Rush Street Interactive, Inc. Q3 FY2025 earnings call

• Promoted Kyle Sauers to President and CFO, expanding his role to oversee marketing, operations, and commercial strategy. Elevated Rob Picard to Chief Strategy Officer. • Q3 revenue record, up 20% YOY. Adjusted EBITDA up 54% YOY. • Strong North American MAU growth (34% YOY) with highest quarterly user growth in 4 years. • Record first-time depositors for the company, achieving this at attractive customer acquisition rates. • Disciplined approach driving operating leverage, with marketing expense down 1% YOY but up 5% sequentially. • Balance sheet strong with $273 million unrestricted cash and no debt.

Revenue reached a record $277.9 million, up 20% year-over-year. Adjusted EBITDA was $36 million, up 54% year-over-year. North America MAUs increased 34% year-over-year to 225,000, with North American online casino markets driving 46% year-over-year MAU growth. Latin America MAUs were 415,000, up 30% year-over-year, but Colombia had net revenue down 27% during the quarter due to player bonusing related to the temporary VAT tax. Revenue in North America grew 26% while Latin America fell 11%.

• Raised full-year 2025 revenue guidance to $1.1 billion to $1.12 billion, up from prior guidance. • Adjusted EBITDA guidance raised to $147 million to $153 million, up 62% YOY. • Confidence in sustained growth in North American online casino markets, with momentum seen since March continuing.

• Potential increase in Mexico gaming tax rates from 30% to 50%. • Uncertainty around Colombia's VAT tax reform and its impact on operations. • Sweepstakes operators posing challenges with unregulated products affecting consumer protection and tax revenue. • Sports outcomes affecting hold in sports betting, as seen with player-friendly sports results.

Q: How do fourth quarter incremental margins look, with mention of increased marketing and sports outcomes?

A: Kyle Sauers noted increased marketing spend and impact of player-friendly sports outcomes in Colombia.

Q: Thoughts on Mexico gaming tax increase?

A: Kyle Sauers said they've been tracking it, not anticipated at start of 2025, but ways to reduce effective rate.

Q: Next steps for Colombia's VAT tax?

A: Richard Schwartz stated current tax reform needs congressional support, and current view is it won't pass.

Q: Payment processing partnerships?

A: Richard Schwartz mentioned partnerships like Sightline Payments and BurraPay, driven by reputation as innovator, focusing on great player experience and financial improvement.

Q: Impact of Colombia's VAT tax on strategies?

A: Kyle Sauers said Q3 impact was due to bonusing, but 2026 could be better with VAT going away or operators adjusting bonusing.