Meridian Holdings — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third-quarter revenue was $46.0 million, a 3% decrease year-over-year; nine-month revenue grew 10% to $146.3 million.
• Net loss attributable to Meridian Holdings for the quarter was $13.3 million ($1.05 per share), including $11.5 million in non-cash impairment charges; net loss for the nine months was $8.8 million ($0.70 per share).
• Adjusted EBITDA (non-GAAP) for the quarter was $0.4 million, down from $4.8 million in the prior-year period; nine-month Adjusted EBITDA was $12.6 million, down from $14.0 million.
• Gross profit for the quarter was $24.8 million (54.0% margin), down from $26.4 million (55.8% margin) in the prior year; nine-month gross profit rose 6% to $79.8 million.
• Operating cash flow for the nine months was $17.7 million, up 3% year-over-year; free cash flow (non-GAAP) increased to $10.9 million from $2.5 million in the prior period.
• Total debt decreased 47% to $24.1 million; net debt (non-GAAP) fell 65% to $8.1 million, marking the seventh consecutive quarter of deleveraging.
• Cash and cash equivalents were $16.0 million as of September 30, 2026, compared to $7.8 million in bank and other loans.

Guidance and Future Outlook:

• Full-year 2026 revenue outlook is updated to $195 million–$198 million, assuming no resumption of operations in Brazil.
• Management expects the fourth quarter, historically the strongest, to see higher betting volume and continued momentum in online casino revenue.
• The company anticipates a modest increase in sports betting revenue in Q4 compared to Q3, alongside continued growth in online casino.
• Goals include improving margins and driving operational efficiency through targeted marketing, retail footprint optimization, and higher-margin online casino growth to return to profitability levels seen in the first half of 2026.

Business Segments and Product Lines:

• Meridianbet Group revenue grew 16% for the nine months to $103.8 million, driven by online casino revenue up 21% to $46.9 million.
• Online casino revenue in Q3 rose 17% to $17.1 million; new registrations increased 25% to 458,680, and customer deposits rose 9% to $101.1 million.
• Expanse Studios revenue from third-party operators grew 114% in Q3, with 14 new games released and 101 proprietary titles as of September 30, 2026.
• RKings and Classics for a Cause combined revenue fell 19% in Q3 to $9.1 million, impacted by market competition and regulatory changes in Australia.
• GMAG (including MexPlay) revenue rose 5% in Q3 to $3.7 million; MexPlay revenue grew 55% to $0.9 million with first-time depositors up 35%.
• Online sports betting revenue fell 15% in Q3 to $8.7 million due to customer-favorable results lowering margins to 7.4%; however, nine-month online sports betting revenue rose 12% to $33.5 million.

Market and Competitive Landscape:

• Brazil suspended fixed-odds betting, including online casinos, via Provisional Measure No. 1,394/2026, forcing operators to go offline and return player balances.
• The company wrote off the Brazilian license and related intangible assets ($5.5 million) and does not expect to resume operations in Brazil in 2026.
• Amendments to Australia's Interactive Gambling Act take effect January 1, 2027, requiring business model changes for Classics for a Cause.
• RKings and Classics for a Cause faced reduced effectiveness in digital advertising channels and changes in customer purchasing behavior.

Risks and Challenges:

• Customer-favorable sports results significantly reduced online sports betting margins in Q3.
• Higher operating costs included marketing for the FIFA World Cup and bad-debt expenses at GMAG.
• Regulatory uncertainty in Brazil and upcoming Australian gambling law changes pose operational risks.
• Continued operating losses at the reporting unit holding RKings and Classics for a Cause led to a $5.9 million goodwill impairment.

Management Commentary and Tone:

• CEO Zoran Milosevic described the quarter as challenging but noted the core business remains healthy and generates cash to fund growth.
• CFO William Scott highlighted the company's ability to reduce debt using internally generated cash without raising equity capital in 2026.
• Management expressed confidence in the company's cash position being sufficient to meet working capital and capital expenditure requirements for at least twelve months.
• The tone acknowledges the impact of one-off adjustments while emphasizing continued growth in online casino and operational efficiency initiatives.

Other Key Points:

• The company extended the remaining $15.6 million of acquisition consideration owed to former owners of Meridianbet Group (related parties) to November 1, 2031, with no interest.
• No equity capital was raised in 2026, and no share repurchases were made in the quarter.
• Shares outstanding were 12,681,533 as of September 30, 2026.
• Interest expense for the nine months fell 74% to $0.9 million.
• The company repaid $9.0 million of debt during the first nine months of 2026.