Rush Street Interactive, Inc. Q2 FY2024 earnings call

• Strong revenue and EBITDA growth: Second quarter revenue was $220 million, up 34% Y/Y, and EBITDA was $21.4 million, a $20 million improvement Y/Y. Both were quarterly records.
• MAU growth: North America MAU grew 24% Y/Y, Latin America MAU grew 79% Y/Y. Maintained high payer value with differentiated user experience.
• Revenue diversification: Revenue from markets outside IL and PA was 59% of total, with higher gross profit margin in those markets.
• Marketing efficiency: Set records for new depositors in US and Latin America while cutting marketing spend. Marketing spend was $36.3 million, down 10% Y/Y.
• New market launches: Live in Peru for iCasino and online sports betting; ongoing evaluation in Brazil; momentum in Alberta, Canada for potential near-term launch.

Second quarter revenue was $220 million, up 34% year-over-year. iCasino revenue grew more than 40% year-over-year and online sports betting more than 25%. In North America, MAUs were 164,000, up 24% year-over-year, while ARPMAU was up 6% year-over-year to $380. In Latin America, MAUs were up 79% to 288,000, while ARPMAU was down 2% compared to the prior year period. Revenue from markets other than Pennsylvania and Illinois accounted for 59% of revenue during the second quarter, with gross profit margin in those markets reaching 47% during the quarter.

• Raised full-year revenue guidance: Now expects $860 million to $900 million (midpoint $880M), up from prior guidance.
• Raised full-year EBITDA guidance: Now expects $64 million to $72 million (midpoint $68M), up from prior guidance, noting impact of Illinois tax increase and Peru launch but still upward revision.

• Legislative risks: Efforts to alter operating models in states like Delaware and Illinois could impact operations.
• Brazil regulatory uncertainties: Awaiting clarity on tax framework and gray market treatment post-regulation.
• Competitive intensity: Potential impact of marginal tax rate changes and competitive spend in certain markets.

Q: Hey, great, great for taking my questions and great quarter again. Just a question on promotional velocity and iGaming. Have you seen a material difference in the industry? And then just on improving CAC trends, I think we've heard from multiple operators now they're seeing lower CAC on a similar level of marketing. So is there something in the industry that's going on that's driving lower CAC?

A: Richard Schwartz: We're in a more rational market now. We sustained and grew in prior irrational market. Our CAC has continued to improve. Other competitors may be spending less on marketing. We've improved in finding high-value players. Kyle Sauers: CAC has improved nicely in both sports-only and multi-product markets.

Q: Good afternoon, everyone. I want to follow-up on Chad's question there on spending money to gain more customers. Is the talk around marketing increasing in the back half of the year or just you being opportunistic based off of kind of some of those trends where you're acquiring easier or was this planned spend just ahead of when the more important periods of the year?

A: Richard Schwartz: Combination of event and seasonally driven. Olympic campaign in Canada, football season. More dynamic than opportunistic. We're making smart investments in marketing. Kyle Sauers: We modify based on value of players and cost to attract them.

Q: Thank you. Hey Richard, Kyle. Great job on the quarter guys. Two topics. I guess the first topic is Latin America Africa sorry if I missed this, but can you give us some color on sort of LatAm as a segment in terms of revenue and EBITDA contribution whether it's a quarter for the first half or maybe how you're thinking about it for the year. If you can't give EBITDA obviously comment maybe just if it's plus or minus would be helpful. And then before I jump in there kind of just the last piece on Latin America which are in Pannon like maybe you're incrementally more cautious on the entry into Brazil. Curious if that's the right read through there and maybe any sort of update on the regulatory framework and maybe the challenges that you see in that market?

A: Kyle Sauers: Latin America is a nice contributor, close to 15% of revenue, growing faster than NA. Profitable with higher gross margins than NA markets. Richard Schwartz: Brazil is a large market with moving parts. We'll update on plans. We're disciplined in entering markets. Mike Hickey: Nice. Very helpful. The second topic, just on the regulatory piece, thinking sort of Delaware and Illinois. Delaware, obviously a huge success for you guys. Do you feel like now, Richard, you sort of have a sustained licensing advantage? I mean, it was sort of challenged to bring in multiple operators. It looks like that was shot down. Do you feel like you're in a position here where you're comfortable, or are we going to have to worry about sort of a continual flow of challenges on sort of the monopoly that you have? And then on the Illinois side, I guess just more on the tax side, are you guys more comfortable today that the idea that there could be a contagion here with other states also raising taxes? Like, do you think that's still a concern for investors, or do you think we're more in a comfortable spot than maybe a month or two ago?

A: Richard Schwartz: In Delaware, we're confident current operating model is best for the state. Legislative efforts may continue, but we're committed to maintaining success. In Illinois, tax impact is manageable. States are unique; tax increase in Illinois is a one-off, not a trend. Mike Hickey: Nice. Very helpful.