Rush Street Interactive, Inc.

Good afternoon. Thank you for attending today's Rush Street Interactive third quarter 2024 earnings call. My name is Jayla, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'll now like to turn the conference over to our hosting team.

Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2024 earnings release. that can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at weststreetinteractive.com. Some of our comments will be forward-looking statements within the meaning of 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, or 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 third quarter 2024 earnings release, and our investor deck, which is available in the investor section of the RSI website at RushStreetInteractive.com. For purposes of today's call, and thus 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 third quarter 2024 earnings call. I am pleased to report that we've achieved another record-breaking quarter in both revenue and adjusted EBITDA. For the third quarter, we reported revenue of $232 million, up 37% compared to last year, and up sequentially for the 15th time during our 16 quarters of being a public company. Our adjusted EBITDA reached $23 million, which is the seventh consecutive quarter of improving profitability. In terms of the scale, this represents an increase of over five times from the same period last year. Consistent with recent trends, we continue to attract new quality players at an impressive rate, doing so efficiently and maintaining high player values. This success is a testament to our unique products and engaging user experience, which fosters loyal customers and drives growth and profitability. Additionally, our efficient marketing spend has contributed significantly to our bottom line. In light of these results, we are raising our 2024 revenue guidance by 3% and EBITDA guidance by 24% at the midpoints. It's worth noting that the midpoint of our EBITDA guidance is now 110% higher than what was originally put forward at the beginning of the year. Kyle will offer more details in his remarks. These impressive results underscore our commitment to our long-term strategic objectives, which include being a leader in online gaming across the Americas. By continuously innovating and enhancing our product offerings, combined with expanding our market presence, we are laying a solid foundation for long-term performance and continued improvements in profitability. Our focus on technology and product innovation, strategic partnerships, and the customer experience positions us well to continue to capitalize on the growing opportunities in the online casino and sports betting industry. We remain dedicated to delivering value to our shareholders while providing a superior gaming experience to our users. To that end, We also announced today a buyback of up to $50 million of our common shares. We remain highly confident in the opportunity ahead of us for continued top line growth and improved profitability. And we believe this is the right use of our consistently increasing cash generation and existing cash balance. Looking closer at the results on the quarter, it again paints a picture of broad-based growth and success. In North America, both iCasino and sports revenues grew by over 30%. We continue to see incredible success with our launch in Delaware. Our Latin American business again produced impressive results, and we experienced better than expected sports hold during the quarter. Underpinning all of these results are fantastic trends in player counts and player values. For the quarter, North American mouths reached 168,000, up 28% year over year, marking another consecutive quarter of accelerating growth. ARPMAL in North America increased by 4% to $388, a new record for us since going public almost four years ago. This growth is a testament to our underlying strategic focus on user engagement and retention and ability to improve ARPMAL while quickly growing player counts. In Latin America, we continue to experience remarkable growth with our mouths increasing year over year by 122% to 329,000. This increase highlights the effectiveness of our localized strategies and teams and our ability to attract and retain users. Our art now in the region was $39 higher on a sequential basis and lower by 9% versus last year. These trends were directly influenced by the increased new player volumes from the Copa America in June and July. which drove momentum in active user accounts. With that overview, let's talk about a few particular markets to add context on our results. Our revenues are continuing to diversify. In Latin America and in US and Canadian markets launched since 2021, revenue was up 83% year over year in the third quarter. The geographic diversification of our business is continuing to progress. The percentage of revenue generated from markets outside of Illinois and Pennsylvania is now 62%, up from 52% during the year-ago quarter. Easily the highest it's been since going public. Our expanding margins and increased profitability is a result of this trend, where we are seeing a higher growth in our more profitable markets. For the second quarter in a row, we saw nine different markets with year-over-year growth of over 50%. One of those continued bright spots was the state of Delaware. Performance has been exceptionally strong with our GGR now running an annual rate nearing $100 million. This run rate is the result of an increase of almost five times the predecessor operator's run rate in iCasino. and the solid success we're having in online sports. The robust performance in Delaware is a real-time example of the impact of our product and operations teams delivering high-quality gaming experiences and our ability to drive substantial revenue growth in established markets. Delaware continues to be an opportunity we remain very excited about. The momentum we've been experiencing in Latin American operations continues, and even accelerated into the third quarter. Our Latin America revenue almost doubled year over year, coming in just shy of 100% growth. Our partnership with Multimedials in Mexico has been instrumental in this success, providing us with valuable local insights, relationships, and enhancing our market penetration. Latin America now accounts for 16% of our total revenue. demonstrating its continued importance to our long-term strategic objectives and our commitment to delivering tailored experiences that resonate with local players. Our marketing efforts continue to yield positive results, building on the strong foundations laid in previous quarters. The great results I shared earlier around MALs and ART MALs are being driven by our targeted and data-driven marketing efforts. Our campaigns have effectively leveraged a mix of traditional and digital channels, allowing us to reach a broad audience and attract new users at a very solid base. In fact, in North America, we once again reduced our cost to acquire players, down by about a third compared to the year-ago quarter. Building on our commitment to product and tech innovation, there are a couple of recent announcements we've made that I wanted to call out. During the quarter, we were excited to announce the launch of our enhanced iRush Rewards loyalty program. The new program was created based on customer feedback, aiming to deliver a more valuable and rewarding experience for our users. We extended the time for players to retain their loyalty tier and associated benefits, gave players increased access to more free promotional events such as bingo and slot tournaments, complimentary cruises and vacations, boosted promotions and gifts, access to live concerts and sporting events, and more. We also substantially improved the user interface and, importantly, the communication of benefits to players. All of these changes align with our player-first philosophy and should continue to drive industry-leading retention and player values. We also continue to drive innovation on the player engagement front. leveraging our real-time promotional engine to provide extra value to our customers by putting twists on proven, beloved games. Building and extending on the success of our proprietary games, such as bingo, trivia, and football squares, we just launched PropX, a game-changing bonus promotion that combines the excitement of collecting sports cards with the thrill of prop bets. offering users a unique and engaging way to enhance your sports betting experience with BetRivers. We are excited because PropPacks not only adds an extra layer of excitement to watching NBA games, but also offers our users value in the form of additional opportunities to win at no extra cost to them, providing them with a clear incentive to place their single game parlay bets with BetRivers. Our strong results and momentum continue to be driven by our strategic initiatives and commitment to operational excellence. Our ability to track to retain high value players coupled with our innovative product offerings and effective marketing strategies has resulted in robust growth in both our revenues and profitability. We are particularly proud of the progress we've made in diversifying our revenue streams and expanding our market presence both in North America and Latin America. These accomplishments underscore our dedication to delivering exceptional value to our customers and shareholders. With that, I'll turn the call over to Kyle.