Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rush Street Interactive Inc (RSI, Financial) reported a record-breaking quarter with revenue of $232 million, marking a 37% increase compared to the previous year.
- The company achieved its seventh consecutive quarter of improving profitability, with adjusted EBITDA reaching $23 million, a fivefold increase from the same period last year.
- RSI continues to attract new quality players efficiently, maintaining high player values, which contributes to growth and profitability.
- The company raised its 2024 revenue guidance by 3% and EBITDA guidance by 24% at the midpoint, reflecting strong financial performance.
- RSI announced a buyback of up to $50 million of its common shares, indicating confidence in its cash generation and financial stability.
Negative Points
- Despite strong growth, RSI faces potential headwinds from currency fluctuations in non-US markets, which could impact revenue.
- The company will be lapping the launch of Delaware, which may affect year-over-year growth comparisons in the future.
- RSI's Latin American market saw a 9% decrease in average revenue per user compared to last year, despite overall growth in user numbers.
- The recent tax increase in Illinois could lead to less investment and potential adjustments in market strategies.
- RSI remains cautious about entering the Brazilian market, indicating potential uncertainties or challenges in expanding there.
Q & A Highlights
Q: Can you discuss the LTV to CAC you're seeing in the US and Canada, particularly in the first two months of the football season, and explain the rationale behind implementing a buyback instead of a dividend?
A: Kyle Sauers, CFO: We continue to attract new players at attractive prices, with strong predicted LTVs. Regarding the buyback, we felt it was the right time due to better visibility into cash flow prospects. It provides flexibility to return capital to shareholders while maintaining the ability to execute on new market launches and consider M&A opportunities.
Q: With the business accelerating, how does this affect your thoughts on potential expansion, particularly in Latin America and other markets?
A: Richard Schwartz, CEO: We will direct capital to the highest returns and are evaluating exciting opportunities in Latin America. We expect to expand into additional markets in the region and North America, such as Alberta, which we hope to launch next year.
Q: Can you provide insights into the growth expectations for next year, considering the current business acceleration?
A: Kyle Sauers, CFO: We expect continued growth across all markets, with improving gross margins due to structural cost improvements and favorable revenue mix trends. We also anticipate leverage over marketing and G&A costs, leading to improved profitability and cash flow. A potential headwind could be lapping the Delaware launch.
Q: How are you retaining first-time depositors in Latin America, given the exceptional growth and event-driven deposits?
A: Kyle Sauers, CFO: Despite high user counts during events like Copa America, we maintained almost flat ARPMU, which is impressive. Our October trends show continued strong year-over-year user growth, indicating effective retention strategies.
Q: Regarding the recent tax increase in Illinois, have you observed any changes in operator behavior or market dynamics?
A: Richard Schwartz, CEO: While there's awareness of the higher tax rate, we haven't seen quantifiable changes yet. Some platforms may adjust their holds in different states over time, but the market remains strong for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
