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 26, 2025. I will now turn the call over to Kyle Sowers, the financial officer. You 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 conditions. 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 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 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, 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 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've not only set records in revenue, profitability, cash flow, 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, seasoned 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 delivers 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 and 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 sportsbooks 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 MALs were at an all-time company record of 205,000, up 28% year-over-year, marking another consecutive quarter of accelerating growth. ARTMAL in North America increased to $346. The fast growth in players, while maintaining our leading ARTMAL 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 MALs increasing year over year by 71% to 348,000. This increase highlights the effectiveness of our localized strategies and teams and our ability to attract and retain users. Our ARPMAL 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 our MAU 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 MALs and ART MALs. 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 the 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. But 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.