Wynn Resorts Q3
The top line
- Revenues nearly tripled to $994.6m while adj, property EBITDA was back in positive territory at $154.6m from a loss last year of $65.9m.
- Las Vegas properties generated $476m of revenues and $183.4m in adj. EBITDA (beating consensus) and Macau revenues stood at $312m while adj. EBITDA was at $10.2m (both missing consensus).
- Changes at the top see Craig Billings replace Matt Maddox at CEO. Billings was previously interactive CEO. his replacement there is yet to be decided.
Augean task completed: Maddox has been at the helm for four years after taking on the post from disgraced founder Steve Wynn in what the company said was “one of the messiest transitions in corporate history”. He said Billings was the “exact right person” to replace him, having been his “right-hand man” for five years.
“He makes decisions fast and he feels the brand,” Maddox added.
Heat/kitchen interface: Talking about the sports-betting landscape, Maddox said the market is “really not sustainable right now”.
“Competitors are spending too much to get customers,” Maddox said. “The economics are just not something that we’re going to participate in in the short term. We’re going to be focused on building a long-term business that’s sustainable, that is not losing lots and lots of money.”
Burning up: Billings told analysts Wynn Interactive had a turnover of $645m and has an annualized revenue run rate of ~$170m. But in disclosing that WynnBet had achieved 26,000 FTDs in Arizona in September, he added that the company had decided to pivot and suggested the EBITDA burn would “decline materially” in Q122.
“The current combination of large-scale brand spend, performance marketing spend, and customer bonuses that we see in the marketplace does not drive unit economics that meet our return requirements,” Billings said.
This is a low: Deutsche Bank suggested the new interactive strategy was “sound”, suggesting the ~$103m of expected Q4 losses would be a high- (low) watermark. “We think there are a few reasons for the decision, most notable of which being the chasing of unprofitable cohorts by competitors,” Deutsche Bank added.
“While we applaud the decision, we are intrigued by what the process of re-engagement looks like,” the Deutsche Bank team added. “As we have previously said, we believe customer acquisition is one piece of the puzzle, but customer retention is an entirely different and ongoing matter, as is often the case in a commodity business.”
Let them eat bet slips: “We had a buffet that was losing $12m a year, so we ripped it out when we were shut down and we built probably the world’s best sports bar that, once Massachusetts legalizes sports-betting, it’ll be the best sportsbook on the east coast, hands-down.”
