Melco Resorts & Entertainment moved closer to turning a net profit in the third quarter after a 320.6% increase in revenue allowed the company to narrow its net loss for the period.

Sales reached $1.02 billion (£826.7 million/€952.5 million) in the three months to September 30, up from $241.8 million a year earlier. Casino was the catalyst for this growth at Melco, with revenue here increasing 346.2% to $812.1 million in the third quarter.

Melco said the sharp increase in sales was due to the easing of pandemic measures in Macau earlier this year. Due to the strict regulations in the region, the operator had to contend with numerous restrictions in the third quarter of last year.

Although the increase in revenue wasn’t quite enough to bring Melco to profitability in the third quarter, the operator came close. Net loss was $16.3 million, compared to $243.8 million in 2023. This was also an improvement from the net loss of $23.4 million in the second quarter.

“Macau’s recovery continued to strengthen into the third quarter of 2023, particularly in the summer months, with our property viewings and casino player hours benefiting from this growth,” said Lawrence Ho, Chairman and CEO of Melco.

“We had a solid performance in October’s Golden Week and experienced a strong recovery as October progressed. Both gaming and non-gaming segment revenues improved, reinforced by our commitment to investing in world-class entertainment and improving our non-gaming amenities.

“City of Dreams Manila continues to generate solid earnings with a strong margin profile. On the other hand, City of Dreams Mediterranean is affected by the conflict in Israel after a successful opening. Our teams are working on realigning our marketing strategy.”

Broad growth for Melco in the third quarter

Looking at Melco’s third-quarter performance, the casino was its primary source of revenue at $812.1 million. The operator also saw growth in all other segments: room revenue rose 269.9% to $96.1 million, food and beverage revenue rose 235.6% to $60.4 million and entertainment, retail and other sales increased 205.7% to $48.6 million.

In terms of real estate performance, City of Dreams led the way in Macau with sales of $506.2 million. Also in Macau, Studio City’s revenue reached $277.7 million and Altira Macau’s revenue reached $24.2 million. Mocha and other operations in the region generated another $30.1 million in sales.

Outside Macau and the Philippines, City of Dreams Manila reported total third-quarter revenue of $124.9 million. In addition, the opening of the City of Dreams Mediterranean in Cyprus helped increase sales in Europe. Total revenue from Melco’s three Cyprus casinos was $53.4 million in the third quarter.

Costs more than double to $922 million

Turning to third quarter expenses, Melco’s third quarter total operating expenses were 109.5% higher year-over-year at $922.5 million. By far the largest expense for Melco was casino expenses of $533.3 million.

The cost increase was expected across the board due to increased activity in the third quarter following the easing of pandemic restrictions.

Non-operating expenses were $129.5 million, resulting in a pre-tax loss of $34.8 million, compared to $284.6 million a year ago.

Melco is about to transition from red to black

Melco paid income tax of $2.0 million in the third quarter, but recorded losses of $20.5 million, which it said were attributable to noncontrolling interests. Thus, the net loss attributable to Melco in the third quarter was $16.3 million, much less than $243.8 million last year.

Additionally, Melco reported positive Adjusted EBITDA of $280.6 million for the quarter. That compares with a loss of $34.9 million in the same period in 2022.

Could Melco return to net profit for the full year?

Looking at how this has impacted year-to-date performance, Melco’s revenue for the nine months ended September 30 was $2.68 billion, up 164.8% year over year corresponds.

Gaming contributed $2.18 billion to this total. Hotel revenue was $234.8 million, food and beverage revenue was $142.7 million and entertainment, retail and other revenue was $123.7 million. All areas were higher year-over-year.

Operating expenses increased 62.0% to $2.52 billion, with non-operating expenses reaching $349.2 million in the third quarter. As a result, Melco suffered a pre-tax loss of $189.9 million, compared to a loss of $798.5 million last year.

Melco received tax benefits of $1.3 million and also incurred losses of $67.6 million attributable to non-controlling interests. This meant the net loss for Melco was $121.0 million, a significant improvement from $678.6 million in 2022 – giving the operator a slim chance of being in the black for the full year .

Additionally, Adjusted EBITDA increased 10,017.8% to $738.6 million from just $7.3 million last year.