20-F: Melco Resorts Reports Strong 2025 Growth Amid Macau Recovery

Melco Resorts & Entertainment Limited announced a significant increase in net income and operating revenues for 2025, driven by a rebound in Macau tourism and new property openings, despite ongoing geopolitical and regulatory challenges.

Summary

• Total operating revenues for 2025 increased by 11.3% to $5.16 billion, up from $4.64 billion in 2024.
• Net income attributable to Melco Resorts & Entertainment Limited surged to $185.0 million in 2025, a substantial increase from $43.5 million in 2024.
• Adjusted Property EBITDA rose to $1,430.4 million in 2025 from $1,219.3 million in 2024, reflecting improved operational performance.
• City of Dreams Macau saw its Adjusted Property EBITDA increase to $822.1 million in 2025 from $621.6 million in 2024, benefiting from a 16.7% rise in rolling chip volume and the re-launch of House of Dancing Water.
• Studio City's Adjusted Property EBITDA grew to $393.8 million in 2025 from $341.2 million in 2024, driven by improved mass market operations.
• City of Dreams Mediterranean and Other segment generated Adjusted Property EBITDA of $68.2 million in 2025, up from $50.5 million in 2024, indicating improved performance in Cyprus operations.
• The company fully redeemed $1.00 billion of 4.875% Senior Notes due 2025 on June 6, 2025, and $221.6 million of 6.000% Senior Notes due 2025 on July 15, 2025.
• Melco Resorts Finance issued $500.0 million of 6.500% Senior Notes due 2033 on September 24, 2025.
• The 2026 MRF Senior Notes were largely retired through a tender offer ($142.1 million settled September 24, 2025) and subsequent redemption of the remaining $357.9 million on October 25, 2025.
• Grand Dragon Casino and three Mocha Clubs ceased operations between September and December 2025, with gaming equipment re-allocated to other Macau properties.
• City of Dreams Sri Lanka casino commenced operations on August 1, 2025, and Nwa Sri Lanka hotel management began on July 15, 2025.
• The company repurchased 97,035,669 ordinary shares (equivalent to 32,345,223 ADSs) for $166.0 million under its 2024 Share Repurchase Program in 2025.
• As of December 31, 2025, total investment in gaming and non-gaming projects under the Macau Concession reached MOP5,724.2 million (US$714.2 million) out of a total commitment of MOP13,826.7 million (US$1.73 billion) by December 2032.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive filing, reflecting a strong financial rebound driven by Macau's tourism recovery and strategic project developments. However, persistent geopolitical risks, competitive pressures, and significant debt obligations temper the overall sentiment, indicating a cautiously optimistic outlook.

Positives

• Significant increase in total operating revenues by 11.3% to $5.16 billion in 2025, indicating strong business recovery.
• Net income attributable to Melco Resorts & Entertainment Limited rose substantially to $185.0 million in 2025 from $43.5 million in 2024.
• Adjusted Property EBITDA increased across most segments, notably City of Dreams Macau and Studio City, driven by improved gaming and non-gaming operations and tourism recovery.
• Successful re-launch of the 'House of Dancing Water' in May 2025, contributing to non-gaming revenue growth.
• Expansion into new markets with the initial opening of City of Dreams Sri Lanka casino and Nwa Sri Lanka hotel management in Q3 2025.
• Effective debt management with the full redemption of $1.00 billion of 2025 MRF Senior Notes and $221.6 million of 2025 SCF Senior Notes at maturity, and the successful tender offer and redemption of 2026 MRF Senior Notes.
• The company's Macau operating subsidiary received a complementary tax exemption on gaming profits from 2023 to 2027, providing a tax benefit.

Negatives

• Altira Macau continued to report negative Adjusted Property EBITDA, worsening from $(1.9) million in 2024 to $(4.1) million in 2025.
• Mocha and Other segment's Adjusted Property EBITDA decreased to $22.2 million in 2025 from $27.0 million in 2024, primarily due to the closure of Grand Dragon Casino and three Mocha Clubs.
• City of Dreams Manila experienced softer performance, with Adjusted Property EBITDA decreasing to $132.8 million in 2025 from $181.1 million in 2024, and rolling chip volume declining by 18.2%.
• The new 'Other Operations' segment (Sri Lanka) reported negative Adjusted Property EBITDA of $(4.6) million in its initial year of operation (2025).
• Goodwill impairment charge of $57.9 million was recognized in 2025 related to the Mocha and Other segment due to club closures.
• General and administrative expenses increased by 15.6% to $657.4 million in 2025, partly due to full-year trademark license fees and higher payroll.
• Pre-opening costs significantly increased to $50.6 million in 2025 from $20.9 million in 2024, indicating substantial upfront investment for new projects and re-launches.

Risks

• Dependence on Macau, the Philippines, and Cyprus for a substantial portion of cash flow, making the company vulnerable to regional economic, political, and regulatory changes.
• Policies and measures adopted by the PRC and/or Macau governments, including travel restrictions, anti-corruption campaigns, capital controls, and gaming marketing deterrence, could materially and adversely affect operations.
• Intense competition in Macau, the Philippines, Cyprus, and other Asian/European markets from larger, more diversified gaming companies and new integrated resorts.
• Inadequate transportation infrastructure in Macau, the Philippines, or Cyprus could hinder increases in visitor numbers.
• Exposure to natural disasters such as typhoons, heavy rainstorms, and earthquakes, which could damage properties and disrupt operations.
• Reliance on senior management and the ability to attract and retain qualified personnel, with risks of labor shortages, increased costs, and union activities.
• Potential for inadequate insurance coverage for all losses, and increasing insurance costs or reduced policy limits.
• Inherent elements of chance in gaming, leading to volatile revenues and cash flows, and risks of cheating, counterfeiting, and uncollectible gaming receivables.
• Risks associated with mergers, acquisitions, strategic transactions, and new business lines, including integration difficulties, unrealized benefits, and regulatory inquiries.
• Unfavorable fluctuations in currency exchange rates (HKD, MOP, PHP, EUR, LKR against USD) and restrictions on currency conversions/repatriation.
• Failure or alleged failure to comply with anti-corruption laws (e.g., FCPA) and anti-money laundering policies, potentially leading to penalties and reputational harm.
• Cybersecurity risks, including system disruptions, data breaches, and non-compliance with evolving data privacy and protection laws (e.g., GDPR, China Data Security Law, PIPL).
• Environmental, social, and governance (ESG) and sustainability-related concerns, including climate change impacts, energy costs, and stakeholder expectations.
• Construction and development risks for current and future projects, including delays, cost overruns, and difficulties in obtaining permits or financing.
• Risk of revocation or non-renewal of the Macau gaming concession if the company fails to comply with complex legal and regulatory requirements, including investment commitments and minimum gaming revenue targets.
• Uncertainties regarding the continued operation of Mocha Clubs, with some having ceased operations and others transitioning to a management company model.
• Risks related to the tenancy relationship for City of Dreams Manila, dependence on other Philippine licensees, limitations on operating rights, and potential suspension of VIP gaming operations.
• Uncertainty regarding the Sri Lanka gaming market, new regulatory framework (Gambling Regulatory Authority Act), increased taxes, and dependence on John Keells for operations.
• Substantial influence of the controlling shareholder (Melco International), potential conflicts of interest, and competition from Melco International's other projects.
• Risk of Studio City International's delisting from the New York Stock Exchange due to non-compliance with listing requirements.
• High levels of indebtedness and potential inability to generate sufficient cash flow to meet debt service obligations or obtain additional financing on favorable terms.
• Restrictive covenants in credit facilities and debt instruments that limit the company's ability to engage in certain transactions, including dividend payments.
• Potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. Holders.

Future Outlook

The company expects to continue incurring significant capital expenditures for property enhancement and maintenance, as well as pursuing potential growth opportunities. It anticipates financing these through operating cash flow, existing cash balances, and future debt or equity financings. The company will continue to monitor and assess the evolving regulatory landscape in China and other operating jurisdictions, including new data security and anti-monopoly laws, and the impact of geopolitical conflicts on its Cyprus operations. The Countdown hotel rebranding is expected to launch in Q3 2026.

Management Comments

• Our Chief Executive Officer is the Chief Operating Decision Maker (CODM) of the Company.
• The CODM uses Adjusted Property EBITDA for each segment as the measure of segment profit or loss to allocate resources to each segment and to compare the operating performance of the Company's properties with those of its competitors as a way to assess performance.
• Our board will continue to review from time to time our dividend policy as part of our commitment to maximizing shareholder value, taking into consideration our financial performance and market conditions.

Industry Context

StockSavvy.ai notes that Melco Resorts' strong 2025 performance, particularly in Macau, aligns with the broader recovery trend in the region's gaming and tourism industry following the easing of COVID-19 restrictions. The company's strategic focus on premium mass market and non-gaming amenities, as evidenced by the re-launch of 'House of Dancing Water' and new hotel openings, positions it to capitalize on evolving consumer preferences. However, the competitive landscape remains intense, with other major players like Galaxy and Sands China also expanding and renovating properties. The entry into new markets like Sri Lanka, while diversifying, introduces new regulatory and market-specific risks. The ongoing geopolitical tensions and their impact on tourism, especially in Cyprus, highlight the industry's vulnerability to external factors.

Comparison to Industry Standards

• Melco Resorts' 11.3% revenue growth and significant net income increase in 2025 demonstrate a robust recovery, potentially outperforming some regional competitors still grappling with post-pandemic challenges or slower market segments.
• The company's Adjusted Property EBITDA margin improvement, particularly in City of Dreams and Studio City, suggests effective cost management and strong demand in its core Macau premium and mass markets, comparable to leading integrated resorts globally.
• The continued negative Adjusted Property EBITDA at Altira Macau and softer performance at City of Dreams Manila indicate areas where Melco Resorts faces specific market or competitive pressures, potentially lagging behind more successful properties in those respective markets.
• The initial negative Adjusted Property EBITDA for City of Dreams Sri Lanka is typical for new market entries, but its long-term success will be benchmarked against established integrated resorts in emerging Asian gaming hubs like those in the Philippines or Vietnam.

Management Changes

Corporate Governance

Legal Proceedings

• Avax S.A. & Terna S.A. (main contractor for City of Dreams Mediterranean) filed a notice of arbitration against ICR Cyprus Resort Development Co Limited, seeking additional payment for construction. The company believes the claims are without merit and intends to vigorously defend against them and pursue counterclaims. The outcome and possible loss are currently indeterminable.

Related Party Transactions

• Management fee expenses of $2.036 million paid to Melco International and its subsidiaries for senior management services and corporate office operations in 2025.
• Trademark license fees of $32.671 million paid to Melco International in 2025 for the use of licensed marks for City of Dreams, under a 10-year agreement commenced January 1, 2024.
• Operating agreement with iRad (an affiliated company of Mr. Lawrence Yau Lung Ho) for a private hospital at Studio City, commencing October 1, 2025, and ending November 30, 2034. A security deposit of $1,953 was received from iRad.
• Redemption of $1.00 million of 2025 MRF Senior Notes and $1.386 million of 2025 SCF Senior Notes held by an independent director in 2025.
• An independent director subscribed for $4.00 million of 2033 MRF Senior Notes in September 2025.
• Redemption of $0.20 million of 2026 MRF Senior Notes held by an executive officer in 2025.
• As of December 31, 2025, Mr. Ho's controlled entity, an independent director, and an executive officer held $30.0 million, $8.5 million, and $1.8 million, respectively, in senior notes issued by subsidiaries.
• Interest expense of $1.5 million, $0.307 million, and $0.121 million paid/payable to Mr. Ho's controlled entity, an independent director, and an executive officer, respectively, in 2025.

Stakeholder Impact

• Shareholders: Positive impact from increased net income and revenues, but potential dilution from future capital raises and ongoing stock price volatility remain concerns. Share repurchase program aims to return value.
• Employees: Impacted by workforce optimization (e.g., Mocha Club closures), but also benefit from employee attraction/retention initiatives and share incentive plans. Union activities in the Philippines could affect labor relations.
• Customers: Benefit from enhanced integrated resort offerings, re-launched entertainment (House of Dancing Water), and new destinations (Sri Lanka). However, regulatory changes (e.g., smoking restrictions, Renminbi controls) could affect customer experience and visitation.
• Creditors: Debt obligations are substantial, but the company's improved cash flow and active debt management (redemptions, new issuances) indicate a commitment to meeting financial commitments. Compliance with covenants remains critical.
• Macau Government: Benefits from increased gaming taxes and contributions due to higher gaming revenues. The company's investment commitments under the Concession are being fulfilled, supporting local development.

Next Steps

• Launch of The Countdown hotel rebranding in the third quarter of 2026.
• Continued investment in gaming and non-gaming related projects under the Macau Concession, with a total commitment of MOP13,826.7 million (US$1.73 billion) by December 2032.
• Melco Resorts Macau's application for an extension to the annual payment agreement for dividend distributions from gaming profits for 2026-2027 is under review by the Macau government.
• Negotiation proceedings between Melco Resorts Leisure and KMM-MELCO-GTS for a collective bargaining agreement have commenced in the Philippines.

Key Dates

Recommendation

Melco Resorts & Entertainment Limited demonstrated a strong financial recovery in 2025, with significant increases in net income and operating revenues, primarily driven by the rebound in Macau tourism and successful project developments. The company's proactive debt management and expansion into new markets like Sri Lanka are positive indicators. However, the gaming industry remains highly susceptible to geopolitical tensions, evolving regulatory landscapes in key markets (Macau, Philippines, Cyprus), and intense competition. The negative EBITDA from Altira Macau and softer performance in City of Dreams Manila, coupled with substantial debt and ongoing capital commitments, present notable risks. A 'hold' recommendation is appropriate as the positive momentum is balanced by these significant, inherent challenges and uncertainties, suggesting that while the company is on a recovery path, a 'buy' signal would require more sustained positive trends and clearer mitigation of the identified risks.

Keywords

Integrated Resort, Casino, Macau, Philippines, Cyprus, Sri Lanka, Gaming, Hospitality, Entertainment, Melco Resorts, MLCO, SEC Filing, 20-F, Financial Results, Revenue, Net Income, EBITDA, Debt, Capital Expenditures, Regulatory Risk, Geopolitical Risk, Tourism, Share Repurchase, Senior Notes