Meridian (NASDAQ:MRDN) reported a third-quarter loss as customer-favorable sports betting results, higher costs and the suspension of operations in Brazil weighed on performance. The company also revised its 2026 revenue outlook.
Revenue fell 3% from a year earlier to $46 million, while the net loss attributable to Meridian Holdings was $13.3 million, or $1.05 per share. That compared with net income of $0.6 million, or $0.05 per share, a year earlier. The latest quarter included $11.5 million in non-cash impairment charges.
Adjusted EBITDA declined to $0.4 million from $4.8 million. For the first nine months of 2026, revenue rose 10% to $146.3 million, although adjusted EBITDA fell to $12.6 million from $14 million.
Chief Executive Officer Zoran Milosevic said the company is focused on improving margins and operating efficiency to return to the profitability it reported in the first half of the year.
Brazil Suspension and Sports Betting Margins
Meridian wrote off $5.5 million associated with its Brazilian gaming license and related intangible assets after Brazil’s ban on fixed-odds betting, including online casino operations. The company suspended its operations there and does not expect to resume them during the remainder of 2026.
Another $5.9 million of goodwill impairment related to the reporting unit comprising gaming aggregation business GMAG, U.K. prize competition business RKings and Australian trade promotion business Classics for a Cause. Management attributed the charge to continued operating losses in that unit.
President and Chief Financial Officer William Scott said the company considered the Brazil write-off prudent given the uncertainty surrounding the regulatory situation. Milosevic said Meridian is maintaining a minimal local presence and pursuing legal avenues to resume operations.
Scott said Brazil represented less than 1% of overall revenue, while weakness at RKings and Classics for a Cause had a greater effect on the outlook.
Online sports betting revenue fell 15% to $8.7 million in the quarter, despite higher betting volume, as the margin declined to 7.4% from 8.2% a year earlier. Milosevic said World Cup results affected July, while both August and September were also unfavorable. He said the start of the European soccer season can be difficult for betting operators because team statistics are less established.
Casino Growth Offset by Higher Costs
Meridianbet Group, which accounted for 72% of quarterly revenue, increased sales 2% to $33.1 million. Its operating income fell to $0.7 million from $4.6 million because of lower sports betting margins and higher costs.
Online casino revenue rose to $17.1 million from $14.6 million a year earlier and $14.5 million in the second quarter. For the first nine months, online casino revenue grew 21%. Milosevic said Meridian added game providers during the quarter and now offers more than 2,500 games.
Quarterly selling, general and administrative expenses increased 5% to $28.2 million. The rise included $0.9 million in additional bad debt expense, primarily in GMAG’s business-to-business gaming content resale operation, as well as higher marketing, rent, utilities and salary costs.
RKings and Classics for a Cause reported a combined 19% revenue decline to $9.1 million, though their operating result improved from a small second-quarter loss to a small third-quarter profit. Milosevic said the company is working to change the Classics for a Cause business model ahead of a change in Australian trade promotion law on Jan. 1, 2027.
MexPlay revenue grew 55%, while first-time depositors increased 35%. Milosevic said Meridian expects to separate MexPlay in its reporting for the fourth quarter.
Outlook and Cash Flow
Meridian now expects full-year revenue of $195 million to $198 million, revising its prior expectations for second-half growth. The outlook assumes no Brazilian operations in the fourth quarter and continued low revenue at RKings and Classics for a Cause.
Scott said the company expects a modest increase in fourth-quarter sports betting revenue from the third quarter, supported by higher betting volume, alongside continued online casino growth. Management did not provide 2027 guidance.
Operating cash flow rose 3% to $17.7 million in the first nine months. Free cash flow, after capital expenditures and lease payments, increased to $10.9 million from $2.5 million a year earlier. Net debt fell 65% year over year to $8.1 million, marking the seventh consecutive quarter of net debt reduction.
The company also extended the maturity of $15.6 million in acquisition consideration owed to former Meridianbet Group owners, who are related parties, to Nov. 1, 2031. The amount carries no interest.
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.
