Melco's Property EBITDA Falls 24% as Macau Weakens and Cyprus Sets a Record

Melco Resorts' Macau properties earned 29% less in the third quarter, and bad luck at the City of Dreams VIP tables explains only part of it. A record quarter in Cyprus added $2.5 million against a $92.8 million fall for the group.

• Melco Resorts & Entertainment reported third-quarter Adjusted Property EBITDA of $287.6 million on 4 November, down 24.4% from $380.4 million, on operating revenues down 10.4% to $1.17 billion
• Net income attributable to the company fell to $34 thousand from $74.7 million, and City of Dreams in Macau earned $130.3 million against $206.9 million
• Chief Financial Officer Geoff Davis said unfavourable VIP win rates at City of Dreams cost about $14 million, putting hold-adjusted property EBITDA at about $298 million
• City of Dreams Mediterranean and three satellite casinos in Cyprus earned a record $25.7 million, up from $23.2 million, on 17% more mass table drop and 83% hotel occupancy
• Melco bought back about $160 million of its shares between 1 July and 3 November while calling deleveraging its first priority, in a market whose October GGR fell 10%

Macau Did the Damage, and Hold Explains Only Part of It

Melco Resorts & Entertainment (Nasdaq: MLCO) reported total operating revenues of $1.17 billion for the quarter to 30 September in its unaudited third-quarter earnings release of 4 November, against $1.31 billion a year earlier. It reports in US dollars under US GAAP; Adjusted Property EBITDA is a non-GAAP measure. Operating income fell to $100.2 million from $184.5 million, and adjusted net income to $6.5 million from $83.7 million.

City of Dreams Macau's Adjusted EBITDA fell 37% on revenues of $566.2 million. Rolling chip volume fell to $4.63 billion from $5.58 billion and the win rate to 2.49% from 3.68%, against an expected range of 2.85% to 3.15%. Mass table drop slipped to $1.63 billion from $1.66 billion. On the 4 November call, Chief Financial Officer Geoff Davis put the cost of that win rate at about $14 million, offset by about $2 million each from favourable VIP results in Manila and Sri Lanka, for hold-adjusted property EBITDA of about $298 million.

Studio City earned $90.6 million, down from $104.7 million, as mass drop fell 10%. Melco's four Macau segments, including Altira Macau and the Mocha slot clubs, three of which closed under a government mandate in late 2025, produced $225.0 million against $316.6 million, a 29% fall. City of Dreams Manila earned $32.9 million, down from $41.3 million.

Cyprus Grows on Mass Play, With Almost No VIP

City of Dreams Mediterranean in Limassol and its three satellite casinos lifted revenues to $96.7 million from $85.8 million, which the company attributes to stronger mass market performance. Chairman and Chief Executive Officer Lawrence Ho said in the release that it was the segment's "highest quarterly EBITDA on record", and that the Philippines and Cyprus showed "resilience despite the ongoing headwinds in those countries and regions", without naming them.

Mass table drop rose to $220.6 million from $188.5 million, gaming machine handle to $759.0 million from $690.9 million, and hotel occupancy to 83% from 72% at an average daily rate of $611. Rolling chip volume was just $0.3 million. Over nine months the segment has earned $54.5 million, against $47.2 million in 2025.

Debt, Buybacks and a Dividend Late Next Year

Total debt was $6.98 billion at 30 September, with cash of $886.6 million. Melco redeemed $765 million of 2027 and 2028 notes in the quarter, funded largely by drawdowns on bank facilities. President Evan Winkler called deleveraging "our number one priority". Davis said Melco would "aim to recommence the dividend potentially towards the end of next year", and guided to fourth-quarter net interest of $115 million to $120 million.

The Year-Ago Quarter Flattered the Comparison

City of Dreams won 3.68% on rolling chip a year ago, above its own expected range, so the base was inflated before this year's luck turned. Adding back the $14 million still leaves the property about $63 million short of last year, on lower VIP volume and flat mass drop. That fits a market where mass baccarat revenue fell 7.9% in the third quarter and Wynn Macau's VIP turnover more than halved. Melco's decline is mostly demand, not variance.

Cyprus Is Growing but Cannot Carry the Group

Cyprus produced 8.9% of property EBITDA, and its $2.5 million gain was less than a fifth of the hold shortfall at a single Macau property. The better news is its quality: mass tables, slots and hotel rooms rather than VIP luck, with nine-month earnings up 15.5%. But Melco remains a Macau company, drawing 78% of property EBITDA there.

Buybacks and Deleveraging Are Drawing on the Same Cash

Operating income of $100.2 million did not cover the quarter's $110.8 million of interest, yet Melco spent about $160 million on buybacks between July and early November while refinancing bonds with bank debt. Davis said buybacks remain a priority at current valuations, which is one reason he would not fix a date for the dividend. With Ho citing weak Chinese consumption for October's fall, that trade-off will be tested in the fourth quarter.

Melco's third quarter was a Macau problem that a record in Cyprus could not offset. Until mass play in Macau recovers, buybacks and a future dividend will compete with debt reduction for a shrinking pool of earnings.