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Wynn Resorts (NASDAQ:WYNN)
Q3 2021 Earnings Call
Nov 09, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Welcome to the Wynn Resorts third quarter 2021 earnings call. [Operator instructions] This call is being recorded. If you have any objections, you may disconnect at this time.  I will now turn the line over to Craig Billings, chief financial officer. Sir, you may begin.

Craig Billings -- Chief Financial Officer

Thank you, operator, and good afternoon, everyone. On the call with me today are Matt Maddox and Brian Gullbrants in Las Vegas. Also, on the line are Ian Coughlan Linda Chen, Ciaran Carruthers, Frederic Luvisutto, and Jenny Holaday. I want to remind you that we may make forward-looking statements under safe harbor Federal Securities laws, and those statements may or may not come true.

I'll now turn the call over to Matt Maddox.

Matt Maddox -- Chief Executive Officer

Thanks, Craig, and thank you all for joining us today. So first, I'd like to address my decision to leave the company. I've been at Wynn for 20 years and been the CEO for the last four. And I made a commitment in 2018 to this company and to the board of directors and what was likely one of the messiest transitions in corporate history that I'd do everything I could to keep the culture, to make the -- to get the company on firm footing and to ensure that we would emerge better than we were before.

Now, along that journey as we were making lots of progress in getting things stable, we bumped into a pandemic. And that was the time really when Wynn was able to shine. We became the beacon in the hospitality. People looked at us on what to do.

We paid all of our staff during the shutdown. We invested in our culture. We knew that by doing those things and continuing to be exactly who we are, that it would pay off over the long term, not just for our people and for our customers, but for our shareholders. I'd like to thank the unwavering commitment and support of the board of directors during these four years.

After we made this decision, they did ask me if I would remain on the Wynn Macau board to ensure stability and to assist with the concession renewal process there, which I agreed to do through 2022 and also the Wynn interactive board to make sure that we create lots of value for the Wynn Resort shareholders, which I also agreed to. I'm very happy to say that the board was -- is 100% behind and has picked the exact right person to replace me as I transition out in Craig Billings. Craig has been my right-hand man for five years now. He's been through the good, the bad, all of it, and he knows what to do.

He understands culture. He's not a guy that's going to build a big corporate infrastructure. He makes decisions fast and he feels the brand and the company really couldn't be in a better position going forward. And in fact, if you look at that, I think the proof is in this quarter.

If we just jump to the results and get the business here, in Las Vegas, we made $183 million of EBITDA. And that's not a whole bunch of cost savings that are going to go away over time and can you sustain the margin, etc. Only $15 million to $18 million of that $183 million came from cost savings. The rest of it, we're taking market share.

Over the last four years, we've opened a 400,000 square-foot convention facility. We built a new golf course. We have changed out 40 of our 60 retail stores to become the shopping destination. We restructured our club so that margins went from 7% to almost 30%.

We've raised our prices in our hotels seeing straight flow through. Every area we're taking share, casino included. We are not only outpacing all of our results, but we're taking share from the market. I knew coming in that we needed to cater to a demographic that was in more than 30 to 50 on top of our current demographic in the baby boomer generation.

We've opened lots of new restaurants. In fact, one of the new ones, Delilah. If you call right now, you can't get in until February. I've never seen anything like it.

And while that's one restaurant, it's an example of all the changes that we've made, that have really set the foundation for Wynn Las Vegas to take off like a rocket ship. And I think one of the most important aspects of a successful business is culture. People talk about that, but we all know in our business, only people make people happy. And if your employees believe that their future will be better because of the place they work and that their employer is going to take care of them when times get tough, you've harnessed the power of the universe.

And that's what we have going on right now. Look, I'll give you an example. Hospitality is experiencing extreme labor shortages right now throughout North America. It's a fact.

People are talking about it, but not at Wynn. We had four open servers in our restaurants, positions, open positions. Last month, we had 1,066 people apply. Sure, big tip job.

You might expect that. We had 22 open positions for casino cleaners last month. They clean the bathrooms, the casino, the restaurants. They make the place sparkle.

We had 2,015 people apply for those 22 spots. That is the sign of a good business. That's when you know you're going to win over the long term because your customers understand that loyalty and people want to be here. And so, I feel very good about where Wynn Las Vegas is in terms of its culture, its employees, the product and its future.

Looking on for Boston Harbor, same thing. Record results, $64 million of EBITDA. And we did the very similar that we did in Las Vegas during the shutdown, was we looked at things that weren't working. We had a buffet that was losing $12 million a year.

So we ripped it out, while we were shut down, and we built probably the world's best sports bar that once Massachusetts legalizes sports betting, it will be the best sports book on the East Coast hands down. We put in new food and beverage offerings. We reconfigured the entire casino. We changed out our casino loyalty program, and our database has been growing exponentially.

We have over 418,000 people in the database. And at the trajectory that it's growing now, that's probably going to double over the next two years. So Encore Boston Harbor, again, is only at the beginning of its growth and the North American assets really couldn't be in a better position. There was a little bit of concern that maybe the stimulus money or pent-up demand, etc., was causing some of this? And that may be true for the third quarter and what we experienced in the summer, but it's certainly continuing.

In October, Wynn Las Vegas had its best month on record, highest EBITDA, highest margin and we held below our normal range. Same at Encore Boston Harbor. The group business is coming back. We've seen groups taking up over 30% of our room nights in August and September.

And the way that we're running these facilities now and the way that we're yielding and being unrelenting on price because people like the quality, the flow-through is happening. Just last weekend, our average rate was $780 in Las Vegas, and we're at 99% occupancy. And that is continuing into the future because we're taking market share and Las Vegas itself is growing. Turning to Macau.

We've had, as everyone in the market has had fits and starts there as to the business. But what has been very encouraging over the last month has been the consultation process with the government. It's been open, it's been transparent, it's been productive, and we feel very good about the future of Macau and our position in Macau. Looking at Wynn Interactive.

We launched lots of new products this quarter that we're very proud of. We made great progress in Arizona with first-time depositors. And we're seeing good customer feedback and our retention is quite strong. However, the market is really not sustainable right now.

Competitors are spending too much to get customers. And the economics are just not something that we're going to participate in, in the short term. So while we built the brand, we launched the product in the third quarter, we're going to be focused on building a long-term business that's sustainable, that is not losing lots and lots of money. So we are shifting our strategy to think about the future, think about the long term, think about cash preservation.

And we remain very confident that we'll create significant value for the Wynn Resort shareholders with our digital strategy. With that, I'm going to go ahead and turn it over to Craig. Congratulations, Craig.

Craig Billings -- Chief Financial Officer

Thank you, Matt.

Matt Maddox -- Chief Executive Officer

And I'll let him go through some more details.

Craig Billings -- Chief Financial Officer

Thank you. Like everyone in the company. I've admired your leadership over the course of the past four years. More than anyone, you know the dedication and talent of the thousands of folks who make up the Wynn team, and I'm honored to have been asked to lead that team.

Turning to the quarter. At Wynn Las Vegas, we generated $183.4 million of adjusted property EBITDA on $476 million of operating revenue. Overall, our hotel occupancy reached 83% in the quarter, with 93% occupancy on weekends. Importantly, we stayed true to our luxury brand and have resisted dropping rate with overall ADR reaching $392 during the third quarter of '21, nearly 30% above Q3 2019 levels.

Our other non-gaming business saw broad-based strength across F&B and retail, which was also well above pre-pandemic levels. In the casino, our Q3 '21 slot handle was 31% above Q3 2019, and table drop was 18% above Q3 '19, despite still suppressed international play due to COVID-related travel challenges. The team in Las Vegas has done a great job of controlling costs without negatively impacting the guest experience, delivering a record adjusted property EBITDA margin of 38.5% in the quarter. Opex per day was $3 million in Q3 '21, approximately $250,000 per day below Q3 2019 levels despite the 19% increase in revenue.

As new high-margin business like groups and convention returned to the property, we expect opex to increase modestly, but we remain committed to maintaining the cost structure that appropriately balances margins and our exacting service standards. In Boston, we generated another record quarter with adjusted property EBITDA of $64.6 million in Q3 on a record EBITDA margin of 33.6%. We remain very disciplined on the cost side there, too with opex per day, excluding a $3 million benefit from a few onetime items of $950,000 in Q3 '21, a decrease of over 25% compared to $1.3 million per day in Q4 '19 and a modest increase relative to 2Q '21. Our Macau operations delivered $10.2 million of EBITDA in the quarter on $312 million of operating revenue, while business in the quarter was challenging due to the evolving COVID situation, we remain disciplined on costs.

Our opex, excluding gaming tax and the reversal of certain performance-based incentive accruals in the third quarter was approximately $2.1 million per day. We continue to be well positioned to drive strong operating leverage as the business recovers. Turning to Wynn Interactive. In Q3, the business generated approximately $645 million in total turnover, disproportionately weighted to September.

In late August, we launched a number of key product improvements, which have been well received by customers. On a normalized basis, Wynn Interactive is now run rating over $170 million of gross revenue. During the quarter and since, we have achieved several other key milestones for the business, including launching day one in Arizona, where we drove over 26,000 first-time depositors through September 30, securing a number of additional market access agreements, obtaining a license to operate in the state of New York and becoming an official sports betting partner of the NFL. While sports betting remains an exciting, high-growth market and will potentially be a $30 billion to $40 billion TAM over time, the marketplace is proving to be very competitive with multiple operators deploying meaningful marketing dollars, driving high cost per acquisition and significant customer bonus offers.

In light of this dynamic, we are intentionally pivoting our approach to scaling, taking a more measured and long-term focus to grow a healthy and sustainable business, as Matt mentioned. Thus, we expect our Q3 and Q4 EBITDA burn, driven heavily by our branding campaign and preopening user acquisition in Arizona will decline materially beginning in Q1 2022, as we focus on cost per acquisition that is commensurate with customer lifetime values. We continue to believe in our team, our product and the longer-term opportunity. And there's certainly a path to grow our business in ways that create value for Wynn Resorts shareholders.

But the current combination of large-scale brand spend, performance marketing spend and customer bonuses that we see in the marketplace does not drive unit economics that meet our return requirements. Turning to the balance sheet. Our liquidity position remains very strong with global cash and revolver availability of over $3.7 billion as of September 30. In Macau, we had approximately $1.8 billion of available liquidity as of September 30.

And in the U.S., we had total available liquidity of approximately $1.9 billion as of September 30. As previously announced, during the quarter, Wynn Macau, Limited entered into a new $1.5 billion senior unsecured revolving credit facility that matures in 2025. The arrangement includes broad participation by our group of supportive existing lenders, including local and international banks. Borrowing under the new facility, along with $200 million of cash on hand, we are used to refinance and retire our existing senior secured credit facility.

Finally, our capex in the quarter was $103 million, and we remain prudent with respect to capex, while we gain further confidence in the recovery. As a reminder, we are limited in what we can say about Wynn Interactive due to the live S-4 that we have on file. With that, we'll now open up the call to Q&A. Operator?

Questions & Answers:


Operator

[Operator instructions] Our first question is from Carlo Santarelli with Deutsche Bank. You may go ahead.

Carlo Santarelli -- Deutsche Bank -- Analyst

Hey, everyone. Thank you, and, Matt, congratulations. Craig, congratulations as well. Guys, obviously, you spent some time talking about Wynn Interactive and fully appreciating that you can't say much where -- given where you are in the process.

The decision to pivot, is that something whereas you think about the way the market is shaping up and the -- what I would assume, you deem as unprofitable cohorts of customers that are being acquired right now by others. Is that something that, in your view, changes in the next six to nine months? Or is it something where you'll wait until you actually see kind of that change start to happen?

Craig Billings -- Chief Financial Officer

Yes, it's a great question, Carlo. As we've talked about before, we're really focused on lifetime value versus cost per acquisition. And when that ratio is favorable, we're more than happy to invest to drive long-term profitable growth. If you materially overshoot on CPA or offer noneconomic promotions, then you can end up upside down on a customer pretty quickly, which obviously isn't very shareholder-friendly.

In the current environment, there are certainly opportunities for us to do ROI-positive acquisition. They absolutely exist. It's really a question of scale. So if you're not trying to be aggressive and drive headline market share with large-scale brand spend, performance spend, hyper-aggressive customer promos, there are absolutely opportunities to grow the business over the course of the longer term.

Carlo Santarelli -- Deutsche Bank -- Analyst

That's helpful. And then, Matt, maybe this one is for you as you kind of talked about the consultation and some of the encouraging things that were coming out of those meetings. Do you have any sense coming out of there to the extent that you could share when you're starting to think about the next steps in the process and potentially some more visibility into, not only the timeline of the process, but maybe some of the things that we should expect coming out of it?

Matt Maddox -- Chief Executive Officer

What I can tell you is when the government announced the consultation process, it was very structured to add a beginning timeline and when the meetings are going to be scheduled and everything happened exactly as they had laid out. And so, we've just been very happy with how open it's been and how constructive it's been. And I think that that is going to continue throughout '22 as Macau really focuses on the long-term health and stability, which they have continued to say, of the industry and of the region. So I can't give any specific dates or timelines, but what I can tell you is we're very confident in the process.

Carlo Santarelli -- Deutsche Bank -- Analyst

That's great. Thank you both.

Matt Maddox -- Chief Executive Officer

Thanks, Carlo.

Operator

Thank you. The next question is from Joe Greff with J.P. Morgan. You may go ahead.

Joe Greff -- J.P. Morgan -- Analyst

Hello, everyone. Matt, congratulations, best of luck. It's been a long time. And Craig, very happy for you, congratulations on your promotion.

Craig Billings -- Chief Financial Officer

Thanks, Joe.

Joe Greff -- J.P. Morgan -- Analyst

Matt, do you want to give any more description to the reason why you're stepping away now? I'm not sure the statement, the press release really kind of delved into that in great detail, and maybe there are reasons for that. And then, my second question, Craig, I know you have opinions on casino real estate monetization. Given just the valuations we've seen in Las Vegas and elsewhere in regional casino markets, I was hoping you can give us your updated thoughts, particularly maybe with particular attention to EBH.

Matt Maddox -- Chief Executive Officer

Yes, sure, Joe. It's actually -- there's nothing more to it than what I laid out at the beginning of this call. I've been here for 20 years. I was Steve Wynn's right-hand guy for a long time.

And when that transition happened. I made the commitment that I was going to make sure this company didn't lose what it was built on, which was excellence, service-driven and just being the best. And that's what I wanted to do. That's what I wanted to achieve.

And we've done that. Now the pandemic, frankly, elongated my program a little bit because when that hit, I realized you don't need to read through that and make sure that we come out better than ever. So it's really one of those -- it's been 20 years exactly what I wanted to achieve, we've done. And I feel like the management team that's in place, the people that are in place and where this company is that it's the right time for me to go do something else, which I'm quite excited about.

And it's -- and Craig is the exact right person to step in. There's really nothing more to it. I committed to four years, and that's my four-year anniversary.

Craig Billings -- Chief Financial Officer

And on the real estate side, Joe, you know our position. Our position is -- over any reasonable period of time, our valuation appropriately reflects the value of our real estate, then we're always more content to control that real estate and be able to invest in that real estate. And really, that hasn't changed to the extent that it does change, then obviously, we'll have to consider what's in the best interest of shareholders.

Joe Greff -- J.P. Morgan -- Analyst

Great. Thank you.

Operator

Thank you. The next question is from Thomas Allen with Morgan Stanley. You may go ahead.

Thomas Allen -- Morgan Stanley -- Analyst

Thank you. And I just wanted to reiterate the congratulations to you both, on Matt, what's been a great career, and, Craig, congratulations on the new role.

Craig Billings -- Chief Financial Officer

Thank you.

Matt Maddox -- Chief Executive Officer

Thanks.

Thomas Allen -- Morgan Stanley -- Analyst

So the U.S. results are really stellar back in mid-2019, you guys had set targets of $515 million for Vegas and $275 million for Boston. Any updated thoughts around the kind of longer-term outlook for those properties?

Craig Billings -- Chief Financial Officer

Well, yes, sure, I'll jump in. And I think that given what we are seeing now, those estimates feel quite conservative. And I think it's pretty clear. What we achieved in Las Vegas was it's market share taking and it's a restructure of the business.

It's not -- I think that we all sit around and think our normalized margins are between 35% and 40% in this market. And so, we didn't go out and cut a whole bunch of cost and slowly bring people back, trying to squeeze every last dollar. No, we went out and got more customers. And I think that's going to continue.

And the same at Encore Boston Harbor.

Matt Maddox -- Chief Executive Officer

There isn't one piece of the business, Thomas, that we haven't touched and addressed and changed and adapted. So really, these two assets are firing on all cylinders.

Thomas Allen -- Morgan Stanley -- Analyst

Perfect. And then, just following up on the transition. Any thoughts on the new CFO? And then Craig, you can still run Wynn Interactive, how are you thinking about that?

Craig Billings -- Chief Financial Officer

Sure. We're fortunate at the company that we have a reasonably deep bench at the corporate level, and we've done -- we've hired some real talent on the Wynn Interactive side. So we'll be coming back to you soon with the management structure, with the revised management structure and an outlook, and we'll talk to you about it then. Stay tuned.

Thomas Allen -- Morgan Stanley -- Analyst

All right. Thank you.

Operator

Thank you. The next question is from Shaun Kelley with Bank of America. You may go ahead.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Great. Good afternoon, everyone. And yeah, Matt, Craig, I offer my congratulations as well. Matt, it's been a lot long number of years.

So look forward to hearing what's next. Craig, I'd love to hit on a couple of the comments, and I know there's only so much you can probably cover right now on Interactive. The comment specifically on CPAs. I mean I know you know this formula better than probably anyone else on this call.

Can you talk about the prevailing like just level of what you're seeing out there? Because one challenge we, I think, all run into as analysts is the formula kind of spits out whatever in a way, a little bit of whatever you want. So the more you spend on marketing, you can justify it if your LTV is higher, and it's hard for us to kind of independently validate. So just a little bit of thought around like what is that prevailing level of spend out there and sort of what do you maybe want it to be to make the model or math work to what you think is going to be a profitable long term?

Craig Billings -- Chief Financial Officer

Sure, Shaun. Yes, we don't quote specific CPAs or specific LTVs. LTVs of course, are a pretty lengthy forward-looking estimate. What I would say is that you really have kind of three elements that impact this, right? You have brand spend, you have performance spend, where you're actually buying digital ads to bring customers directly to the product.

And then, you have the underlying promotion that you're providing to the customer. And some participants in the market have structural advantages in those areas. Some participants don't. And so, when you're pulling all three of those levers, into a very, very aggressive market where there's a ton of competition and a ton of folks doing the same thing, it can become particularly difficult, particularly in states where you're entering the market late.

So in Arizona as an example, where we did 26,000-plus FTDs over the course of September that's a great outcome. Other states that -- where maybe you're entering or scaling a little bit later, it becomes much more offer-driven. And you can pretty -- again, pretty quickly get upside down. So I think what we're focused on is leveraging the advantages that we have, right? We have a database, we have brands.

And to the extent that we're not aggressively chasing every single lever, we can build a business over the longer term. That's a great business into what will eventually be a really, really strong TAM.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

And then maybe a pivot for my follow-up, but just focused on or looking out to Las Vegas for 2022. You obviously have a shiny brand-new convention center that's never been fully able to be utilized. Can you talk a little bit about how you expect that to ramp in '22? And when we might be at a level that you might consider run rate or really showing the potential of all the levers that you have there?

Matt Maddox -- Chief Executive Officer

Brian, why don't you take that?

Brian Gullbrants -- President

Sure. The group rooms that we have right now are pacing ahead for '22 and even for '23, all at solid ADRs. The sales team is doing an amazing job. And I think we continue to see the interest level just spiking for some reason.

It's fantastic. We even have short-term interest. So very solid on the group side and foresee this continuing.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Matt Maddox -- Chief Executive Officer

Thanks, Shaun.

Operator

Thank you. The next question is from Stephen Grambling with Goldman Sachs. You may go ahead.

Stephen Grambling -- Goldman Sachs -- Analyst

Thanks. I'll offer my congrats and best wishes as well. Two follow-ups to earlier questions. First, on the Macau, while the timing of recovery is uncertain, given your confidence in the concession renewal, what are some of the things that you're doing now or plan on doing to change the positioning of the assets to cater more to premium mass?

Matt Maddox -- Chief Executive Officer

Yes, sure. Ian, why don't you jump in and take that.

Ian Coughlan -- President, Wynn Macau

So over the last three years, we've been pivoting luxury assets that were formally taken up by junket operators. And we've been opening them up for premium mass, whether it's villas in our towers, high-end fleets, and general gaming spaces. And we are fortunate to have the best assets and best service in market. So the pivot is very, very straightforward for us.

Stephen Grambling -- Goldman Sachs -- Analyst

Great. And then, maybe as an unrelated follow-up on real estate value. Craig, I appreciate the response on valuation. So if we were to look at Vegas and Boston assets separately, are the two markets seeing different kind of potential differences in capital intensity and valuation from where you sit today?

Craig Billings -- Chief Financial Officer

Well, on the capital intensity side, naturally, Boston is going to be less capital intensive. It's just the nature of the business there and the nature of the asset relative to Vegas, right? Vegas is a market of pretty consistent reinvention. And as Matt mentioned, we've done an incredible job at that. On the valuation side, again, I think you have to look over any reasonable period of time and look at the value of the real estate within the broader business.

So we watch that very closely. We watch it all the time, and we're very conscientious of the underlying real estate value. But that has historically been our position, and it remains unchanged.

Stephen Grambling -- Goldman Sachs -- Analyst

Do you think that the competitors' response to -- sorry competitors actually pursuing this have actually changed the competitive environment perhaps to your beneficiary?

Craig Billings -- Chief Financial Officer

Have they changed the competitive environment? I guess it's just a form of financing, right? It's no different than a piece of debt. It just happens to be, over time, a more expensive piece of debt than we observed in the bond markets today. At the end of the day, each operator is going to make their own decision and form their own strategy. Being an opco has its advantages and has its disadvantages depending upon what's happening in the broader business.

So I don't think it's an operational question other than the willingness to continue to reinvest in your business and how you do that, but I don't think it's a day-to-day operational question per se.

Stephen Grambling -- Goldman Sachs -- Analyst

Fair enough. Thanks.

Operator

Thank you. The next question is from David Katz with Jefferies. You may go ahead.

Cassandra Lee -- Jefferies -- Analyst

Hi. This is Cassandra asking on behalf of David. First, congratulations to both Matt and Craig on behalf of David. And thanks for taking the questions.

So I would like to ask about New York. You've got the license yesterday, just given the high tax rate at 51% and your comment around pivoting in your approach to scalability. So how are you thinking about your launch in New York?

Craig Billings -- Chief Financial Officer

Thank you . Yes, we were really pleased to be awarded that license yesterday. And New York clearly has the potential to be one of the largest addressable markets in the U.S. Given the tax rate, as you point out, it's a prime example of a market where you need to be incredibly prudent with respect to marketing and bonusing spend, which obviously, as you also pointed out, a theme that I discussed pretty heavily in my prepared remarks.

We have a great database in New York, particularly in the more affluent areas of the state. And certainly, to the extent that you're prudent with marketing spend and bonusing, there's the opportunity to build a business there over time. But no doubt, the tax rate is a headwind that we all have to acknowledge.

Cassandra Lee -- Jefferies -- Analyst

Got it. And if I may follow up, I think there is a request for information. I mean New York for downstate license. Any thoughts around potentially pursuing that or pursuing other organic or greenfield opportunities for Wynn?

Matt Maddox -- Chief Executive Officer

Yes. This is Matt. And Craig and I have, for the last five-plus years, we work on these things together, and that is what Wynn does. So I think we will be participating in the New York process up until it seems either like a good deal or uneconomic, and it's hard to know.

But that's one that we're going to keep a close eye on. And there are other potential new jurisdictions that could be really exciting, actually. And what's so great about this company is our design team and architecture team, over 100 people that are responsible for Mirage and Treasure Island and Bellagio and Wynn, basically the modern-day integrated resort are all intact and excited. And you can't build something new if you haven't built these things in the past, and our team is really good at that and understands how to make these things work, both financially, but more importantly, for the customers.

So If a new opportunity comes up, that makes sense for Wynn and the Wynn brand, I think that we will -- the team will continue to look at it.

Cassandra Lee -- Jefferies -- Analyst

Got it. Thank you very much for taking my questions.

Craig Billings -- Chief Financial Officer

Thank you. Operator, we have time for one last question.

Operator

Thank you. Our last question is from Robin Farley with UBS. You may go ahead.

Robin Farley -- UBS -- Analyst

Great. Thanks for taking the question. Craig, let me add my congratulations on to everyone else's on the new role. I had a question about the potential gaming law changes in Macau.

I'm just wondering what your view is on if government approval is required for dividends, would that be a concern in terms of ability to get shareholders' return on the investment there? Or would you be comfortable that that would not be a factor that would come into play.

Matt Maddox -- Chief Executive Officer

Robin, it's Matt. I think everyone is focused on that issue, and the industry is fairly united. And like I said, I think the government has been very open and transparent. And in fact, in one of the consultative hearings, they talked about the need to balance the employment market and stability of Macau with returns for shareholders, which I think is perfectly logical and makes a lot of sense.

And Linda, you're attending these meetings in person. What are your thoughts?

Ian Coughlan -- President, Wynn Macau

This is Ian. We've been very impressed with the partnership orientation of government with their pragmatism and also the progress that's being made. It's been very transparent. They've allowed us to engage directly in-person and also in writing.

We've shared our concerns. We don't have clarity on a number of the issues at this point, but we will get clarity further along the way. All of the concessions have similar concerns. And we believe that the fact that we've aired them and share them that they will be given very serious consideration by government.

Ultimately, we're in partnership with government. We're also very aware of the growing regional competition, particularly with Japan now picking up. So there's a desire for stability going forward. And they understand that we're businesses that need to reinvest and continue to develop.

So we feel a lot of support from government. It's a process. We'll get more information further down the line, but we're very confident that they have our best interest at heart.

Robin Farley -- UBS -- Analyst

That's great. Can I follow up on a quick one related to the online gaming strategy, if I could. I'm just curious with the approach of so many online betting operators, is that revenue matters early and at not -- I would say, not at any cost, but that -- and the market seems very willing to value on multiples of revenue. And I mean, I'm old school, and I think as you do that profitability matters more than that.

But what -- how do you -- I guess, what are your thoughts about if you don't focus on that in the early stages, you mentioned that entering late is more offer driven maybe than getting it on day one. And so, it seems like that suggests that you do see a trade-off of -- that there will be expense later if you don't sort of capture the topline market share upfront. So I wonder if you could just put some context around that.

Craig Billings -- Chief Financial Officer

Sure. Sure, Robin. First, let me say that we fully intend to be day one in every market that we address. And so, we'll be there.

We'll be there day one. The important thing to keep in mind is it's not so much "income statement profitability." Its profitability of cost per acquisition versus lifetime value. It's making sure that every first depositor that you drive or every cohort of first depositors that you drive are ultimately profitable on a lifetime value basis. So that's where we're focused.

It's much more about the return on the spend, the return on the ad spend. And certainly, we believe that we have the ability to do that over time. It doesn't mean that we're going to intentionally enter markets late.

Robin Farley -- UBS -- Analyst

And I wasn't suggesting that you would, but just that maybe holding back on the spend would mean that the revenue market share wouldn't be as high as the profitability market share. But that's helpful context. Thank you very much.

Matt Maddox -- Chief Executive Officer

Sure. No problem.

Craig Billings -- Chief Financial Officer

All right, everybody. Thank you for joining today. We'll talk to you next quarter. Thanks.

Operator

[Operator signoff]

Duration: 39 minutes

Call participants:

Craig Billings -- Chief Financial Officer

Matt Maddox -- Chief Executive Officer

Carlo Santarelli -- Deutsche Bank -- Analyst

Joe Greff -- J.P. Morgan -- Analyst

Thomas Allen -- Morgan Stanley -- Analyst

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Brian Gullbrants -- President

Stephen Grambling -- Goldman Sachs -- Analyst

Ian Coughlan -- President, Wynn Macau

Cassandra Lee -- Jefferies -- Analyst

Robin Farley -- UBS -- Analyst

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