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 2024 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, February 26th, 2025. I will now turn the call over to Kyle Sowers, the financial officer. May proceed.

Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter and year end 2024 earnings release. It can be found under the heading, financials, quarterly results, in the investor section of the RSI website at rushstreetinteractive.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, 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-GAP 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 GAP. 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 not related to our underlying business performance. A reconciliation of these non-GAP measures to the most directly comparable GAP measure is available on our fourth quarter in year-end 2024 earnings release and our investor deck, which is available in the investor section of the RSI website at brushstreetinteractive.com. For purposes of today's call, in less noted otherwise, when discussing profitability, EBITDA, or other income statement measures other than revenue, we're referring to those items on a non-GAP 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 2024 earnings call. I'd like to begin by expressing my gratitude to the entire RSI team for their outstanding efforts. Their dedication and hard work have been instrumental in our success. I couldn't be more proud of the incredible team we've built over the years. Your dedication is a key reason we excel in such a competitive industry. As I reflect on our performance in 2024, this has undoubtedly been our best year ever. We not only set records in revenue, profitability, cashflow, margins, user accounts, and many other key KPIs, but we also made significant advancements in our technology platform, strategic initiatives, and customer centric experiences, demonstrating an ability to execute while scaling effectively. Most importantly, we believe we have positioned ourselves for success in the years ahead. We concluded the year with a record-setting quarter in both revenue and adjusted EBITDA, exceeding the high end of our most recent guidance. For the year, we grew revenue 34%. While this top-line growth was impressive, what stands out was our ability to drive 36% of that growth to the bottom line. We expanded gross margin by over 200 basis points, reduced marketing expense compared to last year, and gained leverage over our G&A costs. As a result, we saw an 11 times increase in adjusted EBITDA for the year. Our long-term focus and expertise in creating differentiated and high-quality user experiences are paying off. We have simultaneously achieved our growth and profitability targets across our entire portfolio, while increasing contributions from all geographies, both iCasino and sports, and from both our newer and more mature markets. As we take stock of our progress, our focus on three key principles has positioned us for long-term success. First, our customer-centric approach prioritizes a world-class user experience. This is easier said than done. It requires a clear vision, in-house technology, innovative product teams, season operations teams, and deep user insights. Our players notice and appreciate how we take care of them for exceptional customer service and reducing friction in their journey to our unique real-time reward system. This proprietary system delights our players in unexpected ways, including offering extra chances to win through fun and engaging in-house developed content that deliver secondary gaming experiences not available elsewhere. Second, our continuous investment in in-house technology supports diverse and innovative product features. These new features often require a deep understanding of our users and sophisticated development. Our commitment to technology will ensure we stay ahead of the curve. Third, as evident in our results, we leverage operational efficiency to scale and enhance margins. This approach has driven our recent strong results that underscores our commitment to becoming a leader in online gaming across the Americas. Regarding the quarterly results, as investors evaluate our performance, there are a few takeaways worth pointing out. As referenced earlier, we've experienced broad-based growth. Top-line performance was strong once again, with strength across products. Both Online Casino and Online Sportsbook each grew over 27%. We are also continuing to experience strength across geographies. North America Online grew 29%. Latam grew 54%. This growth was in the face of player-favorable NFL outcomes in the Q4, reinforcing the consistency and diversification of our revenue streams. Underlying these results are strong trends in both player accounts and player values. For the fourth quarter, North American MAUs were at an all-time company record of 205,000, up 28% year over year, marking another consecutive quarter of accelerating growth. ArtMAU in North America increased to $346. The fast growth in players, while maintaining our leading ArtMAU level, is a true testament to our underlying strategic focus on user engagement and retention. In Latin America, we continued to experience high levels of growth, with our MAUs increasing year over year by 71% to 348,000. This increase highlights the effectiveness of our localized strategies and teams, and our ability to track and retain users. Our ArtMAU in the region was $39. When measured in local currency, this increased both sequentially and year over year. Our marketing efforts continue to yield positive results, building on the strong foundation laid in previous quarters. Our MAU and ArtMAU trends 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 pace. While we've made tremendous improvements in our marketing efficiency over the past couple of years, we continue to improve and find new strategies to maximize effectiveness. Overall spend continues to deliver strong results, as evidenced by our continued momentum in MAUs and ArtMAUs. We are closely monitoring the 2025 legislative sessions in several US states and Canadian provinces for potential online casino legalization and expansion opportunities. We cannot predict specific outcomes, but there is a growing recognition that online casino gambling is already happening in these places and across the United States and Canada through offshore, unregulated and unlicensed sites, including online sweepstakes casinos that offer real money games that look and feel exactly like regulated sites, but pay no taxes and lack player safeguards and protections. Regulation is a proven way to protect players and generate significant tax dollars to fund critical government budget initiatives like education, healthcare and other important programs. We remain dedicated to delivering value to our shareholders and providing an unparalleled gaming experience to our users. The success we experienced in 2024 sets a strong foundation and we are optimistic about maintaining our strong momentum into 2025. Our focus will remain on delivering consistent performance and driving value for our shareholders. With that, I'll turn the call over to

Kyle. Thanks, Richard. Fourth quarter revenue was 254.2 million, up 31% year over year, leading to full year 2024 revenue of 924.1 million, up 34% year over year. Our growth in the quarter in the full year was well balanced across both eye casino and sports and also across geographies. In the fourth quarter, gross profit margin increased to 36.5%. We continued the improvement in our revenue diversity and drove higher revenue growth in our more profitable markets. For the full year, gross profit margin was ahead of plan at 35.0%, an improvement of over 200 basis points versus the prior year. We achieved sequential improvement in gross margin in each quarter throughout the year. For 2025, we expect our gross margins to continue to improve as the revenue mix continues to improve and we execute on cost improvements. On the marketing side, we continue to stay disciplined and refine our spend. We are spending more in markets where we see better opportunity for returns and we will continue to be flexible with those investments. In fact, in Q4, we increased marketing spend once again and had our highest spend in the last seven quarters, while importantly still achieving leverage over our marketing spend and delivering another record even a quarter. Fourth quarter marketing spend was 43.1 million or 17% of revenue compared to .8% of revenue last year. For the full year, adjusted advertising and promotion spend was 155.8 million, down from 158.4 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 mile. Looking ahead to 2025, we expect you'll see continued discipline from our marketing efforts. And while we won't be shy about making investments when we see the opportunities, we do expect to get incremental leverage over our marketing spend again in 2025. So marketing spend that grows at a lower rate than revenue for the year. G&A for the fourth quarter was 19 million or .5% of revenue compared to .4% last year. And then for the full year was 74.8 million or .1% of revenue, which compares to .8% last year. For 2025, we expect to get some modest leverage over our G&A expense and come in less than 8.1%. Similar to years past, much of the run rate increase in G&A will come in the first quarter as we have our annual compensation adjustments for employees. Our adjusted EBITDA for the fourth quarter was 30.6 million, reflecting a significant increase of over two and a half times compared to the prior year. For the full year adjusted EBITDA of 92.5 million increased more than 11 fold compared to the prior year. In 2024, we made a tremendous leap in obtaining benefits from the increasing scale in our business. We were also able to demonstrate a strong flow through from earnings to cash flow, highlighting what we see as a very high quality of earnings. We ended the year with 229 million unrestricted cash and no debt, an increase of approximately 61 million for the year. During the fourth quarter, we did not buy back any shares under our repurchase authorization. We are initiating full year revenue and adjusted EBITDA guidance for 2025. We currently expect revenue to be between 1.01 and 1.08 billion, which represents 1.045 billion at the midpoint, up 13% year over year. For the full year 2025, we currently expect adjusted EBITDA to be between 115 million and 135 million, which represents 125 million at the midpoint, up 35% year over year. Our guidance ranges for revenue and EBITDA include a range of potential business impacts from the recent tax changes in Colombia, with the assumption that the tax lasts through the end of the year. As you saw in our 8K from last week, the Colombian president has issued an emergency decree to among other things, levy a tax on players for deposits made into online betting accounts. There is currently a review of the constitutionality of this decree, the applicability of the tax, and the temporary timeframe over which it can be administered. Including the court's automatic review that is expected during the next few months, we anticipate several strong legal challenges on constitutionality. If the tax were to be repealed or shortened, we would expect to see upside to our guidance ranges. In addition to the Colombian tax, other considerations that help bridge the difference between the low and high ends of our revenue and EBITDA guidance include the growth of the markets that we are in, our ranges of continued success in attracting new and monetizing existing players, our varying levels of marketing investment, and potential currency movements in our non-US markets. And as a reminder, our guidance includes only those markets that are live as of today. With that, operator, please open the lines for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question. And we will pause here briefly as questions are registered. The first question is from the line of Dan Ollitzer with Wells Fargo. You may proceed.

Hey, good afternoon, everyone. Thanks for taking my question. First, just to follow up on the guidance, Kyle, you mentioned that it does include Colombia. Is there any way to quantify that, what's being baked in right now? And then separately, along the same line, as you think about that midpoint of 13% revenue growth for 2025, is there any way you could further unpack that between Latin America and the US, or even within the US, iGaming and how you're thinking about the growth for 2025?

Sure. So, I'll start with the Colombia piece, just to make sure it's absolutely clear that both the high and low end of our ranges for revenue and EBITDA include the impact of the VAT, assuming that it's in place through the end of the year. So, we just want to make sure that that's clear, that if the tax were to be reversed or shortened, that that provides upside to both the bottom end and the top end of our guidance. When you think about what we've included for Colombia, listen, we're only a few days into this, so we're learning as we go here what the impact might be, and then it'll take a while to have all that flesh out. But at the low end of the guidance, I'd assume that's a pretty bad outcome for Colombia for the year and how it's played out. At the high end of the guidance, it's more around things turning out pretty well there, given the circumstances. And then when thinking about the other 85-plus percent of the business, on the revenue side, we're expecting growth in almost all of our markets. It's certainly an expectation that much more of our absolute growth is coming from markets that include iCasino. That's, as you know, that's where we've been putting more of our investment dollars from marketing. That's where we see higher player values, where we offer really great differentiation in the product and obviously have been continuing to have a lot of success in Q4 and so far here in the start of Q1.

All right, and just for my follow-up, obviously it's been a pretty heavy headline cycle in terms of taxes and proposed increases for sports betting and iGaming. I guess, is your guidance faking in anything along those lines? And I guess more broadly, how do you think about that risk across the myriad of states that have proposed something in some form versus maybe the upside risk of a path to legalization for iGaming in some of these states?

Yeah, so I'll hit the guidance piece. We have not, outside of Columbia, where we've assumed it for the full year, the VAT deposit tax, we've not included other scenarios of tax changes in other markets that we're in. So just like we do not have included in our guidance new markets that might go live sometime later this year, we're also not including any proposed legislation around taxes. To the extent something were to be approved and legislated in the future, then we'd of course consider that for the future guidance. But the guidance we have right now does not include any tax changes. And then I'll let Richard just comment on the landscape.

Sure, yeah, hey Dan. You know, on the subject of tax increases, there's no doubt that substantial tax increases are a near-term setback. But we view it as a clear display of the need for states to raise taxes. And while states are looking at online gaming industry to raise funds, it cuts both ways. And in some ways, including on a net-net basis, we believe it's actually really beneficial for our industry and for us especially if it accelerates expansion of opportunities. And so we know that the legalization online casino is one of the most attractive and proven options to raise funds. And let's not forget that 88% of the US adult population can play regulated online casino today. It's a large population available for us to sort of be able to work towards legalization efforts. So while in the near-term you might have a couple of hiccups, ultimately we think that the net-net is positive for us as you start to see the needs for the states accelerate the revenue generation and online gaming can represent a very substantial way for them to achieve their goals.

Thanks, it makes sense. Thanks

so much for all the detail. Thanks, Dan. The next question is from the line of Ryan Sigdahl with Craig Hallam Capital. You may proceed.

Hey, good afternoon, guys. Really nice results. I want to stay on Columbia for a minute. So I know it's early, I know it's the first few days. It looks like at least one of your competitors is passing on the cost directly to the consumer to not a lot of fanfare there. Many others are straight out absorbing the cost. Rush Bet appears to be somewhere in the middle, kind of passing along but offering a VAT bonus to the consumer. I guess thoughts on how you think this is working thus far in the first couple of days from a retention standpoint, competitive standpoint, and then if you're willing to, how much of that cost do you think you can mitigate with the strategy?

Sure, why don't I start and maybe you can add on the mitigation element, Kyle. Yeah, I mean, the competitors are all trying to determine like we are how to manage this most effectively. There's different levels of approaches and sophistications vary. I feel really good about our situation and the positiveness because of our technology and the fact that we can do a lot of things with our platform that aren't very common to be able to do from others in terms of segmentation to ensure the proper players are getting the bonusing. So I think we have our, the ownership of our own platform provides us with the ability to really be nimble and smart when, especially with our bonusing strategies. I think we've already seen some operators start with one approach and change their approach pretty drastically and what we're doing is really staying the course and modifying and tweaking and monitoring situations to ensure that we're always looking out for the players that matter most for our business. So I think it is really early, hard to really get into too much more detail because it's so dynamic and fluid but I will say that I'm confident we're the best team in the industry down there and a very top quality platform for the market which should allow us to manage through this better than our competitors.

Yeah, maybe just on the mitigation Ryan, as you pointed it's super early. Things are holding up well down there. There's things we've already done immediately. You mentioned some of the different kind of competitive responses to this. So you're right, we're modifying the way that we're handling promotions. We and the rest of the industry have the ability to reduce marketing spend and we're doing some of that. And then we look to our vendor partners to help share in the impact and we've got a lot of costs that are variable with revenue. And as Richard pointed out, I think we feel like we've got some advantages because of owning our own platform, our proprietary bonusing engine and probably allows us to do some things differently than our competitors to excite and retain those players. And we're well capitalized. We've got a really strong player friendly brand down there. So we're optimistic. It'll turn out better than it could. And things are holding up pretty well so far.

Great, for my second question, just want to move over to Delaware specifically. So really impressive results. Basically grew almost every month sequentially up, up triple digits, et cetera, all the way through January of last month. So I guess as you think about that market, it's continuing to outperform is 2025 the year of let's continue to lean in and invest in that market or is it the year where you can start to really drive margin even better? Thanks.

Yeah, so you're right. I think the data came out for January not too long ago. We've continued to have really strong sequential growth as you point out almost month after month, like clockwork. And so we're very, very, very proud of that. We reached a TGR run rate over 125 million in the fourth quarter. And then it grew again in January. So we've got a lot of opportunity still there. And I think from a margin perspective, I think our margins are more fixed there from an operating perspective, not completely, but fairly fixed. So it's gonna be more about driving new players and player monetization, which we think there's a lot of room left to grow there. Obviously our growth rate in the early part of the year from Delaware is gonna be more significant than it's likely to be later in the year, just given the launch date right at the end of 2023. But a lot of opportunities still left there.

Very good. Thanks guys. Good luck.

Thanks, Ryan. The next question is from the line of David Katz with Jeffreys. You may proceed.

Evening, thanks for taking my question. I wanted to just raise the issue of sweepstakes, getting a lot of discussion at least among us. Curious what your perspectives on it are, what it can lead to, what impacts it's having. And any thoughts to that end, I think would be welcome and helpful.

Thanks. Yeah, sure. Hi, David. Yeah, I mean, I referenced a little bit of this earlier, but at the end of the day, you have a product that is online casino that looks and feels and plays like a regulated online casino product that is not regulated, not taxed, not protected, and dominant in the markets around the country right now because there's a free for all and a proliferation of a wild west mentality that I think ultimately it is surprising when you get to some of the land-based casinos opposing online casino, regulated online casino, you don't hear what efforts are being put into stopping this sort of unlicensed activity that's proliferating in their states today. So absolutely it is having an impact despite what everyone can come up with research that tries to make any point they want, but ultimately it is a product that is trying to circumvent the gaming laws, the gambling laws on a -by-state level. And I certainly think there should be enforcement to ensure that there's an even playing field for all participants and to ensure that all online casino gameplay is being regulated, taxed, and properly protected. There's a lot of miners especially that are playing on many of those products and I think it's in the industry's interest to ensure that gets enforced and be brought into proper regulatory frameworks. And ultimately this existence of this activity is a really great accelerator in addition to the tax needs of the states to legalize online casino because online casino gaming is already existing, so might as well tax it to protect consumers. So I think there's a really winning arguments in favor of accelerating I-Guestino legislation to address this current issue that exists.

Thanks for that. And I wanted to just follow up on the sports betting side. We spend a ton of time talking about the product mix and the different kinds of bet offerings, et cetera, and their abilities to drive margins. I'd love your updated thoughts on things such as in-play betting and just general commentary around your product mix. And that's it for me, thanks.

Sure, I mean, in-play betting is certainly always known to be an important category of sports betting. You see in the European markets what every year for almost a decade or two you see improvements, increases in volume and frequency of in-game betting. So certainly for us, we've invested in that from the very beginning and a lot of the sports that are very fast-paced that appeal really well to in-game betting like soccer and tennis, we've really achieved some strong results in. In fact, we have some podcasts in that area that really drive a lot of volume of traffic and interest in that category. And we've really targeted that audience knowing that some of our competitors that focus more on historically on that daily fantasy didn't really have the same sophistication in terms of built-up audience in the tennis and soccer category. So we did focus and have focused on that. I think product mix is critical, but the player props are also very popular. And as you've also seen from us and the rest of the industry, Seelan-Gun Parley has shown they have some staying power and we put a lot of effort into proving our experience for our players in that area. A lot of these innovative promotional tools that we have built that are unique to the industry that I referenced earlier has not been available to play anywhere else are really making a difference for us. So we're continuing to invest in those types of experiences knowing that at the end of the day, the players realize when you're doing something unique and different for them and they like something you're doing that isn't available anywhere else, they're gonna stay loyal with you and that's what helps drive our player counts and player values.

Thanks very much. Appreciate it. Thanks, Tim.

Next question is from the line of Bernie McTernan with Needham & Co. You may proceed. Bernie, your line may be muted. The next question is from the line of Jed Kelly with Oppenheimer. You may proceed.

Hey, great. Thanks for taking my question. I guess, just kind of circling back to New Jersey and

say they

do raise taxes, typically with internet companies, when there's a period of like tighter regulation or higher taxes, you generally see the larger players lean in and market more. So just given where your market position is in New Jersey, how would we expect under a higher tax scenario you to operate and would you not wanna lean back on marketing? And then just the point on future iGaming, iCasino regulation, it's been a while since we have seen states start to legalize. I mean, can you see any catalysts or anything? We get the budgets, deficits and needing revenue, but is there anything that's kind of why the pace has been so slow over the past two years? Thanks.

Jeff, maybe I'll take the New Jersey piece first. I think it's probably too early. I mean, we obviously have a really strong brand in that area of the country. We've built a really solid customer base. We're well capitalized. We have to evaluate the situation and look at what's happening within competition. I don't think this level of tax that's being talked about means you've got to dramatically change the way that you're marketing, but you would need to mitigate some of that. So I think it's probably too early for us to say what we do from a competitive standpoint there. I'll let Richard talk about the, kind of the, I casino legislation. Yeah, sure.

There's more efforts going into this than ever before. If you just listen to the earnings calls from our competitors this week and previously, in the prior weeks, you'll see that everyone's focused on it, which is a tremendous difference from where it was a couple of years ago, where you didn't hear anything about efforts to legalize I casino. It's really all about sports betting. As the profits from I casino have improved and the tax space increased, you're starting to see a lot more focus on this category. And so with that, you get alignment, these groups that are focusing on aligning together in the industry to achieve a result of improving legalization in more markets. But as I said a few minutes ago, the fact that online casino is already happening in every state in the US, and it's not being taxed or regulated or not protecting consumers is a really strong accelerant that helps us to sort of make that point why he might as well protect consumers and tax it. I think the fact that you have some improvements happening in efforts in Alberta are making progress. I think there'll be some spring legislative session. It's expected to sort of show some progress here, and I think there's some positive developments that are happening this week. So we're looking forward to Alberta moving forward, but you're starting to see the states, you start to see the crash in the state budgets where as a federal government is less willing to perhaps fund the states to the level in the past, states are looking for additional ways to generate income and taxes. And as I said, iCasino is a incredible way for them to achieve that result. And especially for the states that are already forced but in legalized, regulated, very simple add on. So I think you're gonna see a lot more movement in this area perhaps than you have in the last year based on those factors.

Great, that's helpful. And you think that message is starting to resonate with the governors?

I think it's starting to more really now, you're starting to see the pressure. In fact, the pressure, as I said earlier, for states to start to look for gaming to increase the taxes from our industry is sort of the signs that other states and governors are also looking for ways to increase revenues, and this is a easy way to do it. So I do think that message is starting to percolate and I think the need is for state revenues to increase is more than it has been in the past years.

Great, thank you and nice job.

Thanks, Jeff. The next question is from the line of Chad Bainan with Macquarie, you may proceed.

Hi, good afternoon, thanks for taking my question. Richard, Kyle, wanted to ask about M&A opportunities and buybacks, so given the cash that you have at the end of the quarter and the outlook for 25, this will obviously continue to build. Can you kind of help us think about maybe the magnitude of buyback opportunities? And if you're not participating there, is it because you're in the market looking for, talking acquisitions on the M&A side, thanks.

Sure, Kyle, why don't you take the buyback and then I'll take the M&A part of it.

Yeah, appreciate the question, Chad. I wouldn't, we've, I think we're comfortable with our cash position, you're right, that cash position should continue to build nicely. I wouldn't correlate our activity executing our buyback with some indication about M&A activity and the timing of that. I think those are, while they ultimately can impact each other, I wouldn't necessarily go to that direct correlation. So, we didn't buy back any stock in the fourth quarter after our authorization, we are gonna continue to be opportunistic, we'll continue to monitor the situation. I think, despite the near term headwinds here from this temporary tax in Columbia, and obviously came out with what we felt like was strong guidance in particular in the face of that, we're very confident in the business trends throughout the business and we're intent on driving shareholder value. So, some of that could include returning capital in the form of share buybacks. Now, let Richard talk about M&A landscape.

Yeah, I mean, we're actively assessing and considering options all the time. It's what you have to do in our business and we have a very clear focus on sort of line of sight that we have a profitable business in our company, we have opportunities to prove it in Latin America, potentially we're looking at options, full time opportunities, anything that can add value for the shareholders. Ultimately, having a 229 million now of unrestricted cash and growing our cash flow, great balance sheet, it gives us a lot of flexibility and a lot of options and our only focus is on what can we do to invest this capital to deliver the best return for our shareholders. So, we do consider all the M&A options and we have an active team that's always considering different variations and possibilities, I'll say.

Great, thank you both. And then on the guidance, not sure if you guys build top down or bottoms up, but as we think about the sports betting hold improvements, getting the product features that continue to drive higher hold, is there an expected sports betting hold increase that's implied in your guidance for 25 or are you not building it that way and you're simply looking at the MAUs and kind of driving a certain amount of revenue out of those customers, thank you.

Sure, thanks. So, it's a combination of those and obviously, given that we plan in our guidance for a lot of different scenarios, it does include both those. I'll say that we improved sports hold in 24. We actually improved our sports hold in Q4 of this year compared to the prior year despite the NFL outcomes that we all dealt with. We improved it as a company in North America and in Latin America, so we're pretty pleased with that. There have been a lot of product improvements and mixed improvements, so we are expecting additional hold improvement in 25 versus 24.

Thanks Kyle, nice quarter guys.

Thanks, Chad.

The next question is from the line of Jordan Bender with Citizens, you may proceed.

Afternoon everyone, maybe to just follow up on the outlook. The implied flow through for the year in 25 is below what you saw in 24 and from what I understand, Columbia is a pretty variable business model, so that shouldn't hurt too much to the downside. So, is there anything to call out in terms of why that's the case and is it kind of just servitism baked into the guidance? Thank you.

Yeah, thanks Jordan. So, it's a good point. The midpoint of our guide this year, flow through is around 27% and that compares to what was 36% last year. And so, just maybe to think about last year, 2024 benefited from an actual absolute dollar decrease in marketing spend compared to 2023 and we reduced marketing nicely, but still drove that 34% revenue growth. In 2025, we have plans to increase marketing spend. We still plan to get leverage over the marketing line, but that difference is the primary driver of the flow through between 2024 and 2025.

Great, thanks. And then a lot of the outlooks from your competitors include commentary around promotions continuing to come down. So, as we see the competitive environment continue to ease around you, are you looking to any states that you're not currently operational as the competitive environment lessens ahead of you?

Jordan, is your question states that we have not entered from a sports book only perspective in the past and are we reconsidering those? Is that the gist of the question?

Yeah, as a competitive environment in the OSB only states you're not in starts to ease. Does it make it any more attractive for you guys to go operate there?

Yeah, so we have these parameters that we look at for every jurisdiction and the tax rate, the cost to entry, will iGaming be in the future, likely to be in the future added. And so those are things that we've looked at in the past. I think looking at a competitive landscape, you start to see that even though you might have a diminished number of competitors in some of these jurisdictions, the ones that are actually carrying all the financial results are still in these markets and continue to invest. So I think that, we always look at markets we haven't gotten into to decide whether we wanna go into them, but there isn't something that unless we see an outlook change where we think iGasino is gonna be accelerated in that jurisdiction or there's an opportunity, I don't think it's gonna raise the level opportunity that we have in front of us because we have so many other great opportunities ahead of us, we can't get to them all, including all the Latin American markets that we have opportunities in. So we're not gonna just sort of chase a sports market coming in late where we don't really see a strategic value longer term for us outside of the sports fighting business.

Great, thank you very much.

Thanks, George. The next question is from the line of Joe Stoff with Uscua Hanna, you may proceed.

Thank you, hi there Richard, kind of. On the North American growth outlook in 25, I was curious about how you think about user growth versus the growth in art models. Is it fair to assume that you would think that art model is gonna grow faster than user growth? And then almost a related topic, I was wondering if you can comment just on the level of penetration so to speak within iGasino, it's a pretty finite market right now, you guys have been operating and really doing well in all those states and I'm wondering, is the opportunity set to grow and to expand the penetration rate of adults that really choose to use iGasino, where are we kind of in that continuum?

Yeah, so I can start, I think on the Mao versus Art Mao and where's the growth coming from? I'd expect that it's gonna be a nice combination of both, I mean if you look at our player counts throughout 2024, I mean just as last quarter we grew North America by 28% and that was the highest quarter for the year, now we benefited from Delaware in those numbers throughout the year but even without Delaware we would have had accelerating and sequential user counts for geez, almost the last two years, so even ex Delaware we've had really good user count growth and more of that has been in iGasino markets than sports markets, so some of that player value and whether it's Art Mao growth or Mao growth, it's gonna come down to, are we bringing in more casino players than sports players who are generally more, the casino players being more valuable? So I think there's an opportunity for both of those to be driving the revenue growth and be a nice balance there.

I

guess I could jump in on the

maturity of the markets, every state has a varying level of maturity, of course New Jersey was the first to do iGasino and for us, Delaware's been the most recent one, so what you've seen in the European markets, and I grew up in the European markets years ago, 20 years of growth in these regulated markets at least that you saw comes as in growth and you're seeing that here in the US that all the markets still growing, even the most mature market in New Jersey have continued to grow at record rates, so I think what you'll see is that there's a large population that hasn't tried iGaming in many markets and over time as everything else becomes more digitalized, you get more people willing to try and embrace the benefits of digital gaming, you still see the land-based casino still maintain their revenues but you start to see the state's benefit even more from the increased iGaming player bases that will play both online and land-based and those players will also only be digital, but you also grow an audience every year by people getting to become the proper Asia gamble, it's a new class of people every year and on top of that you just have a larger number of existing populations in the states that are gonna try for the first time, so I just think that as industries you look back in European markets, you'll see that it has, it's not surprising to me that it's been consistently growing in the US, I would expect that to continue based on my experiences in other European markets prior to the US market opening up.

Yeah, it feels like all the analysts that have covered this industry have kind of under-putted on their estimates on the TAM and everyone has to keep raising them time after time, so maybe everyone's got it right at this point, but it sure seems like there's opportunity for that to continue to grow.

Yeah, and I appreciate that response and I guess I was wondering maybe forget, part three of the question is like there certainly was a re-acceleration in iCasino growth in the second half versus the first half and I'm wondering if you can comment on reasons why you think that is an aggregate, I'll leave it wide open if you could.

Yeah, Joe, I think we just can focus on ourselves and we know that as you've seen, we've had tremendous growth and I think we're getting better at everything we're doing, releasing great new product features and innovations and you can see that, and this is really simple and in a day, it's about getting player counts, increasing your player counts and increasing your player values and we've done both. So if you do that, you're gonna grow your business nicely and you do that by offering players a great user experience and so what we do is we focus on execution and the things that we can control, which is exactly what I described.

Thank you,

guys. There are currently no questions registered, so as a brief reminder, is star one to ask a question. The next question is from the line of David Horntal with Private. My apologies. It looks like the last question was our last question. I would now like to pass the conference back over to Richard for any closing remarks.

Appreciate it. Well, thank you again for joining us today. We look forward to updating you on our progress when we share our first quarter results in the spring.

That concludes today's call. Thank you for your participation and enjoy the rest of your day. Enjoy the rest of your day.