Rush Street Interactive, Inc. Q3 FY2024 earnings call

• Achieved record revenue and adjusted EBITDA for the quarter, with adjusted EBITDA at $23.4 million, a 5x increase from the prior year.
• Continued to attract new players efficiently, with North American cost to acquire players down by one-third year-over-year.
• Launched enhanced iRush Rewards loyalty program and PropPacks, a unique bonus promotion combining sports cards and prop bets.
• Announced a buyback of up to $50 million of common shares, leveraging increasing cash generation.

For the third quarter, revenue was $232.1 million, up 37% year-over-year. North America saw iCasino and sports revenues grow by over 30%, with North American MAUs reaching 168,000, up 28% year-over-year, and ARPMAU at $388, a 4% increase. Latin America had MAUs increase 122% year-over-year to 329,000, with revenue almost doubling year-over-year. Revenue from markets outside of Illinois and Pennsylvania accounted for 62% of total revenue, up from 52% the prior year.

• Raised full-year 2024 revenue guidance to between $900 million and $920 million, with the midpoint at $910 million, a $30 million increase from prior guidance.
• Raised full-year 2024 EBITDA guidance to between $82 million and $86 million, with the midpoint at $84 million, a $16 million increase and 24% rise from prior guidance.

• Regulatory risks, including potential tax increases in states which could impact profitability and drive volumes to unregulated sites.
• Market uncertainties in new and existing markets, such as potential challenges in lapping the strong growth of newly launched markets like Delaware.

Q: On the U.S., Canada user growth, LTV to CAC and buyback reasons?

A: Kyle Sauers mentioned continued attractive player acquisition costs and that the buyback was due to strong cash flow visibility and flexibility to return capital to shareholders.

Q: On capital allocation and expansion, especially in Latin America and North America?

A: Richard Schwartz stated they will direct capital to highest returns, evaluating opportunities in Latin America and North America, with plans to expand into additional markets in Latin America and Alberta in North America.

Q: On 2025 guidance and headwinds, including Delaware?

A: Kyle Sauers noted expected revenue growth outpacing marketing and G&A costs, and Richard Schwartz discussed Delaware's growth potential despite lapping its launch at the end of 2023.

Q: On Latin America retention and Q4 sports hold rates?

A: Kyle Sauers mentioned strong retention trends and that football results have been player-friendly, with Q4 guidance reflecting solid revenue growth despite sports hold rates.

Q: On Delaware growth potential and EBITDA tailwind?

A: Kyle Sauers discussed Delaware's growth potential and that the $10 million tailwind in Q3 had a lower impact on EBITDA than initially thought.

Q: On Illinois tax increase and Brazil launch?

A: Richard Schwartz noted awareness of Illinois tax increase but no major quantifiable impact yet, and stated Brazil is being monitored with a cautious approach.

Q: On advertising spend split and regulatory risk for 2025?

A: Kyle Sauers discussed advertising spend split and regulatory risks, including potential tax increases and legalization momentum in iGaming states.