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SEC filingMGM's Q1 2026 revenue grew 4% YoY, but operating income fell 22% due to higher costs and lower insurance proceeds.
For the three months ended March 31, 2026, MGM Resorts International reported consolidated net revenues of $4.45 billion, a 4% increase compared to $4.28 billion in the prior year quarter. The growth was driven by strong performance at MGM China (+9%), MGM Digital (+43%), and Regional Operations (+2%), while Las Vegas Strip Resorts revenue was flat. Despite the top-line growth, operating income declined 22% to $301 million from $385 million, and net income attributable to MGM Resorts International fell 16% to $125 million. The margin compression was primarily due to a $46 million increase in self-insurance expense (reserve build), a $41 million year-over-year decline in business interruption insurance proceeds related to the September 2023 cybersecurity incident ($8 million in Q1 2026 vs $49 million in Q1 2025), higher gaming taxes at MGM China, and increased payroll-related expenses. The effective tax rate decreased to 13.6% from 15.0%, favorably impacted by the mix of U.S. and foreign income, including Macau gaming profits exempt from complementary tax.
Las Vegas Strip Resorts net revenues were essentially flat at $2.18 billion. Non-gaming revenue increased $29 million, led by an $18 million rise in catering and banquets within food and beverage, but casino revenue fell $25 million due to lower table games volume. Table games drop decreased to $1.46 billion from $1.51 billion, and slot handle was nearly unchanged at $5.69 billion. Hotel metrics softened slightly: occupancy dropped to 92% from 94%, ADR held at $257, and RevPAR declined to $238 from $242. Segment Adjusted EBITDAR margin contracted to 34.4% from 37.3%, pressured by lower insurance proceeds and higher self-insurance costs.
Regional Operations net revenues increased 2% to $918 million, driven by a $13 million increase in casino revenue from higher slot and table games drop. Table games drop rose to $1.01 billion from $947 million, and slot handle increased to $6.62 billion from $6.57 billion. Segment Adjusted EBITDAR margin fell to 28.3% from 31.0%, impacted by higher payroll expenses, lower insurance proceeds, and increased self-insurance reserves.
MGM China net revenues grew 9% to $1.12 billion, with casino revenue up $81 million driven by main floor table games drop ($3.97 billion vs $3.63 billion) and improved win percentage (27.1% vs 25.2%). Segment Adjusted EBITDAR margin declined to 24.4% from 27.8%, primarily due to a $23 million increase in intercompany branding license fee expense from a new long-term agreement and higher payroll costs.
MGM Digital net revenues surged 43% to $183 million, driven by LeoVegas B2C growth. The Segment Adjusted EBITDAR loss improved to $26 million from $34 million, as revenue gains partially offset higher marketing and gaming tax expenses.
Management highlighted several strategic developments and liquidity factors. In April 2026, MGM completed the sale of MGM Northfield Park for $546 million, with the VICI master lease amended to reduce annual cash rent by $53 million. Cash and cash equivalents stood at $2.3 billion as of March 31, 2026, with $918 million held by MGM China. The company expects consolidated capital expenditures of $780 million to $880 million for the remainder of 2026, including $130 million to $180 million for MGM China. Planned cash interest payments over the next twelve months are approximately $325 million to $345 million on a consolidated basis. MGM continues to explore development opportunities, including expanding its global online gaming presence and funding its equity share in MGM Osaka (approximately JPY335.9 billion remaining through 2028). The company also noted $1.5 billion remaining under its $2.0 billion stock repurchase plan as of March 31, 2026.
As of March 31, 2026, MGM reported cash and cash equivalents of $2.29 billion, up from $2.06 billion at year-end 2025. Total debt (net) stood at $6.40 billion, a modest increase of $0.17 billion driven by draws on the MGM China revolving credit facility. Stockholders' equity was $3.31 billion, reflecting net income partially offset by share repurchases. Inventory remained low at $0.12 billion. Deferred revenue and contract liabilities totaled $1.22 billion, primarily comprising outstanding chip liability ($179M), loyalty program obligations ($205M), and customer advances ($839M).
MGM has a significant funding commitment to MGM Osaka, an unconsolidated affiliate developing an integrated resort in Japan. As of March 31, 2026, JPY 335.9 billion (approximately $2.1 billion) remained to be funded, with JPY 21.0 billion ($138 million) contributed during Q1 2026. Additionally, MGM China provides bank guarantees of MOP 1 billion ($124M) for its gaming concession, of which MOP 700 million ($87M) is secured by pledged cash. The Bellagio REIT shortfall guarantee covers $3.01 billion of landlord debt, though its fair value is immaterial. Operating lease liabilities totaled $25.0 billion, with annual rent expense of $570 million in Q1 2026, including $83 million for the Bellagio lease.
During Q1 2026, MGM repurchased approximately 2 million shares for $90 million, leaving $1.5 billion in authorization under the April 2025 $2.0 billion plan. No dividends were declared. Total debt increased slightly by $0.17 billion, with net borrowings of $178 million. Capital expenditures were $155 million, with $51 million in Las Vegas Strip Resorts and $42 million in MGM China. The pace of capex slowed from $228 million in Q1 2025.
Revenue is reported across four segments: Las Vegas Strip Resorts ($2.18B, flat YoY), Regional Operations ($918M, +2% YoY), MGM China ($1.12B, +9% YoY), and MGM Digital ($183M, +43% YoY). MGM China contributed 25% of total revenue but 22% of Segment Adjusted EBITDAR. The strong growth in MGM China reflects recovery in Macau. MGM Digital remains loss-making at the EBITDAR level (-$26M) but improved from -$34M a year ago. The lease-intensive structure (triple net leases) means Rent Expense of $565M is deducted below Segment EBITDAR, highlighting the capital-light model for domestic properties.
The cash flow statement for Q1 FY2027 (three months ended March 31, 2026) shows robust operating cash flow (CFO) of $567.8 million, significantly exceeding net income of $174.8 million. This divergence is typical and driven by non-cash charges: depreciation and amortization of $263.7 million, stock-based compensation of $35.1 million, and other adjustments. The operating cash flow coverage of net income is 3.25x, indicating strong conversion.
Capital expenditures totaled $154.7 million, a 32% decline from $228.0 million in the prior year, reflecting lower investment spending. While free cash flow is not explicitly stated, implied FCF (CFO minus capex) is approximately $413.1 million, providing ample coverage for share repurchases of $88.9 million.
Working capital changes were a net use of cash: accounts receivable increased $23.1 million (driven by growth), prepaid expenses rose $76.9 million, and accounts payable and accrued liabilities decreased $98.0 million. A notable item is the net income tax refund of $86.8 million (supplemental disclosure), which boosted operating cash flow. Additionally, the company recorded foreign currency transaction gains of $25.3 million, reversing prior-year losses. The change in cash and equivalents was $229.2 million, ending at $2.38 billion.
Share repurchases of $88.9 million were significantly lower than the $489.3 million in the prior year, while net debt borrowings of $178.4 million were added. No common dividends were paid. Overall, the company maintained strong liquidity and cash generation.