Q4 2023 Rush Street Interactive Inc Earnings Call

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive fourth quarter and year-end 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Good day, ladies and gentlemen, thank you for standing by and welcome to the Rush Street Interactive fourth quarter and year end 2023 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today.

Operator: A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, March 6, 2024. I will now turn the call over to Kyle Sauers, Chief Financial Officer. You may proceed.

March six 2024, I will now turn the call over to Kyle Sauers, Chief Financial Officer. You May proceed. Thank you operator and good afternoon by now everyone should have access to our fourth quarter and year end 2023 earnings release. It can be found under the heading financials quarterly results in the investors section of the Rsi website at Rush Street interact.

Kyle L. Sauers: Thank you, Operator, and good afternoon. By now, everyone should have access to our fourth quarter and year-end 2023 earnings release. It can be found under the heading Financials, Quarterly Results, in the Investors section of the RSI website at RushStreetInteractive.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should, and other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to We assume no responsibility for updating any forward-looking statements.

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Some of our comments will be forward looking statements within the meaning of the federal Securities laws forward looking statements are not statements of historical fact are usually identified by the use of words, such as will expect should and other similar phrases are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect we assume no responsible.

<unk> for updating any forward looking statements. Therefore, you should exercise caution in interpreting and relying on them.

Kyle L. Sauers: Therefore, you should exercise caution in interpreting and relying on, We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. In particular, we will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share based compensation, adjustments for certain one time or non recurring items, and other adjustments that are either non-cash or not related to our underlying business, A reconciliation of these non gap measures to the most directly comparable gap measure is available in our fourth quarter and year end 2023 earnings release, and our investor deck, which is available at the investor section of the RSI website at rushstreetinteractive.com.

For you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition during.

During the call we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. In particular, we will be discussing adjusted EBITDA, which we define as net income or loss before interest income taxes depreciation and amortization.

Asian share based compensation adjustments for certain one time or nonrecurring items and other adjustments that are either non cash or not related to our underlying business performance.

Reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our fourth quarter and year end 2023 earnings release, and our Investor deck, which is available at the investors section of the Rsi website at restaurant interactive Dot com for purposes of today's call unless noted otherwise when discussing profitability EBITDA or other income state.

Kyle L. Sauers: For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA, or other income statement measures other than revenue, we're referring to those items on a non-gap adjusted EBITDA basis. With me on the call today is Richard Schwartz, chief executive officer. We will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard. Thanks, Kyle.

<unk> measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis with me on the call today, we have Richard Schwartz Chief Executive Officer will first provide some opening remarks, and then open the call to questions.

With that I'll turn the call over to Richard.

Thanks, Carl Good afternoon, and welcome to our fourth quarter and year end 2023 earnings call.

Richard Todd Schwartz: Good afternoon, and welcome to our fourth quarter and year-end 2023 earnings call. I'd like to start by saying how proud I am of our team at Rush Street Interactive. What we've accomplished this year, and how we set ourselves up for success for years to come. We exceeded the high end of our revenue guidance for the year and achieved EBITDA profitability far ahead of our target. Through strong execution by our team, we improved year-over-year EBITDA by $100 million. We initially set out to be profitable for the second half of 2023, though as a result of our focused efforts. We delivered better results and were profitable for the full year. We ended the year with a record-setting quarter and have started 2024 with strong momentum.

I'd like to start with how proud I am of our team our Rush Street interactive.

While we've accomplished this year.

We've set ourselves up for success for years to come.

We exceeded the high end of our revenue guidance for the year.

And achieve EBITDA profitability far ahead of our targets.

Through strong execution by our team, we improved year over year EBITDA by $100 million.

We initially set out to be profitable for the second half of 2023.

As a result of our focused efforts, we delivered better results and were profitable for the full year.

We ended the year with a record setting quarter.

And have started 2024 with strong momentum.

Richard Todd Schwartz: Our investments and know-how in creating differentiated and high-quality user experiences are paying off, as we simultaneously achieve our growth and profitability targets, with increased contribution from all geographies, from both iCasino and sports, and from both our newer and more mature market. Our 2023 ALPS performance and the momentum in the new year are the result of us continuing to execute on three key operating principles. First, the customer. I've said it time and again, product and user experience wins in the end.

Our investments and Knowhow, and creating differentiated and high quality user experiences are paying off.

As we simultaneously achieved our growth and profitability targets with.

With increased contribution from all geographies.

From both casino and sports.

And from both our newer and more mature markets.

Our 2023, <unk> performance and the momentum in the new year are the result of us continuing to execute on three key operating principles.

First the customer.

I've said, it time, and again product and user experience wins in the end.

Richard Todd Schwartz: We have felt this way since we started the business in 2012, and we continue to feel it today. We feel we have a competitive advantage that is not easily replicated, and that we have spent the past 10 plus years focused on enhancing the user experience as our top priority. We are all about offering customers a world-class user experience that minimizes friction and drives retention. This ethos is fundamental to our company.

We have felt this way since we started the business in 2012.

And we continue to feel that today.

We feel we have the competitive advantage not easily replicated and that we have spent the past 10 plus years focused on enhancing the user experience as our top priority.

We are all about offering customers a world class user experience and minimizes friction and drives retention.

This ethos is fundamental to our success.

Richard Todd Schwartz: Second, technology. Investing in and continuously improving our best-in-class technology platform is what allows us to support our wide and ever-growing range of differentiated product features and functions and accomplish our customer and financial goals. Third, offering leverage that grows as we scale, with each year as we drive growth in a diversified set of markets. We expect to deliver improving earnings and Cashflow. This past year, not only did we improve EBITDA by $100 million, as I referenced earlier, but we did so on a $100 million increase in revenue. We saw continued progress in each of these areas throughout the year, culminating in a very strong fourth quarter. Turning to our results, revenue for the fourth quarter was $194 million, up 17% from the prior year. Quarterly EBITDA improved $28.8 million, coming in at $11.5 million, compared to negative 17.3 million last year.

Second as technology investing and continuously improving our best in class technology platform is what allows us to support our wide an ever growing range of differentiated products features and functions and.

And accomplish our customer and financial goals.

Third is operating leverage that grows as we scale.

With each year as we drive growth in our diversified set of markets, we expect to deliver improving earnings and.

And cash flow.

This past year, not only did we improve EBITDA by $100 million.

As I referenced earlier, but we did so on a $100 million increase in revenue.

We saw continued progress in each of these areas throughout the year.

Eliminating and a very strong fourth quarter.

Turning to our results revenue for the fourth quarter was $194 million up 17% from the prior year.

Quarterly EBITDA improved $28 8 million coming in at $11 5 million.

Compared to negative $17 3 million last year.

Richard Todd Schwartz: For the full year, we grew revenue 17% to $691 million, which, as I mentioned, resulted in an improved EBITDA of $8.2 million. A large part of the improvement is that we continue to grow revenue much more efficiently. Kyle will provide more detail on the numbers.

For the full year, we grew revenue 17% to $691 million.

As I mentioned resulted in improved EBITDA of $8 2 million.

A large part of the improvement is that we continue to grow revenue much more efficiently.

<unk> will provide more detail on our numbers.

Richard Todd Schwartz: There are a few things to take away from the quarter and the year. Top-line performance was strong once again. As we are seeing, our customer-centric approach and our ability to innovate translate into results. We saw strength across products, both iCasino and online sports betting, and also across geography, U.S. and Canada, and also Lafayette.

There are a few things to take away from the quarter and the year.

Topline performance was strong once again as.

As we are seeing our customer centric approach and our ability to innovate translate into results.

We saw strength across products.

I casino and online sports betting and.

And also across geographies U S and Canada and also Latam.

Richard Todd Schwartz: When looking at different market vintages, it's exciting to note that, excluding our US markets launched before 2021, our revenue growth was an impressive 44% during the fourth quarter. We continue to grow faster in our higher-margin market. A couple of highlights of note in the U.S. and Canada.

When looking at different market vintages.

It's exciting to note that excluding our U S markets launched before 2021.

Our revenue growth was an impressive 44% during the fourth quarter.

We continue to grow faster than our higher margin markets.

A couple of highlights of note in the U S and Canada.

Richard Todd Schwartz: Higher user accounts are driving increased revenue, even as we grow player value. In fact, during the fourth quarter, we achieved our highest year over year revenue growth in the last four quarters at 7%, which was well balanced between iCasino and Online Sports Betting, only in March. Even more important, that growth accelerated throughout the quarter and has continued nicely into Q1 of this year. Here are some Q4 highlights for a few specific markets. Michigan has seen a strong acceleration in revenue, and Q4 was our highest growth rate in the past year. New Jersey has also seen nice progress in recent quarters.

Higher user counts are driving increased revenue, even as we grow player values.

In fact during the fourth quarter, we achieved our highest year over year MAU growth in the last four quarters at 7%.

Which was well balanced between casino and online sports betting only markets.

Even more important.

That growth accelerated throughout the quarter and that has continued nicely into Q1 of this year.

Looking at Q4 highlights for a few specific markets.

Michigan has seen a strong acceleration in revenue.

In Q4 was our highest growth rate in the past year.

New Jersey has also seen nice progress in recent quarters.

Richard Todd Schwartz: And we hit a new high for revenue in that market since we rebranded Tibet Rivers in Q3 of 2022. In Ontario, we continue to have great success with year-over-year growth of 50%. West Virginia also continued a strong pace as well, where we grew revenue by 80% compared to the prior year.

And we hit a new high for revenue that market since we rebranded does that reverse in Q3 of 2022.

In Ontario, we continue to have great success with a year over year growth of 50%.

West Virginia continued a strong pace as well, where we grew revenue by 80% compared to the prior year.

Richard Todd Schwartz: Delaware is a market that, in a short time, has already validated the impact of our high-quality user experience. As a reminder, we are the sole iGaming and online sports book platform in the state, powering online casino and sports betting for each of the state's three land-based. It has only been a little over two months, but nevertheless, we are extremely pleased with the start. Over the first 60 days, we are at a run rate that would imply over 60 million annual GGR. The prior operator only had iCasino. So for comparison purposes, over two-thirds of the GGR is iCasino, and the rest is online sports betting. Comparing apples to apples.

Delaware is a market that in a short time has already validated the impact of our high quality user experience.

As a reminder, we are the sole I gaming and online sports foot platform in the state powering online casino and sports betting for each of the states three land based casinos.

It has only been in little over two months, but nevertheless, we are extremely pleased with the start.

Over the first 60 days, we are at a run rate that would imply over $60 million in annual GTR.

The prior operator, only had I casino so for comparison purposes.

Over two thirds of the <unk> casino and the rest being online sports betting.

Comparing apples to apples.

Richard Todd Schwartz: Online Consumer Results, which at this point was simply our replacement of their prior online casino platform in operation, is running above three times what the previous operator was doing. And then, obviously, we are seeing strong industry results in online sports betting, which has never been offered to players in this day prior to our loss. These initial results, in our view, highlight our differentiated product and user experience and why, time and again, we are able to excel in markets that include iConsumer. Moving South.

<unk> casino results, which at this point was simply a replacement of their prior online casino platform and operations.

Is running above three times, what the previous operator was doing.

And then obviously we are seeing strong initial results and online sports betting which has never been offered a players in the state prior to our launch.

These initial results in our view highlight our differentiated product and user experience and why time and again, we are able to sell in markets that include a casino.

Moving south.

Richard Todd Schwartz: We continue to execute extremely well, demonstrated by the fact that LATAM continues to show very strong performance. For example, revenue in Columbia grew over 65% year over year. While in Mexico, it was up approximately 60% quarter over quarter. This brings fourth quarter LATAM revenue contribution to over 13% of total revenues, the highest level in our history. Latin America remains topical both for us as well as within the broader industry landscape. Several countries are planning for iCasino and online sports betting expansion. Simply stated, we are a proven leader in Latin America. We have a demonstrated track record of success, powered by significant infrastructure investments, technology localized and customized for the region, and the know-how that only comes from on-the-ground experience. No word demonstrates our capabilities in LAPTAM better than Columbia.

We continue to execute extremely well demonstrated by the fact of Latam continues to show very strong performance.

Revenue in Colombia grew over 65% year over year.

While in Mexico, It was up approximately 60% quarter over quarter.

This brings fourth quarter Latam revenue contribution to over 13% of total revenues the highest level in our history.

Latin America remains topical both for us as well as within the broader industry landscape.

As several countries are planning for <unk> and online sports betting expansion.

Simply stated we are a proven leader in Latin America.

Have a demonstrated track record of success powered by a significant infrastructure investment technology localized and customized for the region.

And the know how that only comes from on the ground experience.

Nowhere demonstrates our capabilities in Latam better than Columbia.

Richard Todd Schwartz: Our results in Columbia continue to grow at a very rapid pace, as fourth quarter revenue growth accelerated to its highest rate of the year. We've come a long way and expect a lot of growth ahead. Five years ago, we sat out in Columbia with no brand recognition, no databases, unknown employees, no relationships. Moreover, no one in our company even spoke Spanish fluently.

Our results in Colombia continued to grow at a very rapid pace as fourth quarter revenue growth accelerated to its highest rate of the year.

We've come a long way and I expect a lot of growth ahead.

Five years ago, we set out in Colombia with no brand recognition.

No databases.

<unk> employees.

No relationships.

Essentially nothing.

No one in our company even spoke Spanish fluently.

Richard Todd Schwartz: By focusing on the fundamentals and building the business in a sustainable way, we've grown to the point where we believe that we have recently become the second largest operator in Columbia. We've achieved this success by investing in the business and executing on the fundamentals from the very beginning. We have built an entire organization locally, including full operations, marketing, payments, legal, compliance, finance, HR, and development.

By focusing on the fundamentals and building the business in a sustainable way, we have grown to the point, where we believe that we have recently become the second largest operator in Colombia.

We've achieved this success by investing in the business and executing on the fundamentals from the very beginning.

We have built an entire organization locally include.

Including the full operations marketing payments legal compliance finance HR and development teams.

Richard Todd Schwartz: Our strong presence has allowed us to develop local relationships and, more importantly, earn and retain credibility in the market with our employees, partners, and customers. This approach has served us well, as several competitors, some global operators, have entered the market during the last couple of years. However, despite their initial effort and aggressive marketing spends, they have not been able to capture meaningful market share.

Our strong presence has allowed us to develop local relationships and more importantly earn and retain credibility in the market with our employees partners and customers.

This approach has served as well as several competitors some global operators and turn to the market. During the last couple of years. Despite their initial effort and aggressive marketing spend.

They have not been able to capture meaningful market share.

Richard Todd Schwartz: Bottom line, Columbia remains an exciting market for us, and is both fast growing in itself, with years of growth ahead, while at the same time providing us the foundation to expand in LATAM, as we are doing in Mexico. In Mexico, as we shared after we launched in late 2022, our expectations were to begin seeing a meaningful ramp-up in the second half of 2020. We were able to deliver on this, as represented by the 185% revenue growth in the second half, compared to the first half of last year. Furthermore, when compared to our start in Colombia, we have generated about two times the revenues since launch in Mexico over the same time. Couple this with our app being one of the highest rated in Latin America, and we are poised for continued success.

Bottom line Columbia remains an exciting market for us.

Both fast growing in itself.

With years of growth ahead, while at the same time, providing us the foundation to expand in Latam as we are doing in Mexico.

In Mexico as we shared it after we launched in late 2022 RF.

Our expectations were to begin seeing a meaningful ramp up in the second half of 2023.

We were able to deliver on this as represented by the 185% revenue growth in the second half compared to the first half of last year.

When compared to our start in Colombia, we have generated about two times the revenue since launch in Mexico.

Over the same time period.

Couple this with our App being one of the highest rated in Latin America, and we are poised for continued success.

Richard Todd Schwartz: Beyond our current footprint, LabTam is a region where there are several opportunities to play to our strengths. Many investors are aware that in late December, the President of Brazil signed legislation authorizing the regulatory framework for both online casino and sports. This is the conclusion of a lengthy legislative process that, for much of the time, was thought would only lead to legalization of sports. Fortunately, especially for RSI.

Beyond our current footprint Latam as a region, where there are several opportunities that play to our strengths.

Many investors are aware that in late December the president of Brazil signed legislation authorizing the regulatory framework for both online casino and sports book.

This is the conclusion of a lengthy legislative process that for much of the time was stock would only lead to legalization of sports book.

Fortunately, especially for resi.

Richard Todd Schwartz: At the end of the process, online casino was added. For us, this inclusion of online casinos certainly makes the market opportunity bigger, and it is another aspect of legislation that plays to our strength. There are many regulations and complexities that we worked through for the Brazilian market.

At the end of the process online casino was added.

For us this inclusion of online casino certainly makes the market opportunity bigger.

And it is another aspect of legislation that plays to our strength.

There are many regulations complexities that we worked through for the Brazilian market.

Richard Todd Schwartz: We have spent a long time preparing to leverage our technology capabilities in the and plan to participate. We look forward to updating you on our progress in the coming quarters. There's also Peru, which gets a lot less attention, which we are very excited about as well. Last year, Peru not only approved laws governing online gaming and sports betting, but it also published online gaming regulations.

But we have spent a long time preparing to leverage our technology and capabilities in the country and plan to participate.

We look forward to updating you on our progress in coming quarters.

There is also Peru, which gets a lot less attention.

Which we're very excited about as well.

Last year, Peru, not only approved laws governing online gaming and sports betting.

But it also published online gaming regulations.

Richard Todd Schwartz: This is an exciting market for us, given its adjacency to Colombia and shared media markets, meaning that many of the soccer TV broadcasts that we market in Colombia are viewed by consumers in Peru. In fact, our research has shown that our RushFed brand is already widely recognized. As our timing becomes more clear on a Peruvian launch, we will share more details. Notwithstanding, we expect to launch later this year. In terms of how we see the market size of both countries, the population of Brazil is over 200 million people, and Peru is about $35 million.

This is an exciting market for us given its adjacency to Colombia and shared media markets, meaning that many of the soccer TV broadcast that we market on in Colombia are viewed by consumers in Peru.

In fact, our research has shown that our rush bed brand is already widely recognized in Peru.

As our timing becomes more clear on the Peru launch, we will share more details.

Notwithstanding we expect to launch later this year.

In terms of how we see the market size of both countries.

Population in Brazil is over 200 million people and.

And Peru is about $35 million.

Richard Todd Schwartz: Compare that with Mexico, which is $130 million, and Colombia, which is $50 million. Safe to say, between ramping up Mexico and then with Brazil and Peru legislative activity, we are seeing significant near and intermediate-term opportunities to target a population of over 425 million people and over an estimated $6 billion total addressable market, and these four regulated lifetime markets alone. Shifting to the North American legislative outlook, we are at the beginning of 2024's legislative sessions around the country, and there are a host of states on our radar that we are watching closely for iCasino. We certainly discussed them at length on past calls. While we are not laying odds on legislative outcomes, some of the states that we are watching include New York, Maryland, Illinois, as well as provinces in Canada, most notably Alberta.

Pair that with Mexico, which is $130 million in Colombia, which is $50 million.

Safe to say between ramping Mexico, and then with Brazil, Peru Legislative activity, we are seeing significant near and intermediate term opportunities targeted population of over 425 million people.

And over an estimated $6 billion total addressable market.

And these four regulated Latam markets alone.

Shifting to the North American Legislative outlook.

At the beginning of 2020 fours legislative sessions around the country and there are a host of states on our radar that we are watching closely for iqos opportunities.

We certainly discussed at length on past calls.

While we are not leaning on the legislative outcomes. Some of the states that we are watching include New York, Maryland, Illinois, as well as provinces in Canada, most notably Alberta.

Richard Todd Schwartz: As we look ahead, these, along with the exciting growth initiatives I've mentioned regarding Latin America, have us very excited about the future. There is no shortage of near and long-term opportunities in our universe. We remain confident over the long term, given the beneficial economics of government budgets, especially as compared to inflows from online sports betting, that expansion in iCasino legislation is increasingly a question of when, not if. More and more positive momentum is building, some quite visible to the public, and more behind the scenes as the online industry ratchets up its focus and investments in legalizing iCasino and more Now, I'll hand it over to Kyle to talk in more detail about the finances. Thanks, Richard.

As we look ahead these along with exciting growth initiatives I've mentioned regarding Latin America have us very excited about the future.

There is no shortage of near and long term opportunities in our universe.

We remain confident over the long term given the beneficial economics to government budgets, especially as compared to inflows from online sports betting that expansion in <unk> legislation is increasingly a question of when not if.

More and more positive momentum is building some quite visible to the public and more behind the scenes.

The online industry Ratchets up its focus on investments in legalizing casino in more markets.

Now I'll hand, it over to Kyle to talk in more details about the financials.

Thanks Richard.

Kyle L. Sauers: Fourth quarter revenue was 193.9 million, up 17% year over year, leading to full year 2023 revenue of 691.2 million, also up 17% year over year. We continue to experience well-balanced performance across both iCasino and Online Sports Bay, both up 19% year over year during the quarter. Geographically, we're also very well balanced with double-digit growth in both our US, Canadian, and LATAM markets. We continue to achieve improved flow through to earnings and cash flow as we scale the business. We posted our third consecutive quarter of positive EBITDA, with the fourth quarter coming in at a record of $11.5 million. As Richard mentioned, our EBITDA for the full year improved by $100 million on a similar dollar increase in revenue. Underlying the results, we're very encouraged with the trends in our player acquisition and retention as measured by monthly active users. Fourth quarter North American miles were nearly 160,000, reaching a quarterly record.

Fourth quarter revenue was $193 9 million up 17% year over year, leading to full year of 2023 revenue of $691 2 million also up 17% year over year, we continued to experience well balanced performance across both I casino and online sports betting both up 19% year over year during the quarter.

Geographically, we're also we're very well balanced with double digit growth in both our U S Canadian and Latam markets.

We continue to achieve improved flow through to earnings and cash flow as we scale. The business, we posted our third consecutive quarter of positive EBITDA with the fourth quarter coming in at a record of $11 5 million as.

As Richard mentioned, our EBITDA for the full year improved by $100 million on a similar dollar increase in revenue.

Underlying the results were very encouraged with the trends in our player acquisition and retention as measured by monthly active users.

Fourth quarter, North American mileage, where nearly a 160000, reaching a quarterly record in fact miles were up 7% year over year, our highest mile growth of the year. Most of this increase reflects our successful efforts in player acquisition and retention across both online casino and sports betting in our existing markets.

Kyle L. Sauers: In fact, miles were up 7% year over year, our highest mile growth of the year. Most of this increase reflects our successful efforts in player acquisition and retention across both online casino and sports betting in our existing market. We also continue to see improved trends in ArtMal. During the fourth quarter, our US and Canadian ArtMal revenue of $345 was up 5% compared to last year and at the highest level for a Q4 in the three years since going public in December 2020. With our continued strong success in Latin America and anticipated growth to new Latin American markets in the coming years, we feel this is the right time to start sharing user and player value data about our LATAM market. Miles during the fourth quarter were 204,000, up 33% year over year. If we look back to Q4 of 2021, two years ago, our miles are up an incredible 144%, and that's on top of what was already a sizable player base. Our average mile in LATAM was $42 during Q4, up 28% year over year.

We also continue to see improved trends in art amount during the fourth quarter, our U S and Canadian art MAU of $345 was up 5% compared to last year and at the highest level for a Q4 in the three years since going public in December 2020.

With our continued strong success in Latin America, and anticipated growth to new Latin American markets in the coming years.

We feel this is the right time to start sharing user and player value data about our Latam markets.

Miles during the fourth quarter were 204000 up 33% year over year.

If we look back to Q4 of 2021 two years ago, our mouths are up an incredible 144% and that's on top of what was already a sizeable player base.

Our art MAU in Latam was $42 during Q4 up 28% year over year.

Kyle L. Sauers: In our investor deck, you'll also find some additional historical Latin America Mao and Art Mao data to give you a perspective on the trajectory of our growth there. Switching to hold percentage, as a company, iCasino was in line with our expected range during the quarter. However, in online sports betting, we were below our expected hold percentage, given generally unfavorable sports outcomes during the quarter.

In our Investor deck Youll also find some additional historical Latin America, MAU and <unk> data to give you a perspective on the trajectory of our growth there.

Switching to hold percentage as a company I casino was in line with our expected range during the quarter.

And online sports betting we were below our expected hold percentage given generally unfavorable sports outcomes during the quarter.

Kyle L. Sauers: Despite the lower sports hold, our strong financial performance in the quarter further demonstrates the stability of our business and the lower reliance on sports outcomes. Our gross profit margin was 32.1% for the quarter and 32.9% for the full year, up 270 basis points compared to the full year 2022. Our gross margin outside of Pennsylvania and Illinois increased by 900 basis points to 44% as our total revenue mix continued to shift away from Pennsylvania and Illinois, increasing from 45% to 52% for markets other than Pennsylvania and Illinois during Q4.

Despite the lower sports hold our strong financial performance in the quarter further demonstrates the stability of our business and a lower reliance on sports outcomes.

Our gross profit margin was 32, 1% for the quarter and 32, 9% for the full year up 270 basis points compared to the full year 2022.

Our gross margin outside of Pennsylvania, and Illinois increased by 900 basis points to 44% as our total revenue mix continued to shift away from Pennsylvania, and Illinois, increasing from 45% to 52% for markets other than Pennsylvania, Illinois, and during Q4 for those that follow us closely.

Kyle L. Sauers: For those that follow us closely, you'll recall that our operating margins are relatively fixed given the structure under which we operate with our land-based partners in those two states. There is an inverse relationship between our marketing spend and our market access royalty expense. Therefore, as our marketing cost decreases in Pennsylvania and Illinois as those markets mature, our royalty rate increases, which decreases our gross margins, but our operating margins remain steady. This creates very consistent profitability for us in those two markets, but also less dependence on them as other markets grow. In fact, the 52% of revenue that came from other markets in the fourth quarter produced more than 70% of our profitability.

You'll recall that our operating margins are relatively fixed given the structure under which we operate with our land based partners in those two states, there's an inverse relationship between our marketing spend and our market access royalty expense, therefore, as our marketing costs decreases in Pennsylvania and Illinois.

As those markets mature our royalty rate increases.

Decreases our gross margins, but our operating margins remained steady.

This creates very consistent profitability for us in those two markets, but also less dependence on them as other markets growth.

In fact that 52% of revenue that came from other markets in the fourth quarter produced more than 70% of our profitability.

Kyle L. Sauers: When it comes to 2024, we expect our revenue mix to continue to increase towards non-Pennsylvanian Illinois markets and to improve gross margins in those other markets, with some offsetting decrease in Pennsylvania and Illinois gross margins, with the net effect expected to be a small increase in total company gross margin percentage for the full year 2024. On the marketing side, we continue to stay disciplined and are seeing greater efficiency with spend. Fourth quarter advertising and promotion spend was $34.6 million, down from $63.2 million last year. For the full year, advertising and promotion spend was $158.4 million, down from $218.4 million last year.

When it comes to 2024, we expect our revenue mix to continue to increase towards non Pennsylvania, and Illinois markets and to improve gross margins in those other markets with some offsetting decrease in Pennsylvania, and Illinois gross margins with the net effect expected to be a small increase in total company gross margin percentage for the full year of <unk>.

24.

On the marketing side, we continue to stay disciplined and you are seeing greater efficiency with spend.

Fourth quarter advertising and promotion spend was $34 6 million down from $63 2 million last year.

For the full year advertising and promotion spend was $158 4 million down from $218 4 million last year.

Kyle L. Sauers: We see the efficiencies evident in our growing active user count and getting a larger share of wallet from our players, measured by increasing our revenue. Looking forward to this year, we'll see continued discipline and precision from our marketing efforts. And while we won't be shy about making investments when we see opportunities, we do expect to get leverage over our marketing spend again in 2024. So marketing spend grows at a lower rate than revenue for the year. GNA for the fourth quarter was $16.2 million, and 8.4% of revenue, and for the full year was $60.6 million, which equated to 8.8% of revenue.

We see the efficiencies evident in our growing active user count and getting a larger share of wallet from our players measured by increasing our Mt.

Looking forward to this year, we will see continued discipline and precision from our marketing efforts and while we won't be shy about making investments when we see opportunities. We do expect to get leverage over our marketing spend again in 2020 for some marketing spend that grows at a lower rate than revenue for the year.

G&A for the fourth quarter was $16 2 million and eight 4% of revenue and for the full year was $60 6 million, which equated to eight 8% of revenue.

Kyle L. Sauers: For 2024, we expect to get some modest leverage over our G&A expense and come in less than the 8.8% that we had in 2023. I'll note that much of the run rate increase in G&A will come in the first quarter as we have our annual compensation adjustments for employees. Turning to the balance sheet, we ended the quarter with $168 million in unrestricted cash and no debt.

For 2024, we expect to get some modest leverage over our G&A expense and come in less than the eight 8% that we had in 2023.

I'll note that much of the run rate increase in G&A will come in the first quarter as we have our annual compensation adjustments for employees.

Turning to the balance sheet, we ended the quarter with $168 million in unrestricted cash and no debt. We had a small use of cash during Q4 due to working capital timing and we do expect to be cash flow positive for the full year of 2024.

Kyle L. Sauers: We had a small use of cash during Q4 due to working capital timing, and we do expect to be cash flow positive for the full year of 2024. We are initiating full-year revenue guidance for 2024, which reflects our strong momentum in the fourth quarter and here in early 2024. We currently expect 2024 revenue to be between $770 and $830 million, which represents $800 million at the midpoint, up 16% year over year. As a reminder, our guidance includes only those markets that are live as of today. In addition, during 2024, we are adding adjusted EBITDA guidance to the mix. For the full year 2024, we currently expect adjusted EBITDA to be between $35 million and $45 million, which represents $40 million at the midpoint.

We are initiating full year revenue guidance for 2024, which reflects our strong momentum in the fourth quarter and here in early 2024.

We currently expect 2020 for revenue to be between 770, and $830 million, which represents $800 million at the midpoint up 16% year over year.

As a reminder, our guidance includes only those markets that are live as of today.

In addition, during 2024, we are adding adjusted EBITDA guidance to the mix for the full year 2024, we currently expect adjusted EBITDA to be between $35 million and $45 million, which represents 40 million at the midpoint.

With that operator, please open the lines for questions.

Really.

We will now begin the question and answer session. If you would like to ask a question you may do so by pressing star followed by a one on your telephone keypad.

If for any reason you would like to remove your question you may do so by pressing star followed by ATM.

Operator: With that, operator, please open the lines for questions. They will now begin the question and answer session. If you would like to ask a question, you may do so by pressing the star followed by a one on your telephone keypad. If, for any reason, you would like to remove your question, you may do so by pressing the star followed by a two.

As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.

Again to ask a question. It is star followed by a one on your telephone keypad.

Our first question will come from the line of Bernie Mcternan with Needham and company. Your line is now open.

Unknown Attendee: As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Again, to ask a question to this star, followed by a one on your telephone keypad. Our first question will come from the line of Bernie McTern with Needham & Company. Your line is now open.

Great. Thanks for taking the question just wanted to start with Latam assuming at this point Columbia is positive adjusted EBITDA just wondering on the.

The timing and the path to profitability.

On EBITDA in Mexico, and then I have a follow up as well.

Yes, Hey, Brian Thanks for the question.

Correct on Colombia, Colombia has been profitable for us for quite some time.

Unknown Attendee: Great. Thanks for taking the question. I just wanted to start with LADAM.

I'd have to I'd have to go back and look to see exactly when when we turn profitable but it's.

Kyle L. Sauers: Assuming at this point, Columbia is positive adjusted EBITDA, just wondering about timing and the path to profitability. Yeah, hey, Bernie, thanks for the question. Correct on Columbia, Columbia has been profitable for us for quite some time. I'd have to I'd have to go back and look to see exactly when we turned profitable, but it's, it's quite a while ago. In Mexico, Mexico is getting real close.

It's quite a while ago and Mexico, Mexico is getting getting real close I think we're having some real nice success. There as we mentioned in the prepared remarks, a lot of things going well, they're starting to build nicely.

So we'll keep you updated on on Mexico profitability, but it's it's certainly not a big.

Big burn for us at this point.

Understood and then Theres been some news flow in terms of the Illinois Governor considering.

Kyle L. Sauers: I think we're having some really nice success there, as we mentioned in the prepared remarks, a lot of things are going well, they're starting to build nicely. So we'll keep you updated on Mexico profitability. But it's certainly not a big burn for Unknown Attendee, Chad Beynon, Ryan Sigdahl, Chad Beynon, Daniel Politzer, Michael Hickey, a change to gaming taxes in the state.

A change gaming taxes in the state just wondering if theres any thoughts in terms of the potential impact that that could have unrest street and then any any offsetting levers that you can pull if taxes did in fact go higher.

Kyle L. Sauers: Just wondering if there are any thoughts in terms of the potential impact that that could have on Rush Street. Sure. Yeah.

Sure, Yes, so as you pointed out.

The Governor's budget includes more than doubling of the sports betting tax rate. So obviously not something that we'd be in favor of.

Kyle L. Sauers: So, as you point out, the governor's budget includes more than doubling the sports betting tax rate. So obviously not something that we'd be in favor of. You know, it's early in the session, but I think it's important to note that, because of the structure of the relationship with our market access partner in Illinois, the impact on us of that potential change is much smaller than maybe some have expected. So maybe to frame it, if the new proposed rate had been in effect for the recently completed 2023, the negative impact on our EBITDA would have been less than $3 million. I suppose that the potential upshot is that there's conversation happening around iCasino in Illinois and how much a bigger impact that could have for state revenue than increasing the OSB tax rate. I got it.

It's early in the session, but I think it's important to note that.

Because of the structure of the relationship with our market access partner in Illinois, the impact on us of that potential change is much smaller than maybe some of expected.

So maybe to frame. It is if the new proposed rate had been in effect for the recently completed 2023 impact on our negative impact on our EBITDA would have been less than $3 million.

I suppose the potential upshot is that there's there's conversation happening around <unk> in Illinois, and how much bigger impact of that could have for state revenue then increasing the OSB tax rate.

Got it thanks Scott.

Thank you.

Unknown Attendee: The next question will come from the line of Jed Kelly with Oppenheimer. Your line is now open, Jed. Hi, Josh Maron for Jed Kelly.

The next question will come from the line of Jed Kelly with Oppenheimer. Your line is now open.

Hi, Josh, Maryland for Jed Kelly, Thanks for taking our questions.

Unknown Attendee: Thanks for taking our questions. I just have one on the iGaming regulations. You know, the iCasino regulatory pace has slowed a bit.

One on the I gaming regulation.

I can see utilize ablation pacing has slowed a bit. So just curious on how you guys are thinking about that and rsi position on it.

Unknown Attendee: So just curious about how you guys are thinking about that and RSI's position on it. Sure. Hi, it's Rush. This is Richard.

Sure Hi, Josh This is Richard so yes.

Richard Todd Schwartz: So yeah, listen, we can't predict the timing of these things. But what we do know is that there is growing enthusiasm from our peers and our industry to support this and to generate more tax revenues for the state. What I will say is that there are more bills introduced this year than there have been in a long time. Some of them will make it past the finish line, but there are others that are gaining momentum.

We can't predict the timing of these things, but we do know is that there is a growing enthusiasm from our peers.

And our industry to support this and to generate more tax revenues for the states of what I will say that there has been more bills introduced this year there have been in a long time some of them won't make it past the finish line, where theres others that are gaining momentum and we think certainly.

Richard Todd Schwartz: And we think, certainly, a market like Alberta is something that we're paying very close attention to because we think there have been some very positive public comments by some of the stakeholders there. What we're excited about is that we have so much growth available for us in Latin America right now, and while we certainly are eager and hope and are pushing for iGaming to be added to more states in the United States, we certainly don't have a shortage of opportunities that are really exciting to us. And so, you know, markets like Peru and Brazil and other markets that are already legalizing marijuana are under the process of being regulated right now.

Hi.

Market like Alberta, it's something that we're paying very close attention to because we think this has been some very positive public comments by some of the.

The stakeholders there.

We're excited about is that we have so much growth available for us in Latin America right now that while we certainly are eager would hope and are pushing for I gaming to be added to more states in United States. We certainly don't have a shortage of opportunity that are really exciting to us and so markets like Peru, and Brazil and other markets.

They have already legalized in rate on a process of regulating or anything right. Now. So we have very large populations available for us there, where we can do casino. There. So we have no shortage of opportunities, which is why we're really excited because we have as great of option in our other peers in the United States don't really have to the same extent, we have in terms of having large market opportunities down.

Richard Todd Schwartz: So we have very large populations available for us there where we can do casino there. So we have no shortage of opportunities, which is why we're really excited, because we have this great option that our other peers in the United States don't really have to the same extent we do in terms of having large market opportunities down in Latin America. So we will continue to push for legalization. The states are starting to feel the impact of not having sufficient tax bases to justify some of their costs.

In Latin America. So we will continue to push for legalization in the states are starting to feel the impact of not having sufficient tax basis to justify some of their cost and so because of that.

Efforts.

We see that there is.

Increased tax space, we see more and more.

Richard Todd Schwartz: And so because of that effort, and we see that there's efforts to increase the tax base, we see more and more conversation around iCasino as a possible means to bridge the increase. Great, thank you. The next question will come from the line of Jordan Bender with Citizen JMP. Your line is now open. Good afternoon, everyone. A few on Delaware. I was just wondering, how does that operating model differ from some of the more competitive states that you operate in? As well as, what does the payback period look like?

Compensation around a casino as a possible means to bridge an increased tax basis for states.

Okay, great. Thank you.

Thank you.

The next question will come from the line of Jordan Bender with citizen JMP. Your line is now open.

Good afternoon, everyone.

Delaware I was just wondering how does that operating model differ from some of the more competitive states that you operate in.

As well as what is the payback period look like and then should that be a positive contributor to EBITDA within your guidance, just with I casino being in there as well. Thank you.

Kyle L. Sauers: And then should that be a positive contributor to EBITDA within your guidance, just with iCasino being in there as well? Thank you. Yeah, thanks, Jordan. So on Delaware, first, I'd say, like other North American iCasino markets have been for us, Delaware will be profitable for us quite quickly. Gross margins should be kind of at or maybe a little below our average gross margins, but contribution margin or operating margin should be higher than our typical.

Yes, Thanks, Jordan so.

On Delaware I'd.

I'd say first I'd say like other North American casino markets have been for us Delaware will be profitable for us quite quickly.

Gross margins should be kind of at or maybe a little below our average gross margins.

But contribution margin or operating margin should be high.

Higher than our typical.

Kyle L. Sauers: So it will be a nice contributor for us. You know, we talked about already, we came out of the gate pretty strong in Delaware. So we're very excited about the opportunity there. It's going to be, it'll be a meaningful contributor for us, top and bottom line over time. And then just with free cash flow, or at least in 24, you talked about the ability to produce free cash flow. And naturally, that just kind of begs the question, you know, what is the best use of that? Would you think capital allocation to M&A make sense here? Anything you can opine on that?

It will be a nice contributor for us.

We talked about already we came out of the gate.

Strong and dollars. So we're very excited about the opportunity there.

Is going to be it'll be a meaningful contributor for us in the top and bottom line over time.

Understood and then just with free cash flow or at least in 2004, you talked about the ability to produce free cash flow naturally that just kind of begs. The question what is the best use of.

What you think capital allocation is M&A makes sense here.

Anything you can opine on that.

Kyle L. Sauers: Well, listen, we're going to direct the capital to the highest returns, and we're evaluating all opportunities, whether it's more investment in existing markets or additional investments in new, newly regulated markets. We always are looking at all options on the table.

We're listen we're going to direct capital to the highest returns and we are evaluating all opportunities whether it's more investment in existing markets or additional investments in new and newly regulated markets. We always are looking at all options on the table certainly.

Kyle L. Sauers: Certainly, we're always looking for ways to create more value, maximize shareholder value. I think I'd go back to Richard's question about iCasino legislation and Latin American opportunities. There will be plenty of places for us to make smart investments when new markets open up. So I think that's the first priority for us. Great next quarter.

We're always looking for how do we create more value and maximize shareholder value.

Want to add anything else no.

I think I'd go back to Richard's question.

Question about <unk> casino legislation Latin American opportunities.

There'll be plenty of plenty of places for us to make smart investments.

When when new markets open up so I think thats.

That's the first priority for us.

Great nice quarter.

Unknown Attendee: Thanks, Jordan. The next question will come from the line of Chad Beynon with Macquarie. Your line is now open.

Thanks George.

The next question will come from the line of Chad Beynon with Macquarie. Your line is now open.

Unknown Attendee: Afternoon. Nice quarter. Thanks for taking my question. On the guidance, it looks like the expected flow-through from EBITDA growth versus revenue growth is in the high 20s, low 30s. Kyle, can we just get a little bit more clarification or just color around why 30% flow-through is the right number following a year when you did 100% flow-through?

Afternoon nice quarter, Thanks for taking my question.

On the guidance it looks like the float the expected flow through from EBITDA growth versus revenue growth.

High twenties low thirties.

Kyle can we just get a little bit more clarification or just color around why 30% flow through is the right number following a year when you did.

100% flow through I know you talked about some of the line items being below revenues, but is there anything else that we need to be mindful of.

Kyle L. Sauers: I know you talked about some of the line items being below revenues, but is there anything else that we need to be mindful of? New markets, kind of the ramp, just a little extra color there. Thanks. Yeah, no, I appreciate it.

New markets kind of the ramp.

Just a little extra color there. Thanks.

Yes, no I appreciate it I think you've got to get the math right there.

Kyle L. Sauers: I think you've got the math right there on flow through around around 30% at the midpoint of our guidance. I think if you look back at 2023, pretty significant, and probably for the industry and us, pretty significant pullback in marketing expenses, less, less markets launching more rational behavior. So I think that that was good for us this past year. You know, this is the first time we're offering EBITDA guidance.

On flow through around around 30% at the midpoint of our guidance I think if you look back at 2023.

Pretty significant.

For the industry and us.

It's pretty significant.

Pullback in marketing expenses less less markets launching more rational behavior. So I think that was good for us. This past year. This is the first time, we're offering EBIT guidance.

Kyle L. Sauers: So I want to be careful about offering up long-term flow through plans, but I think we can, we can improve that over time. We want to make sure we're putting the right guidance out there the first time we offer it, something that we can work towards improving as the year goes on. Okay, that makes sense.

So I want to be careful about offering up long term flow through our plans, but I think we can we can improve that over time.

We want to make sure we're putting the right the right guidance out there first time, we're offering it something that we can we can work towards.

Improving as the year goes on.

Okay that makes sense and then what about the.

Kyle L. Sauers: And then what about the main factors that would drive you to the low end of the revenue guidance, which is the 11% versus the high end, which is, Sure. I probably won't give you exact specifics at each end, of course, but, you know, it's still a pretty quickly evolving industry. So, there are a lot of different factors that go into thinking about that revenue guide. You know, we saw really nice acceleration and growth throughout the fourth quarter. We mentioned that in the prepared remarks. The momentum continued into 24.

Main factors that would drive you to the.

The low end of the revenue guidance, which is I think 11% versus the high end, which is 20%.

<unk>.

Sure So I probably won't give you.

Specifics at each end of course, but it's still it's still a pretty quickly evolving industry. So a lot of different factors that go into thinking about that revenue guide.

We saw really nice acceleration in growth throughout the fourth quarter, we mentioned that in the prepared remarks.

The momentum has continued into into 'twenty four.

Kyle L. Sauers: So, we've got a lot of confidence in this 770 to 830 range that we put out there today. You know, sports hold ranges due to sports outcomes, that's always going to be an input. We mentioned in the opening remarks, but excluding our U.S. markets that launched before 2021, we grew over 40% in the fourth quarter. So, we've got some fast-growing markets, so there's some more variability there, so we're mindful of that. And then maybe the last piece, just recall that we had Connecticut live for a good chunk of 2023, and now that's gone for us in 2024, but we added Delaware, which is new.

So we've got a lot of confidence in the $770 million 30 range that we put out there today.

Sports hold ranges due to sports sports outcomes, Thats always going to be an input.

You had mentioned in the opening remarks, but excluding our U S markets that launched before 2021, we grew over 40% in the fourth quarter. So we've got some fast growing markets. So there is some more variability there. So we're mindful mindful of that.

And then maybe the last piece just recall that we had Connecticut live for.

A good chunk of 2023.

Now that's gone for us in 2024, but we added Delaware.

Which is new it's had a great start but.

Kyle L. Sauers: It's had a great start, but again, it's new, so it has a range of potentials in and of itself. So, I think those are all things that we think about in crafting that range of outcomes. Okay, thanks. Are you willing to provide what Connecticut contributed from a revenue standpoint in fiscal year 23? It was round about 20 million or so. Thank you very much.

But again, it's new so it has a range of potentials in and of itself. There. So I think those are all things that we think about in in crafting that that range of outcomes.

Okay. Thanks are you willing to provide what Connecticut contributed from a revenue standpoint in 'twenty three.

It was round about $20 million or so.

Okay.

Kyle L. Sauers: I appreciate it. The next question will come from the line of Ara Masias with Jeffrey. Your line is now open. Hey guys, thanks for taking my question. Congresswoman Porter, could you please give some further color on international market growth as it compares to further expansion in U.S. online sports betting markets? I think when it comes to international growth, you know, the Latin America region is really the second best and growing region in the world for legalized online betting. So the fact that we're obviously strong in North America and Latin America gives us great confidence that those are gonna be markets that are gonna grow for decades, not just a couple of years here and there. So I would say that the sports betting market in the US is obviously very heavily contested. You know, some operators start every new market with having a large database of players already in their systems that are able to be converted from fantasy to real money.

You very much I appreciate it.

Thank you.

The next question will come from the line of Matthias <unk> with Jefferies. Your line is now open.

Hey, guys. Thanks for taking my question guys on the quarter could you. Please give some further color on international market growth as it compares to further expansion in U S online sports betting market.

Thanks.

I think when it comes to the international growth.

The Latin America region is really the second fastest.

Growing region in the World first for legalize online bedding. So the fact, they were obviously strong in North America, and as well as in Latin America gives us great confidence that those are going to be market is going to grow for for decades, not just a couple of years here and there. So I would say that the sports betting market in the U S is obviously very heavily contested.

Some operators start every new market with having a large database of players already in their systems.

We converted from.

Fantasy to real money.

Sports betting you have a scenario where you have.

Richard Todd Schwartz: Unknown Attendee, Jed Kelly, Aaron Lee, Araceli Moreyra, Richard Schwartz, Unknown Attendee, focused on is to be able to continue to grow our Latin America business because it's such a dynamic, fast growing, challenging market to break into and develop the expertise to do well there is something that's very challenging, as I mentioned in my notes or my earlier comments. There are fewer people who've been able to be successful there, despite a lot of effort, because it does take being in the market early, localizing your technology, having a very experienced team on the ground, and really developing a brand from many years ago that now gives you a lift in other jurisdictions in that region as you launch there. So for us, I think the opportunity we have in many of these markets also includes casino and sports betting, which hasn't been the case as much in the U.S. So for those reasons, the tax rates, the competitive intensity being a little bit different, and our expertise there, it's an area that we've always focused on more so than we have on some of the newer ones, where we felt like it was better for us to direct our capital to markets with higher, Thank you so much.

Higher taxes in the U S and a higher competitive intensity, so I think for us.

Opportunity that we've been focused on is to be able to continue to grow our Latin America business, because it's such a.

Dynamic high growing challenging market to break into develop that expertise to do well and there is something thats very challenging as I mentioned in my notes.

My earlier comments.

There are fewer people.

<unk> been able to be successful there just by a lot of effort because it does take being in the market early localizing your technology, having very experienced team on the ground and really developing a brand.

Many years ago that now gives you a lift in other jurisdictions in that region as you've launched there so for us.

The opportunity we have many of these markets are also including casino and sports betting, which hasnt been the case as much in the U S. So for those reasons the tax rates, the competitive intensity being a little bit different and our expertise there.

It's an area that we've obviously focus on more so that we have on some of the newer sports betting markets, where we felt like.

It was better for us to direct our capital to markets with higher returns for us.

Great. Thank you so much that's all for me.

Unknown Attendee: That's all. The next question will come from the line of Ryan Sigdahl with Craig Halem Capital Group. Your line is now open. Hey guys, good afternoon. Curious about Delaware.

Thank you.

The next question will come from the line of Ryan Macdonald with Craig Hallum Capital Group. Your line is now open.

Hey, guys good afternoon.

Curious on Delaware, So new user promos get initial deposits in app downloads from our standpoint, but curious what metrics you can share on follow on deposits and retaining those players. After those promo dollars have been utilized and I get it it's still very early here, but anything notable you guys can share.

Kyle L. Sauers: So new user promos get initial deposits and app downloads from our standpoint, but I'm curious what metrics you can share on follow-on deposits and retaining those players after those promo dollars have been utilized. And I get it; it's still very early here. But anything notable you guys can share? Yeah, I mean, obviously, we've had really good success. I think we're approaching the promotions and bonuses to make sure we're fair to our new players, but we're the only operator there. I think you can see from the state data that's been reported and what we've said that we're off to a really nice start. When you look at either our GGR or our NGR, you won't be surprised that our February daily numbers are higher than they were in January.

Yes.

Obviously, we've had really good success.

I think we're.

We're approaching the promotions and bonus in there.

Make sure we're fair to fair to our new players, but we are the only operator, there I think.

You can see from the state data that's been reported and what we said.

We're off to a really nice start when.

When you look at our either our <unk>.

It wont be surprised that our February daily numbers are higher than they were in January.

Kyle L. Sauers: So, still pretty early, so we don't want to make predictions exactly about where things are headed, but we're very optimistic about Delaware for sure. I guess one thing I'd point out that is probably useful for those that follow trends of state reported data: the January data that was put out by the state does include our five days of December activity since we launched on December 27th. You'll want to keep that in mind when you look at the trending from January to February when that data comes out later here in March. Unknown Attendee.

So still pretty early so we don't want to make predictions exactly where things are headed but we're very optimistic about Delaware for sure I guess, one thing I would point out.

That is probably useful those for those that follow the trends of state reported data the.

The January data that was put out by the state.

It doesn't include our five days of December activity. Since we launched on December 27, So just don't want to keep that in mind. When you look at the trending from from January.

January to February when that data comes out later here in March.

Helpful.

Kyle L. Sauers: As you mentioned, 60 million GGR run rate. Is that what you guys assumed in guidance, or is there some other assumption? Well, I don't think I'd want to start parsing out market by market what's assumed in the guidance. But certainly, there's a range of outcomes there.

You mentioned $60 million <unk> run rate is that what you guys assumed in guidance or is there some other assumption.

Well I don't think I'd want to start parsing out market by market, what's assumed in the guidance, but certainly theres a range of outcomes. There I think there's been a lot of excitement about the product that we launched there and we've gotten really good really good engagement.

Kyle L. Sauers: I think there's been a lot of excitement about the product that we launched there. And we've gotten really good, really good engagement. Certainly, you know, I know, I know Richard referenced it.

Certainly.

I know Richard referenced it but if you could just compare.

Richard Todd Schwartz: But if you just compare our casino revenue compared to where it was before we launched, it's a pretty dramatic improvement. So, as I mentioned, one of the earlier answers, the range of guidance includes some level of variability from what we could expect happening in Delaware just because it's so new. But again, we're certainly optimistic. It's been a faster start than we anticipated. Ryan, just adding on, you know, when we launched, players visited their prior site expected to see the same experience they'd been having for many years. Instead, they found a new and exciting online experience from us that we've talked about for years being really differentiated and innovative. And I think the results are reflective of that.

Our casino revenue compared to where it was before we launched it as a pretty dramatic improvement.

So as I mentioned in one of the earlier answers the range of guidance includes some level of variability from what we could expect happening in Delaware just because its so new.

But again, we're we're certainly optimistic it's been a it's been a faster start than we.

We anticipated.

Brian just adding on we when.

When we launched the players visited their prior site expected to see the same experience we've been having for many years and instead they found a new and exciting online experience from us that we've talked about for years being really differentiated innovative and I think the results are reflective of that when you see all as great content. We offer all these unique features and functionalities that aren't available in the past it on.

Richard Todd Schwartz: When you see all the great content we offer, all those unique features and functionalities that weren't available in the past and aren't really available anywhere else in the country, just on our platform, you see the immediate impact of when you bring a player base to a really high-quality user experience that's unique and differentiated and delivers fun to these players. It immediately had an impact, a positive impact.

Available really anywhere else in the country.

Platform Youre seeing the immediate impact of when you bring a player base to a really high quality user experience, that's unique and differentiated and high and delivers a fund these players and immediately how the impact positive impact and I think I think back to karl's comments in the last quarter. When we sort of suggested that that was going to launch that it wasn't going to have.

Richard Todd Schwartz: And I think, I think back to Kyle's comments the last quarter when we sort of suggested, you know, I thought it was going to launch and it wasn't going to happen overnight. You know, but it really did happen overnight for us because the quality differential is so significant that we think that the players noticed it, and clearly, the numbers are reflective of this massive increase in play relative to what it was the case in the prior 10 years. Before we switch to our English, Yeah, for sure. Performance isn't a coincidence there.

Overnight.

But it really did happen overnight for us because the quality differential is so significant that we think that the players noticed it and clearly the numbers are reflective of this massive increase in play relative to what it was the case in the prior 10 years before we switch to our platform.

Yes for sure performance isn't a coincidence there products absolutely matters.

Richard Todd Schwartz: Products absolutely matter. You guys are doing a nice job. Moving over to Brazil for my last question. Just curious what your plans may be that you can share. Is it to launch with the RushBet brand and organically do it? Do you need to acquire some brand kind of know-how in that country?

You guys are doing a nice job moving over to Brazil from my last question just curious what your plans maybe that you can share as it to launch with the rush.

<unk> brand and Inorganically do it do you need to acquire brand kind of know how in that country.

Richard Todd Schwartz: Yeah, sure. So there's actually a pretty large, decent-sized contingent of our team visiting Brazil this week for a conference we've been planning for years and evaluating all the opportunities. As we mentioned, the iCasino addition to that market recently has really created a more exciting opportunity for us. We have spent time with all the local sports teams, retail companies, stadium owners, media companies, other gaming companies, really getting to know all the players in the market and really trying to assess what the right strategy is for us. And we're not really prepared today to share what that strategy is.

Yeah.

Yes, sure so theres actually a pretty large decent sized contingent of our team visiting Brazil. This week for a conference that we had been there for years and evaluating all the opportunities as we mentioned.

Casino addition to that market recently that really created a more exciting opportunity for us.

We have spent time with all the local sports teams retail companies.

And the owners meet.

Via companies.

Other gaming companies really getting to know all the players in the market and really trying to assess what the right strategy is for us and we're not really a prepared today to share with our strategy is what I can tell you that we're excited by the market and our brand does resonate there as well from our research that we have done and the conversations we have.

Richard Todd Schwartz: But I can tell you that we're excited by the market, and our brand does resonate there as well, from the research that we have done and the conversations we have had. And so one thing to keep in mind, though, is that the market does allow multiple brands as well. So it's always something that we're considering as well. But I think overall, our brand really has done so well in that region that a lot of the broadcasts we're in are viewed in other countries. They're recognized in Brazil as Portuguese as opposed to Spanish.

And so one thing to keep in mind, though is that a market.

It does allow multiple brands as well so it's always something that we're considering as well, but I think overall.

Our brand really has done so well in that region that a lot of the broadcast we're in are viewed and in other countries that recognize in Brazil.

Portuguese as opposed to Spanish, but nonetheless, you still get a lot of highlights of things like that where you will see our brand in the background. So I think our brand is very strong there as one of the answers that we will bring to play in that market, but it may not be the only asset we bring to play in that market.

Richard Todd Schwartz: But nonetheless, you still get a lot of highlights and things like that, where you will see our brand in the background. So I think our brand is very strong there as one of the assets that we will bring to play in that market, but it may not be the only asset we bring to play there. Thanks, Richard, Kyle. Nice job, guys. Thanks, Fred.

Thanks, Richard Kyle Nice job guys.

Thanks, Brian.

Thank you.

Richard Todd Schwartz: As a reminder, if you would like to ask a question, it is star followed by a one on your telephone keypad. The next question will come from the line of Mike Hickey with Benchmark Company. Your line is now open. Hey Richard, Kyle, congrats. {\rtf1 brand,{\i1{\f1 color,{\fi1 color,{\f1 color,{\f1 color,{\fi1 color,{\f1 color,{\f1 color,{\f1, Yeah, thanks, Mike.

As a reminder, if you would like to ask a question. It is star followed by one on your telephone keypad.

The next question will come from the line of Mike Hickey with Benchmark Company. Your line is now open.

Hey, Richard Congrats.

Congrats guys on that.

Q1 'twenty three.

Thanks for taking our questions.

It's also.

On the Brazil market just wanted to.

Confirm in fact that.

Sort of.

Do you plan to enter into that market is.

Baked into your 2004 guide.

No.

I'm also sort of curious I think.

Thank you Bill has a pretty established grain market.

With some fairly large operators just curious.

The competitive intensity.

<unk>.

In that market and how much share.

Do you think is already established in the grain market.

Positioning for that thanks, guys.

Kyle L. Sauers: I'll take the first part and then let Richard comment on the second part. So, we do not have any guidance, the revenue or the EBITDA guidance does not include any new markets. So, you know, we talked earlier about Peru and the expectations for sometime later this year to launch. When that happens, if it makes sense or is necessary to update guidance, we will do so with any new thoughts. And the same for Brazil.

Yes, Thanks, Mike I'll take the first part and then let Richard comment on the second part. So so we do not have any of the guidance the revenue or the EBIT guidance do not include any new markets. So.

We talked about we talked earlier about Peru, and the expectations for sometime later this year to launch.

When that happens.

If it if it makes sense or where it's necessary to update guidance, we will with any new thoughts and same for Brazil.

Kyle L. Sauers: If that happens later in the year or if it moves out till next year, we'll update at that time. So, just for clarity, only the markets we're in today are part of our guidance for revenue and profitability. And so then I'll let Richard talk about the competitive landscape. Hey, Mike, in terms of the competitive landscape, there are quite a large number of gray market operators operating in that market for a number of years, primarily focused on sports betting, although some offer casino games as well. But one of the things that haven't happened in the market is that they haven't really supported local payments for those offshore companies. Consequently, they haven't been able to invest in local media assets.

If that happens later in the year or if it would move out till next year, we'll update at that time. So just for clarity only the markets. We're in today are part of our guidance for revenue and profitability and so then I'll, let Richard talk about the competitive landscape Hey, Mike in terms of the competitive landscape there are quite a large number.

Of gray market operators operating that market for a number of years.

Primarily focused on sports betting on some offer casino as well.

The things that hasn't happened in the market is that they haven't supported local payments for those offshore companies that haven't been able to invest in local media assets. They haven't been able to use.

Richard Todd Schwartz: They haven't been able to use Google and other types of media partners as well to kind of drive larger volumes of play. So, while there are some that will have an advantage in having a brand and a database, it's yet to be seen how that database will be translated into a regulated market. The chief regulator overseeing the effort for the last year recently resigned, and so they're in the middle of finding a replacement. So, even the timing of the launch is a little bit unclear.

Google and other types of media partners as well to kind of drive larger volumes at play. So while there are some that will have an advantage in having a brand and the database is yet to be seen how that database will be translated into a regulated market the chief regulator overseeing the effort to us year recently.

Resigned and so they are in the middle of finding a replacement so even the timing of the launch a little bit unclear.

Richard Todd Schwartz: But what I will say is that even some of our competitors have purchased legal horse racing companies trying to find value in being able to market locally in the country itself in a more normalized way over the last couple of years. So, I think one of the benefits is that local marketing will open up for the first time, and companies that have licenses, like presumably we would be one of them, would have some benefits of being able to reach the audience in a more direct way than they have in the past, and a quick follow-up. Time. Dr. Ken Jones There is no official email address.

But what I will say is that I have known even some of our competitors have purchased.

Legal Horseracing company is trying to find the value in being able to market locally in the country itself in a more normalized way in the last couple of years. So I think one of the benefits is that the local marketing will be open up for the first time in companies that have licenses like presumably we'd be one of them.

We'll have some benefits of being able to reach the audience in a more direct way than you have in the past.

Thanks Richard.

Maybe a quick follow up on.

Domestic business obviously.

To optimize your market access.

Unknown Attendee: We will be checking that out for you once we find out when you're beaten. Thanks again. Bye. Adrian King.

Agreements.

Pulled out of Connecticut.

I did not to go in the Massachusetts, obviously.

<unk> had some success here in Delaware.

Same time.

We've got great cash position.

Unknown Attendee: Thank you. Bye. Bye. Where's everybody? Dr. Hannako Wong, also known as Dan Mey, and Dr. Ola Gulatsky.

Your cash flow.

It looks like.

In 2004, so I guess.

And I guess, all that with sort of an idea.

Think that you will now focus on markets.

For G. Both sports betting.

Unknown Attendee: This is Brady Martin. Ruri Osborne. How are you? Hi there. educavex. permeation.

And gaming I'm, just sort of curious now that you're sort of.

Optimized here and you see new states.

Unknown Attendee: Okay. My name is Brady Martin. I guess all that was sort of an idea. Guy gaming.

North Carolina.

Next week.

It seems like a pretty big Tam opportunity I don't think cyberattacks that not over license timing.

Richard Todd Schwartz: I'm just sort of curious that now that it's optimized here, and you see, do you think you still sort of skip out? Right, yeah, so each new market we evaluate on a case by case basis, and it truly is a very rigorous evaluation process where we're looking at the tax rates, competition, the adjacencies in terms of other markets nearby that we're operating in, and permitted products. And so in the cases of some of these sports-only markets, we're looking at all those considerations and deciding whether we are going to get a better return on investment, investing the energy and time in those markets, or continuing to grow some of the other markets we're in where we feel there's a better ROI. And so ultimately, you know, we want to look for a fast recovery of our investment. And some markets give you a much faster recovery on investment. We've seen that with iCasino markets, where we typically will get profitability in the fourth or fifth quarter after we launch, much sooner than you get for a sports-only market. So for those reasons, we've been very cautious and very selective.

Do you think you still sort of skip out.

States like that as they legalize domestically.

Where do you start to sort of <unk>.

We entertain these these opportunities.

One by one basis as you move forward here.

Right, yes, so each new market, we evaluate on a case by case basis and it truly is a very rigorous evaluation process, where we're looking at the tax rates the competition. The adjacencies in terms of other markets nearby that we're operating in.

Permitted products.

And so in the cases of some of the sports book only markets. We're looking at all of those considerations are deciding how are we going to get a better return on investing the energy and time when those markets are continuing to grow some of the other markets. We're in where we feel there is a better ROI and so ultimately we want to look for a fast recovery of our investment and some market is going to be much faster recovery on investment we've seen.

Now would I casino markets, how we typically will get a <unk>.

Profitability in the fourth or fifth quarter. After relaunch much sooner than you get from a sports with only market. So for those reasons, we have been very cautious and very selective.

And I think we're unique in that we have a whole other region in the world that we have opportunities to tackle, and we're not relying only on growth from additional sports-only markets. Thanks, Mike. Thank you. At this time, we do not have any further questions registered in the queue, so I will turn the call back over to Richard Schwartz for some closing remarks. Well, thank you for joining us today. As you can see, we're experiencing strong momentum across all aspects of our business. It's not hard to see why I'm more excited today than I've ever been about the future opportunities RSI has in front of us. We look forward to updating you on our progress when we share our first quarter results in a couple of months. That concludes today's call. Thank you all for your participation, and you may now disconnect your lines. www.globalonenessproject.org

I think we're unique in that we have a whole other region of the world that we have opportunities to tackle that we're not relying only on growth from additional sports with only markets in the United States.

Thanks, guys. Good luck.

Thanks, Mike.

Thank you.

At this time, we do not have any further questions registered in the queue. So I will turn the call back over to Richard Schwartz.

For some closing remarks.

Well. Thank you for joining us today as you can see we are experiencing strong momentum across all aspects of our business.

It's not hard to see why I'm more excited today than I've ever been about the future opportunities Rsi has in front of us.

Look forward to updating you on our progress when we share our first quarter results in a couple of months.

That concludes today's call. Thank you all for your participation and you may now disconnect your lines.

Yeah.

Okay.