MEEG’s Earnings Dimmed by Increased Costs

• Main Event Entertainment Group (MEEG) reported a 26.5% decline in earnings for the quarter ending in January, reflecting rising costs and sluggish revenue growth.
• MEEG’s revenue grew just 3.0% to $585.03Mn, reflecting higher revenues from previously underperforming segments, which according to management reflects the success of targeted expansion efforts.  Despite these contributions, the company is yet to reach its Q1 2023 revenue peak of $626.99Mn.
• Direct costs rose by 12.5%, primarily driven by event execution costs, infrastructure upgrades, additional non-recurring expenses incurred during the period, and higher labour costs associated with service delivery. With direct costs outpacing revenue growth, gross margin contracted by 4.1 percentage points to 51.6%.
• Operating expenses also outpaced revenue growth, rising 7.5% to $218.72M – from $206.35M in Q1 2024. This increase was driven by planned administrative improvements, a substantial one-time expense for the Company’s 20th Anniversary celebration, higher personnel costs, increased security and fuel expenses and a 51% rise in amortisation expenses to $11.36M due to renegotiated lease agreements and the addition of a new lease.
• MEEG’s lower Q1 2025 earnings follow the 66.2% decline in earnings in FY2024, which the company also attributed to “lower gross profit margins and increases in certain cost categories aligned with its growth strategy”.
• MEEG entered the 2025 fiscal year with a strategic focus on expanding revenue streams and strengthening client relationships. The company plans to improve operational efficiencies while driving revenue growth through deeper market penetration and strategic partnerships. Additionally, there are plans to use its owned events as a key revenue growth driver.
• Amid the weaker earnings, MEEG’s stock price has depreciated by 7.7% since the start of the calendar year to close Monday’s trading session at $10.80.

(Source: JSE & NCBCM Research)