Earnings Call: Rush Street Interactive Sees Record Q3 Growth, Raises 2024 Guidance

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Earnings Call: Rush Street Interactive Sees Record Q3 Growth, Raises 2024 Guidance

Rush Street Interactive (RSI) delivered a record performance in the third quarter of 2024. The company's revenues surged to $232 million, reflecting a 37% increase compared to the previous year. The adjusted EBITDA also rose to $23 million, registering more than a fivefold increase on an annual basis. This performance marks the 15th consecutive quarterly revenue growth since RSI went public, indicating a consistent growth trajectory.

In response to these strong results, RSI raised its 2024 revenue guidance by 3% and its EBITDA guidance by 24%. The company now anticipates that EBITDA will be more than 110% above initial expectations for the year.

Key Points:

  • RSI reported $232 million in revenue for Q3 2024, a 37% year-on-year increase.
  • Adjusted EBITDA for the quarter reached $23 million, more than five times the figures from the previous year.
  • The company revised its 2024 revenue guidance upward by 3% and its EBITDA guidance by 24%.
  • Monthly Active Users (MAUs) increased significantly in both North America (28%) and Latin America (122%).
  • RSI announced a stock buyback program of up to $50 million and reported a strong cash position with $216 million in unrestricted cash and no debt.

Company Outlook: RSI raised its full-year 2024 revenue guidance to between $900 million and $920 million. EBITDA projections for the year were also increased to a range of $82 million to $86 million. The company is exploring expansion into new markets, with a focus on Latin America and Canada, and is open to potential acquisitions.

Headwinds: Despite strong growth, RSI faces challenges with low hold rates in North American sports betting. Potential tax increases and regulatory risks could negatively affect the sector.

Tailwinds: RSI has experienced its highest growth rates in over three years, particularly in Latin America. The company is optimistic about legislative momentum for iGaming legalization across various states. Marketing strategies have led to a reduction in customer acquisition costs. Gross profit margins have improved, and the company is witnessing strong user retention trends.

Gaps: No specific gaps were mentioned in the earnings call summary.

Q&A Highlights: Kyle Sauers noted significant increases in ARPMAU in North America and the growth potential of the Delaware market. RSI is preparing for a January launch in Brazil and plans market entries into Peru and potentially Alberta. Richard Schwartz addressed regulatory concerns and expressed hope that potential tax increases would not proliferate.

In summary, RSI's third-quarter performance set new records for the company, supported by strategic marketing, innovative product offerings, and increasing user engagement. The company's financial health is solid, backed by a strong cash position and no debt. RSI is well-positioned for continued growth, particularly with plans to invest further in high-growth markets such as Latin America.

The company remains cautious yet optimistic regarding regulatory developments and the potential for iGaming legalization in new markets. As RSI enters the final quarter of 2024, it expects to provide further updates after clarifying year-end results.

InvestingPro Insights: Rush Street Interactive’s (RSI) impressive third-quarter performance is further illuminated by key metrics from InvestingPro. According to InvestingPro, the company's 25.05% revenue growth over the last twelve months aligns with the reported 37% year-on-year increase in the earnings report. This consistent growth trajectory is supported by an InvestingPro Tip indicating that analysts expect sales growth this year.

InvestingPro data reveals an impressive 133.06% EBITDA growth over the last twelve months, confirming the more than fivefold increase in adjusted EBITDA mentioned in the article. This significant improvement in profitability is particularly noteworthy, given another InvestingPro Tip that noted RSI was not profitable in the last twelve months. However, analysts expect the company to be profitable this year, consistent with RSI’s upward revision of its EBITDA guidance.

RSI's strong financial position is further emphasized by an InvestingPro Tip revealing that the company holds more cash than debt on its balance sheet. This aligns with the $216 million in unrestricted cash and lack of debt mentioned, underscoring the company’s financial flexibility for future growth initiatives and market expansions.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for RSI, providing deeper insights into the company's financial health and market position.