If you were to put a soundtrack to Wynn Resorts’ first quarter earnings report, an appropriate song might be Gotye’s “I Feel Better.” Looking at the numbers, the company obviously feels better than before.
Wynn Resorts significantly outperformed analysts’ estimates for its gaming business during the quarter. As a result, Wynn will give shareholders a reason to smile again.
Wynn Resorts isn’t down anymore
After the bell on Tuesday, Wynn shared its earnings report for Q1 2023. If any stock owners had trouble seeing the bright side of anything at all, they just needed to be on that earnings call.
A transcript of the earnings call from Motley Fool features CEO Craig Billings and CFO Julie Cameron Doe pointing out the highlights of the quarter. Those included:
- Wynn Las Vegas generated $232 million of adjusted property EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), a single-quarter record for the casino
- Encore Boston Harbor produced $63 million of EBITDA, including a record $191 million in gross gaming revenue
- Wynn Interactive cutting its EBITDA burn rate to $21.1 million
Perhaps most exciting for shareholders, though, is an announced dividend. Billings stated that Wynn Resorts will pay $0.25 per share in early June. Zacks Equity Research remarked upon the better-than-expected quarter for Yahoo! Finance as well, putting greater context to just how strong the quarter was.
According to Zacks, Wynn’s earnings per share beat the consensus estimate by a whopping 261.1%. Additionally, Wynn Resorts outperformed the consensus estimate for its revenue by 13.5%. That number came to $1.42 billion.
While Wynn Interactive did more to deter from that total than add to it, even that segment of the business is better than before.
Wynn Interactive starts to improve
As the earnings call alluded to, the numbers for Wynn’s US online gambling division for the quarter represented a significant improvement. In the first quarter of 2022, the adjusted property EBITDAR for Wynn Interactive was a loss of $31.1 million.
Doe said that “our team continues to stay disciplined on cost while driving improved marketing efficiencies” as an explanation for that improvement of 32.8% year-over-year. It’s unclear what, if any plan Wynn has to bring the Interactive segment closer to profitability, however.
Neither Billings nor Doe mentioned any such strategy on the call. Cutting expenses and improving the return on investment for marketing in its existing locations may not be able to produce greater profitability at this point.
While expansion might seem like an opportunity, current opportunities for that are limited. WynnBet Casino is already operating in the three most prominent US online casino markets of Michigan, New Jersey, and Pennsylvania.
The only state currently weighing legalizing online casino play is Rhode Island. That would not represent an opportunity for Wynn Interactive, though. The bill in its current form would give Bally’s the freedom to offer online slots and other games as Bally’s operates the two brick-and-mortar casinos in that state.
At the same time, the lack of mention of Wynn Interactive’s net loss on the earnings call signals that profitability in that segment might not be a primary focus for the company. Wynn’s C-suite might simply see it as a marketing expense for its physical resorts.
As long as shareholders continue to get dividends, they also might not give much thought to how things could improve. They also feel better.