Rush Street Interactive, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive first quarter 2025 earnings conference call. 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, April 30th, 2025. I'll now turn the call over to Kyle Sowers, Chief Financial Officer.

Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2025 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, 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 risk 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. 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, the most directly comparable GAAP measure, is available in our first quarter 2025 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 thank you for joining us today for our first quarter 2025 earnings call. We have started the year with strong momentum, continuing to build on our success from last year. Our first quarter revenue was $262 million, up 21% year over year. And adjusted EBITDA was $33 million, almost doubled compared to the same period last year. We continue to achieve strong results by prioritizing innovation and the quality of our player experience, while at the same time, excelling in the efficient acquisition and retention of high value players. In essence, we are consistently adding more players to our platform. These players are of higher value and we are acquiring them as efficiently as ever. This growth is driving significant profitability and reinforcing our strong momentum. During the first quarter, we continued to experience solid growth in both our online casino and online sports verticals. Online casino grew by 25%, while sports betting grew by 11%. The growth in sports betting occurred despite player-friendly outcomes throughout March Madness, as well as the Philadelphia Eagles Super Bowl win, which impacted us because of our large sports betting player base in the Delaware, South Jersey, and Pennsylvania areas. The balanced expansion across product verticals is a proof point to our persistent efforts to enhance the user experience across all product verticals and customer touchpoints as we attract and retain high-value players. Our strategy of differentiating our offerings continues to pay off, driving engagement and retention on our platform. In North America, MAL growth per quarter was 17% year-over-year, And in Latin America, our MALs continue to expand at a high rate, growing 61% year over year compared to last year's quarter. In fact, March was the second highest level of MALs in LATAM, despite the tax situation in Colombia, trailing only last July when Colombia played in the finals of the Copa America. I will touch more on the tax situation in Colombia in a few minutes to provide an update from our last call. First, a few takeaways worth noting that underlie the strong results. Domestically, we saw very solid growth across the board, with year-over-year revenue growth in 15 out of our 16 North American online markets. This despite the challenging sports hold in Q1 of this year that I referenced earlier. Our markets with both online casino and online sports betting, such as Michigan, Delaware, and New Jersey, continue to perform exceptionally well For example, in Michigan, we demonstrated impressive growth with revenue up 40% during the quarter. In Delaware, this was our first quarter with year-over-year comparisons, and the revenue growth exceeded 80%. While we anticipate facing tougher comparisons as the year progresses, these Q1 results underscore our continued enthusiasm for this market. New Jersey also remains a strong contributor, growing 27% during the quarter. As the industry approaches the 12th year of legalized online casinos in the state of New Jersey, the market has shown consistent year-over-year revenue growth, and we believe it serves as a prime example of the long-term prospects and durability of the online casino industry. Internationally, we continue to generate strong results. In Mexico, growth accelerated from Q4, and we are seeing year-over-year growth near 50% as we begin our third full year. In Colombia, our GGR was up 55% in local currency, while we've been navigating a temporarily imposed 19% value-added tax on player deposits. On our last earnings call, we were only a few days into the new Colombian VAT tax and were uncertain about how we'd approach the change and the impact on us and the broader market. In response, at least up to this point, similar to others in the market, we have been absorbing the tax through higher bonusing rather than passing the cost on to our players. This approach has allowed us to retain our market share, maintain strong player activity, and keep GGR levels near all-time highs, albeit with lower NGR. To provide clarity on the upcoming timeline, recall that the Colombian president issued two emergency decrees. One declaring a state of emergency in the Catatumbo region due to increased guerrilla activity. which would be the basis to institute emergency tax increases, and another imposing the actual 19% VAT tax to fund efforts against the guerrilla threat. Just recently, the president chose not to renew the state of emergency decree as of April 24th. Both decrees are under automatic review by the Colombian Constitutional Court. A summary of the court's ruling on the first decree was released yesterday. providing that the first decree was declared constitutional in limited parts. We will review the court's full opinion on this decree once available. Regardless, the court must separately and independently rule on the second decree's constitutionality, which is likely by late May or June. Depending on these court rulings, we and our competitors may adjust the boating strategies to better suit operators. Regarding legislative activity, There has been exciting progress in online gaming legislation in Alberta. The iGaming Alberta Act, known as Bill 48, has advanced to the third step of a five-step legalization process, moving to the committee stage. This bill aims to establish an open market for online sports betting and online casinos in the province of Alberta, transitioning from the current monopoly model operated by state-owned Play Alberta The bill proposes creating the Alberta iGaming Corporation to manage contracts with operators, while regulation will be handled by the Alberta Gaming, Liquor and Cannabis Commission. These changes are designed to bring unregulated operators under a regulated market, similar to Ontario's model. We are excited about the progress made and expect to be operating online casino and sports betting in this market next year, leveraging our success in online casino markets in North America. We continue to monitor sessions in various US states. Increasingly challenging economic realities faced by states, combined with a proven financial and consumer protection benefits of regulation, and the fact that unregulated online casinos in the form of online casino sweepstakes and offshore casino sites already exist in the states, creates a compelling case for legalization, regulation, and taxation of online casinos. The reality is that legalizing online casino remains one of the best options for state governments to make up any near or long-term budget deficits. It's reliable, proven, and straightforward for states to implement. In short, legalizing online casinos would be an additive contributor to state budgets, generate large and meaningful tax amounts for states, and in states where land-based casinos already exist, grow the overall pie of gaming revenues for those states. As more states recognize the dual benefits of protecting their citizens and generating substantial tax revenues, we believe that iGaming legalization will gain momentum in the coming years. Reflecting on the current economic macro situation, we are a well-positioned pure play in the online casino and OSB space. Our digital platform offers a very high quality entertainment along with affordability and convenience. This makes it an attractive option for consumers, especially during challenging economic times. The accessible nature of our content makes it an appealing source of entertainment, positioning us as a resilient and well-positioned among other consumer-facing industries. We believe our focus on delivering consistent performance and driving value for our shareholders will continue to make us a strong performer. Our platform's ease of use, affordability, and innovation, combined with our award-winning customer service, are key factors that are helping us to excel during these challenging times and will contribute to us continuing to be an outperformer. I want to emphasize our unwavering commitment to delivering value to our shareholders and providing an unparalleled gaming experience to our users. Our success over recent years has set a strong foundation and we are optimistic about building on this foundation going forward. Thank you for your continued support and confidence in Rush Street Interactive. With that, I'll turn the call over to Kyle.