Galaxy 1Q22 revenue drops 20% but beats past analyst expectations

Galaxy Entertainment posted a 20 percent drop in 1Q22 revenue from the prior year, but its results beat analysts’ estimates, with Bernstein pointing to strong retail and solid premium mass business.
Revenue came in at $4.1 billion, which was also down 14 percent quarter-on-quarter. Adjusted EBITDA was down 33 percent year-on-year and 45 percent sequentially at $575 million. In a “Quick Take” note, Bernstein said the EBITDA results were 19 percent above the Bloomberg consensus and about 38 percent above its own estimates.
Galaxy is the last of Macau’s six operators to report its quarterly results, with all showing the heavy toll from Covid travel restrictions and China’s zero-Covid policy. 
“Whilst we experienced a modest uptick in visitation over the May Labor Holiday we do acknowledge it still remains well below pre-pandemic levels,” Chairman Lui Che Woo said in the earnings release “During the May Labor Holiday our integrated resorts were more active including our hotels and restaurants among others. We believe that this bodes well for the future recovery of Macau as it signals pent-up demand for leisure, tourism and travel.”
In terms of gross gambling revenue, the group posted a drop of 29 percent from last year to $3.4 billion. Mass GGR was down 7 percent, while rolling chip GGR plunged 69 percent to $566 million. One bright spot was electronic GGR which rose 25 percent year-on-year and 2 percent from the prior quarter. 
Bernstein said the mass gaming performance had been “solid in a weak market” and mass, including slots, now makes up about 83 percent of total revenue, much higher than the historical 48 percent. The firm said this indicates “solid premium mass demand.” 
With the closure of the junket business, only Galaxy Macau was offering VIP direct during the quarter. It reported a 4 percent gain in VIP GGR in the period, with management indicating some migration from junket players coming back into the premium-direct programs.
“That said the long-term trend is still too early to tell,” Bernstein said. 

Galaxy Macau key driver