive for 2025. So in summary, we had a very satisfying start to the year. I want to reiterate what I said just a couple of months ago. 2025 is the year we turn the corner to sustainable and growing profitability. We remain on pace to deliver what we guided to, $2.4 to $2.5 billion in full year net revenue and positive EBITDA. As I said earlier, the business is as healthy as it's ever been. We are seeing continued strong momentum and excellent payback economics from our refined approach to player acquisition and management. That said, we are only a quarter in and much of the year still lies ahead. For example, there may be opportunities for reinvesting incremental EBITDA upside behind the momentum we are seeing. So, we're going to monitor the landscape a little while longer before we consider updating our 2025 guidance. Lastly, be aware that revenue growth rates in future quarters will appear to moderate relative to our Q1 growth rates, given that we'll be lapping stronger 2024 quarters that began benefiting from the operational enhancements we've made To wrap up, we're very confident in the direction we're headed and we are focused on continuing to execute against our strategic plan. With that, I'll hand it over to the operator to open the line for questions.

As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, press star one again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question is from the line of Sean Kelly at Bank of America. Please go ahead.