Rush Street Interactive posts record revenue and adjusted EBITDA in Q1

Revenue for the three months to 31 March amounted to $217.4m (£173.7m/€203.0m). This is 33.9% ahead of Q1 in 2023 and a new quarterly record for Rush Street Interactive.

This increase, RSI said, was driven by growth across both its online casino and sports betting businesses. CEO Richard Schwartz added that this trend has carried over from 2023 into the new financial year. He said it is being helped by rapidly increasing player counts and improving player values.

“The results of efforts to continually differentiate our user experience and offer a high-quality experience engages and retains players on our platform,” Schwartz said.

“Said simply, we are adding players to our platform more quickly. Players on average are higher value. We are finding these new players more efficiently than ever and we are driving meaningful profitability from this impressive growth.”

Analysing the Delaware impact in Q1

Just before Q1, Rush Street linked up with BetRivers to launch the first online sportsbook for the Delaware Lottery. This went live in in late December, along with three, new-look online casinos, also powered by Rush Street.

Schwartz spoke positively about the early performance in Delaware. He said annual gross gaming revenue run rate increased and was close to $70.0m. This is up $10.0m from the previous quarter.

“This was driven by a strong end to the quarter,” Schwartz said. “We ran over four times the rate of the previous operator during the month of March, with around 75% of this GGR attributed to online casino.”

Schwartz also referenced the potential expansion of online sports betting in Delaware to additional operators. He hints that it is likely the current set-up will remain.

“We are actively involved in discussions on this topic and have support from key stakeholders in the state, leading us to feel positive on the current structure remaining in place.”

What is happening elsewhere at Rush Street?

Away from Delaware, Rush Street reported resurgence within some of its more mature markets. This includes its three largest online casino markets in North America: Michigan, New Jersey and Pennsylvania. All had their largest year-on-year revenue growth rates of the last two years.

“Our focus on the online casino experience is resonating with new and existing customers, driving very solid growth in these existing markets,” Schwartz said.

Turning to Latin America, Schwartz said he is “extremely pleased” with performance in both Colombia and Mexico. 

“Our RushBet brand is resonating with customers as evidenced by our year-in-year monthly active users and average revenue per monthly active user growth,” he said. “This translated to revenue increases of 84.0% in Latin America. There is a lot of room for continued growth as we invest in both these markets.”

Schwartz also took time to praise the marketing strategy at Rush Street and the impact it is having on growth. This was bolstered further by the appointment of Brian Sapp as its first chief marketing officer last month.

“While our strategy has not wavered, our execution continues to improve, we target the highest ROI opportunities with an emphasis on attracting the highest value players to our platform and retaining them by offering them a high-quality experience and this is working,” Schwartz said.

“Specifically, I’m very proud that we have continued to deliver results in driving greater efficiency in our marketing costs. In fact, in Q1, we had our highest number of first-time depositors ever as a company. It was also the highest in North America since our launch in New York in the first quarter of 2022.”

Net loss almost eliminated in Q1

Advertising and promotions costs in Q1 were reduced by 23.1% to $38.4m as part of this approach. However, higher spending elsewhere, including a 34.8% rise in revenue costs, meant total operating expenses in Q1. In total, costs were 17.1% higher at $215.9m.

That said, such was the impact of Q1 revenue growth that Rush Street was able to turn a $22.1m operating loss into a $1.5m operating profit. Furthermore, $1.6m in interest income meant pre-tax profit hit $3.1m, in contrast to last year’s $21.7m loss.

Rush Street did have to pay $5.3m in income tax, meaning a net loss of $2.2m, although this was markedly better than the $24.5m loss in 2023.

However, when taking off $1.5m of loss from non-controlling interests, net loss attributable to Rush Street was just $727,000. This is much improved from last year’s $7.3m loss.

In addition, adjusted EBITDA for the quarter hit a record $17.1m, which is again in contrast to an $8.7m loss in 2023.

What to expect in the full-year from Rush Street

Rush Street also took the opportunity to publish guidance for the full-year through to 31 December 2024.

Revenue is likely to be between $810.0m and $860.0m, the midpoint of which would be $835.0m and 21.0% ahead of last year. Incidentally, this midpoint is $35.0m higher than original guidance issued previously.

As for adjusted EBITDA, this is set to be between $50.0m and $60.0m, with the midpoint of this – $55.0m – being some 573.0% higher year-on-year. Again, this midpoint is higher than previously stated, with Rush Street increasing this by $15.0m.

Rush Street noted that guidance is based on certain assumptions, including that only current operations are included and that it will not launch in any new markets. Changes in either of these would impact performance for the full-year.

“We are very excited about the opportunity to continue to scale the business and drive growth on the back of our current momentum, which includes increasing our adjusted EBITDA guidance by 38% at the midpoint,” Schwartz said.

“With this growth and scale comes improving earnings and free cash flow. Looking forward, we remain energised in our view that the team is primed to continue executing on our strategy and delivering value to shareholders.”