Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive First Quarter 2023 Earnings Conference Call will follow the formal presentation. Please note that this conference call is being recorded today, May 1, 2023.

I would now like to turn the call over to Kyle Sauers, Chief Financial Officer.

Kyle Sauers

good and operator, you, afternoon. Thank the should By quarter heading to the in first access earnings now, Financials website release restreinteractive.com. Results the everyone XXXX under that our found of have can at section Investors Quarterly RSI be

will comments statements forward-looking federal our of within laws. of meaning the be Some the securities

risks assume detailed interpreting the forward-looking statements. and or discussion are such numerous that could of as words not fact We uncertainties other Forward-looking filings subject of future phrases you and of Therefore, in statements them. updating are on and are SEC caution refer the cause to results expect, We risks exercise responsibility should condition. could use historical no statements usually our and similar financial relying to and what identified actual by materially impact differ that will, for more you operating a we to any our results expect. should for from

the we measure call Officer. website to investor the earnings of will Schwartz, release our at the deck, in these we be considered measures, the a These A on is in not should the call, and Richard rushstreetinteractive.com. me accordance useful results today which which measures comparable financial company's isolation of operating RSI with the most first Chief directly or evaluating our GAAP be section can discuss reconciliation Investors substitute in our as in During measures prepared in believe With performance. available we quarter XXXX have non-GAAP is Executive for available GAAP. our

to remarks opening first call provide We and then some open will questions. the

call Richard. the to With that, I'll turn over

Richard Schwartz

These XX% efficiently call. the to more afternoon, last G&A achieving quarter us and We up support XXXX Good results this with casino marketing a terrific of adjusted for how achieved goals. with year. in were $XXX.X We our we our that stronger-than-expected first long-term allocate a online our Kyle. growth and EBITDA performance managed to in our as Revenues view our we costs. quarter. revenue Thanks, spend compared began is million year welcome continue driver remain disciplined key to earnings

Our business see is customers levels engage deep we opportunity In a experiences operate markets larger casino that and and developing profitability. of line our and with understanding online focus retain higher significantly will we around and betting, casino combined expansion, both centered to continue them. model for top where sports of online

consider and our delivering goal Our our profitability strategic objectives for investors. our long-range of decisions and growing consistent

half to one We this to EBITDA see positive. we as second of where year expect the continue be adjusted

markets. in Our Casino year-over-year growth and eye was Sport broad-based with only our growth both

in strong Colombian perform expanded Revenue we first pesos, Colombia. a a year-over-year. to be high grow on handle -- rate obviously launched fourth grew again in the basis And very continues very outdone, we quarter, is In continue year-over-year in America we to at quarter. growth once In in and improved an Ontario, dollars, across efficiency We GGR In over over and XXXX. revenue GGR foreign revenue. the which headwinds with addition, compared competitive the Internationally, American had sequentially. including we North in market, increased to of and by board, extremely after year-over-year quarter. promotions, by revenue in in rates. Starting XX% we our reflective XX% Latin grew exchange by grew XXX% handle, excellent U.S. XX% XX%, we revenue markets grew we nicely, to not an the on

growth and in support foundation market. focused building on and We remain stable will measured that Mexico. Not believe profitability than Looking back. much our at long-term we in few a different deliberate Columbia Mexico, the years our ramp

there are and important in to We Mexico. this platform is which characteristics experience, are our given user continuing to market especially unique localize several

awareness brand building are Grupo we by time, Multimedia. market and our same acumen local the partner, leveraging At

We continue year. back this Mexico from part to towards the contribution to a of in beginning ramp-up see expect

market vantage saw progress. point, significant new finish online efforts XXXX ever the legislation proposed casino the front, witnessed. There the legislative On States our the of while a online country new no were amount discussions about legislation than casino in session From United more before and line. across the across we've

In this fact, were online our introduced casino count is bills that X year.

made efforts Ohio's online to budget week, of being casino. its near-term including Just This proposed the progress last states to is example legalize gaming, and momentum regardless the of iGaming to made outcomes, the are growing. validates greater House we future legislative added in study other and that language there

prior, the betting even larger sports market online As where states straightforward, the mentioned we legal. those are the online by slot itself market and the are in and facts have significantly both casino market is

compared states. Connecticut. This same we means in outsized that in betting want online of to announcement earn expect would in legalization to an state on given touch recent markets that often the of those to to provide I RSI, sports casino the we new casino our benefit Xx share the to online also market regarding X

in manner for we shareholders. our very makes profitability determined that my are build opening sense As I mentioned to remarks, in a

lottery. end, announced include our second an RFP either until pursue are that continue not sometime sports The to market a lottery and direction. transition likely we with payments the betting does we wind with in agreement year. that operator, partnership that Lottery and the the a in Towards down joint happens, process has planning online this to of half in-person new Kinetic any agreement separation-related support Connecticut to to begun The

revenues, staying us on profitability We thought While coming our years. the true decision. Ultimately, have year's we this in on will about long positive this and hard a it are strategy. also our for impact wind have down will impact to an future

return our have In any we market, to see appropriate investment. on

to partnership customer for could acquisition comes returns-based focus marketing, not our it disciplined it was capital and fit efficiently became right approach unfolded, high-value remain more our elsewhere. As use on for we to the be We market and our attracting that and clear a Connect customers When in platform. and the RSI it resources used strategy.

moved this market marketing As away our came our launches forecasted, of further from we couple over expenses down many last as years. the quarter considerably

expect to the the spending decrease in the of year. continue second We half

product innovation. to Turning and

pride continue ability We ourselves innovate. on to and differentiate our to

build and invested consistently resources improve have invest to efficiencies the continue We and to user experience.

real-time its call kind of excitement that of Michigan, turnon endpoints in online Players opportunity earn leaderboard. tournament's of addition, early Michigan online we in to terrific experience of million. tournament the features that In announcement first about new A the constantly experience to we River's are the bring and to new a given is slot market. strive recent Apple made example launch a April, the casino

April player are to nice and new increase To qualify reception to We're unique Michigan money, to XX markets play. Michigan online ways $X to in of this register with a and experience bonus we for to visit win to X excited our players differentiated our the in first to engine. find other chat portion total tournament with million test, engagement able having as BetRivers from were in slot

the game we've both bets. really unique total March the of engine our Madness average On and a improvement parlays And our sportsbook with bet and side, we in leveraged seen squares same basketball sizes proprietary a during NBA. as strong percentage feature,

place a have promotion of same-game for doubled games. total parlays, putting percentage In as NBA than bets more fact, in since that

RSI Year operator the I for winning Finally, event congratulate entire the Awards of service the America This EGR in the team to last customer marks -- at week. the want North bringing a in further the validation service world-class in cultural place to customers. have year industry products of fourth award row that value this our we won prestigious we and is and

support. and our of ways to one in the we players consumers in also systems earn service choosing teams and trust need quickly company. sports biggest our We trust that's that why betting drivers by online is customer player any finding gaming points resolve for an understand tension for to And automate empower of

that, I'll to turn over the With Kyle. call

Kyle Sauers

Richard. Thanks,

XXX,XXX, in up was year-over-year, year's invest revenue States for after in X% due the state monthly users double and showing balanced miles with Canada Consistent online the last our year-over-year. were business. that York total, in those quarter numbers. throughout New million, the to growth the of markets quarter impact casino, digits our year-over-year first with active launch United on to up In strategy excluding XX% First markets in increased our more $XXX.X

engagement the retain very first during to continue position with monetization last our compared to quarter, coming to $XXX platform. strong demonstrate leadership and player North the remain year. in and up to we continue American We attract players high-quality at XX% Art in miles RPMs as

profitability. Turning to

to a an for in expense first our sequentially. believe quarters. result and sequentially better on the the the came the lower as for this $X.X and the compared loss results down and positive performance year deeper, little prior of expectations, EBITDA promotions for the quarter advertising quarter, the Digging half first of expenses. to was our the improvement We These of down million squarely $XX.X largely XX% second X path last to period in year. million, year compared adjusted EBITDA XX% us best ago in XX% than a puts better internal was Our

to an efficient. shifted can market for is appropriate long-term spending players committed cost increased new value. remain We amounts effort which our and by be to of activities, and being reactivation markets, retention many In monitoring their more

may QX, the big As lower we expected. originally have be further to in of expect decline we last to second where We quarter. be the as from still our decline QX as lower in given spend than half a we expect marketing marketing we our call, But second previewed on in QX. do spend expected not to

in of around by as as more improved a year. XXX Gross improvement markets New launch many York the well where margins points the year-over-year, growing margins result by driven last some of higher basis we're as quickly

see call, a in basis expect year last our XXXX. gross of we on hundred margin mentioned points in several to improvement As full

first year-over-year to the G&A. during XX% Costs XX% to $XX.X Turning quarter. increased and million sequentially

to vigilant make expect continue to we corporate progresses. way to we invest support about the G&A plans higher over costs costs technology coming we the Having year continue our monitoring innovation both and functions, growth said we and as the that, remain While and investments trend years. our to in

more in guidance a quarter our and markets guidance ended We're those remains $XXX no we believe with unrestricted as we're sheet and of million as that are cash debt. live profitability. for our million. revenue year of fully maintaining reminder, than funded $XXX full balance only million includes today. $XXX the We XXXX to excellent Our to And shape, in

that ability and the highest in to that these our path generating and invest offer puts approach modest return marketing markets a growing us our those to strategy profitability sustainable corporate potential. we've demonstrate, strong on disciplined launched already a the markets building and the approach new to As to offer results the on focus in returns, markets costs,

With for that, operator, questions. please open the lines

Operator

comes Chad question from Macquarie. first from Our Beynon

Chad Beynon

saw taking competition you of could performance. big part revenue moves, your share on seen from. just obviously, compared talk to QX foundational that's if I the in the some particularly quarter, most a year? were iGaming for major wondering that I we share see few the where how Great was tell has expecting. during outperformance gained of where more of about and First, guess, quarter, future pieces that your a some I to core one make We've revenues strategy. the wanted some the just tough their how the side portends Always to and ask about you to kind But perform as in revenue, saw players, they're core the

Kyle Sauers

the we which Chad. close numbers a Richard expectations. be beat were take that, for But to in like. was we'd I'll QX see. came our to performance on, can amount, on in by decent It if with relatively and Thanks, Sure. very revenue Obviously, good analyst pleased add sure. the you'd

and big across casino -- across our and broad-based no performance the was I sportsbook, think markets pretty it surprises.

You when or shifting it's where coming hard going share to. it's out, know to around who is it's point from

there. a add have whole I don't So lot to

that we in in had prepared commented really the remarks, strong after Richard the Latin North we highlighted American America and launched growth As markets XXXX.

Those New Those revenue. So more make more mature really than group that not half markets. up in our is Jersey. are Pennsylvania, of Illinois, included

these think from don't rivers, all you in necessarily known we're And well. point markets. really out benefit seeing So as we growth and the that's where I newer strong brand casinos the

those higher margins. is in, So really seeing there a higher have also that growth good then piece we we're a sign. And promising gross another it's where markets

as beneficial incrementally So margin that's been gross improvement. you us in see the for

Richard Schwartz

approaching underwriting a for as the guidance, terms or that you revenue And timing in then we're when Mexico? half you're of in that, has anything I said just changed amount quickly. know again, second launch the we what follow-up, start on see but pretty dollar to is of

track on where is expectations spoke. with Just if we were wondering everything last time

Kyle Sauers

Sure. Yes.

see we numbers that said, year. more and a you're what we'll haven't That's continue expect specific the in We we've half ramp but what start that's any to back the given on to that, of bit is right. little results

But So there. that we're guidance change really No of excited changes. about or big in that a market. in impacting terms view

you kept piece smaller in As same and didn't that of it the reiterated a it, on of piece either of the guidance. thinking probably our but way Mexico saw, a guidance, much we it being impact really terms

Chad Beynon

Kyle. Appreciate it.

Operator

Kelly Our question next from from comes Jed Openheimer.

Jed Kelly

Just in can this iGaming regulation. potential like not you legislative you're And are but on about we any as you get participating coming that how participating relates Massachusetts, to new states in how approaching through mentioned you're thoughts cycle. then it talk Obviously, Kentucky. on

tax lost iGaming sort revenue. you look New going momentum about with Can for in potential talk some State what's state? You of that the on York

Kyle Sauers

Schwartz is start, and This I'll wish. Kyle anything can add Jay. Richard you Sure, if

are of where very our we spend for capital to best our the results. returns, direct what In on always and looking disciplined get capital to terms the expectations markets, we staying are

So our when expected or case-by-case markets. on competitive state adjacent legalized tax at look intensity, then it that to match term we day, investments of the goal at rates, long to data looks new term fast returns. sure soon And those we to markets. see in a our at you'll then on expected with near looking looking the past it a iGaming comes is at opportunity We're our end recover at jurisdiction basis, pace. our make from be relatively for our market, launches the the at in every to that a looking really versus investments at it And

pursue look make the of market, we opportunities the and decision at or not. subjective when that to we and enter whether a market analysis all various in so modeling And the the

we'll doing that's in same what we've the so Massachusetts, and And done thing Kentucky. be in

watching terms at taxes other where both legal we're through on the of Casino, online benefit New looking states -- legalizing In York, New states terms both in are are tax revenues one have We unlike and betting for of in and beachhead there generated we the same eye in of as you of vertical market. limited of the sports snare know, those great XX% excited -- sports product York, that the a betting. a licenses being there,

are sports extended on an us high that that alone the mentioned rate. the and in said basis that, profitability have We before having will tax of next incredibly or industry, be online legalize But market for betting this for that's exciting if market being there as legalize in and you've efforts, to the the I year, to additional will be session. read I heard made it, there believe, Games in again efforts, last

casino in the legalized So brand. all-in we're that market, that given discussions brand a and involved fact that actively a for are as already in be jurisdiction advocating to size there's game in the of those exist and that Rivers the population

a a Obviously, performs the that's casino as it had known in casino same we So market. brand product a casino well. a to

excited for that. So we're

Jed Kelly

Thank you.

Operator

you. Thank

next from Our McTernan Needham. comes from Bernie question

Unidentified Analyst

calling This is Bernie. in Stefanos Crist for

and Ohio you unique Just the can or away Anything we in on that anything launch from QX. different that? take saw

Kyle Sauers

yes, I a tax Well, -- that bunch in. states adjacent market is we're that say a where large other Ohio to of would rate operating population, a we reasonable

a our in think and evaluate for earlier, every better state those as return in get we marketing of does serves for but it case-to-case faster in in terms that we pretty have came said a in felt positive sportsbook our basis, marketing, were of us markets. changed I efforts us way we we promotions us reasons. like some a would, We modest a but it So out for on

launch So we our fast focusing market are term. there. profitable recover you to our as goal know, and we're we a goal because as not -- really did And investments to we long can as on share be as is

but be a believe marketing a disciplined for can we're sure the strong sake not or And grow we marketing so what we we -- make spending like just able we in are get that on that, like and to quickly. sure trying to are the return we get when market appropriate our marketing and the is and acquire are we to share only of spend Ohio launch them. we to economies for to what for spend to that situation And the on that a make be staying going return spend we that cost customers in to value generate they able above

in approach Ohio. So particular with the

had where with past the of in happy approach modest for we've strategy. that contribution has I more markets sooner to one us a we maybe the think other been a made positive some than that different

Unidentified Analyst

can I anything slide about that? your in In deck, opportunities potential or you If us great. possible Peru. Brazil, in like give Any countries Argentina timing That's on America more. can one future you South squeeze and just talked in

Kyle Sauers

Yes. -- success in and continuing really Mexico. with had we've there. markets to No, We're we as love We down evaluate that that region. different Colombia market you know,

states pass, are small take published. both not different might time grow. but Some legislation, Others legislation regulation have is in more some to some of are markets that relatively and yet

of to that but is force which the yet online market for Brazil, value -- us. that's is and And the so that able we incredibly to team smarter we on do make sure want extend to to we this a at legalized long a we another and term, way that's some delivering efforts and have operations populations technology look it, so. that But into in there leveraging are leadership hasn't a do be We of have it betting markets. a other Argentina in region strong example region focused that's regulated. regulated thoughtful

for involved constantly us what invest in So is evaluating region to returns best imagine shareholders. the opportunity can for and to you get active our and that we're very

Operator

Wells Dan Our Fargo. comes question from next Politzer

Dan Politzer

touch cadence. of kind guys of you to reiterated should half on EBITDA the positive. the of wanted I the kind I First, year second EBITDA know be

and of back typically the terms first seasonality component, quarter quarter. the in you second just As from improved look at relative to historically EBITDA the

million given significantly to of there's any reason in losses first think in think given there terms So printed you going the I lighter calendar a quarter, that's the of improve quarter. in second Is $X sports? not that to

Kyle Sauers

-- appreciate Dan. think I so Yes, the question, I

make course. think things on of think -- the certainly many during about. amount that so had launches companies, York think for couple the and I a hard quarter, the I it's we other the first to I us, different in had speak seasonality, revenue, year, But in part and we I of years lot there's the think couple couldn't which last New seasonality on negative for of of to spent been it's marketing there. launch significant Last first of a actually a

to big wrap cadence I'll that's Maybe profitability So from a change in on QX thoughts QX. cadence. revenue with

expenses still about in expected. mentioned think in then I think playoff the versus early our Things well expected our gross March it lower own how came and all margins QX better second year, our relative very I little from so as again in growth far a versus expect we'd NFL than quarter the EBITDA then in out. before, expectations cadence, quarter. think QX. we to. where to given don't expectations it'd in and first came seasonal little I we I were did EBITDA And QX to A Madness, certainly also analyst from this are in QX QX and a revenue lot still be Super trending see an obviously, perspective, Bowl, about to that thinking and dip from second unreasonable in a play perspective quarter of QX, to

it to in by We'll in you've probably out. lower revenue if how potentially QX. modest a QX expenses in QX got We're lower plays in expecting QX marketing we spend bit see than So amount. little some did than

for a is analysts So be that's it And somewhere the for then do fairly reiterated of the call, And half profitable group and second EBITDA. QX again in what you today. I of we range did are the I on think expect where, to we we pointed out year. in think as the reasonable

the cadence, back about we'd of it expect improve the to from thinking the when quarter clearly, into So the year. half second

Dan Politzer

think of sure helpful. And high-level made question, decision you that That's the right? lot into was Connecticut. a I'm is considerations that it. Got of then to there a decision. I went that this exit more

about maybe that, the As you're extent and broader states your we the year. back back finish could there evaluating, XX getting pulling the footprint, exposure, profitability. your take accelerate to a broader past and your no EBITDA step states other and iGaming in that Are line think this you're

Richard Schwartz

Right.

whether to So Canada, Richard. our are. use all and we're South get existing both sports where corporate so markets best America, strongest only North with existing right, America, is it's the U.S., evaluate globally, comparing Yes, markets, opportunities online resources We're this the betting return. going of

I to, to we so that is profitability improve of a done and think the way the is we before, market market. only growing our continue promote point and ensure said that And we we've that to profitability, book get think to which to goal we improve sportsbook of product sports job a as our to in experience, nice really

have market. most Kyle growth markets, we XXX% referenced, last been growth in newer have several years As those XXXX, where fast online sportsbook of in our over markets after which the the a did

markets, say we be would a there's existing to the constantly will markets. everybody I are evaluating decide let that So when new happy change know. we we necessary, And

Kyle Sauers

Yes.

I in I time. I'd is think This point there's evaluation. that a it ongoing thing -- think not the only add, an is

Connecticut had us and for we're right that think to things very specific it about exit it the market. that made I some particular move

evaluate the market there's take expected be spent a the on whether sign there. we long-term returns money exits continue it's and run a it So opportunities whether are is and that in way, any I wouldn't sign well that but a to that to as

Operator

Katz from comes Our next from David Jeffries. question

David Katz

leave of just that second on you half it, from 'XX. the could go there perspective in -- respect to progress Connecticut, just choosing them for if further somebody lot sort does talked limit making on a a little get be you obviously period where a about you're any other them potentially likely of I hard of to that And through wanted most areas. for Is to time when else? in to time the with exit there you're it supporting of

Kyle Sauers

Yes.

who without didn't the the partner. It agreement, we great our out we're partner. be expected, all probably they've that's good a is So remainder the into year work and that why we're done of working the for course. to we're us David, their There is way with appropriately Connecticut that really a getting eventual all details right We'll lottery, for I and make up for feel point in that I got a ourselves, been to specific frame. it's it's But not they're time public. of and set through process. made transitionary to We certainly through we out going where think planning protections going then it we've the the -- a in about to a now. going of sure at them happen period. Obviously, that good and know support whatever position we're We They've don't exiting. place know what's be as happens.

David Katz

and as just iGaming, With how of product betting. then part a positioned evolving is And how education. is is that just to it? product seen of and and respect think follow-up. offerings and talk where for sort in you of about part you're Richard, -- And that's evolution headed iGaming can you my such sports a that Right. puck where customer we've

Kyle Sauers

in and an in most have David. perhaps what's or unique. differentiation But your players one we're to that this in-house and for innovative most versus reason innovation user sector to say a of content like try develop Thanks, for actually going passion would development, another. time. experience. very And are in I Casino. offer with play been a to creating parties, we many the I to experiences is of and early content a really new-to-the-industry particular as operator leader interesting Sure. and invested give you The very although unique in of integrate third little innings license terms that area developing that, is and exclusively I there's something in or from long that are the cases, that in casino and for functions innovate we space, the in years features experience own operators simple, came have our reason

we So players that really whole we've proprietary even that similar to an gamified promotional though that experiences a XD play them experiences that we of top fun some a deliver cards -- and have a the does a built and realize to win like animated create online there's that we or character extra quickly streak an in-house with lot games which to whether deliver whether other to in it's in have wheel creates games, or play our earlier, an us a existing with experience are product they that's engine up might fun additional spans, unique sites, it's a We allow chances to incremental of as award are games, communicate We unique. casino on each with game, graphic that other. types offer tied create instant And place we'd amazing scratch offer community unique. time we with functions games. features of bad whether community have slot chatroom other referenced real bingo to a and it's a Batobbonus where players players trivia had to

our it, business. that grow all we've exciting in has into pioneered our that ahead casino a we for area of innovation developments profits lot and more as taken are we So think try that ahead and racing to I growth kinds and direction with

Operator

Securities. Jordan from comes Our JMP from next question Bender

Jordan Bender

to Great. I opportunities. want future to back potential the go

of competitors their Some your are footprint starting there. to Europe to expand and look

start positive to inflect flow cash the your near here. guys, in you For should future

the organic within that of footprint use your to any kind something start either on and cash in to Europe, So you opportunity to is balance there grow your Or side? acquire look market? could

Kyle Sauers

a I a familiar I'm operators the one the with of run for started larger Chief Commercial business Officer our markets European I in a years was over and or the U.K., the Europe decade. of Sure. Officer ago, mean, almost also in Chief Operating Mateus,

very experience large. what focused certainly and of Ontario to the going that Virginia in product, lot the the So quality think of down the we're head way a we extremely and always is markets in America considering in share We the help U.S. others. competitive we and technology operations, opportunities. to very or we're operate terms start a ways of like as lot in of part in open Latin think world. market, U.S., be the Americas. a continuing opportunity West in the on we is in the market seeing, and we of we are market knowledge grow us is And a And in have a The and in to have

we for on think continue the ample us North to United and there. and to States So there's grow America opportunity focus

possible, is So elsewhere, ahead the evaluate always opportunities while organic we focused remain on us, want to we opportunity very think which of we it's significant.

Jordan Bender

this kind XX% Great. should on touched you we did pretty given think the back kind first the margin, improve assume should still quarter, materially gross the that significantly last the of call, improve back gross just And first should it, you year of of you of my half? margin follow-up, 'XX, I the but in half over the it said don't in half

Kyle Sauers

Yes.

over expected. better we of a is probably last one in several year QX range mentioned full -- puts we which the came XX%-ish, little think here than I a the of basis So improvement in year hundred point margins I full expect our in year, things the

of our does mentioned rates It in of down gross how markets. our more and those to I mix came then are your mix -- we've tax also growth markets was between casino had higher come and sports. each margin before, as it of some and Fortunately, the different markets down to -- profitable of

So expected. back half a we I do good better bit expect I of mix QX was I'd likely little But a say the than had be or QX. a as that in better originally first had beneficial also is to half. little that than the

Operator

Our from question Edward comes from ROTH next MKM. Engel

Edward Engel

the you elicit. guidance, your revenue You maintained of you factor exiting that but Or announced from not? by also maintained revenue that does XXXX it Does guidance in end the year? pullback the

Kyle Sauers

question. great Really Yes.

We range But earlier. that answer guidance as we of Connecticut in time wind when occur down we don't it cooperate frames under. could know wind comfortable down exactly today. that, So process. lottery we an happen question have with the That outcomes is don't to going that different the includes that we're a as part the or to

guidance the include exiting point. Connecticut So some at does

Edward Engel

does a guess bit on the you that that, of I thought. be back than might And imply better initially doing of that what rest of kind business the the

Kyle Sauers

Yes.

other XXXX it's revenue. is we're of enough revenue depending think impact. timing, in the later impact Certainly, or from a if a overall modest on not an some in revenue. that on some terms, impact the the bucket, substantial in the absolute most revenues I But means But more Connecticut has buckets. there's not yes, that that it it's coming out on year dramatic impact

but So it's probably a little bit there, not material. terribly

Edward Engel

we're a going well, more safe to you Perfect. XX-ish state. Or need iGaming. mature be to your But footprint? to you of picture, of close for there? given business XX% possible get do it then to guess, I And legalize we're especially percent term, hard away that this a kind just medium high new states a are Is and it's in kind to bigger about term, just there. talked Obviously, of I TAM know more even current far kind to in guess with of the to longer margin kind lot margins get from you bigger kind when glad of once

Kyle Sauers

Yes.

exact time points more we times we're faster it, in don't of certain jurisdictions. that markets. I I saw this chunk But couple half a good a our - of quarter, think of leverage growing of I some So we in revenue to number pick some operating clearly, want see mentioned of And higher-margin year. of back already, expect right? in the of that to the or

that that's over of coming as of we'll years in come the percentage as many down G&A but they So seeing investing over as corporate expense good. teams, well. our get We're mature. obviously still technology our revenue We're leverage in marketing a markets and

launch point I or to think wouldn't exact or that that. But want in some markets casino pick how our target many. to to the important margin certainly, to additional an having And part time I EBITDA enter into. we'll get include will to of need be

markets but progress sure, for make launching, help of goal will, regardless when consistent it progress towards We new and that do. will they

Operator

Hickey Our Company. next comes Mike from Benchmark question from

Mike Hickey

job your quarter. great on Richard, Kyle,

one some strategic to success. access guess, I curious, states XX business. had here There's have They far competitors of some product. It your is U.S. they've alternatives seeking pretty they're apparently, their Just like to have sounds to interest. the And a along process.

that of constraints. resource they profitability obviously, that consolidation here the The some feeling is challenges. is the have in market challenges evitable, I think

think sort independent aggressive or how makes outside curious with whether thinking about guys perhaps this here box sort more in similar situation a current low environment seeing sense versus alternatives constraints on... pursue you in share a strategy operator just it to your not of of the terms and So of

Kyle Sauers

I'll Sure. question, that Mike. answer

really in we're of a to We've the lesser-known to the a X market proud we being with honest. capital developing. are in we're that U.S. brand So $XXX business if million top position invested get

look said are there So have we that But and opportunities shareholder in generate approaches partnerships nice might value to and different when you always the at that, a that having accomplishment. ways pretty look it's future. that, at

I that we clear but recognize have opportunities, path about be to a So open minded ahead. think have we

And that capital we've that and We have. with able this been show been able substantially support scale to we've than the capital grow path. have less to others business to

So we grow. to feel continue in ability very to confident our

Mike Hickey

only guys. eventually guess, you and out out from that high I pulling Massachusetts the follow-up, sort a a thinking Connecticut. guess with challenging sort we're state, I operators of X but you're share -- there's been pulling important. about states that's of market here pretty level, of of Obviously, obviously,

telling So me were business Richard, when I look think product. a guess you've your you got you today, I great at

states. all to the access got You've key

Now that's for the in with guess, database can of, I I side sort is in and opportunity simply drive mean reset retail you challenge? the database a challenge this to if of business so, the you have on database is align you that complement casino of sort for kind And going that of brand sort yourself online to there an sports reverse. a betting.

Kyle Sauers

Right.

what minute some first parts, I recognized level comes we regions did the same down the in back some way recognizable ago to going just we experience, quality minute the the have as and said to the we at not that, country, as the of most competitors. accomplish to in with the certainly of even our user it some brand of the nationally, the But don't treat our brand, that product, service So is a customers. customer

some built the to seeing great things But where where brand have spending constantly what and how we're make we But it it's would doesn't not build share immediate. grow very over think it's ways that very would can databases, brand a anytime small intensity, certainly, deliver we about and terms markets smart be competitive and of because spend going and don't. markets intense, always whether competitive at that get I a is the business takes tension, lot little sports which at the takes. of very soon. variety the unique certainly having to results in It access worth or time something looking markets we to that strategic build hard stronger or we although to at might in operator where examples enter, it's to ones scale. a I have get corporate that and this us support you evaluating we're show more And high-intensity help to when share sense have or that's of which can having to iGame It's not performing. future, brand. successfully, you time, for we in environment, as has we're volume that But and that food a say to to really even brand declined market you be it all going the effort the point large very think bit. little a we some have stronger don't think of longer we be us very intensity you might improve say casino usually of going to that a aggressively that's legal enter we're be you we of a One a have loud large sometimes that to where

If the market. opportunity online there's casino you to to shift in don't in nearer term think that an

so Do to are look add that you we want anything factors And at. else... those all

Operator

Financial Our next Sohana question comes from Joe Star Group. from

Unidentified Analyst

really are that results That's as year. this really just second questions of more the on first which New iCasino fair couple Pennsylvania to a going and Jersey, be, is on had Is to described ops. for drivers I Then it biggest assume question. and say, Ontario Michigan question you my the mature. growth

of New rebranding able you growth if state. You market that in you and if wondering I'm a to have with a say, flip rebranding, the Jersey, that might be reenter into, more

Kyle Sauers

start Yes. I can real quick.

America nicely very markets. book some been Ontario pretty about nice our even think still also drivers talked for currency I point with down here us only first in But nicely -- call, grew We for Michigan. sure, of really some nice sports your seeing quarter Those be in -- in growing about Latin and growth decent should on and us growth has the we're for headwind there. the also for us. there's

grow be -- Illinois, of markets lot that. a more to So than this little the There's larger, What profile a Pennsylvania, mentioned mature participating a we're I offer in little I broad-based these the growth New couple markets that for earlier a think in. lower had it some opportunities Jersey, will was probably of of more like us that year.

Richard Schwartz

Pennsylvania, licenses market. a to to got comes that in it market It's unlimited When like start. off we strong

entrants So growing arrive. more competition as is the

market continue continue been think be those built is to lot So low that and to to on we our as a growing we players that able to we goal focus have to because that that we offer... unique features area to keep offering an product to well plays the the that's business of of support try that part very to growing we in think

Unidentified Analyst

that expectations of And to in possibly terms your or penetrate in rebranding Jersey, market New more? strategy

Richard Schwartz

is the it rebrand business, the Yes, certainly in beginning brand a money there's some an our think the real looking decision. launched first take The at gaming does was We there since have we're necessary. been was right years market time We we because of that. think It opportunity. ago. many to it rebrand

that us. It an right us with the it's brand, new going that decision. future. the be to into more establish make to market it it's the efforts think takes the category, going to feel in So the we're for some but opportunity we for to And casino putting grow efficient time we there's

Operator

Our question final Sector Hallum. comes from Craig from Ron

Unidentified Analyst

had on you it, to or guys comment want talked fairly about significant with impact on that there's -- know rationale that minimum if any the Curious but about I guarantee and whoever there a Connecticut over -- takes depending that for if willing there. was you're contract. I rumors to start lot potentially if a

Kyle Sauers

question. thanks the for Ryan,

what relationship of Penisthere? terms that really any means of second to what the have doesn't any the part It on don't your have that happens question impact information and In of whatever not Yes, that. that have impact we're next correct. part on And us.

to go was XX -- between partially, would many retail the us. direction to million $XXX applies were well remarks, that the the not from we wouldn't we Connecticut part have to is wholly, on next into any up us prepared the up at to the so how fee other state include That many as participant, in There how dependent some that into over initial As years and agreement. we and payments that running, lottery. that. there factors. in locations either all separation announcement of mentioned But insight no lottery when -- was There the entered that's Connecticut could whether as

Richard Schwartz

estimate a Kyle, the that an share guess just XX is clarification, Or on any was years? I that of revenue $XXX just over part million, that guaranteed?

Kyle Sauers

Yes.

part bunch an that. on we a as that's don't there have of dependent it's factors, of what guarantees longer. as but obligation And different were any So

Unidentified Analyst

you. Got

Okay.

guess, correct implication? you And I commented revenue don't then I were of XX% that Second helpful. it the be on on price kind miles, AR down appears XX% commentary year-over-year. is but believe would question. any that growth, miles

Kyle Sauers

Yes.

during $XXX,XXX quarter. were miles So the

Excluding York, New of so miles large have New York. year in a last number we

XXX,XXX in excluding they markets as were was York, New with up our year-over-year, impacted New casino York, might Armow But numbers, that it X% X%. recall raw actually And were But up You including America, down XX%. miles well. North in in

Operator

no We back you. for further questions. remarks. I hand closing to will have currently Swartz now Thank Richard over

Kyle Sauers

for quarter share look few second months... today. to in we results again you our progress on a when We you forward updating joining us Thank our

Operator

concludes today's you This Thank joining. for call.

You may now disconnect. +

Rush Street Interactive (RSI) 3 May 232023 Q1 Earnings call transcript