BetMGM Sets Sights on Profitable Future with Strong Q1 Performance
BetMGM is optimistic about achieving profitability by the end of this fiscal year, spurred by a significant revenue increase of over 30% in the first quarter.
Navigating through challenging economic conditions, BetMGM has emerged with stronger than expected first-quarter results, giving one of the leading operators in the U.S. renewed hope for full-year profitability by 2025.
For the quarter ending March 31, BetMGM reported a net revenue of $443 million (£330.9 million/€389.1 million), reflecting a notable rise of 34% compared to the same period last year. This upswing translates to an adjusted EBITDA of $22 million, marking a dramatic turnaround from a $150 million loss seen in Q1 2024.
The operator saw remarkable growth in both online sports betting and igaming sectors, with gains of 68% and 27%, respectively. As BetMGM continues to fine-tune its product offerings and pricing structures, encouraging trends have emerged, reinforcing their guidance for 2025.
Adam Greenblatt, CEO of BetMGM, stated, “The momentum we established in the latter half of 2024 has carried into the first quarter, thanks to our focused igaming strategy, allowing us to expand faster than the market and at scale.”
Resilience Amid Economic Challenges
As earnings season unfolds, the overall economic climate remains a significant concern for Wall Street analysts during quarterly reviews. Recent policy announcements, including President Trump’s tariff plan on April 2, sent shockwaves through global markets, resulting in a steep drop for major indices, including significant declines in key gaming stocks due to inflation and tourism worries.
However, in the aftermath, there has been a recovery in major indices as the Trump administration hinted at postponing tariff increases on various trading partners. In the context of the gaming sector, uncertainty looms over how these policy shifts will influence consumers’ spending behaviors.
Industry analysts suggest a potential tightening of consumer spending, which could lead to decreased engagement on major sports betting platforms. In response to these concerns, Greenblatt assured stakeholders that BetMGM has not witnessed any adverse effects on player behavior attributable to the current economic climate.
As customers may look to cut back on expenses, some other operators might need to ramp up promotional activities to retain clientele. However, Greenblatt observed that their customer acquisition costs and overall promotional landscape have remained stable.
Focusing on High-Value Players
A key takeaway from recent discussions revolves around BetMGM’s strategy to engage and maintain "high-value" players. The operator is concentrating its resources on retaining its most profitable users. This refined focus has produced positive results in various metrics over the quarter.
While active player days increased by 20% year-over-year, the average handle per active player surged 37% in the same timeframe. This approach emphasizes improved promotional strategies and better customer segmentation.
BetMGM is also scrutinizing the balance between customer acquisition costs and the value those players bring to the company. As Greenblatt mentioned, the company is adopting a "more surgical" approach to invest in its most beneficial clients.
The period saw a 28% rise in bets per active user compared to last year. When questioned about promotional spending’s proportion to total handle, Greenblatt noted that costs in the U.S. remain higher than in established markets like Australia, but he anticipates a moderation as the market continues to develop.
Confirming 2025 Revenue Expectations
Despite facing several unfavorable outcomes during March Madness, BetMGM’s net revenue still climbed. Notably, Florida emerged as the unexpected champion in the men’s tournament, while UConn claimed victory on the women’s side—an unlikely shift that cost the company approximately $30 million in projected revenue during the quarter.
Greenblatt reiterated BetMGM’s commitment to achieving profitability by 2025, emphasizing that this fiscal year serves as a crucial reinvestment period. After closing out 2024 with an EBITDA loss of $244 million, BetMGM set its sights on net revenue guidance between $2.4 billion and $2.5 billion for the coming year.
Long-term, BetMGM aims for an impressive EBITDA exceeding $500 million annually, aligning with the growth projections of its peer, Caesars Digital, further solidifying its competitive stance in the evolving gaming landscape.