20-F: Studio City Reports Strong 2025 Growth, Reduced Net Loss

Studio City International Holdings Limited reported an 8.7% increase in total operating revenues to $694.6 million for 2025, significantly narrowing its net loss to $58.8 million.

Summary

• Total operating revenues for the year ended December 31, 2025, increased by 8.7% to $694.6 million, up from $639.1 million in 2024.
• Net loss attributable to Studio City International Holdings Limited decreased to $58.8 million in 2025, an improvement from $96.7 million in 2024.
• Revenue from casino contract rose to $305.9 million in 2025, compared to $259.8 million in 2024, driven by better mass market operations.
• Mass market table games drop increased to $3.76 billion in 2025 from $3.68 billion in 2024, with hold percentage rising to 33.4% from 30.6%.
• Gaming machine revenue grew to $127.2 million in 2025 from $111.7 million in 2024, with handle at $3.60 billion and win rate at 3.5%.
• Average net win per gaming machine per day was $451 in 2025, up from $431 in 2024.
• Hotel room revenues increased by 4.5% to $168.0 million in 2025, with average daily rate at $171, occupancy rate at 98%, and REVPAR at $167.
• Studio City Casino did not have VIP rolling chip operations in 2025, compared to $77.1 million in VIP rolling chip revenue in 2024.
• Adjusted EBITDA increased to $284.5 million in 2025 from $245.3 million in 2024, with an Adjusted EBITDA margin of 41.0%.
• Total outstanding indebtedness as of December 31, 2025, was $2.03 billion.
• The application for Macau Complementary Tax exemption for 2023-2032 was rejected in September 2024, leading to a Macau Complementary Tax expense of $7.7 million in 2025.
• 198 gaming machines were re-allocated to Studio City from closed Mocha Clubs between September and December 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, reflecting strong operational recovery and significant reduction in net losses, driven by robust mass market gaming and hotel performance. The improved Adjusted EBITDA and prestigious awards for non-gaming amenities are encouraging, despite ongoing tax and debt obligations.

Positives

• Total operating revenues increased by 8.7% to $694.6 million in 2025, indicating strong business recovery and growth.
• Net loss significantly narrowed to $58.8 million in 2025 from $96.7 million in 2024, demonstrating improved financial performance.
• Revenue from casino contract saw a substantial increase to $305.9 million in 2025, driven by robust mass market operations.
• Mass market table games drop and hold percentage both increased, reflecting higher customer engagement and better win rates.
• Gaming machine revenue and handle also increased, with a higher win rate, indicating strong performance in this segment.
• Hotel operations showed growth with increased average daily rate ($171), high occupancy rate (98%), and improved REVPAR ($167) in 2025.
• Adjusted EBITDA grew by 16% to $284.5 million in 2025, with an improved margin of 41.0%, highlighting operational efficiency.
• Studio City's Star Tower received its ninth consecutive Forbes Travel Guide Five-Star recognition in 2026, and Epic Tower earned its second, affirming luxury service quality.
• The Spa at Epic Tower and Zensa Spa also received Forbes Travel Guide Five-Star recognitions, enhancing the resort's non-gaming appeal.
• Pearl Dragon, the signature Cantonese restaurant, maintained its One MICHELIN Star for the ninth consecutive year and received other prestigious dining awards.
• Studio City Phase 2 achieved a BREEAM Excellent rating for New Construction, demonstrating commitment to environmental sustainability.
• W Macau Studio City was recognized as one of the 'Worlds Most Beautiful Hotels' by UNESCO's Prix Versailles in 2024.
• Studio City Water Park was listed among China's Top 100 Novel Attractions in 2023 and received a Leading Edge Award, indicating strong appeal for entertainment offerings.

Negatives

• The company reported a net loss of $58.8 million in 2025, continuing a history of net losses in most operating years.
• Non-gaming revenues from food and beverage, entertainment, mall, retail, and other categories decreased by 4.2% to $152.3 million in 2025, primarily due to fewer residency concerts.
• The application for Macau Complementary Tax exemption for 2023-2032 was rejected, resulting in a $7.7 million tax expense in 2025.
• The company has a substantial amount of existing indebtedness totaling $2.03 billion as of December 31, 2025, requiring significant interest and principal payments.
• The absence of VIP rolling chip operations in 2025 means a loss of a revenue stream that generated $77.1 million in 2024.
• The company faces concentration risk due to its sole operation of Studio City in Macau, making it vulnerable to regional economic and regulatory changes.

Risks

• Reliance on the Gaming Operator's concession and compliance with the Studio City Casino Agreement, with potential adverse effects from non-compliance or termination.
• Short operating history for full operations compared to competitors, leading to significant risks and uncertainties regarding future operating results.
• Sole operation of Studio City creates concentration risk, making the business highly susceptible to changes in Macau laws, travel policies, economic conditions, and competition.
• Volatility in financial condition and results of operations if VIP rolling chip operations are re-introduced, due to high bets, economic sensitivity, and lower margins.
• History of net losses and no assurance of future profitability, with expected increases in costs and capital expenditures.
• Substantial existing indebtedness ($2.03 billion) and potential for additional debt, which could limit financing, reduce cash flow for operations, and create competitive disadvantages.
• Inability to comply with credit facility and debt instrument covenants could lead to default, acceleration of debt, and loss of assets.
• Difficulty in obtaining adequate financing on satisfactory terms in the future due to market conditions, investor perceptions, and interest rates.
• Risks in operating non-gaming offerings, including the ability to attract and retain customers, and the potential for attractions to become obsolete.
• Impact of the reputation and integrity of parties engaged in business activities at Studio City Casino, including gaming promoters, on the company's reputation and regulatory standing.
• Seasonality and other fluctuations in business, making it difficult to accurately identify recurring trends and manage customer services and supplies.
• Macau's infrastructure may not adequately support the gaming and leisure industry's development, potentially affecting visitation to Studio City.
• Health and safety or food safety incidents at Studio City could lead to reputational damage and financial exposures not fully covered by insurance.
• Cybersecurity risks, including disruptions, data misappropriation, breaches of information security, and cybercrimes, could materially affect business and reputation.
• Failure to protect the integrity and security of company staff, supplier, and customer information and comply with evolving data privacy laws.
• Inability to keep pace with and successfully incorporate technological developments (e.g., AI) into operations may impair competitiveness.
• Negative press or publicity about the company or its affiliates could lead to government investigations, harm reputation, and adversely affect business.
• Inability to retain qualified management and personnel, especially given limited supply in Macau and government policies on non-resident workers.
• Construction hazards may cause personal injury or loss of life, leading to liabilities, losses, delays, and negative publicity.
• Contractors may face difficulties in finding sufficient labor at acceptable costs, causing construction delays and increased costs.
• Possible infringement of key intellectual property or dissemination of proprietary information, or infringement of third-party IP rights, could adversely affect business.
• Insufficient insurance coverage for material losses, including those from natural disasters, infectious diseases, or cybersecurity attacks.
• Expiration of Studio City Entertainment's Macau complementary tax exemption, leading to increased tax expenses.
• Involvement in legal and other proceedings, which are inherently unpredictable and could result in substantial costs, delays, or adverse decisions.
• Failure to comply with anti-corruption laws (e.g., FCPA) could result in penalties, harm reputation, and adversely affect business.
• Fluctuation in the value of H.K. dollar, U.S. dollar, Pataca, or RMB may adversely affect indebtedness, expenses, and profitability, especially with Renminbi export restrictions.
• Economic or trade sanctions and a heightened trend towards trade and technology de-coupling could negatively affect relationships with suppliers and partners.
• Climate change, ESG, and sustainability concerns could negatively impact business through increased costs, reduced demand, or reputational damage.
• Claims or regulatory actions under China's competition laws may result in fines, business constraints, and reputational damage.
• Macau government's right to terminate the Gaming Operator's concession without compensation, potentially preventing Studio City Casino operation.
• Intense competition in the Macau gaming industry and elsewhere in Asia, including from new developments and potential legalization of gaming in other markets.
• Adverse changes or developments in Macau gaming laws or regulations, including those on gaming promoters, commission caps, and table/machine allocations, could increase costs or cause unsuccessfulness.
• Operational risks common to gaming facilities, such as inability to collect gaming receivables, limited credit availability, inability to control win rates, fraud/cheating, counterfeiting, and gaming machine malfunctions.
• Potential for the Macau government to grant additional gaming rights, increasing competition.
• Ineffectiveness of anti-money laundering policies to prevent exploitation for money laundering purposes, leading to reputational damage or regulatory sanctions.
• Heavy dependence on Melco Resorts, with potential conflicts of interest due to Melco Resorts' controlling ownership and other integrated resorts.
• Changes in Melco Resorts' share ownership could trigger defaults under indebtedness or require debt repurchase offers.
• Material adverse effects from economic slowdowns in China and nearby Asia regions, including reduced visitor spending and increased operating costs from inflation.
• Foreign exchange restrictions on the Renminbi could impede customer flow from mainland China and negatively impact gaming operations.
• Policies, campaigns, and measures by PRC and/or Macau governments (e.g., travel restrictions, anti-corruption, currency controls) could adversely affect operations.
• Uncertainties in China's legal systems and rapid changes in rules and regulations may expose the company to risks and penalties.
• PRC government influence over operations or overseas offerings could result in material changes and impact share value.
• Terrorism, violent criminal acts, war, widespread health epidemics, political developments, and other factors affecting discretionary spending may reduce visitation.
• Macau's susceptibility to typhoons and heavy rainstorms may damage property and disrupt operations, potentially leading to uninsured losses.
• As a Cayman Islands holding company, dependence on distributions from MSC Cotai, which may be restricted by laws or debt instruments.
• Participation by principal shareholders in equity offerings has reduced public float and liquidity of ADSs.
• Inability to remain in compliance with NYSE listing requirements could lead to delisting, affecting liquidity and share price.
• Volatility in ADS trading price due to broad market factors, industry performance, political tensions, and company-specific events.
• Lack of research or adverse changes in recommendations by securities analysts could cause ADS price and trading volume to decline.
• Techniques employed by short sellers may drive down ADS market price, requiring significant resources to defend against allegations.
• ADS holders have fewer rights than shareholders and must act through the depositary, potentially limiting voting rights and recourse.
• Limited jury trial rights for ADS holders with claims arising under the deposit agreement.
• Limited participation in future rights offerings and potential for dilution, and non-receipt of cash dividends if unlawful or impractical.
• Substantial future sales or perceived potential sales of ADSs or other equity securities could cause price decline.
• Discretionary proxy given to the depositary to vote Class A ordinary shares if ADS holders do not vote, potentially influencing management.
• Reliance on price appreciation for return on investment, as no dividends are expected in the foreseeable future.
• Limitations on the transfer of ADSs due to depositary book closures or other reasons.
• Difficulty enforcing judgments obtained against the company due to incorporation in the Cayman Islands and assets/personnel located outside the U.S.
• Exemption from certain U.S. provisions as a foreign private issuer, potentially affording less protection to shareholders.
• Increased costs as a public company due to compliance with Sarbanes-Oxley Act and other regulations.
• Limited judicial precedent under Cayman Islands law compared to U.S. law, potentially offering less protection for shareholder rights.
• Potential adverse U.S. federal income tax consequences if classified as a Passive Foreign Investment Company (PFIC).
• Adverse U.S. federal income tax consequences if a U.S. person is treated as owning at least 10% of shares.
• Changes in tax law relating to multinational corporations (e.g., OECD BEPS, Pillar Two) could adversely affect tax position and increase taxes.

Future Outlook

The company expects to continue focusing its business strategy on cultivating further growth in premium mass and mass market operations at Studio City Casino and enhancing differentiated non-gaming amenities. It anticipates incurring future capital expenditures for existing operations and plans to meet funding needs through operating cash flow and various financings. The company will continue to evaluate its capital structure and opportunities to enhance it, including potential refinancing or asset monetization. The direction of global monetary policy and its impact on funding costs and market risk mitigation strategies remains uncertain.

Management Comments

• Management believes current available cash and cash equivalents, along with funds from credit facilities and additional financings, will be adequate to satisfy current and anticipated operating, debt, and capital commitments.
• Management believes the costs incurred under the Studio City Casino Agreement and the allocation methods under the Management and Shared Services Arrangements are reasonable and reflect the company's cost of doing business.

Industry Context

StockSavvy.ai notes that Studio City's performance reflects a broader recovery in Macau's gaming and tourism sector, with visitor arrivals to Macau increasing by 14.7% and gross gaming revenues rising by 9.1% in 2025. The company's strategic focus on mass market and non-gaming attractions aligns with Macau's diversification efforts and the evolving preferences of Chinese tourists. The re-allocation of gaming machines from Mocha Clubs to Studio City indicates a consolidation and optimization strategy within the Melco Resorts group to enhance asset utilization in key properties. However, the rejection of the tax exemption application highlights the ongoing regulatory scrutiny and potential for increased operational costs in the highly regulated Macau market, a trend observed across concessionaires.

Comparison to Industry Standards

• Studio City's 98% hotel occupancy rate in 2025 is exceptionally high, surpassing typical industry averages for luxury resorts, indicating strong demand for its accommodations. For example, major competitors like Las Vegas Sands' Venetian Macau and Wynn Palace typically report occupancy rates in the high 80s to low 90s in a healthy market.
• The average daily rate (ADR) of $171 and REVPAR of $167 demonstrate solid pricing power and revenue generation per available room, comparable to premium mass-market focused properties in Cotai.
• The mass market table games hold percentage of 33.4% is robust, indicating effective game management and favorable outcomes for the casino, often exceeding the 25-30% range seen in some regional competitors.
• The company's Adjusted EBITDA margin of 41.0% in 2025 is competitive within the Macau integrated resort sector, reflecting improved operational leverage compared to prior years, though still below the peak margins of some established operators during boom periods.
• The continued recognition of Star Tower and Epic Tower with Forbes Travel Guide Five-Star awards, and Pearl Dragon's MICHELIN Star, positions Studio City's non-gaming offerings at the top tier of global luxury hospitality, comparable to services offered by properties like City of Dreams and Galaxy Macau.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to, nor aware of, any material legal or administrative proceeding, investigation, or claim which, individually or in the aggregate, may have significant effects on its business, financial condition, or results of operations.

Related Party Transactions

• Revenue from casino contract with Melco Resorts (Macau) Limited (MRM) was $305.9 million in 2025.
• Rooms and food and beverage revenues from Melco Resorts and its subsidiaries totaled $152.1 million in 2025.
• Services fee revenues from Melco Resorts and its subsidiaries were $68.3 million in 2025.
• Entertainment revenues from Melco Resorts and its subsidiaries were $13.9 million in 2025.
• Staff costs recharged by Melco Resorts and its subsidiaries amounted to $129.7 million in 2025.
• Corporate services provided by Melco Resorts and its subsidiaries cost $44.9 million in 2025.
• Other services from Melco Resorts and its subsidiaries were $23.1 million in 2025.
• Staff costs for construction and renovation work capitalized by Melco Resorts and its subsidiaries were $3.5 million in 2025.
• Sale of property and equipment to affiliated companies generated $7.5 million in 2025.
• Transfer-in of other long-term assets from affiliated companies amounted to $30.7 million in 2025.
• Entered into an operating agreement with iRad Imaging and Diagnostic Medical Center Ltd. (an affiliated company of Mr. Lawrence Yau Lung Ho) for mall and sales-type lease income of $358 in 2025.
• A security deposit of $1.95 million was received from iRad pursuant to the Studio City Operating Agreement as of December 31, 2025.
• Mr. Lawrence Yau Lung Ho's controlled entity held $30.0 million of SCF Senior Notes as of December 31, 2025.
• An independent director of SCIH held $600 of SCC Senior Secured Notes as of December 31, 2025.
• Total interest expense of $1.5 million related to SCF Senior Notes was paid or payable to Mr. Ho and his controlled entity in 2025.
• Total interest expense of $44 related to SCC Senior Secured Notes was paid or payable to the independent director in 2025.

Stakeholder Impact

• **Shareholders:** Improved financial performance with narrowed net loss and increased Adjusted EBITDA could positively impact shareholder confidence and potentially future share price. However, the continued net losses and substantial debt remain a concern. The rejection of the tax exemption could reduce future distributable profits.
• **Employees:** Increased business activities and growth in operations suggest stable to growing employment opportunities. The company's reliance on Melco Resorts for staffing and management indicates a shared employee base and potential for Melco Resorts' policies to influence Studio City's employees.
• **Customers:** Enhanced non-gaming amenities, including award-winning hotels and restaurants, and the re-allocation of gaming machines, aim to attract and retain a broad range of customers, improving their experience. However, potential impacts from PRC government policies on travel and currency could affect customer visitation and spending.
• **Suppliers:** Increased business volumes and capital expenditures imply continued demand for goods and services from suppliers. However, economic or trade sanctions and de-coupling trends could affect relationships with technology partners and other business partners.
• **Creditors:** The company's ability to meet debt service obligations is improving with increased operating income and Adjusted EBITDA. However, the substantial outstanding indebtedness and restrictive covenants in debt agreements remain a key consideration for creditors.

Next Steps

• Continue to focus on cultivating further growth in premium mass and mass market operations at Studio City Casino.
• Enhance differentiated non-gaming amenities to complement gaming operations.
• Incur capital expenditures for the continued development of existing operations.
• Evaluate capital structure and opportunities to enhance it, including potential refinancing existing debt, monetizing assets, or sale-and-leaseback transactions.
• Monitor and assess developments in China's cybersecurity and data privacy regulations and ensure compliance.
• Submit annual proposals for the execution of specific investment projects under the Concession Contract to the Macau government for approval.
• Submit annual reports on the execution of the investment plan under the Concession Contract to the Macau government.

Key Dates

Recommendation

Studio City International Holdings Limited shows significant operational improvements in 2025, with strong revenue growth, a narrowed net loss, and increased Adjusted EBITDA, driven by a recovering Macau market and successful mass market strategy. The company's luxury non-gaming offerings continue to receive high accolades, enhancing its competitive position. However, the substantial outstanding debt of over $2 billion, the ongoing history of net losses, and the recent rejection of a key tax exemption introduce considerable financial risk and uncertainty. Furthermore, the heavy reliance on Melco Resorts and exposure to evolving PRC and Macau regulatory environments, including potential changes in gaming laws and cross-border capital controls, present material external risks. While the operational recovery is positive, these persistent risks warrant a 'hold' recommendation, suggesting investors monitor further progress in debt reduction, sustained profitability, and regulatory stability before considering a stronger position.

Keywords

Integrated Resort, Macau Gaming, Casino Operations, Hospitality, Entertainment, Mass Market Gaming, Non-Gaming Revenue, SEC Filing, Financial Performance, Debt Management, Regulatory Risk, China Economy, Tourism, Studio City