Net loss was $24.5m in Q1, down from a net loss of $52.3m during the first quarter of 2022.
RSI’s adjusted EBITDA loss for the quarter was $8.7m, an improvement of 80% compared to the prior year and the company’s best performance in the last seven quarters.
A disciplined approach to marketing spend has contributed to RSI’s better-than-expected Q1 results.
Advertising and promotions expenses were reduced to $49.4m, a 26% decrease from the previous year and down 22% sequentially.
Meanwhile, revenue grew 20% compared to Q1 2022, primarily driven by more than 100% growth in Latin America and new market launches in North America.
“We continue to perform very strongly in Colombia,” CEO Richard Schwartz said. “In the first quarter, on a year-over-year basis in Colombian pesos, we grew by over 40% across the board, including in handle, GGR and revenue,” he added.
In US dollars, RSI grew revenue 20%, reflective of year-on-year headwinds in foreign exchange rates.
During the firm’s earnings call, Schwartz explained the decision to wind down a partnership with the Connecticut Lottery Corporation, stating that it was not the right fit for RSI, and resources could be used more efficiently elsewhere.“While this wind down will have an impact on our future year’s revenues, it will also have a positive impact for us on profitability in the coming years. We thought long and hard about this decision,” he said.
“In any market, we have to see appropriate return on our investment. As the Connecticut market and partnership unfolded, it became clear that it was not the right fit for RSI and our capital and resources could be used more efficiently elsewhere,” Schwartz added.
During Q1 2023, costs increased 19% year-over-year and by 10% sequentially to $14.7m.
CFO Kyle Sauers explained that although RSI continues to invest in both its technology and corporate functions, “we remain vigilant about monitoring costs and the way we invest to support our growth and innovation plans over the coming years”.
Sauers also cautioned that costs are expected to continue to rise throughout the year.
Despite this, RSI’s balance sheet “remains in excellent shape”, with $147m in unrestricted cash and no debt, indicating that the company is well-funded to achieve profitability.
Edward Engel from Roth MKM asked Sauers whether RSI’s 2023 revenue guidance included the impact of exiting from Connecticut.
Sauers confirmed that the guidance does take into account the Connecticut wind down, but the company is still uncertain about the exact timing of the exit as they are cooperating with the lottery in that process.
Despite this uncertainty, RSI is confident that their revenue guidance range accounts for different outcomes or time frames for the wind down.
Current trading & outlook
RSI expects revenue for the full year 2023 to come in between $630m and $700m, unchanged from its previous expectations.
At the midpoint of the range, revenue of $665m represents 12% year-over-year growth.