MGM Q3 deep dive: margin recovery and digital growth offset soft leisure demand

MGM Resorts (NYSE:MGM), a leading player in the hospitality and casino entertainment sector, reported its third-quarter results for 2026, aligning closely with Wall Street's revenue forecasts but falling short on profitability metrics. The company generated $4.21 billion in revenue, which remained unchanged compared to the same quarter last year, while analysts had anticipated a slightly higher figure of $4.23 billion. The adjusted loss per share was $0.11, significantly underperforming against the consensus estimate of a profit of $0.08 per share.

During this quarter, MGM's adjusted EBITDA was recorded at $402.8 million, considerably lower than the $1.02 billion forecast by analysts, resulting in an operating margin of 2.8%, a notable improvement from the previous year's margin of -2.7%. The company's market capitalization stands at $6.86 billion.

In its report, MGM attributed the mixed financial performance to a combination of strong activity in its casinos, record revenues from slot machines, and robust demand from group and convention business in Las Vegas. However, these positive factors were countered by a decline in leisure travel and reduced room rates. CEO Bill Hornbuckle described the current operating landscape as "notable," citing macroeconomic challenges such as increasing airline and fuel costs that have affected both occupancy rates and spending from transient customers. Additionally, the company highlighted record performance at MGM China and continuous growth in its digital gaming segment, BetMGM, as key achievements during the quarter.

Looking forward, MGM Resorts plans to capitalize on high-profile events in Las Vegas and continue investing in premium assets while expanding its digital gaming operations. The management team is optimistic that upcoming events and improvements in international travel will help stabilize leisure demand, and they intend to focus their capital on projects that promise high returns, such as the integrated resort planned for Osaka. Chief Operating Officer Ayesha Khanna Molino commented, "We anticipate that the strengthening event calendar and improvements in international travel will help offset recent softness." The company also emphasized a commitment to maintaining cost discipline and adjusting investment strategies in response to evolving market conditions.

Insights from management's commentary highlighted the effects of macroeconomic factors on leisure and transient demand, while underscoring the importance of effective execution in gaming, conventions, and digital channels to drive overall performance.

In Las Vegas, casino revenues experienced an 8% increase, supported by high-end gaming and special events, including the annual $5 million slot tournament. This growth helped to mitigate the impact of lower leisure room rates and occupancy levels. The convention and group business segment outperformed internal expectations for room nights and is projected to account for 20% of the total business mix for the year, providing a cushion against transient demand weaknesses.

In terms of digital performance, BetMGM's North American operations achieved an 8% increase in revenue and a remarkable 112% rise in adjusted EBITDA. Management noted that iGaming has emerged as a primary growth driver, with enhanced profitability stemming from a focus on premium players and states offering multiple gaming products.

On the international front, MGM China reported record quarterly revenues and increased market share, with new premium mass offerings and upgraded high-limit gaming areas contributing to longer play durations and higher volumes. However, management also pointed out the challenges posed by elevated airfares and fuel costs, particularly affecting demand in Las Vegas, along with shorter booking windows and a less active event calendar as the quarter came to a close.