Rush Street Interactive, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive fourth quarter and year-end 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, March 6, 2024. I will now turn the call over to Kyle Sowers, Chief Financial Officer. You may proceed.

Thank you, Operator, and good afternoon. By now, everyone should have access to our fourth quarter and year-end 2023 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at RushTreeInteractive.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should, and other similar phrases, and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. In particular, we will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain one-time or non-recurring items, and other adjustments that are either non-cash or are not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our fourth quarter and year-end 2023 earnings release and our investor deck, which is available at the investor section of the RSI website at rustreinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA, or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis. With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard.

Thanks, Kyle. Good afternoon, and welcome to our fourth quarter and year-end 2023 earnings call. I'd like to start with how proud I am of our team at Rush Street Interactive, what we've accomplished this year, and how we've set ourselves up for success for years to come. We exceeded the high end of our revenue guidance for the year and achieved EBITDA profitability far ahead of our targets. Through strong execution by our team, we improved year-over-year EBITDA by $100 million. We initially set out to be profitable for the second half of 2023, though as a result of our focused efforts, we delivered better results and were profitable for the full year. We ended the year with a record-setting quarter and have started 2024 with strong momentum. Our investments and know-how in creating differentiated and high-quality user experiences are paying off as we simultaneously achieved our growth and profitability targets with increased contribution from all geographies, from both iCasino and sports, and from both our newer and more mature markets. Our 2023 ALPS performance and the momentum in the new year are the result of us continuing to execute on three key operating principles. First, it's the customer. I've said it time and again, product and user experience wins in the end. We have felt this way since we started a business in 2012, and we continue to feel it today. We feel we have a competitive advantage not easily replicated. in that we have spent the past 10 plus years focused on enhancing the user experience as our top priority. We are all about offering customers a world-class user experience that minimizes friction and drives retention. This ethos is fundamental to our success. Second is technology. Investing and continuously improving our best-in-class technology platform is what allows us to support our wide and ever-growing range of differentiated product features and functions, and accomplish our customer and financial goals. Third is operating leverage that grows as we scale. With each year, as we drive growth in a diversified set of markets, we expect to deliver improving earnings and cash flow. This past year, not only did we improve EBITDA by $100 million, as I referenced earlier, but we did so on a $100 million increase in revenue. We saw continued progress in each of these areas throughout the year, culminating in a very strong fourth quarter. Turning to our results, revenue for the fourth quarter was $194 million, up 17% from the prior year. Quarterly EBITDA improved $28.8 million, coming in at $11.5 million, compared to negative $17.3 million last year. For the full year, we grew revenue 17 percent to $691 million, which, as I mentioned, resulted in improved EBITDA of $8.2 million. A large part of the improvement is that we continue to grow revenue much more efficiently. Kyle will provide more detail on the numbers. There are a few things to take away from the quarter and the year. Top-line performance was strong once again, as we are seeing our customer-centric approach and our ability to innovate translate into results. We saw strength across products, both iCasino and online sports betting, and also across geographies, US and Canada, and also LATAM. When looking at different market vintages, it's exciting to note that excluding our US markets launched before 2021, our revenue growth was an impressive 44% during the fourth quarter. We continue to grow faster in our higher margin markets. A couple of highlights of note in the U.S. and Canada. Higher user accounts are driving increased revenue, even as we grow player values. In fact, during the fourth quarter, we achieved our highest year-over-year malgrowth in the last four quarters at 7%, which is was well-balanced between iCasino and online sports betting, only markets. Even more important, that growth accelerated throughout the quarter and has continued nicely into Q1 of this year. Looking at Q4 highlights for a few specific markets, Michigan has seen a strong acceleration in revenue, and Q4 was our highest growth rate in the past year. New Jersey has also seen nice progress in recent quarters, and we hit a new high for revenue in that market since we rebranded Divette Rivers in Q3 of 2022. In Ontario, we continue to have great success with year-over-year growth of 50 percent. West Virginia continued a strong pace as well, where we grew revenue by 80 percent compared to the prior year. Delaware is a market that in a short time has already validated the impact of our high-quality user experience. As a reminder, we are the sole iGaming and online sportsbook platform in the state, powering online casino and sports betting for each of the state's three land-based casinos. It has only been a little over two months, but nevertheless, we are extremely pleased with the start. Over the first 60 days, we are at a run rate that would imply over $60 million in annual GGR, The prior operator only had iCasino, so for comparison purposes, over two-thirds of the GGR is iCasino, and the rest being online sports betting. Comparing apples to apples, the online casino results, which at this point was simply our replacement of their prior online casino platform and operations, is running above three times what the previous operator was doing. Obviously, we are seeing strong initial results in online sports betting, which has never been offered to players in the state prior to our launch. These initial results, in our view, highlight our differentiated product and user experience and why, time and again, we are able to excel in markets that include iCasino. Moving south, we continue to execute extremely well. demonstrated by the fact that LATAM continues to show very strong performance. Revenue in Colombia grew over 65% year over year, while in Mexico it was up approximately 60% quarter over quarter. This brings fourth quarter LATAM revenue contribution to over 13% of total revenues, the highest level in our history. Latin America remains topical both for us as well as within the broader industry landscape, as several countries are planning for iCasino and online sports betting expansion. Simply stated, we are a proven leader in Latin America. We have a demonstrated track record of success, powered by significant infrastructure investment, technology localized and customized for the region, and the know-how that only comes from on-the-ground experience. Nowhere demonstrates our capabilities in LATAM better than Columbia. Our results in Columbia continue to grow at a very rapid pace, as fourth quarter revenue growth accelerated to its highest rate of the year. We've come a long way and expect a lot of growth ahead. Five years ago, we set out in Columbia with no brand recognition, no databases, no employees, no relationships, essentially nothing. No one in our company even spoke Spanish fluently. By focusing on the fundamentals and building the business in a sustainable way, we've grown to the point where we believe that we've recently become the second largest operator in Colombia. We've achieved the success by investing in the business and executing on the fundamentals from the very beginning. We have built an entire organization locally, including the full operations, marketing, payments, legal, compliance, finance, HR, and development teams. Our strong presence has allowed us to develop local relationships and, more importantly, earn and retain credibility in the market with our employees, partners, and customers. This approach has served us well as several competitors, some global operators, entered the market during the last couple of years. Despite their initial effort and aggressive marketing spends, they have not been able to capture meaningful market share. Bottom line, Colombia remains an exciting market for us. It is both fast-growing in itself with years of growth ahead, while at the same time providing us the foundation to expand in LATAM, as we are doing in Mexico. In Mexico, as we shared after we launched in late 2022, our expectations were to begin seeing a meaningful ramp-up in the second half of 2023. We were able to deliver on this as represented by the 185% revenue growth in the second half compared to the first half of last year. When compared to our start in Colombia, we have generated about two times the revenue since launch in Mexico over the same time period. Couple this with our app being one of the highest rated in Latin America, and we are poised for continued success. Beyond our current footprint, Laptown is a region where there are several opportunities to play to our strengths. Many investors are aware that in late December, the President of Brazil signed legislation authorizing the regulatory framework for both online casino and sports book. This is the conclusion of a lengthy legislative process that for much of the time was thought would only lead to legalization of sports book. Fortunately, especially for RSI, At the end of the process, online casino was added. For us, this inclusion of online casino certainly makes the market opportunity bigger, and it is another aspect of legislation that plays to our strength. There are many regulations and complexities still to be worked through for the Brazilian market, but we have spent a long time preparing to leverage our technology and capabilities in the country and plan to participate. We look forward to updating you on our progress in coming quarters. There is also Peru, which gets a lot less attention, but which we are very excited about as well. Last year, Peru not only approved laws governing online gaming and sports betting, but it also published online gaming regulations. This is an exciting market for us, given its adjacency to Colombia and shared media markets, meaning that many of the soccer TV broadcasts that we market on in Colombia are viewed by consumers in Peru. In fact, our research has shown that our Rush Fed brand is already widely recognized in Peru. As our timing becomes more clear on a Peru launch, we will share more details. Notwithstanding, we expect to launch later this year. In terms of how we see the market size of both countries, the population of Brazil is over 200 million people, and Peru is about 35 million. Compare that with Mexico, which is 130 million, and Colombia, which is 50 million. Safe to say, between ramping Mexico and then with Brazil and Peru legislative activity, we are seeing significant near and intermediate term opportunities to target a population of over 425 million people and over an estimated $6 billion total addressable market in these four regulated Latin markets alone. Shifting to the North American legislative outlook, We are at the beginning of 2024's legislative sessions around the country, and there are a host of states on our radar that we are watching closely for iCasino opportunities. We certainly discussed them at length on past calls. While we are not laying odds on legislative outcomes, some of the states that we are watching include New York, Maryland, Illinois, as well as provinces in Canada, most notably Alberta. As we look ahead, along with exciting growth initiatives I've mentioned regarding Latin America, have us very excited about the future. There is no shortage of near and long-term opportunities in our universe. We remain confident over the long term. Given the beneficial economics to government budgets, especially as compared to inflows from online sports betting, that expansion in iCASUNA legislation is increasingly a question of when, not if. More and more positive momentum is building, some quite visible to the public, and more behind the scenes as the online industry ratchets up its focus and investments in legalizing iCasino in more markets. Now, I'll hand it over to Kyle to talk in more details about the financials.

Thanks, Richard. Fourth quarter revenue was $193.9 million, up 17% year-over-year, leading to full-year 2023 revenue of $691.2 million, also up 17% year-over-year. We continue to experience well-balanced performance across both iCasino and Online Sportsbetting, both up 19% year-over-year during the quarter. Geographically, we're also very well-balanced with double-digit growth in both our U.S.-Canadian and LATAM markets. We continue to achieve improved flow through to earnings and cash flow as we scale the business. We posted our third consecutive quarter of positive EBITDA with the fourth quarter coming in at a record of 11.5 million. As Richard mentioned, our EBITDA for the full year improved by 100 million on a similar dollar increase in revenue. Underlying the results, we're very encouraged with the trends in our player acquisition and retention as measured by monthly active users. Fourth quarter North American mows were nearly 160,000, reaching a quarterly record. In fact, mouths were up 7% year over year, our highest mouth growth of the year. Most of this increase reflects our successful efforts in player acquisition and retention across both online casino and sports betting in our existing markets. We also continue to see improved trends in art mouth. During the fourth quarter, our US and Canadian art mouth of $345 was up 5% compared to last year, and at the highest level for a Q4 in the three years since going public in December 2020. With our continued strong success in Latin America and anticipated growth to new Latin American markets in the coming years, we feel this is the right time to start sharing user and player value data about our LATAM markets. MAUs during the fourth quarter were 204,000, up 33% year over year. If we look back to Q4 of 2021, two years ago, Our MAUs are up an incredible 144%, and that's on top of what was already a sizable player base. Our ARPMAU in LATAM was $42 during Q4, up 28% year over year. In our investor deck, you'll also find some additional historical Latin America MAU and ARPMAU data to give you a perspective on the trajectory of our growth there. Switching to hold percentage, as a company, iCasino was in line with our expected range during the quarter, In online sports betting, we were below our expected hold percentage, given generally unfavorable sports outcomes during the quarter. Despite the lower sports hold, our strong financial performance in the quarter further demonstrates the stability of our business and the lower reliance on sports outcomes. Our gross profit margin was 32.1% for the quarter and 32.9% for the full year, up 270 basis points compared to the full year of 2022. Our gross margin outside of Pennsylvania and Illinois increased by 900 basis points to 44% as our total revenue mix continued to shift away from Pennsylvania and Illinois, increasing from 45% to 52% for markets other than Pennsylvania and Illinois during Q4. For those that follow us closely, you'll recall that our operating margins are relatively fixed given the structure under which we operate with our land-based partners in those two states. There's an inverse relationship between our marketing spend and our market access royalty expense. Therefore, as our marketing cost decreases in Pennsylvania and Illinois, as those markets mature, our royalty rate increases, which decreases our gross margins, but our operating margins remain steady. This creates very consistent profitability for us in those two markets, but also less dependence on them as other markets grow. In fact, the 52% of revenue that came from other markets in the fourth quarter produced more than 70% of our profitability. When it comes to 2024, we expect our revenue mix to continue to increase towards non-Pennsylvania and Illinois markets and to improve gross margins in those other markets, with some offsetting decrease in Pennsylvania and Illinois gross margins, with the net effect expected to be a small increase in total company gross margin percentage for the full year 2024. On the marketing side, we continue to stay disciplined and are seeing greater efficiency with spend. Fourth quarter advertising and promotion spend was $34.6 million, down from $63.2 million last year. For the full year, advertising and promotion spend was $158.4 million, down from $218.4 million last year. We see the efficiencies evident in our growing active user count and getting a larger share of wallet from our players, measured by increasing our amount. Looking forward to this year, we'll see continued discipline and precision from our marketing efforts, and while we won't be shy about making investments when we see opportunities, we do expect to get leverage over our marketing spend again in 2024, so marketing spend that grows at a lower rate than revenue for the year. G&A for the fourth quarter was $16.2 million and 8.4% of revenue, and for the full year was $60.6 million, which equated to 8.8% of revenue. For 2024, we expect to get some modest leverage over our G&A expense and come in less than the 8.8% that we had in 2023. I'll note that much of the run rate increase in G&A will come in the first quarter as we have our annual compensation adjustments for employees. Turning to the balance sheet, we ended the quarter with $168 million in unrestricted cash and no debt. We had a small use of cash during Q4 due to working capital timing. and we do expect to be cash flow positive for the full year of 2024. We are initiating full year revenue guidance for 2024, which reflects our strong momentum in the fourth quarter and here in early 2024. We currently expect 2024 revenue to be between $770 and $830 million, which represents $800 million at the midpoint, up 16% year over year. As a reminder, our guidance includes only those markets that are live as of today. In addition, during 2024, we are adding adjusted EBITDA guidance to the mix. For the full year 2024, we currently expect adjusted EBITDA to be between $35 million and $45 million, which represents $40 million at the midpoint. With that, operator, please open the lines for questions.

Absolutely. We will now begin the question and answer session. If you would like to ask a question, you may do so by pressing star followed by A1 on your telephone keypads. If for any reason you would like to remove your question, you may do so by pressing star followed by A2. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Again, to ask a question, it is star followed by A1 on your telephone keypad. Our first question will come from the line of Bernie McTern with Needham and Company. Your line is now open.

Great. Thanks for taking the question. Just wanted to start with LADAM. Assuming at this point Columbia is positive adjusted EBITDA, just wondering on the timing and the path to profitability on EBITDA in Mexico, and then I have a follow-up as well.

Yeah. Hey, Bernie. Thanks for the question. Correct on Columbia. Columbia has been profitable for us for quite some time. I'd have to go back and look to see exactly when we turn profitable, but it's It's quite a while ago. And Mexico is getting real close. I think we're having some real nice success there, as we mentioned in the prepared remarks. A lot of things going well there, starting to build nicely. So we'll keep you updated on Mexico profitability, but it's certainly not a big burn for us at this point.

Understood. And then there's been some news flow in terms of the Illinois governor considering a change to gaming taxes in the state. Just wondering if there's any thoughts in terms of the potential impact that that could have on Rush Street and then any offsetting levers that you could pull if taxes did in fact go higher.

Sure. Yeah. So as you point out, the governor's budget includes more than doubling of the sports betting tax rate. So obviously not something that we'd be in favor of. It's early in the session, but I think it's important to note that because of the structure of the relationship with our market access partner in Illinois, the impact on us of that potential change is much smaller than maybe some have expected. So maybe to frame it, if the new proposed rate had been in effect for the recently completed 2023, negative impact on our EBITDA would have been less than $3 million. I suppose the potential upshot is that there's conversation happening around iCasino in Illinois and how much bigger impact that could have for state revenue than increasing the OSB tax rate.

Got it. Thanks, Kyle.

Thank you. The next question will come from the line of Jed Kelly with Oppenheimer. Your line is now open, Jed.

Hi, this is Josh Marin. I'm for Judge Kelly. Thanks for taking our questions. I have one on the iGaming regulations. You know, iCasino legislation pacing has slowed a bit, so just curious on how you guys are thinking about that and RSI's position on it.

Sure. Hi, this is Josh. This is Richard. So, yeah, listen, we can't predict the timing of these things, but what we do know is that there's a growing enthusiasm from our peers and our industry to support this and to generate more tax revenues for the states. What I will say is that there's more bills introduced this year than there have been in a long time. Some of them will make it past the finish line, but there's others that are getting momentum. We think certainly a market like Alberta is something that we're paying very close attention to because we think there's been some very positive public comments by some of the stakeholders there. What we're excited about is that we have so much growth available for us in Latin America right now, that while we certainly are eager, we hope and are pushing for iGaming to be added to more states in the United States, we certainly don't have a shortage of opportunities that are really exciting to us. And so, you know, markets like Peru and Brazil and other markets that have already legalized and are in the process of regulating right now. So we have very large populations available for us there where we can do casino there. So we have no shortage of opportunities, which is why we're really excited because we have this great option that our other peers in the United States don't really have to the same extent we have in terms of having large market opportunities down in Latin America. So we will continue to push for legalization. The states are starting to feel the impact of not having sufficient tax bases to justify some of their costs. And so because of that efforts, and we see that there's efforts to increase tax base, we see more and more conversation around iCasino as a possible means to bridge and increase tax bases for states.

Okay, great. Thank you.

Thank you. The next question will come from the line of Jordan Bender with CitizenJMP. Your line is now open.

Good afternoon, everyone. A few on Delaware. I was just wondering, how does that operating model differ from some of the more competitive states that you operate in, as well as what does the payback period look like? And then should that be a positive contributor to EBITDA within your guidance, just with iCasino being in there as well? Thank you.

Yeah, thanks, Jordan. So on Delaware, so I'd say first, I'd say like other North American iCasino markets have been for us. Delaware will be profitable for us quite quickly. Gross margins should be kind of at or maybe a little below our average gross margins, but contribution margin or operating margin should be higher than our typical. So it will be a nice contributor for us. We talked about already, we came out of the gate pretty strong in Delaware. So we're very excited about the opportunity there. Um, it's going to be, it'll, it'll be a meaningful contributor for us, the top and bottom line over time.

Understood. Um, and then just with free cash flow, or at least in 24, you talked about, you know, the ability to produce free cash flow. Naturally, that just kind of begs the question, what is the best use of that? Would you think capital allocation? Does M&A make sense here? Anything you can opine on that?

Well, listen, we're going to direct the capital to the highest returns, and we're evaluating all opportunities, whether it's more investment in existing markets or additional investments in newly regulating markets. We always are looking at all options on the table. Certainly, We're always looking for how do we create more value, maximize shareholder value. I don't know if you want to add anything else.

No, I think I'd go back to Richard's question about iCasino legislation, Latin American opportunities. There'll be plenty of places for us to make smart investments when new markets open up. So I think that's the first priority for us. Great. Thanks, Carter. Thanks, Jordan. Thank you.

The next question will come from the line of Chad Bannon with Macquarie. Your line is now open.

Afternoon. Nice quarter. Thanks for taking my question. On the guidance, it looks like the expected flow through from EBITDA growth versus revenue growth is high 20s, low 30s. Kyle, can we just get a little bit more clarification or just color around why 30% flow through is the right number following a year when you did 100% flow through? I know you talked about some of the line items being below revenues, but is there anything else that we need to be mindful of? New markets, kind of the ramp, just a little extra color there. Thanks.

Yeah, no, I appreciate it. I think you've got the math right there on on on flow through around around 30 at the uh in the midpoint of our guidance i think if you look back at 2023 um pretty significant and i thought probably for the industry um and us pretty significant um uh pullback in marketing expenses less less markets launching uh more rational uh behavior um so i think that that was good for us this past year um you know this is the first time we're offering EBITDA guidance, so I want to be careful about offering up long-term flow-through plans, but I think we can improve that over time. We want to make sure we're putting the right guidance out there the first time we're offering it, something that we can work towards improving as the year goes on.

Okay, that makes sense. And then what about the main factors that would drive you to the low end of the revenue guidance, which is, I think, 11% versus the high end, which is 20%. Thanks.

Sure. So I probably won't give you exact specifics at each end, of course, but it's still a pretty quickly evolving industry, so a lot of different factors that go into thinking about that revenue guide. You know, we saw really nice acceleration and growth throughout the fourth quarter. We mentioned that in the prepared remarks. The momentum's continued into 24, so we've got a lot of confidence in this 770 to 830 range that we put out there today. You know, sports hold ranges due to sports outcomes, that's always going to be an input. We mentioned in the opening remarks, but excluding our U.S. markets that launched before 2021, we grew over 40% in the fourth quarter. So we've got some fast-growing markets, so there's some more variability there, so we're mindful of that. And then maybe the last piece, just recall that we had Connecticut live for a good chunk of 2023, and now that's gone for us in 2024, but we added Delaware which is new. It's had a great start, but again, it's new, so it has a range of potentials in and of itself there. So I think those are all things that we think about in crafting that range of outcomes.

Okay, thanks. Are you willing to provide what Connecticut contributed from a revenue standpoint in 23?

It was around about $20 million or so. Okay.

Thank you very much. Appreciate it.

Thank you. The next question will come from the line of Ara Macias with Jefferies. Your line is now open.

Hey, guys. Thanks for taking my question. Congress on the Quarter. Could you please give some further color on international market growth as it compares to further expansion in U.S. online sports betting markets? Thanks.

I think when it comes to the international growth, The Latin America region is really the second fastest growing region in the world for legalized online betting. So the fact that we're obviously strong in North America and as well as in Latin America gives us great confidence that those are going to be markets that are going to grow for decades, not just a couple of years here and there. So I would say that the sports betting market in the U.S. is obviously very heavily contested. Some operators start betting. every new market with having a large database of players already in their systems that are able to be converted from fantasy to real money sports betting. You have a scenario where you have, you know, relatively higher taxes in the U.S. and a higher competitive intensity. So I think for us, the opportunity that we've been focused on is to be able to continue to grow our Latin America business because it's such a dynamic, high-growing business challenging market to break into and develop the expertise to do well in there is something that's very challenging. As I mentioned in my notes or my earlier comments, there are fewer people who've been able to be successful there despite a lot of effort because it does take being in the market early, localizing your technology, having a very experienced team on the ground, and really developing a brand from many years ago that now gives you a lift in other jurisdictions in that region as you launch there. So for us, I think the opportunity we have in many of these markets are also including casino and sports betting, which hasn't been the case as much in the U.S. So for those reasons, the tax rates, the competitive intensity being a little bit different and our expertise there, it's an area that we've always focused on more so than we have on some of the newer sports betting markets where we felt like it was better for us to direct our capital to markets with higher returns for us.

Great. Thank you so much. That's all for me. Thank you.

The next question will come from the line of Ryan Sigdahl with Craig Halem Capital Group. Your line is now open.

Hey, guys. Good afternoon. Curious on Delaware. So new user promos get initial deposits and app downloads from our standpoint, but curious what metrics you can share on follow-on deposits and retaining those players after those promo dollars have been utilized. And I get it. It's still very early here, but anything notable you guys can share?

Yeah, I mean, obviously we've had really good success. I think we're approaching the promotions and bonusing there, make sure we're fair to our new players, but we're the only operator there. I think you can see from the state data that's been reported and what we've said that we're off to a really nice start. When you look at either our GGR or our NGR, It won't be surprised that our February daily numbers are higher than they were in January. So still pretty early, so we don't want to make predictions exactly on where things are headed, but we're very optimistic about Delaware for sure. I guess one thing I'd point out that is probably useful for those that follow trends of state reported data, the January data that was put out by the state does include our five days of December activity since we launched on December 27th. So just, you'll want to keep that in mind when you look at the trending from January to February when that data comes out later here in March.

Helpful. As you mentioned, 60 million GGR run rate. Is that what you guys assumed in guidance or is there some other assumption?

Well, I don't think I'd want to start parsing out market by market what's assumed in the guidance, but certainly there's a range of outcomes there. I think there's been a lot of excitement about the product that we launched there, and we've gotten really good engagement. Certainly, I know Richard referenced it, but if you could just compare our casino revenue compared to where it was before we launched, it's a pretty dramatic improvement. So as I mentioned in one of the earlier answers, the range of guidance includes some level of variability from what we could expect happening in Delaware, just because it's so new. But again, we're certainly optimistic. It's been a faster start than we anticipated.

Ryan, just adding on, when we launched the players visited their prior site, expected to see the same experience they've been having for many years, and instead they found a new and exciting online experience from us that we've talked about for years being really differentiated and innovative. And I think the results are reflective of that. When you see all this great content we offer, all these unique features and functionalities that aren't available in the past and aren't available really anywhere else in the country, just only on our platform, you're seeing the immediate impact of when you bring a player base to a really high-quality user experience that's unique and differentiated and delivers fun for these players. It immediately had the impact, a positive impact, and I think I think back to Kyle's comments the last quarter when we sort of suggested that was going to launch and it wasn't going to happen overnight. But it really did happen overnight for us because the quality differential was so significant that we think that the players noticed it and clearly the numbers are reflective of this massive increase in play relative to what was the case in the prior 10 years before we switched to our platform.

Yeah, for sure. Performance isn't a coincidence there. Product absolutely matters. You guys are doing a nice job. Moving over to Brazil for my last question, just curious what your plans may be that you can share. Is it to launch with the RushBet brand and organically do it? Do you need to acquire a brand kind of know-how in that country?

Yeah, sure. So there's actually a pretty large, decent-sized contingent of our team visiting Brazil this week for a conference there. We've been there for and evaluating all the opportunities, as we mentioned, the iCasino addition to that market recently, that really created a more exciting opportunity for us. We have spent time with all the local sports teams, retail companies, stadium owners, media companies, other gaming companies, really getting to know all the players in the market and really trying to assess what the right strategy is for us. And we're not really prepared today to share what that strategy is. But I can tell you that we're excited by the market. And our brand does resonate there as well from our research that we have done and the conversations we have had. And so one thing to keep in mind, though, is that the market does allow multiple brands as well. So it's always something that we're considering as well. But I think overall, our brand really has done so well in that region that a lot of the broadcasts we're in are viewed in other countries. They're recognized in Brazil as Portuguese as opposed to Spanish. But nonetheless, you still get a lot of highlights and things like that where you will see our brand in the background. So I think our brand is very strong there and is one of the assets that we will bring to play in that market, but it may not be the only asset we bring to play in that market.

Thanks, Richard, Kyle. Nice job, guys. Thanks, Ryan. Thanks.

Thank you. As a reminder, if you would like to ask a question, it is star followed by a one on your telephone keypad. The next question will come from the line of Mike Hickey with Benchmark Company. Your line is now open.

Hey Richard, Kyle. Congrats guys on the strong Q4 in 23. Thanks for taking our questions. Just curious also on the Brazil market, just wanted to confirm in fact that sort of your planned entry into that market is baked into your 24 guide, Kyle. And I'm also sort of curious, I think Brazil has a pretty established gray market. with some fairly large operators. Just curious about the competitive intensity you see in that market and how much share you think is already being established from the grain market and how you position for that. Thanks, guys.

Yeah, thanks, Mike. I'll take the first part and then let Richard comment on the second part. So we do not have any of the guidance, the revenue or the EBITDA guidance, do not include any new markets. So We talked earlier about Peru and the expectations for sometime later this year to launch. When that happens, if it makes sense or it's necessary to update guidance, we will with any new thoughts. And same for Brazil. If that happens later in the year or if it would move out until next year, we'll update at that time. So just for clarity, only the markets we're in today are part of our guidance for revenue and profitability. And so then I'll let Richard talk about the competitive landscape.

Hey, Mike, in terms of the competitive landscape, there are quite a large number of gray market operators operating that market for a number of years, primarily focused on sports betting, although some offer casino as well. But one of the things that hasn't happened in the market is that they haven't really supported local payments for those offshore companies. They haven't been able to invest in local media assets. They haven't been able to use Google and other types of media partners as well to kind of drive larger volumes of play. So while there are some that will have an advantage in having a brand and a database, it's yet to be seen how that database will be translated into a regulated market. The chief regulator overseeing the effort the last year recently resigned, and so they're in the middle of finding a replacement. So even the timing of the launch is a little bit unclear. But what I will say is that I've known even some of our competitors have purchased you know, legal horse racing companies trying to find a value in being able to market locally, you know, in the country itself in a more normalized way the last couple of years. So I think one of the benefits is that the local marketing will open up for the first time and companies that have licenses, like presumably we'd be one of them, would have some benefits of being able to reach the audience in a more direct way than you have in the past.

Thanks, Richard. Just maybe a quick follow-up on domestic business, you've obviously optimized your market access agreements. You pulled out of Connecticut, decided not to go into Massachusetts. You've obviously had some success here in Delaware. At the same time, you've got a great cash position. Your cash flow is positive. It looks like 24 so I guess I guess all that was sort of an idea Richard I think that you're going to focus on markets that offered you both sports betting and I gaming I'm just sort of curious now that you sort of optimized here and you see new states like North Carolina opening next week that seems like has a pretty big I don't think it's overtaxed, not overlicensed. I mean, do you think you still sort of skip out on states like that as they legalize domestically? Or do you start to sort of entertain these opportunities on sort of one-by-one basis as you move forward here? Thanks, Les.

Right. Yeah. So each new market we evaluate on a case by case basis. And it truly is a very rigorous evaluation process where we're looking at the tax rates, the competition, the adjacencies in terms of other markets nearby that we're operating in, permitted products. And so in the cases of some of these sportsbook only markets, we're looking at all those considerations and deciding are we going to get a better return on investing the energy and time when those markets are continuing to grow some of the other markets we're in where we feel there's a better ROI. And so ultimately, you know, we want to look for a fast recovery of our investment. And some markets give you a much faster recovery on investment. We've seen that with iCasino markets, how we typically will get a profitability in the fourth or fifth quarter after we launch much sooner than you get for a sports fit only market. So for those reasons, we've been very cautious and very selective. And I think we're unique in that we have a whole other region in the world that we have opportunities to tackle that we're not relying only on growth from additional sports fit only markets in the United States.

Thanks, Mike.

Thank you. At this time, we do not have any further questions registered in the queue, so I will turn the call back over to Richard Schwartz for some closing remarks.

Well, thank you for joining us today. As you can see, we're experiencing strong momentum across all aspects of our business. It's not hard to see why I'm more excited today than I've ever been about the future opportunities RSI has in front of us. We look forward to updating you on our progress when we share our first clear results in a couple of months.

That concludes today's call. Thank you all for your participation, and you may now disconnect your lines.