Higher spending leads to $52.3m net loss at RSI in Q1
Revenue for the three months to 31 March 2022 was $134.9m, up 20.7% from $111.8m in the same period of last year and a new quarterly record for the business.
RSI said this growth was driven by a number of developments in the quarter including its launch in both New York and Louisiana, while it also went live in the Canadian province of Ontario shortly after the end of Q1.
Also in the quarter, RSI expanded its ambassadors and betting content production portfolio with the likes of NBA great Joakim Noah and former New York Mets manager Bobby Valentine, while it became an official sportsbook partner of the New Orleans Pelicans.
However, the rise in revenue was accompanied by an increase in spending, with operating costs jumping 33.0% year-on-year from $139.1m to $185.0m.
Costs of revenue were up 25.4% to $99.9m and advertising and promotions spend hiked 58.3% to $66.8m, though general administration expenses were down 6.6% to $15.5m. Depreciation and amortisation costs were also 306.1% up to $2.7m.
After including $222,000 worth of net interest expense, this left a pre-tax loss of $50.3m, compared to a $728,000 profit in the previous year. Higher costs also meant that adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) reached a loss of $43.4m, close to triple the $15.1m loss in 2021.
RSI paid $2.0m in income tax, which resulted in a net loss of $52.3m, far greater than the $76,000 loss posted in Q1 of 2021. However, RSI noted $37.6m of this was attributable to non-controlling interests, meaning the loss attributable to RSI was $14.7m still much wider than the $17,000 comparable loss last year.
“Launching five new markets in seven months, with an additional market set for launch by the end of the second quarter, positions us well to continue to rapidly expand and diversify the business with an eye towards profitability,” RSI chief executive Richard Schwartz said.
“We remain disciplined in our approach and are balancing profitability from more developed markets with investments in new market launches. In fact, excluding the impact of our New York launch during the first quarter, our adjusted EBITDA loss is less than $15.0m, demonstrating the growing profitability of our previously launched markets.
“Achieving consistent profitability is our top priority and we expect RSI to be adjusted EBITDA positive for the second half of 2023.”
Based on its performance in Q1, RSI said it would raise revenue guidance for the full year to the end of 2022 from a range of $580.0m to $630.0m, to between $600.0m and $650.0m.
At the midpoint of the new range, revenue of $625.0m would represent 28.1% year-over-year growth when compared to $488.0m of revenue posted in 2021.