Melco Resorts & Entertainment Limited (NASDAQ:MLCO) shares dropped 3.6% after the casino operator reported second-quarter earnings and revenue below Wall Street expectations. Weaker gaming activity and softer non-gaming operations in Macau weighed on the quarter, although the company’s Cyprus business delivered stronger growth.
Melco Resorts misses Q2 expectations
Melco Resorts reported adjusted earnings of $0.02 per ADS for the second quarter, falling $0.07 short of the analyst consensus estimate of $0.09.
Revenue reached $1.25 billion, below Wall Street expectations of $1.28 billion and down 6% from $1.33 billion in the same period of 2025.
The year-over-year decline reflected weaker rolling chip and mass-market table gaming activity, alongside softer performance across the company’s broader non-gaming operations.
The earnings and revenue misses contributed to the negative market reaction following the announcement.
Property EBITDA declines
Adjusted Property EBITDA fell to $303.8 million during the quarter, compared with $377.7 million in the prior-year period.
Despite the decline in operating performance, net income attributable to Melco Resorts increased to $22.7 million, equivalent to $0.06 per ADS.
That compared with net income of $17.2 million, or $0.04 per ADS, during the second quarter of 2025.
Management acknowledged the difficult operating environment but reiterated its focus on attracting higher-quality visitors and strengthening customer engagement.
“Despite near-term headwinds that are reflected in our second quarter results, our priorities continue to be to deepen customer engagement, attract high quality visitation, and continue investing in our properties to anticipate the changing needs of our guests,” said Lawrence Ho, Chairman and Chief Executive Officer.
City of Dreams Macau weighs on performance
Melco’s flagship City of Dreams property in Macau experienced a significant deterioration in its year-over-year results.
Revenue declined to $632.2 million from $710.5 million in the same quarter last year.
Adjusted EBITDA dropped to $147.8 million from $225.6 million, reflecting the impact of softer gaming activity on the property’s profitability.
Studio City also reported weaker results. Revenue decreased to $371.5 million from $388.2 million, while Adjusted EBITDA fell to $95.5 million from $105.2 million.
The declines across both major Macau properties highlight the challenges facing Melco in its most important gaming market.
Cyprus operations deliver stronger growth
Performance outside Macau provided a more encouraging signal during the quarter.
City of Dreams Mediterranean in Cyprus generated revenue of $82.0 million, up from $72.3 million in the previous-year period.
Property EBITDA increased 60% year over year as regional travel disruptions eased, supporting improved visitor activity and operating performance.
The stronger Cyprus results provided some diversification against the weakness experienced across Melco’s Macau portfolio.
REM hotel opening scheduled for third quarter
Melco is also preparing to expand its hospitality offering with the phased opening of its new REM hotel beginning in the third quarter of 2026.
The project forms part of the company’s continuing investment in its properties as management seeks to respond to changing guest preferences and strengthen the overall customer experience.
Further investment could help Melco broaden its appeal beyond traditional casino gaming and increase its exposure to non-gaming tourism and hospitality spending.
Melco ends quarter with $1.04 billion in cash
Melco Resorts reported total cash and bank balances of $1.04 billion as of June 30, 2026.
Total debt stood at $7.05 billion, leaving the company’s leverage position an important consideration as it continues investing across its resort portfolio.
While higher net income and strong growth in Cyprus provided positive elements, the weaker performance at City of Dreams and Studio City, combined with the earnings and revenue misses, dominated investor reaction.
Attention will now turn to whether Macau operations can regain momentum during the second half of 2026 and whether the phased launch of REM can provide an additional source of growth.