Melco Resorts & Entertainment (NASDAQ:MLCO) reported what management described as a “strong” first quarter of 2026, with year-over-year growth in both group and Macau earnings and continued progress on several strategic initiatives, including a new luxury hotel opening at City of Dreams Macau and a planned retail refresh.
Quarterly performance and Macau trends
Chairman and CEO Lawrence Ho said both group property EBITDA and Macau property EBITDA increased 12% year-over-year during the first quarter. Ho added that Melco’s Macau gross gaming revenue (GGR) rose approximately 10% year-over-year, with “solid growth across all segments.”
Executive Director and CFO Geoff Davis reported group-wide adjusted property EBITDA of approximately $381 million for Q1 2026, up 12% year-over-year. Adjusted for VIP hold, Davis said property EBITDA was approximately $356 million. He noted that favorable win rates at City of Dreams Macau and City of Dreams Manila benefited property EBITDA by approximately $20 million and $5 million, respectively.
On costs, Davis said daily operating expenses in Macau (excluding House of Dancing Water) were approximately $3.2 million per day, “in line with our prior guidance.” Including House of Dancing Water and residency concerts over the last four quarters, total daily OpEx “has been relatively stable,” according to Davis. He said Macau property EBITDA margin increased to approximately 28%, which he attributed in part to operating leverage, while emphasizing the company remains focused on cost management to improve flow-through and margins.
REM hotel launch and City of Dreams retail refresh
Ho highlighted the planned launch of REM, a new luxury hotel at City of Dreams Macau, which was officially announced in March. He said Melco remains on track to begin a phased opening early in the third quarter of 2026, describing REM as a “meaningful enhancement” to the City of Dreams portfolio that aims “to redefine contemporary luxury across Macau.”
Evan Winkler, President and Managing Director, provided additional detail, saying the opening will add 149 keys and that operating expenses associated with REM are expected to increase by roughly $30,000 to $40,000 per day as it begins operations. Winkler said the product is “highly differentiated” and is “very heavily weighted towards the one bedroom suite product,” with flexibility to combine suites and rooms.
Management also discussed a refresh of retail areas at City of Dreams Macau. Ho said the company has “commenced a refresh of the retail areas” and plans to enhance food and beverage offerings. In response to a question about potential disruption, Winkler said work has already begun and will be phased “zone by zone” over the next 10 to 12 months. While construction will take place in different areas throughout the period, he said Melco does not expect any timeframe where the property is “massively impacted,” citing a phasing plan designed to minimize disruption.
Philippines, Cyprus, and Sri Lanka updates
In the Philippines, Ho said City of Dreams Manila faced competitive pressures and broader industry headwinds, but still delivered year-over-year growth. Ho reported property EBITDA rose 24% year-over-year in Q1 2026 and GGR increased 9%. He said the company continues to “punch above our weight in the market” and is expanding marketing initiatives across Southeast Asia.
For City of Dreams Mediterranean and satellite casinos in Cyprus, Ho said results were affected by conflicts in the Middle East that escalated in late February. However, he added that April showed “significant improvements in occupancy, visitation, and play levels,” and said the company remains “operationally flexible” in anticipation of further recovery in travel demand.
Ho also noted that Melco’s casino operations in Sri Lanka recorded positive EBITDA in Q1 2026, and said the company remains focused on a “progressive ramp” of operations throughout the year.
Trademark acquisition, liquidity, and share repurchases
A major corporate update on the call was Melco’s purchase of trademarks previously licensed from Melco International. Ho said the company purchased the subsidiary of Melco International that owns the trademarks, calling them “integral” to Melco’s business and saying the acquisition provides “full control of the IP” and flexibility to expand the brand “without any incremental cost.”
Davis said the purchase price was $375 million, and that the transaction followed arm’s length negotiations between independent audit committee members, with a professional valuation firm assisting the evaluation. He noted the trademark license fee in Q1 2026 was approximately $13.4 million, implying a purchase price of just under 7x the annualized first-quarter fee. Davis said the multiple was “in line with Melco’s current trading multiple” and below those of Macau peers.
Davis added that the deal results in an “immediate increase in EBITDA and cash flow” and removes uncertainty around potential fee increases at the end of the prior royalty arrangements. Funding will come from a combination of a credit facility draw and internal funds, and Davis said the incremental debt is “immaterial” to the company’s credit profile. He said debt-to-EBITDA is expected to rise by less than half a turn after the transaction, and that management expects leverage to return to Q1 2026 levels before the end of 2026.
On the balance sheet, Davis reported available liquidity of approximately $2.4 billion at the end of Q1 2026, including consolidated cash of roughly $1.1 billion. During the quarter, Melco repaid $60 million in debt at Melco Resorts and $10 million at Studio City, and Davis said the group has no material debt maturities in 2026.
The company also highlighted capital returns. Davis said that as of April 29, 2026, Melco had repurchased approximately 2.5 million ADSs for total consideration of about $14 million year-to-date. He said the company expects to continue “opportunistic” repurchases and characterized the share price as “meaningfully undervalued,” noting that recent trading levels imply a free cash flow yield of over 20%.
In addition, Davis said the board approved a new $500 million share repurchase program, which is incremental to the existing authorization and brings total repurchase authorization to $710 million. Davis said the company remains focused on reducing debt and leverage while evaluating capital allocation based on cash availability, market conditions, and the share price.
Guidance items, holiday commentary, and dividend timing
For the second quarter of 2026, Davis provided guidance on non-operating items:
Depreciation and amortization: approximately $140 million to $145 million
Corporate expense: approximately $30 million
Consolidated net interest expense: approximately $115 million to $120 million (including finance liability interest tied to Macau and Cyprus licenses and finance lease interest related to City of Dreams Manila)
Davis also said total 2026 capital expenditures had been reduced to approximately $425 million, down from about $450 million previously, with roughly $350 million remaining after Q1 spending.
Asked about the May Labor Day/Golden Week holiday period, Ho said that, amid conflict in the Middle East, he has seen indications of increased short-distance travel within China, including reports of flight cancellations to international markets. Ho said that dynamic has benefited Macau so far, adding that for Golden Week Melco has seen both occupancy and player quality improve year-over-year.
On the topic of dividends, Ho said Melco’s goal remains to resume a dividend by year-end 2026, while noting the company will consider its opportunity set, including share repurchases. Davis and Ho reiterated a continued focus on disciplined capital allocation.
During Q&A, management also addressed Macau reinvestment and competitive conditions. Winkler said the market remains highly competitive and that player reinvestment levels “tick[ed] up,” but he characterized them as stable for now, with no near-term expectation for further increases or decreases unless competitive behavior changes materially.
Ho also said the company could not comment in detail on a reported Macau government diversification fund, but stated that the non-gaming commitment made during the 2022 license renewal “remains” and “is not gonna increase.”
About Melco Resorts & Entertainment (NASDAQ:MLCO)
Melco Resorts & Entertainment Limited (NASDAQ: MLCO) is a developer, owner and operator of integrated resort destinations in Asia and Europe. The company’s portfolio spans casino gaming, hotel accommodations, retail, dining and entertainment facilities. Melco’s properties feature a mix of luxury hotels, award-winning restaurants, high-limit gaming salons and entertainment venues, catering to a broad range of leisure and business travelers.
In Macau, Melco owns and operates flagship properties including City of Dreams Macau, Altira Macau and Studio City.
