Meridian Q2 Earnings Call Highlights

Key Points

• Meridian delivered stronger financial results: Second-quarter revenue rose 16% year over year to $50.2 million, and the company posted $2.2 million in GAAP net income versus a loss of $4.6 million a year earlier. Adjusted EBITDA increased 43% to $5.9 million, with the margin expanding to 11.8%.
• Customer activity reached records, but sportsbook margins were pressured: World Cup outcomes favorable to bettors reduced the football-betting margin to about 6.2%, below the typical 10%-11% range. Despite this, registrations, deposits and wagering volume grew sharply, while Meridianbet revenue increased 23%.
• Cash generation supported continued deleveraging: Operating cash flow more than tripled to $7.8 million, total debt fell 45% year over year to $26.7 million, and net debt declined 65% to $9.4 million. Management expects second-half constant-currency revenue growth of roughly 8%-10% and identified customer retention, Expanse Studios expansion and cost control as key priorities.

Meridian NASDAQ: MRDN reported second-quarter revenue growth, a second consecutive quarter of GAAP profitability and continued debt reduction, while management said sportsbook margins were pressured by bettor-friendly World Cup results.

Revenue rose 16% year over year to $50.2 million, although Chairman and Interim Chief Executive Officer William Scott said the result was modestly below the company’s prior guidance range. Net income attributable to Meridian was $2.2 million, or $0.17 per diluted share, compared with a net loss of $4.6 million, or $0.31 per share, a year earlier.

For the first half of 2026, revenue increased 17% to $100.3 million, surpassing $100 million for the first time in the company’s history, according to Scott. Adjusted EBITDA increased 43% to $5.9 million in the second quarter, while adjusted EBITDA margin expanded about 222 basis points to 11.8%.

World Cup Results Pressure Margins Despite Record Customer Activity

Scott said the company’s revenue shortfall relative to its outlook resulted from sports outcomes rather than weaker customer demand. Wagering volume, deposits and new customer registrations all reached records during the quarter, he said.

Meridianbet Group revenue climbed 23% year over year to $35.8 million, representing 71% of total company revenue. Segment operating income rose 91% to $6.1 million.

Zoran Milosevic, chief executive officer of Meridianbet Group, said new customer registrations exceeded 516,000, up 37% from the prior-year quarter. First-time depositors and total deposit volume each increased 24%, while betting gross gaming revenue rose 37% on record wagering activity.

However, sportsbook results were affected by favorable outcomes for bettors during the World Cup group stage, including winning favorites and high-scoring matches. Milosevic said Meridianbet’s overall World Cup margin was approximately 6.2%, below its typical football-betting margin of about 10% to 11%, but above the company’s internal expectation of 2% to 4% for the tournament.

Casino gross gaming revenue increased 12%, while casino wagering volume rose 27%. Casino hold was below the prior-year rate, including the effect of two major customer wins totaling more than $1.2 million during the quarter, management said.

Milosevic said the company is focused on converting and retaining customers acquired during the tournament. He estimated that roughly 170,000 of the approximately 519,000 registered accounts during the period were incremental registrations associated with World Cup marketing activity.

Operating Leverage and Segment Performance

Gross profit increased 10% to $26.9 million, while gross margin declined to 53.5% from 56.4% a year earlier, reflecting sportsbook margin compression and lower casino hold.

Selling, general and administrative expense fell 8.5% to $24.4 million despite revenue growth. SG&A represented about 49% of revenue, compared with approximately 62% in the prior-year quarter. Income from operations improved to $2.4 million from an operating loss of $2.3 million a year earlier.

The company’s RKings & Classics segment generated combined revenue of $10.8 million, up 4% year over year. GMAG revenue was $3.6 million, in line with the prior-year period. Within GMAG, Meridian said its B2B aggregation platform deployed 2,382 new games, up 13%, and added three providers.

MexPlay, the company’s consumer-facing online casino business in Mexico that is reported in GMAG, posted a 31% revenue increase. Registrations increased 50% and first-time depositors rose 53% from the prior year.

Expanse Studios, Meridianbet’s proprietary game studio, increased revenue 138% and gross gaming revenue 90%. The studio distributes nearly 90 proprietary titles across more than 1,800 active sites, Milosevic said. During the quarter, Expanse received certifications in Latvia, Colombia, Portugal and Slovenia, entered a North American distribution partnership with Break Gaming, and launched with MaxBet Serbia.

Cash Flow Supports Further Deleveraging

Chief Financial Officer Rich Christensen said operating cash flow more than tripled to $7.8 million from $2.4 million in the prior-year quarter. First-half operating cash flow rose 28% to $13 million.

Cash and cash equivalents totaled $17.3 million at quarter-end, while total debt was $26.7 million, down 45% year over year and 62% from the end of 2024. Net debt declined 65% year over year to $9.4 million, marking the company’s sixth consecutive quarter of debt reduction.

Net debt leverage fell to 0.39 times annual adjusted EBITDA from 0.53 times in the preceding quarter. Interest expense declined about 80% to $0.3 million, compared with $1.5 million a year earlier.

Christensen said Meridian repaid $2.8 million of debt during the quarter while continuing to invest in technology and operations without raising capital. Shares outstanding increased 0.23%, solely because of vesting from previously granted employee awards, he said.

Management said it will continue to reduce debt while retaining flexibility to use leverage for opportunities it considers attractive. The company is also evaluating capital allocation among growth investments and additional balance-sheet strengthening.

Second-Half Outlook

For the second half of 2026, Meridian expects constant-currency revenue growth of approximately 8% to 10% year over year. Management expects the fourth quarter to be the company’s strongest period of the year, citing major sporting events and holiday wagering activity.

Meridianbet is expected to grow faster than the consolidated outlook, Christensen said, while smaller raffle-ticket businesses are expected to grow more slowly. He said that mix shift could support profitability because Meridianbet has a higher gross-profit profile than the company’s other businesses.

Management identified customer conversion and retention, expansion of Expanse distribution, sportsbook pricing and risk discipline, technology investments and continued cost control as priorities for the remainder of 2026.

About Meridian (NASDAQ:MRDN)

Meridian Holdings Inc is engaged in the online gaming and betting business, providing sports betting, online casino, and gaming operations across multiple jurisdictions in Europe, Africa, and Central and South America. The company has three reportable segments: MeridianBet Group, GMAG, and RKings & CFAC. The MeridianBet Group segment includes retail and online sports betting, casinos, and related gaming operations. The GMAG segment focuses on the resale of third-party gaming content, mainly serving customers in the Asia-Pacific region.

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