Rush Street reaffirms H2 2023 positive EBITDA target despite lowered 2022 guidance

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Rush Street Interactive (RSI) expects to be EBITDA positive by the second half of 2023 after posting record revenue in its latest quarterly results, despite lowering its earnings guidance for full-year 2022.

The operator generated $148m in revenue in Q3, marking its 14th consecutive quarter of revenue growth.

Revenue climbed 21% year-on-year, while total operating costs and expenses increased by 19.9% to $168.6m. That left the business with a $20.6m loss from operations in Q3, compared to a $17.7m loss in the prior-year period.

The business made an adjusted EBITDA loss of $12.5m, marginally higher than Q3 2021’s $12.2m EBITDA loss.

Other expenses, including income taxes, left the firm with a net loss of $22.7m in Q3, compared to an $18.9m net loss in Q3 2021. 

During the quarter, the number of real-money monthly active users in the US and Canada using the operator’s brands grew by some 31% year-on-year, to around 130,000.

The average revenue generated per monthly active user was some $345, a 6% increase on the previous quarter.

As of the end of the period, RSI held unrestricted cash and cash equivalents on its balance sheet of $195m, with no debts outstanding.

The business is focused firmly on the expansion of the online casino vertical, as it has proven to be significantly more profitable than sports betting.

Indeed in Michigan, New Jersey, Pennsylvania and West Virginia – where RSI operates both online sports betting and iGaming – 74.1% of Q3 revenue was derived from online casino with just 25.9% coming from sports betting.

The most valuable customers, however, appear to be those who engage with both verticals. The average customer who plays both sports betting and online casino generates some 2.2x more revenue than either individual product customer per month, RSI said.

“We posted a solid third quarter, as our efficient approach to marketing and robust platform continue to perform well,” said RSI CEO Richard Schwartz.

“Despite a lower than normal online casino hold rate and currency headwinds during the quarter, which we believe collectively impacted our quarterly revenue by an estimated $6m, we generated record revenues for the fourteenth straight quarter and progressed towards our profitability goals and our target of being adjusted EBITDA positive for the second half of 2023.

“In terms of activity, we continue to see very strong volumes in markets where we operate both online casino and sports betting, as we are able to execute on the enhanced profitability offered by the online casino vertical in these markets. 

“Internationally, we are seeing strong results from both Colombia and Ontario and we are excited to begin increasing marketing efforts in Mexico. We remain focused on building a strong foundation in our new markets that will provide stable, long-term growth opportunities while keeping an eye on future profitability.”

RSI CEO Richard Schwartz: “Despite a lower than normal online casino hold rate and currency headwinds during the quarter, which we believe collectively impacted our quarterly revenue by an estimated $6m, we generated record revenues for the fourteenth straight quarter and progressed towards our profitability goals and our target of being adjusted EBITDA positive for the second half of 2023.”

Following the release of its Q3 results, RSI has reduced revenue guidance for the full-year 2022 from a range of $600m-$630m to a range of $580m-$600m. At the midpoint of the updated range, revenue would have risen some 25% year-on-year.

Highlights for the business during the quarter included expanding its partnership with LaLiga to become the exclusive sportsbook partner throughout South America, rebranding its New Jersey online casino and sportsbook to BetRivers to create stronger branding and marketing efficiencies, and opening retail sportsbook operations in Maryland.

The firm said it has further plans to launch online sports betting in both Maryland and Ohio in the coming months.

On the operator’s Q3 earnings call, CEO Schwartz said he was hopeful that new markets would open for iGaming in the US in the near future, with a focus on Iowa, Indiana, Illinois and New York.

With widespread lobbying efforts taking place across the industry, Schwartz thinks it is “very possible you will start to see some movement in legalisation efforts in the states that I mentioned, perhaps others.”

About the author

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Conor Mulheir

Conor entered the gaming industry in 2018 producing high-level live event content for audiences in London, Amsterdam and São Paulo. From 2020, he went on to report news and commission exclusive content for various gaming media brands before joining iGaming NEXT as editor in January 2022.

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