Q2 2024 Rush Street Interactive Inc Earnings Call

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Unknown Attendee: Good day, ladies and gentlemen. Thank you for standing by.

Operator: A question and answer session will follow, and four more presentations. Please note that this conference call is being recorded today, July 31st, 2024. I will now turn the call over to Kyle Sauers, Chief Financial Officer. Kyle, you may proceed. Thank you, operator, and good morning. Now, everyone should have access to our second quarter, found under the, rtly Results in the Investor section of the RSI website at Rush Street Interactive. Some of our comments will be forwarded, and the Federal Security, forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, or other similar, Intersubject.

Kyle L. Sauers: [inaudible] Therefore, you should exercise caution. We refer you to our FCC filings for a more detailed discussion, which could impact our future operating results. During the call, we will discuss our non-GAP, evaluating the company's operating performance. These measures should not be considered in isolation or as a whole for our financial results prepared in accordance with. We'll be discussing adjusted EBITDA, which we define as net income or loss before interest and income tax.

Kyle L. Sauers: Association, and Amortization, Share-Based Compensation, Adjustment, one-time or non-recurring items, and other adjustments that are either not or are not related to our underwriting. A reconciliation of these non-gap measures to the most directly comparable gap is available in our second quarter, 2024, and Aaron Betts, active is available in the investor section of the RSI website at rushstreetinteractive.com. Unknown Attendee, Jed Kelly, Aaron Lee, Joshua Marin, Araceli Moreyra; We're referring to those items on a non-GAAP adjustment. With me on the call today we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call to questions. With that, I'll turn the call over to you.

Unknown Attendee: Welcome to the Rush Street Interactive second quarter, 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow and form more presentation.

Speaker Change: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow and formal presentation.

Unknown Attendee: Please note that this conference call is being recorded today, July 31, 2024.

Speaker Change: Please note that this conference call is being recorded today, July 31st, 2024. I will now turn the call over to Kyle Sauers, Chief Financial Officer. Kyle, you may proceed.

Kyle Sauers: I will now turn the call over to Kyle Sauers, Chief Financial Officer. Kyle, you may proceed. Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2024 earnings release. It can be found under the heading Financials quarter of the results in the investor's section of the RSI website at Rush Street Interactive.com. Some of our comments will be forward-looking statements within the meaning of the Federal security laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words, such as will, expect, show it, or other similar phrases, and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

Kyle L. Sauers: Thank you, Operator, and good afternoon. By now, everyone should have access to our second quarter 2024 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at RushStreetInteractive.com.

Kyle L. Sauers: Some of our comments will be forward-looking statements within the meaning of the federal securities laws.

Speaker Change: Forward-looking statements are not statements of historical fact, and are usually identified by the use of words such as will, expect, should, or other similar phrases, and are subject to numerous risks and uncertainties that could cause actual results to differ maturely from what we expect. We assume no responsibility for updating any forward-looking statements.

Kyle Sauers: We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results in 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'll 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 are not related to our underlying business performance.

Speaker Change: Therefore, you should exercise caution in interpreting and relying on them. 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.

Speaker Change: These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. In particular, we'll be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation, and amortization.

Speaker Change: Share-based compensation, adjustments for certain one-time or non-recurring items, and other adjustments that are either non-cash or are not related to our underlying business performance.

Kyle Sauers: A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our second quarter 2022 war Marines release and our investor deck, which is available in the investor section of the RSI website at rustreetinteractive.com. 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-GAAP adjusted EBITDA basis.

Speaker Change: A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our second quarter 2024 earnings release and our investor deck, which is available in the investor section of the RSI website at RushStreetInteractive.com.

Speaker Change: 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-GAAP-adjusted EBITDA basis.

Kyle Sauers: With me on the call today, we have Richard Schwartz, Chief Executive Officer, who will first provide some opening remarks and then open the call to questions.

Speaker Change: With me on the call today, we have Richard Schwartz, Chief Executive Officer, who will first provide some opening remarks and then open the call to questions. With that, I'll turn the call over to Richard.

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

Richard Schwartz: Thanks, Kyle. Good afternoon and welcome to our second quarter of 2024 earnings call. Looking back at the past 12 months, our results have been a clear sign to us that our approach is working. We have consistently exceeded expectations, and this quarter is no exception. As we continue to innovate, grow, and deliver value to our customers. I remain confident that we are well on our way to achieving our goal of being a leader in online gaming across America. Second quarter revenue was 220 million, up 34% year-over-year, and EBITDA was 21.4 million, representing a 20 million improvement year-over-year.

Richard Todd Schwartz: Thanks, Kyle. Good afternoon, and welcome to our second quarter of 2024. Looking back at the past 12 months, our results have been a clear sign to us that our approach is working. We have consistently exceeded expectations, and this quarter is no exception, as we continue to innovate, grow, and deliver value to our customers. I remain confident that we are well on our way to achieving our goal of being a leader in online gaming across the globe. Second quarter revenue was $220 million, up 34% year over year.

Speaker Change: Thanks Kyle. Good afternoon and welcome to our second quarter 2024 earnings call.

Richard Todd Schwartz: Looking back at the past 12 months, our results have been a clear sign to us that our approach is working.

Richard Todd Schwartz: We have consistently exceeded expectations, and this quarter is no exception.

Richard Todd Schwartz: As we continue to innovate, grow, and deliver value to our customers, I remain confident that we are well on our way to achieving our goal of being a leader in online gaming across America.

Richard Todd Schwartz: Second quarter revenue was $220 million, up 34% year-over-year, and EBITDA was $21.4 million, representing a $20 million improvement year-over-year.

Richard Todd Schwartz: The EBITDA was $21.4 million, representing a 20 million improvement year over year. Both of these were quarterly records, and I'm very proud of our team for continuing to generate. Consistent with trends from the last couple of quarters, we are adding new players to the platform fast, and we are doing it more efficiently.

Richard Schwartz: Both of these were quarterly records, and I'm very proud of our team for continuing to generate these excellent results. Consisting with trends from the last couple of quarters, we are adding new players to the platform faster; we are doing it more efficiently, and we are maintaining high player values for offering a different experience that keeps players coming back time and again. All of us leads to solid top line growth and strong flow through to the bottom line. As we see in our recent quarterly results, we are continuing to post strong growth across both Icasino and sports, with Icasino revenue growing more than 40% year over year and online sports betting more than 25%.

Richard Todd Schwartz: Both of these were quarterly records, and I'm very proud of our team for continuing to generate these excellent results.

Richard Todd Schwartz: Consistent with trends from the last couple of quarters, we are adding new players to the platform faster, we are doing it more efficiently, and we are maintaining high player values by offering a differentiated experience that keeps players coming back time and again.

Richard Todd Schwartz: We are maintaining high player value by offering a differentiated experience that keeps players coming back time and time again. All of this leads to solid top line growth, as we see in our recent quarterly results. We are continuing to post strong growth across both iCasino and, I-Casino revenue growing more than 40% year-over-year, and online sports betting more than $25,000. Underlying the growth is a solid mix of increasing player numbers, that we attribute to our high quality and differential, which engages and retains players. For the second quarter, GDP growth in the United States and Canada was 24% year-over-year.

Richard Todd Schwartz: All of this leads to solid top-line growth and strong flow-through to the bottom line.

Richard Todd Schwartz: As we see in our recent quarterly results, we are continuing to post strong growth across both iCasino and sports.

Richard Todd Schwartz: With iCasino revenue growing more than 40% year-over-year, and online sports betting more than 25%.

Richard Schwartz: Underlying the growth is a solid mix of increasing player counts with improving player value trends that we attribute to our high quality and differentiated user experience that engages and retains players on our platform. For the second quarter, Mal growth in the United States and Canada was 24% year over year. This is the sixth consecutive quarter in which we have seen our year-to-year Mal growth in North America accelerate. In Latin America, rapid Mal growth continued during the second quarter, as we were up 79% year over year. It is noteworthy that this growth in users across our geographies did not come at expensive player value.

Richard Todd Schwartz: Underlying the growth is a solid mix of increasing player counts with improving player value trends that we attribute to our high quality and differentiated user experience that engages and retains players on our platform.

Kyle L. Sauers: For the second quarter, mild growth in the United States and Canada was 24% year-over-year. This is the sixth consecutive quarter in which we have seen our year-over-year mild growth in North America accelerate.

Richard Todd Schwartz: This is the sixth Executive Quarter in which we have seen our year-over-year Mao, North America, in Lafayette, America. Rapid malgrowth continued during this quarter; we were up 79% year over. It is noteworthy that this growth in users across our geography did not come at the expense of player value. We increased North American art compared to last year by six, while Latin American art matter was only modestly lowered.

Kyle L. Sauers: In Latin America, rapid malgrowth continued during the second quarter, as we were up 79% year over year.

Kyle L. Sauers: It is noteworthy that this growth in users across our geographies did not come at the expense of player value.

Richard Schwartz: Specifically, we increased North American art Mal compared to last year by 6%, while Latin America art Mal was only modestly lower in the second quarter despite the outsized Mal growth.

Kyle L. Sauers: Specifically, we increased North American art mail compared to last year by six percent.

Richard Todd Schwartz: Despite the outsized mouths. With that overview, let's zoom into some key market highlights to provide added context. We continue to diversify our revenue streams across Latin America and in U.S. and Canadian markets. Long. Revenue was up 75% year over year, and the percentage of revenues generated from markets outside of Illinois and Pennsylvania is now 59.

Kyle L. Sauers: While Latin America RMAO was only modestly lower in the second quarter, despite the outsized MAO growth.

Richard Schwartz: With that overview, let's zoom into some key market highlights to provide added context on our results. We continue to diversify our revenue streams across markets. In Latin America and in US and Canadian markets launched since 2021, revenue was up 75% year over year in the second quarter. And the percentage of revenues generated from markets outside of Illinois, Pennsylvania is now 59%. The highest it's been since going public. Our ability to deliver much higher growth in our more profitable markets continues to drive higher incremental profitability. On our last quarterly call, I share the each of Michigan, New Jersey, and Pennsylvania have the highest levels of year-over-year revenue growth in over two years.

Kyle L. Sauers: With that overview, let's zoom into some key market highlights to provide added context on our results.

Kyle L. Sauers: We continue to diversify our revenue streams across markets.

Kyle L. Sauers: In Latin America, and in U.S. and Canadian markets launched since 2021, revenue was up 75% year-over-year in the second quarter.

Speaker Change: And the percentage of revenues generated from markets outside of Illinois and Pennsylvania is now 59%. The highest it's been since going public.

Richard Todd Schwartz: The highest experience is going, our ability to deliver much higher growth in our more profitable market continues to drive higher incremental. On our last quarterly call, I shared that each of Michigan, New Jersey, and Pennsylvania had their highest levels of year-over-year revenue growth. This trend continued, offering markets exhibited even higher growth.

Kyle L. Sauers: Our ability to deliver much higher growth in our more profitable markets continues to drive higher incremental profitability.

Kyle L. Sauers: On our last quarterly call, I shared that each of Michigan, New Jersey, and Pennsylvania have their highest levels of year-over-year revenue growth in over two years.

Richard Schwartz: This trend continued again as all three markets exhibited even higher growth during the second quarter. In fact, we had nine different markets with a year-over-year online revenue growth rates of over 50%. Again, demonstrating the breadth of our success and growing the business. In Delaware, our performance continues to progress nicely, achieving total GGR of over 37 million during the first half of the year. Our eye casino revenue during this period was more than four times with the previous. was the operator had achieved in the same prior year time frame. Toward the end of the second quarter, we added live dealer on the Iconcino site, and we're excited to have our first football season approaching on its forceful site.

Kyle L. Sauers: This trend continued again, as all three markets exhibited even higher growth during the second quarter.

Richard Todd Schwartz: In fact, we had nine different markets with year-over-year online revenue growth rates of over... Again, demonstrating the breadth. In Delaware, our performance continues to progress, giving total GGR of over 37 million. Our iCasino revenue during this period was more than four times what the previous, for the end of the. Added live viewer.

Kyle L. Sauers: In fact, we had nine different markets with year-over-year online revenue growth rates of over 50%.

Kyle L. Sauers: Again, demonstrating the breadth of our success in growing the business.

Kyle L. Sauers: In Delaware, our performance continues to progress nicely, achieving total GGR of over 37 million during the first half of the year.

Kyle L. Sauers: Our iCasino revenue during this period was more than four times what the previous operator had achieved in the same prior year time frame.

Kyle L. Sauers: Toward the end of the second quarter, we added live DLR on the iCasino side, and we're excited to have our first football season approaching on the Sportsbook side.

Richard Todd Schwartz: And we're excited to have our first football season approaching. We continue to steadily expand our customers and remain very excited about where we are. Certainly, our success has caught the attention of others. Delaware, and investors, may be familiar with the recent lobbying and legislative efforts to alter the operating model that is delivering great results. Proposed legislation was soundly defeated, and the Bill failed to advance to a floor vote in either the House or the Senate for the legislative session.

Richard Schwartz: We continue to steadily expand our customer base, and remain very excited about where we see the opportunity of progressing in Delaware. Certainly, our success has caught the attention of others in our industry, who chose to bypass the Delaware RFP over a year ago. Many investors and analysts may be familiar with recent lobbying and legislative efforts to alter the operating model that is delivering great results for the state. In the recently ended session, the proposed legislation was soundly defeated. The bill fails to advance to a floor vote in either the House or the Senate before the legislative session adjourned on June 30th, as it was clear that the current industry framework is delivering better outcomes for the state.

Kyle L. Sauers: We continue to steadily expand our customer base and remain very excited about where we see the opportunity progressing in Delaware.

Kyle L. Sauers: Certainly, our success has caught the attention of others in our industry who chose to bypass the Delaware RFP over a year ago.

Kyle L. Sauers: Many investors and analysts may be familiar with the recent lobbying and legislative efforts to alter the operating model that is delivering great results for the state.

Kyle L. Sauers: In the recently ended session, the proposed legislation was soundly defeated.

Kyle L. Sauers: The bill failed to advance to a floor vote in either the House or the Senate before the legislative session adjourned on June 30th, as it was clear that the current industry framework is delivering better outcomes for the state.

Richard Todd Schwartz: As it was clear that the current industry, delivering better, and continuing to maintain our focus on exceeding, Turning to our Latin American operation, to continue to experience great growth, revenue in the region grew 73% year over year. And as noted earlier, that growth is driven by the substantial year-over-year MAL growth. While the vast majority of this revenue growth comes from Colombia, in Mexico, we continue to see solid growth and remain ahead of where we were at the same point in time post-launch from our start. When it comes to marketing, we continue to refine our strategy. Spend to target the highest-value players and find them in unique ways.

Richard Schwartz: We continue to maintain our focus on exceeding expectations in Delaware. Turning to our lots of American operations, we continue to experience great momentum. Revenue in the region grew 73 percent year-over-year, and as noted earlier, that growth was driven by the substantial year-over-year malgrowth. While the vast majority of this revenue growth comes from Columbia, in Mexico, we continue to see solid growth and remain ahead of where we were at the same point in time post-launched to our start in Columbia. When it comes to marketing, we continue to refine our strategy and spend to target the highest value players and find them in unique ways.

Kyle L. Sauers: We continue to maintain our focus on exceeding expectations in Delaware.

Speaker Change: Turning to our Latin American operations, we continue to experience great momentum. Revenue in the region grew 73% year-over-year, and as noted earlier, that growth was driven by the substantial year-over-year MAL growth.

Speaker Change: While the vast majority of this revenue growth comes from Colombia, in Mexico we continue to see solid growth and remain ahead of where we were at the same point in time post-launch to our start in Colombia.

Speaker Change: When it comes to marketing, we continue to refine our strategy and spend to target the highest value players and find them in unique ways.

Richard Schwartz: In the United States, we added a record number of first-time deposits that are still platform for a second quarter, while at the same time having our lowest second quarter marketing spend is going public. This says a ton about our efficiency, and the success of our marketing strategies and efforts, as it goes without saying that our cost of acquisition benefited significantly. In Latin America, we also added a record number of first-time depositors for a second quarter, beating our previous high by an impressive 71 percent, while at the same time reducing spend that compared to that comparable quarter last year.

Richard Todd Schwartz: In the United States, we added a record number of first-time depositors to the platform while at the same time having our lowest second quarter marketing strength. This says a ton about our. As it goes without saying that our cost of acquisitions benefited. In Latin America, we also added a record number of first-time depositors for a second time, beating our previous high by an impressive 71%, while at the same time reducing spend compared to that comparable quarter last year. Say it; it's simple.

Speaker Change: In the United States, we added a record number of first-time depositors to a platform for a second quarter, while at the same time having our lowest second quarter marketing expenses go in public.

Speaker Change: This says a ton about our efficiency and the success of our marketing strategies and efforts, as it goes without saying that our cost of acquisition benefited significantly.

Speaker Change: In Latin America we also added a record number of first-time depositors for a second quarter beating our previous high by an oppressive 71% while at the same time reducing spend it compared to that comparable quarter last year.

Richard Schwartz: To say it simply, we're spending less to acquire more customers. A result we're very proud of. We continue to use high-profile events to acquire new players, benefiting the second quarter in Latin America, continuing momentum into the third quarter, where the Copa America and Euro Cup soccer tournaments. Our teams use this unique opportunity to bring on a significant number of new players, introducing them to the Rushbet brand and platform, with a goal of retaining them for years to come. We have a similar opportunity around the Olympics in North America, and we've been strategic about picking up unique media assets to drive user growth that should benefit both our eye casino and sports betting verticals.

Richard Todd Schwartz: We're spending less, and the result we're very proud of, benefiting the second quarter in Latin America, continuing momentum into the third quarter, where the Copa America and Eurocup soccer. Our teams use this unique opportunity to bring on a significant number of new customers, introducing them to the Rush Pet Brand, with the goal of retaining them for years. We have a similar opportunity around these Olympics in North America.

Speaker Change: To say it simply, we're spending less to acquire more customers, a result we're very proud of.

Speaker Change: We continued to use high-profile events to acquire new players. Benefiting the second quarter in Latin America, continuing momentum into the third quarter were the Copa America and Euro Cup soccer tournaments.

Speaker Change: Our teams use this unique opportunity to bring on a significant number of new players, introducing them to the RushBet brand and platform with a goal of retaining them for years to come.

Richard Todd Schwartz: And we've been strategic about picking up unique media assets to drive user growth that should benefit both our eye-gazers and our users, and sports in a new market. We continue to pursue and evaluate a variety of opportunities across, Let's begin in Canada. Many of you may have seen that since we last spoke, the Alberta legislator passed a bill, a step forward in efforts to launch commercial online gaming, which, from our advantage, is beginning to point to a near, We will continue to monitor the opportunity at the province.

Speaker Change: We have a similar opportunity around these Olympics in North America and we've been strategic about picking up unique media assets to drive user growth that should benefit both our iCasino and sports betting verticals.

Richard Schwartz: On the new mark. David Katz Front, we continue to pursue an evaluated variety of opportunities across the Americas. Let's begin in Canada. Many of you may have seen that since we last spoke, the Alberta Legislator passed a bill that would step forward an effort to launch commercial online gaming and sports betting in that profit. From our vantage point, momentum is beginning to point to a near-term launch as being their real possibility. We will continue to monitor the opportunity as the province, according to the Canadian Gaming Association, has among the highest per capita spending on gaming in the country.

Speaker Change: On the new markets front, we continue to pursue and evaluate a variety of opportunities across the Americas.

Speaker Change: Let's begin in Canada. Many of you may have seen that since we last spoke, the Alberta legislator passed a bill that was a step forward in efforts to launch commercial online gaming and sports betting in that province.

Speaker Change: From our vantage point, momentum is beginning to point to a near-term launch as being a real possibility.

Richard Todd Schwartz: According to the Canadian Game, has among the highest per capita. This is a market that has great potential, Much like we've seen in other and Latin America as we are now. We are now live in Peru at iCasino in Alameda.

Speaker Change: We will continue to monitor the opportunity as the province, according to the Canadian Gaming Association, has among the highest per capita spending on gaming in the country.

Richard Schwartz: This is a market that has great attributes, much like we've seen in other markets in North America. In Latin America, as we announced this week, we are now live in Peru, and I could see in an online sports betting. Marking the third country we've launched in Latin America, Peru is a market we are excited about. It is about two-thirds of the population of Colombia, with slightly higher GDP per capita. We believe we are well positioned for success there, given the marketing adjacencies and overlap with Colombia, existing brand recognition, and the established teams in Latin America we will leverage.

Speaker Change: This is a market that has great attributes, much like we've seen in other markets in North America.

Speaker Change: In Latin America, as we announced this week, we are now live in Peru with iCasino and Online Sports Betting, marking the third country we've launched in Latin America.

Richard Todd Schwartz: Marking the third country we've launched in last, Crew is a market we are excited about, is about two-thirds of the population. We believe we are well within, established teams in Latin America. Timing of modest loss period

Speaker Change: Peru is a market we are excited about. It is about two-thirds of the population of Colombia with slightly higher GDP per capita.

Speaker Change: We believe we are well positioned for success there, given the marketing adjacencies and overlap with Columbia, existing brand recognition, and the established teams in Labs of America we will leverage.

Richard Schwartz: For planning and modest launch period in Peru, so we don't expect a significant impact on either expenses or revenues in 2024. We look forward to discussing a progress there on future calls. Our evaluation in Brazil is ongoing. We are awaiting clarity on several items, including the tax framework and how the grain market will be treated post-regulation. Again, our strategy has been to maintain certain levels of fiscal discipline in all of our markets, both new and existing. Brazil will be no different. We will continue to provide updates as appropriate on our plans.

Richard Todd Schwartz: We don't expect a significant impact on either expenses or revenue. We look forward to discussing our progress there. Our evaluation in Brazil is ongoing. We are awaiting clarity on several items, including the tax. Again, our strategy has been to maintain certain levels of fiscal discipline in all of them, both new. There will be no, and We will continue to provide updates as appropriate on our plans. I will add that there are other markets in LAPD, and of course, we will provide updates on these markets. With that, I'll turn the call over to you.

Speaker Change: We're planning a modest launch period in Peru, so we don't expect a significant impact on either expenses or revenues in 2024.

Speaker Change: We look forward to discussing our progress there on future calls.

Speaker Change: Our evaluation in Brazil is ongoing. We are awaiting clarity on several items, including the tax framework and how the gray market will be treated post-regulation. Again, our strategy has been to maintain certain levels of fiscal discipline in all of our markets, both new and existing.

Speaker Change: Brazil will be no different. We will continue to provide updates as appropriate on our plans.

Richard Schwartz: Lastly, I will add there are other markets in Latin that we continue to evaluate.

Speaker Change: Lastly, I will add there are other markets in LAPDAN that we continue to evaluate, and of course, we will provide updates on these markets when appropriate.

Kyle Sauers: And of course, we will provide updates on these markets when appropriate, without offering the call over to Kyle.

Kyle Sauers: Thanks, Richard. Second quarter revenue was 220.4 million, up 34% year over year, with balanced growth once again in both iCasino and online sports betting products. Our growth was also strong across our different geographies and market ventures. As the business continues to scale further, top line expansion is resulting in growing profitability. We had record EBITDA, again this quarter, coming in at 21.4 million, up over 20 million from last year's Q2 EBITDA of 1.2 million. As our business scales, we continue to drive improvements in profitability with strong flow-through. As Richard discussed, our revenue was driven by strong growth in our player base in combination with a nice improvement in player values in North America.

Kyle L. Sauers: Thanks, Richard. Second quarter revenue was $295,000, with balanced growth once again in both iCasino and. Our growth was also strong across our different geographies and markets. The Business Continues to Scale Further, Top-Line Experience. Resulting in growing

Speaker Change: With that, I'll turn the call over to Kyle.

Kyle: Thanks, Richard. Second quarter revenue was $220.4 million, up 34% year-over-year, with balanced growth once again in both iCasino and online sports betting products.

Kyle: Our growth was also strong across our different geographies and marked advantages.

Kyle: As the business continues to scale further, top line expansion is resulting in growing profitability. We had record EBITDA again this quarter, coming in at $21.4 million, up over $20 million from last year's Q2 EBITDA of $1.2 million.

Kyle L. Sauers: We had record EBITDA, coming in at $21.4 million, up over $20 million from last year's Q2 EBITDA of $1 million. Business Scales will continue to drive improvements in profitability with strong. As Richard discussed, our revenue was driven by strong growth in our players, combined with a nice player values. In North America, miles were 164, up 24% year-over-year, while Art Mile was up 6% year-over-year to $300,000. In Latin America, now, we're up to 79.

Speaker Change: As our business scales, we continue to drive improvements in profitability with strong flow-through. As Richard discussed, our revenue is driven by strong growth in our player base in combination with a nice improvement in player values in North America.

Kyle Sauers: In North America, miles were 164,000, up 24% year over year, while art mile was up 6% year over year to $380. In Latin America, miles were up 79% to 288,000, while art mile was now in 2% compared to the prior year period. We are bringing in players efficiently, retaining them well, and driving strong player value by offering them a unique and fun experience. In the second quarter, growth is profitable. Margin increased around 100 basis points sequentially to 34.6%. Revenue from markets, others in Pennsylvania, Illinois accounted for 59% of revenue during the second quarter, while gross profit margin in markets, others in Pennsylvania, Illinois reached 47% during the quarter, the highest point in our history.

Speaker Change: In North America, miles were $164,000, up 24% year-over-year, while Art Mile was up 6% year-over-year to $380.

Kyle L. Sauers: 288,000. Well, our team, we are bringing in players. ,,,,,,,,,,,,, and the second quarter gross profit. [inaudible] Revenue from markets other than Pennsylvania and Illinois accounted for 59% of revenue during this year, while gross profit margin in markets in Illinois reached 47 percent. The highest point.

Speaker Change: In Latin America, MOUs were up 79% to 288,000, while ARTMOU was down 2% compared to the prior year period. We are bringing in players efficiently, retaining them well, and driving strong player value by offering them a unique and fun experience.

Speaker Change: In the second quarter, gross profit margin increased around 100 basis points sequentially to 34.6%.

Speaker Change: Revenue from markets other than Pennsylvania and Illinois accounted for 59% of revenue during the second quarter, while gross profit margin in markets other than Pennsylvania and Illinois reached 47% during the quarter, the highest point in our history.

Kyle Sauers: We're also very pleased with our marketing investments for the quarter. As Richard mentioned, we set records for new players in both the US and Latin America, but we also did so while cutting our costs to acquire players by more than half compared to the year prior. Marketing spend during the quarter was 36.3 million, down 10% compared to the prior year quarter. As a percentage of revenue, marketing was 16% during the quarter, down from 24% in the year-ago quarter. We expect marketing spend to increase sequentially into the third and fourth quarters, reflect in the increased investment Richard referenced for the Olympics, the start of footfall season, and capitalizing on our ability to acquire players at much better CPAs. As always, we will stay flexible and dynamic with our marketing spend.

Kyle L. Sauers: We're also very pleased with our. As Richard mentioned, we set records for new players in both the U.S. and Latin America. We also did so while cutting our costs to acquire by more than half. Marketing spend during the quarter was $36.3 million, down 10% compared to the prior year, and as a percentage of revenue, marketing was 16% during the quarter, down from 24% a year ago.

Speaker Change: We are also very pleased with our marketing investments for the quarter. As Richard mentioned, we set records for new players in both the U.S. and Latin America, but we also did so while cutting our costs to acquire players by more than half compared to the year prior.

Richard: Marketing spend during the quarter was $36.3 million, down 10% compared to the prior year quarter.

Speaker Change: As a percentage of revenue, marketing was 16% during the quarter, down from 24% in the year-ago quarter.

Kyle L. Sauers: We expect marketing spend, [inaudible] Reflecting the increased investment Richard referenced for the Olympics and capitalizing on our ability to acquire. As always, we'll stay flexible and dynamic. GNA for the second quarter was 18.5, up 1%. We expect GNA to continue to increase sequentially throughout the remainder of. Turning to the balance sheet, we ended the quarter with $194 million in unrestricted cash and no debt, generated $28 million in our net cash position to the first, turn into our guide, for all the first half of the year, region, both our full year revenue and.

Speaker Change: We expect marketing spend to increase sequentially into the third and fourth quarters.

Speaker Change: Reflecting the increased investment Richard referenced for the Olympics, the start of football season, and capitalizing on our ability to acquire players at much better CPAs. As always, we'll stay flexible and dynamic with our marketing spend.

Kyle Sauers: GNA for the second quarter was 18.5 million, up 1% sequentially. We expect GNA to continue to increase sequentially throughout the remainder of the year as we make investments to support our growth.

Speaker Change: G&A for the second quarter was $18.5 million, up 1% sequentially. We expect G&A to continue to increase sequentially throughout the remainder of the year as we make investments to support our growth.

Kyle Sauers: Turning to the balance sheet, we ended the quarter with 194 million in unrestricted cash and no debt, and we've generated $28 million increase in our net cash position for the first half of the year.

Speaker Change: Turning to the balance sheet, we ended the quarter with $194 million in unrestricted cash and no debt. And we've generated a $28 million increase in our net cash position for the first half of the year.

Kyle Sauers: Turning to our guidance, with a strong first half of the year behind us, we are raising both our full-year revenue and EBITDA guidance for 2024. We now expect full-year revenue to be between 860 million and 900 million, which increases the midpoint to 880 million, up 45 million from our prior guidance. We expect full-year EBITDA to be between 64 million and 72 million, which increases the midpoint to 68 million, up 13 million and 24% from our prior guidance. As a reminder, our guidance includes only those markets that are live as of today, and we think it's noteworthy that we're raising EBITDA despite the impact of the increased Illinois tax rate and the cost associated with the Peru launch.

Speaker Change: Turn into our guidance for the strong first half of the year behind us.

Kyle L. Sauers: Now we expect full-year revenue of 160 million. And I, Unknown Speaker, have a great day, increases the midpoint to $880 million, up $45 million from our prior, Respectful Year, EBITDA. 64 million and 72 million, which increases the midpoint to 68 of $13,024,000. As a reminder, our guidance includes only those markets that are live as, and we think it's noteworthy that we're raising EBITDA guidance. Despite the impact, the tax rate, and the cost associated with the peruse. Operator, please open the line.

Speaker Change: We are raising both our full-year revenue and EBITDA guidance for 2024. We now expect full-year revenue to be between $860 million and $900 million, which increases the midpoint to $880 million, up $45 million from our prior guidance.

Speaker Change: We expect full year EBITDA to be between $64 million and $72 million, which increases the midpoint to $68 million, up $13 million and 24% from our prior guidance.

Speaker Change: As a reminder, our guidance includes only those markets that are live as of today, and we think it's noteworthy that we're raising EBITDA guidance despite the impact of the increased Illinois tax rate and the costs associated with the Peru launch.

Unknown Attendee: And with that operator, please open the line. We've got three questions. We will now begin our question and answer session. At this time, if you would like to ask a question, please press star followed by one on your telephone keypad.

Speaker Change: And with that, Operator, please open the line for questions.

Operator: We will now begin our question and answer session. At this time, if you would like to ask a question, please press star followed by one on your telephone keypad. If, for any reason, you would like to remove a question, please press star followed by two.

Speaker Change: We will now begin our question and answer session.

Speaker Change: At this time, if you would like to ask a question, please press star followed by 1 on your telephone keypad.

Unknown Attendee: If you're free, any review, let's remove that question. Please press Star follow-up by two. Again, to ask a question, it is Star One.

Operator: Again, to ask a question, it is star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from Ryan Sigdahl with the company Craig Hullam Capital. Ryan, your line is now open. Good afternoon, Richard, and Kyle. Nice job.

Speaker Change: and for any reason you would like to remove that question.

Unknown Attendee: As a reminder, if you're using us to be the phone, please remember to pick up your handset before asking a question.

Speaker Change: Please press star followed by 2.

Speaker Change: Again, to ask a question, it is star 1. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from Ryan Sigdahl with the company Craig Hullam Capital. Ryan, your line is now open.

Kyle L. Sauers: Good quarter again. Maybe Kyle will stick on the last point talking about Illinois and the tax increase. Can you talk through the puts and takes and, I guess, who's ultimately burdened given your managed service agreement with Rush Street Gaming with, ultimately, the higher taxes in the state? And then, secondly, how do you think about strategy as it relates to competitive intensity and how the marginal tax rate may impact your larger competitors in the state relative to yourself? Yeah, I'll go on that first part. Ryan, let Richard chime in.

Ryan Sigdahl: Our first question comes from Ryan Siddle with the company Craig Hollum Capital Ryan. The line is not open. Good afternoon, and Richard Kyle. Nice job. Good quarter game.

Ryan Sigdahl: Maybe Kyle's sticking on the last point, talking about Illinois and the tax increase. Can you talk to the puts, takes, and I guess who's ultimately burdened given your managed service agreement with Rust Street Gaming with ultimately the higher taxes in the state? And then secondly, how do you think about strategy as it relates to the competitive intensity and how the marginal tax rate may impact your larger competitors in the state relative to yourself?

Speaker Change: Good afternoon, Richard, Kyle. Nice job. Good quarter again.

Speaker Change: Maybe, Kyle, sticking on the last point, talking about Illinois and the tax increase, can you talk through the puts, takes, and I guess who's ultimately burdened, given your managed service agreement with Rush Street Gaming, with ultimately the higher taxes?

Kyle L. Sauers: in the state? And then secondly, how do you think about strategy as it relates to the competitive intensity and how the marginal tax rate may impact your larger competitors in the state relative to yourself?

Kyle Sauers: Yeah, I'll go on that first part, Ryan and Richard Cheyman. So the way that tax rate was finalized, being a graduated tax was better for us. As you point out, more of the burden of that is on our partner in Illinois. The impact on us ends up being less than we originally expected under the construct that was put forward. We're initially, so at current revenue levels, it's less than a two million annual impact on us. Obviously, we hope for that to increase as we increase the business there. And as I think I pointed out in the prepared remarks, we've built that impact into our guidance already.

Kyle L. Sauers: Yeah, I'll go on that first part, Ryan, and let Richard chime in. So the way that tax...

Kyle L. Sauers: So the way the tax, the rate was finalized, being a graduated tax, was better for us. As you point out, more of the burden of that is on our partner in Illinois. The impact on us ends up being less than we originally expected under the construct that was put forward initially. So at current revenue levels, it's less than a $2 million annual impact on us. Obviously, we hope for that to increase as we increase business there.

Richard: rate was finalized, being a graduated tax was better for us. As you point out, more of the burden of that is on our partner in Illinois, the impact on us.

Richard: It ends up being less than we originally expected under the construct that was put forward initially. So at current revenue levels, it's less than a $2 million annual impact on us. Obviously, we hope for that to increase.

Kyle L. Sauers: And as I think I pointed out in the prepared remarks, we've built that impact into our guidance already. And from a competitive standpoint, it went from being one of the most reasonable tax rate markets in the country to one of the highest ones. So you can imagine that there will be a change of effort and investment made in the state because of that. And therefore, I think the competitive intensity will decline.

Richard: As we increase the business there, and as I think I pointed out in the prepared remarks, we've built that impact into our guidance already.

Kyle Sauers: From a competitive standpoint, it wouldn't from being one of the most reasonable tax rate markets in the market in the country to one of the more highest ones. So you can imagine that there will be a change of effort and investment made in the state because of that. And therefore, I think the competitive intensity will decline. I think that actually probably goes well for companies that are less aggressive in their spend in terms of just trying to create an experience that players like and treat them well and retain the customers, which is where we have done well historically.

Richard: And from a competitive standpoint.

Richard: It went from being one of the most reasonable tax rate markets and...

Richard: in the market in the country to one of the more highest ones. So you can imagine that there will be a...

Richard: change of effort and investment need in the state because of that and therefore I think the competitive intensity will decline and I think that actually probably goes well for companies that have, you know, less aggressive in their spend in terms of just trying to

Richard Todd Schwartz: And I think that actually probably goes well for companies that are less aggressive in their spend in terms of just trying to create an experience that players like and treat them well and retain customers, which is where we have done well historically. And moving up north to Ontario, any comments on performance, and if you're willing to comment on growth rates relative to the overall industry figures that we see? Sure.

Richard: Create an experience that players like and treat them well and retain the customers, which is what we have done well historically.

Richard Schwartz: Moving up north to Ontario, any comments on performance and if you're willing to comment on growth rates relative to the overall industry figures that we see? We're really excited by a marketing campaign running right now during the Olympics, which is essentially exclusive around the entire country. We're really making sure our brand is front and center during the Olympics. We're really the only brand that's in our category that's being broadcast in association with all the Olympic broadcasts. And so given a lot of interest in the basketball team up there with a lot of NBA players and obviously sports like tennis and soccer is performed really well for us outside of the Olympics.

Speaker Change: And moving up north to Ontario any comments on performance and if you're willing to comment on growth rates relative to the overall industry figures that we see?

Richard Todd Schwartz: We're really excited by a marketing campaign we're running right now during the Olympics, which is essentially exclusive around the entire country, really making sure our brand is front and center. During the Olympics, we're really the only brand that's in our category that's being broadcast in association with all the Olympic broadcasts. And so given a lot of interest in the basketball team up there with a lot of NBA, some star NBA players, and obviously sports like tennis and soccer perform really well for us outside of the Olympics, and we're expecting them to do well for us during the Olympics, we think it's a great opportunity for us to head into the second half of the year to continue growing the way we have. We aren't going to really break out specific market performances, Very good. I'll turn it over to the others. Thanks, guys. Good luck!

Speaker Change: Sure.

Speaker Change: We're really excited by a marketing campaign we're running right now during the Olympics, which is essentially exclusive around the entire country.

Speaker Change: Really making sure our brand is front and center. During the Olympics, we're really the only brand that's in our category that's being broadcast in association with all the Olympic broadcasts. And so, given a lot of interest in the basketball team up there with a lot of NBA, some star NBA players, and obviously sports like tennis and soccer perform really well.

Richard Schwartz: And we're expecting to do well for us during the Olympics. We think it's a great opportunity for us to head into the second half of the year to continue growing the way we have.

Speaker Change: For us outside of the Olympics, and we're expecting it to do well for us during the Olympics, we think it's a great opportunity for us to head into the second half of the year to continue growing the way we have. We aren't going to really break out specific market performances, though, like we normally do.

Richard Schwartz: We aren't going to really break out specific market performances, though, and like we number do. Very good.

Ryan Sigdahl: I'll turn it over to the others. Thank you, guys. Good luck.

Unknown Attendee: Thanks, Ryan.

Speaker Change: Very good. I'll turn it over to the others. Thanks guys. Good luck.

Frank: Thanks, Ryan.

Daniel Politzer: Next question comes from Daniel Politzer with the company Wells Fargo. Daniel. Your line is not open. Hey, good afternoon everyone. Thanks for taking my question. If first one, it won't flow through. The first half of this year has been really strong. Obviously, you've been reflected profitably, positively in terms of your profitability. But as we think about the back half of the year, I think your guidance is implying something like 20% flow through. To what degree is there some conservatism baked in there, or is that more reflective of market launches, or Illinois, or something else altogether?

Kyle L. Sauers: Thanks, Ryan. The next question comes from Daniel Politzer with the company Wells Fargo. Daniel, your line is now open. Hey, good afternoon, everyone.

Frank: Next question comes from Daniel Politzer with the company Wells Fargo. Daniel, your line is now open.

Operator: Thanks for taking my question. First one on flow through. The first half of this year has been really strong. Obviously, you've increased profitably and positively in terms of your profitability. But as we think about the back half of the year, I think your guidance is implying something like 20% flow through. To what degree is there some conservatism baked in there?

Daniel Brian Politzer: Hey, good afternoon, everyone. Thanks for taking my question. First one, on flow-through, the first half of this year has been really strong. Obviously, you've inflected profitably and positively in terms of your profitability.

Speaker Change: But as we think about the back half the year, I think your guidance is implying something like 20% flow-through. To what degree is there some conservatism baked in there, or is that more reflective of market launches or Illinois or something else altogether?

Kyle L. Sauers: Or is that more reflective of market launches or Illinois or something else altogether? Yeah, Dan, thanks for the question. This is Kyle.

Kyle Sauers: Yeah, Dan. Thanks for the question. I'll take it. So some of the improvements in EBITDA compared to last year in the first half relates to lower marketing spend. And based on what we've indicated today, we're expecting to increase marketing spend. You're over a year in the second half, so that impacts the flow through during those quarters. I think it's probably more useful to look at the full year and take out some of the seasonality of the business and seasonality of our marketing investments.

Kyle L. Sauers: I'll take it. So, you know, some of the improvements in EBITDA compared to last year in the first half relate to lower marketing spend. And based on what we've indicated today, we're actually, we're expecting to increase marketing spend year-over-year in the second half. So that impacts the flow-through during those quarters.

Speaker Change: Yeah, Dan, thanks for the question. This is Kyle. I'll take it.

Kyle L. Sauers: Some of the improvements in EBITDA compared to last year in the first half relates to lower marketing spend, and based on what we've indicated today, we're expecting to increase marketing spend year-over-year in the second half, so that impacts the flow-through during those quarters. I think it's probably more...

Kyle L. Sauers: I think it's probably more useful to look at the full year and take out some of the seasonality of the business and seasonality of our marketing investments. And I think if you look at it that way, the guidance puts us in a, you know, low to mid 30% range for flow-through for the year.

Kyle L. Sauers: Useful to look at the the full year and takes out some of the seasonality of the business and seasonality of our marketing investments And I think if you look at it that way the guidance puts us in a you know low to mid 30% range for for flow through for the year

Kyle Sauers: I think if you look at it that way, the guidance puts us low to mid 30% range for flow through for the year. Got it. And then in terms of the customer acquisition environment, have you seen any changes in terms of, you know, the cost to acquire sports betting customers versus iGaming? Technology, marketing tools, as well as investing in capabilities to make sure that we find the right players and the right places that are valuable for us. Ultimately, you'll see in what I shared is that we're getting more players for less spend, which means we're becoming extremely efficient in what we do.

Kyle L. Sauers: And then in terms of the customer acquisition environment, have you seen any changes in terms of, you know, the cost to acquire a sports betting customer versus iGaming? Well, yeah, for us, we've been able to deliver reductions across all categories of marketing. I think we had an irrational market for a period of time, and it's become a lot more rational, and I think we've been improving quite a bit with our investments in technology and marketing tools, as well as our investments in capabilities to make sure that we find the right players in the right places that are valuable for us.

Kyle L. Sauers: Got it. And then in terms of the customer acquisition environment, have you seen any changes in terms of, you know, the cost to acquire, sports betting, customer versus iGaming?

Speaker Change: Well, yeah, we've seen for us, we've been able to deliver reductions across all categories of marketing. I think we had an irrational market for a period of time.

Speaker Change: And it's become a lot more rational and I think we've been improving quite a bit with our...

Speaker Change: Investments in technology, marketing tools, as well as investing in capabilities to make sure that we find the right players in the right places that are valuable for us.

Kyle L. Sauers: Ultimately, you'll see from what I shared is that we're getting more players for less spend, which means we're becoming extremely efficient in what we do, and we think there are opportunities to continue to improve in that area. So I would say we have seen some improvements, and we're excited by the opportunity to kind of invest some more in marketing moving into the second half of this year. Yeah, and just maybe put a fine point on it, Dan; it's improved very nicely in both sports-only markets and markets with both products. Thanks so much.

Speaker Change: Ultimately, you'll see in the notes and what I shared is that we're getting more players for less spend, which means we're becoming extremely efficient in what we do, and we think there's opportunities to continue to improve in that area. So I would say we have seen some improvements, and we're excited by the opportunity to kind of invest some more in marketing moving to the second half of this year.

Kyle Sauers: And we think there's opportunities to continue to improve in that area. So I would say we have seen some improvements. And we're excited by the opportunity to kind of invest some more in marketing moving to the second half of this year. Yeah, and just maybe put a fine point on it. It's improved very nicely in both sports-only markets and markets with both products. Understood.

Dan: Yeah, and just maybe put a fine point on it, Dan, it's improved very nicely in both sports-only markets and markets with both products.

Daniel Politzer: Thanks so much.

Bernard McTernan: Thanks, Dan. Next question comes from Bernie McTernan with a company meeting. Bernie, the land is not open. Great. Thanks for taking questions. Maybe just to start all up on Ryan's question in Illinois. Have you actually just, I know it's only been a month since the actual tax rate increases, but have you seen any change in behavior from any of the operators thus far as a result tax situation? No, I think we really haven't seen anything that I would comment on here. Okay, understood.

Dan: Understood. Thanks so much.

Tim: Thanks, Tim.

Operator: Thanks, Dan. Our next question comes from Bernie McTernan with the company Needham. Bernie, your line is now open.

Speaker Change: Our next question comes from Bernie McTernan with the company Needham. Bernie, your line is now open.

Richard Todd Schwartz: Great. Thanks for taking questions. Maybe just to start all off on Ryan's question in Illinois. Have you actually seen any change in behavior from any of the operators thus far as a result of the tax situation? No, I think we really haven't seen anything that I would comment on here.

Bernard Jerome McTernan: Great. Thanks for taking the questions. Maybe just to start all up on Ryan's question on Illinois. Have you actually just, I know it's only been a month since the actual tax rate increases, but have you seen any change in behavior from any of the operators thus far as a result of the tax situation?

Speaker Change: No, I think we really haven't seen anything that I would comment on here.

Richard Todd Schwartz: Okay, understood. And then, just given the success and, you know, strong MAU trends that you've seen, would there be any thought of revisiting states that you are currently in where only online sports betting is legalized, like North Carolina, for example? Does that make more sense now, given all the success that you're having? We look at those markets all the time, the ones that we're in, the ones that we're out. We're always constantly evaluating where the opportunity is for the best ROI. And we think the mix we have right now is really strong.

Richard Schwartz: And then just given the success and the strong MAU trends that you've seen, would there be any thought of revisiting states that you aren't currently in where only online sports that you legalize like a North Carolina. For example, does that make more sense now, given all the success that you're having? Well, we look at those markets all the time. The ones that were in ones that were out are always constantly evaluating with the opportunities for the best ROI. I think the mix we have right now is really strong. What we're seeing is that a larger percentage of our overall market footprint are now moving to casino markets.

Speaker Change: Okay, understood.

Speaker Change: And then, just given the success and the strong MAU trends that you've seen, would there be any thought of revisiting states that you aren't currently in, where only online sports vetting is legalized, like in North Carolina, for example? Does that make more sense now, given all the success that you're having?

Speaker Change: Well, we look at those markets all the time, the ones that we're in, the ones that we're out, and we're always constantly evaluating where the opportunity is for the best ROI. And we think the mix we have right now is really strong. What we're seeing is that a larger percentage of our overall market footprint...

Richard Todd Schwartz: What we're seeing is that a larger percentage of our overall market footprint is now moving to casino markets. In fact, 9 out of our 19 states are now markets, I should say, globally have casino in them. So I think the combination really gives us twice the value of being able to acquire players for sports across the casino. So while it's possible, we are getting much better in sports constantly.

Richard Schwartz: In fact, nine out of our 19 states are now casino markets. I should say globally have casino in it. I think the combination really gives us twice the value of the acquired players to sports across the casino. So, while it's possible, we are getting much better in sports constantly. Our products improving, our user experience improving, we'll bring some innovations to the market in the last year that have worked really well. We have some additional ones we're working on for later this year. So I think it's never, it's never something we don't consider, but I would say they were really glad that we are growing in the way that we are in all of our markets.

Speaker Change: are now moving to casino markets. In fact, nine out of our 19 states are now, or markets I should say, globally have casino in it. So I think the combination really gives us twice the value of being able to acquire players for sports across the casino.

Richard Todd Schwartz: Our product's improving, our user experience is improving, and we've been bringing some innovations to the market in the last year that have worked really well. We have some additional ones we're working on for later this year, so I think it's never something we don't consider, but I would say that we're really glad that we are growing in the way that we are. In all of our markets, we're very balanced in the casino and sports.

Speaker Change: So, while it's possible, we are getting much better in sports constantly, our product's improving, our user experience is improving.

Speaker Change: or bringing some innovations to the market in the last year that have worked really well. We have some additional ones we're working on for later this year. So I think it's never something we don't consider, but I would say that we're really glad that we are growing in a way that we are in all of our markets. We're very balanced in the casino and sports.

Richard Schwartz: We're very balanced in the casino in sports, and the sports that they're part of our business still, and it's something that we're excited to keep growing. But I don't think it's something that is pending for us to be jumping into another sports-only market. Understood. That helps me.

Richard Todd Schwartz: And sports is a big part of our business still, and it's something that we're excited to keep growing. But I don't think it's something that is pending for us to be jumping into another sports-only market. Understood. That's all for me.

Speaker Change: And the sports is a big part of our business still, and it's something that we're excited to keep growing. But I don't think it's something that is pending for us to be jumping into another sports-only market.

David Katz: Thanks. Next question comes from David Katz with a company, Jeffries. David, young line is not open. Even everyone, thanks for taking my questions. It, and I apologize if I missed it in your prepared remarks. I was on on time, but, but Delaware is a market really that has been one of the important engines of growth.

Speaker Change: Understood. That's all for me. Thanks, Richard.

Operator: Thanks, Richard. Our next question comes from David Katz with the company Jeffries. David, your line is not open. Evening, everyone.

Speaker Change: Our next question comes from David Katz with the company Jeffries. David, your line is now open.

Operator: Thanks for taking my questions, and I apologize if I missed it in your prepared remarks. I was on time.

David Brian Katz: Evening, everyone. Thanks for taking my questions.

David Brian Katz: I apologize if I missed it in your prepared remarks, I was on on time.

Richard Todd Schwartz: But Delaware is a market that has been one of the important engines of growth. Could you just give us some updated color on sort of how that's doing and put some context around just how big it is in the grand scheme of things, potentially? Sure, I mean, it continues to be a really strong performance for us. I think the quality of the technology and our user experience really has resonated with the audience there, almost immediately.

David Brian Katz: Delaware is a market really that has been one of the important engines of growth. Could you just give us some updated color on sort of how that's doing and put some context around just how big it is in the grand scheme of things, potentially?

Richard Schwartz: Blake, could you just give us some updated color on how that's doing and put some context around just how big it is in the grand scheme of things, potentially? Sure, I mean, it continues to be a real strong performance for us. I think the quality of the technology and our user experience really is resonated with the audience there, almost immediately, and we're continuing to improve our performance there to the point where we shared that we are generating four times more than what the prior operator had achieved over the same prior year time frame, so really a strong result.

Richard Todd Schwartz: And we're continuing to improve our performance there, to the point where we shared that we are generating four times more revenue than the prior operator had achieved over the same prior year timeframe. So really a strong result. We are adding live dealers; we did add live dealers at the end of this last quarter.

Speaker Change: Sure, I mean, it continues to be a real strong performance for us. I think the quality of the technology and our user experience really has resonated with the audience there almost immediately. And we're continuing to improve our performance there to the point where we shared, you know, that we are generating four times more what the prior operator had achieved over the same.

Richard Schwartz: We are adding live dealer. We did add live dealer at the end of the last quarter, and as you know, it's a very popular product category, one that brings a lot of trust to the users who like to play table games. And so, we're excited for that to have been live. And we'll get the benefit of that. We think they're in the football season when you have a lot of cross-cell between the sports and the live dealer type of products, and we're just really excited for the first time to have ever in a state of Delaware to offer an online sports product to be getting a football season.

Speaker Change: Prior to your time frame, so really a strong result.

Speaker Change: We are adding Live Dealer. We did add Live Dealer at the end of this last quarter, and as you know, it's a very popular product category, one that brings a lot of trust to the users.

Richard Todd Schwartz: And as you know, it's a very popular product category, one that brings a lot of trust to users who like to play table games. And so we're excited for that to have gone live. And we'll get the benefit of that, we think, during the football season, when you have a lot of cross-sell between the sports and the live dealer type of products. And we're just really excited for the first time ever in the state of Delaware to offer an online sports product at the beginning of the football season.

Speaker Change: who like to play table games. And so we're excited for that to have been live. And we'll get the benefit of that, we think, during the football season when you have a lot of cross-sell between the sports and the live dealer type of products. And we're just really excited for the first time to have ever in the state of Delaware to offer an online sports product at the beginning of football season.

Richard Schwartz: So I think those two things, live dealer and football season, are going to be opportunities for us to continue to expand our customer base, and we're really excited about the opportunity in Delaware. And is it fair to classify it as I assume it's without growing out of the company as a whole at this point, so it's sort of a creative to the growth. Any context we could put around that? Well, it's going to make sure I answer your question, David. It's all new for us, so obviously it's all growth. We did, as a reminder, exit Connecticut late last year, so that's a bit of an offset, but it's been a nice contributor for us.

Speaker Change: So I think those two things, live dealer and football season, are going to be opportunities for us to continue to expand our customer base. And we've been really excited about the opportunity in Delaware.

Richard Todd Schwartz: So I think those two things, the live dealer and football season, are going to be opportunities for us to continue to expand our customer base. And we remain really excited about the opportunity in Delaware. And is it fair to classify it as, you know, I assume it's outgrowing the company as a whole at this point. So it's sort of accretive to the growth. Any context we could put around that?

Speaker Change: And is it fair to classify it as, you know, I assume it's outgrowing kind of the company as a whole at this point, so it's sort of accretive to the growth? Any context we could put around that?

Richard Todd Schwartz: Well, it's, I want to make sure I answer your question, David. You know, it's all new for us, so obviously, it's all growth. We did, as a reminder, Exit Connecticut late last year, so that's a bit of an offset. But it's been a nice contributor for us. In the first half of the year, about $37 million in GGR.

Speaker Change: Well, it's...

Speaker Change: I want to make sure I answer your question, David. You know, it's all new for us, so obviously it's all growth. We did...

Speaker Change: As a reminder, exit Connecticut late last year, so that's a bit of an offset, but it's...

David Katz: In the first half of the year, about 37 million in GGR. Obviously, there's some bonuses there that brings that number down to the financial statement revenue number, but we'd expect it to continue to grow nicely in the back half of the year, as Richard pointed out, for reasons being first football season and the addition of live dealer. Okay, that'll work. I have more, but I'll come in in the back end. Thanks.

Speaker Change: It's it's a it's been a nice contributor for us, you know in the first half of the year about 37 million

Kyle L. Sauers: Obviously, there's some bonuses in there that brings that number down to the financial statement revenue number. But we'd expect it to continue to grow nicely in the back half of the year, as Richard pointed out, for reasons being the first football season and the addition of the live dealer. Okay, that'll work.

Speaker Change: in GGR. Obviously, there's some bonus in there that brings that number down to the the financial statement revenue number but we'd expect it to continue to grow nicely in the in the back half of the year as Richard pointed out for

Richard: for reasons being first football season and the addition of live dealer.

Operator: I have more, but I'll come in at the end. Thanks. Thanks, David. Our next question comes from Chad Beynon with the company Macquarie. Chad, your line is now open.

Speaker Change: Okay, that'll work. I have more, but I'll come in the back end. Thanks.

Unknown Attendee: Thanks, David.

David Brian Katz: Thanks, David.

Chad Beynon: A nice question comes from Chad Bingham with the company McCuary. Chad, your line is not open. Afternoon, thanks for taking my question and nice results. I wanted to ask about hold rates, I guess, related to both eye gaming and OSB. Anything major to call out in the quarter, and then I guess going forward, there's a couple of things. Obviously, the Euro Copa finals were in the third quarter, so wondering if you could provide a little color around that and then, more importantly, as we kind of get into NFL season, kind of where's the product now, and how are you thinking about potential hold rate increases versus what you had last football season or in Q4, 23.

Speaker Change: Our next question comes from Chad Beynon with the company Macquarie. Chad, your line is now open.

Operator: Afternoon, thanks for taking my question and for the nice results. Wanted to ask about hold rates, I guess, related to both iGaming and OSB. Anything major to call out in the quarter? And then, I guess, going forward, there are a couple things. Obviously, the Euro Copa Finals were in the third quarter, so wondering if you could provide a little color around that.

Chad C. Beynon: Afternoon, thanks for taking my question and nice results. Wanted to ask about hold rates, I guess related to both iGaming and OSB.

Speaker Change: Anything major to call out in the quarter?

Speaker Change: And then I guess, going forward, there's a couple things, obviously the Euro Copa finals were in the third quarter, so wondering if you could provide a little color around that, and then more importantly, as we kind of get into NFL season, kind of where's the product now, and how are you thinking about potential hold rate increases?

Kyle L. Sauers: And then, more importantly, as we kind of get into the NFL season, kind of where the product is now and how are you thinking about potential hold rate increases versus what you had last football season or in Q4-23? Thanks. All right, Chad, I'll start.

Kyle Sauers: Thanks. All right, Chad, I'll start. I think there's about six questions in there, so I hope I can get all of them. On Q2 hold, both Icasino and sports margins were within our expected range. Sports was probably the lower end of our range. I'd point out that our expectation is that all of our hold ranges for both Icasino and sports, that continues to improve, which I think answers another of your question that we'd expect. The improvements in our product, our new prop central came in late last year, squares, the improvement in our parlay product, and same game parlay product, should drive improvement in hold this year, but that's the same across the business.

Speaker Change: versus what you had last football season or in Q4-23. Thanks.

Kyle L. Sauers: I think there are about six questions in there, so I hope I can get all of them. On Q2 hold, you know, both iCasino and sports margins were within our expected range, although sports was probably the lower end of our range. I'd point out that our expectation is that our hold ranges for both iCasino and sports will continue to improve, which I think, answers another of your questions that we'd expect, the improvements in our product. Our new Prop Central that came in late last year, Squares, the improvement in our Parlay product, and Same Game Parlay product should drive improvement in hold this year. But that's the same across the business.

Speaker Change: All right, Chad, I'll start, I think.

Chad C. Beynon: There's about six questions in there, so I hope that I can get get all of them. On Q2 hold, you know, both iCasino and sports margins were within our expected range. Sports

Speaker Change: was probably the lower end of our range. I'd point out that our expectation is that of our hold ranges for both iCasino and sports, that continues to improve, which I think...

Speaker Change: Our new prop, Central.

Speaker Change: that came in late last year.

Speaker Change: squares, the improvement in our Parley product and same game Parley product should drive improvement in hold this year. But that's the same across the business. On the COPA and the euros, I think Richard highlighted just how...

Kyle Sauers: The Copa and the Euros, I think Richard highlighted just how helpful that was for acquiring new players. A lot of great activity, both at the end of Q2 and the beginning of Q3. We'll probably wait until we release Q3 results to give a whole lot of details on the outcomes. I think, as you know, Argentina beat Colombia in the final, so that was certainly a good outcome for us.

Kyle L. Sauers: On COPA and the Euros, I think Richard highlighted just how helpful that was for acquiring new players, a lot of great activity, both at the end of Q2 and the beginning of Q3. We'll probably wait until we release the Q3 results to give a whole lot of details on the outcomes. I think, as you know, Argentina beat Colombia in the finals, so that was certainly a good outcome for us. Thanks, that's great.

Speaker Change: How helpful that was for acquiring new players, a lot of great activity, both at the end of Q2 and the beginning of Q3. We'll probably wait until we release.

Speaker Change: Q3 results to give a whole lot of details on the outcomes. I think, as you know, Argentina beat Colombia in the finals. So that was that was certainly a good outcome for us.

Richard Schwartz: Thanks, that's great. I appreciate all that on hold, and then separately just on Mexico. I know you mentioned that the business is at a better point at its time since launch compared to where Colombia was. So how should we think about when a business like this scales up, or could you just remind us how long it took for Colombia, which is still growing now, to really get to a significant amount of contribution. Thank you. Well, I'll start, and then maybe Kyle can add in. So I mean, Mexico goes very, very nicely. It's a really fun opportunity for us.

Kyle L. Sauers: Appreciate all that on hold. And then separately, just on Mexico, I know you mentioned that the business is at a better point at its time since launch compared to where Columbia was, so how should we think about when a business like this scales up, or could you just remind us how long it took for Columbia, which is still growing now, to really get to a significant amount of contribution? Thank you. I'll start and then maybe Kyle can add in later.

Speaker Change: Thanks. That's great. Appreciate all that on hold. And then, separately just on Mexico, I know you mentioned that the business is at a better point at its

Speaker Change: And it's time since launch compared to where Columbia was. So how should we think about when a business like this scales up, or could you just remind us how long it took for Columbia, which is still growing now, to really get to a significant amount of contribution? Thank you.

Richard Todd Schwartz: So, I mean, Mexico is growing very nicely. It's a really fun opportunity for us. You have to get all the localization customization right, which we're almost at the point where we have that.

Speaker Change: I'll start and then maybe Kyle can add in. So, I mean, Mexico's growing very nicely. It's a really fun opportunity for us.

Richard Schwartz: You have to get all the localization, customization right, which we're almost at the prop time where we have that. We have a couple more payment integrations. We're finishing up that. I think it's going to make an improvement as well. But we're really excited for that. We have a casino audience down there that I think really understands the casino category, and obviously it gets to appreciate the variety and the quality of our casino experience. So it is a market that we're investing more in because we do see larger opportunities for growth in terms of the actual timeline of where we are.

Speaker Change: You'd have to get all the localization and customization right, which we're almost...

Speaker Change: at the prop time where we have that we have a couple more payment integrations we're finishing up that I think it's going to make a improvement as well but we're real excited for that we have a casino audience down there that's I think really understands the casino category and obviously gets to appreciate the variety and the quality of our casino experience

Richard Todd Schwartz: We have a couple more payment integrations we're finishing up that I think are going to make an improvement as well. But we're real excited about that. We have a casino audience down there that I think really understands the casino category and obviously gets to appreciate the variety and the quality of our casino experience. So it is a market that we're investing more in because we do see larger opportunities for growth. In terms of the actual timeline of where we are, well, yeah, so I'll just, without absolute specifics, say that it took Columbia several years before we started to really hit our stride and accelerate growth.

Speaker Change: So it is, um...

Speaker Change: It is a market that's

Speaker Change: We're investing more in because we do see larger opportunities for growth. In terms of the actual timeline...

Richard Schwartz: So I'll just, without absolute specifics, say that it took Colombia several years before we started to really hit our stride and accelerate growth. But, as you've seen over the last several years, once we got to, I don't know, tipping point would be the right term. But brand awareness product was really where it needed to be in Colombia. Growth has really accelerated. And we think we have a similar opportunity in Mexico as we start to build that base and develop some brand awareness. Product is certainly in a better place today than it was in Colombia five years ago.

Speaker Change: of where we are, well, yeah, so I'll just, without absolute specifics, the.

Speaker Change: It took Columbia several years before we started to really hit our stride and accelerate growth. But as you've seen over the last several years, once we got to, I don't know if tipping point would be the right term, but brand awareness.

Kyle L. Sauers: But as you've seen over the last several years, once we got to, you know, I don't know if the tipping point would be the right term, but brand awareness, and product were really where it needed to be in Columbia, growth has really accelerated. And we think we have a similar opportunity in Mexico as we start to build that base and develop some brand awareness. And our product is certainly in a better place today than it was in Columbia five years ago. So we think the opportunity is really, really good for us there. That's great. Thank you both very much.

Speaker Change: Product was really where it needed to be in Columbia.

Speaker Change: Growth has really accelerated.

Speaker Change: And we think we have a similar opportunity in Mexico as we start to build that base and develop some brand awareness.

Speaker Change: Product is certainly in a better place today than it was in Columbia five years ago. So we think the opportunity is really, really nice for us there.

Richard Schwartz: So we think the opportunity is really, really nice for us there.

Unknown Attendee: Great. Thank you both very much.

Jed Kelly: Next question comes from Jit Kelly with the company Oppenheimer. Did you line up about open? Great, great, great for taking my questions in a great quarter to get. Just a question on promotional velocity and high gaming. Have you seen a material difference in the industry? And then just on improving cash trends, I think we've heard from multiple operators now; they're seeing lower cash on a similar level of marketing. So is there something in the industry that's going on that's driving lower cash, and then I'll follow up?

Speaker Change: That's great. Thank you both very much.

Operator: The next question comes from Jed Kelly with the company Oppenheimer. Jed, your line is now open. Unknown Speaker Hey, great, great for taking my questions and a great quarter. Just a question on promotional velocity and iGaming. Have you seen a material difference in the industry and then just on improving cat trends? I think we've heard from multiple operators now that they're seeing lower tech on a similar level of marketing. So is there something in the industry that's going on that's driving lower cash flow, and then I will follow. Right, so a couple questions there.

Trev: Thanks, Trev.

Speaker Change: Next question comes from Jed Kelly with the company Oppenheimer. Jed, your line is now open.

Jed Kelly: Hey, great, great for taking my questions and a great quarter again. Just a question on promotional velocity in iGaming. Have you seen a material difference in the industry? And then just on improving cat trends, I think we've heard from multiple operators now.

Speaker Change: You know, they're seeing lower CAC on a similar level of marketing. So is there something in the industry that's going on that's driving lower CAC? And then I have a follow-up.

Richard Schwartz: All right, so a couple questions in there. First of the reference earlier, we're in a more rational market than we've been before. We sustain and grew in the prior a rational market. So it's easier for us to improve and perform, I think, in a rational market that we're experiencing now. In terms of our approach, we look for good value ourselves based on our own positioning in the marketplace, and we have a little less concern with others are doing. Obviously, we pay attention, but we make our own decisions to drive you based on what's in our best interest.

Richard Todd Schwartz: First, as I referenced earlier, you know, we're in a more rational market than we were before. We survived and grew in the prior irrational market. So it's easier for us to improve and perform, I think, in a rational market that we're experiencing now. In terms of our approach, you know, we look for good value ourselves based on our own positioning in the marketplace, and we have a little less concern with what others are doing.

Speaker Change: All right, so a couple questions in there.

Speaker Change: First, as I referenced earlier, you know, we're in a more rational market than we've been before. We sustained and grew in the prior irrational market, so it's easier for us to improve and perform, I think, in the rational market that we're experiencing now. In terms of our approach, you know, we look for good value ourselves based on...

Richard Todd Schwartz: Obviously, we pay attention, but we make our own decisions and strategies based on what's in our best interest. And so I'll say there's always going to be competitiveness there. There's always someone in there coming in aggressive, spending a lot.

Speaker Change: Our own positioning in the marketplace, and we have a little less concern with what others are doing. Obviously, we pay attention, but we make our own decisions and strategies based on what's in our best interest.

Kyle Sauers: And so, while I'll say there's always going to be competitiveness there. There's always someone in there coming in aggressive, spending a lot, and we've over many years now been able to sustain and grow in that environment where others are out spending us because ultimately comes down to the putting players first in the quality of the user experience. I would say that the CAC for us, as we've shared, has continued to improve and reduce. I think it's possible that some other of our competitors are spending less than they did historically, lesser percentage of their revenues on marketing.

Richard Todd Schwartz: And we've, for many years now, been able to sustain and grow in that environment where others are outspending us because, ultimately, it comes down to putting players first and the quality of the user experience. I would say that the CAC for us, as we've shared, has continued to improve and reduce. I think it's possible that some other of our competitors are spending less than they did historically, a smaller percentage of their revenues on marketing.

Speaker Change: And so, I'll say there's always going to be competitiveness there.

Speaker Change: There's always someone in there coming in aggressive, spending a lot.

Speaker Change: And we've, over many years now, been able to sustain and grow in that environment where others are outspending us because it ultimately comes down to the putting players first and the quality of the user experience.

Speaker Change: I would say that the CAC for us, as we've shared, is...

Speaker Change: has continued to improve and reduce. I think it's possible that some other of our competitors are...

Speaker Change: Spending less than they did historically, a lesser percentage of their...

Kyle Sauers: I also think it's possible that some of the smaller opportunities that we're still spending, that exit of the market, so that prize opportunity for those that are still here. I know we've improved massively in terms of our maturity as an organization and knowing where to get the players, what players are valuable, and how to make sure we're getting players that are long-term viable for us. And so I think that investment we've made is really delivering for us to better value. And I can't really speak to how others are doing it, but I would say that I think the whole industry is probably getting better as well.

Richard Todd Schwartz: I also think it's possible that some of the smaller operators that we're still spending on have exited the market, so that provides opportunity for those that are still here. I know we've improved massively in terms of our maturity as an organization and knowing where to get the players, what players are valuable, and how to make sure we're getting players that are long-term viable for us.

Speaker Change: revenues on marketing. I also think it's possible that some of the smaller operators that we're still spending that exited the market so that provides opportunity for those that are that are still here. I know we've improved massively in terms of our maturity as an organization and knowing where to get the players.

Richard Todd Schwartz: And so I think that the investment we've made is really delivering better value for us. And I can't really speak to how others are doing it, but I would say that I think the whole industry is probably getting better as well. Yeah, and the only thing I would add to that, Jed, is Richard's points about our marketing and how much better we've gotten at finding High Value Players in the Right Places and Doing It at an Appropriate Cost.

Speaker Change: What players are valuable and how to make sure we're getting players that are long-term viable for us.

Jed Kelly: And so I think that investment we've made is really delivering for us the better value and I can't really speak to how others are doing it, but I would say that I think the whole industry is probably getting better as well. Yeah, and the only thing I would add to that, Jed, is Richard's, all of his points about our marketing and how much better we've gotten in finding

Kyle Sauers: Yeah, and the only thing I would add to that, Jed, is Richard's all of his points about our marketing and how much better we've gotten in finding high value players in the right places and doing it in an appropriate cost. The same goes on the bonus thing that you referenced. We've gotten a ton better at making sure that the right bonuses are going to the right players and that we're giving value to the players that deserve it most. I'm sure others in the industry have gotten better at that as well, but we're very pleased with how much better we are both on the bonus inside and on the marketing efficiency.

Richard Todd Schwartz: The same goes on the bonusing that you referenced; we've gotten a ton better at making sure that the right bonuses are going to the right players and that we're giving value to the players that deserve it most. I'm sure others in the industry have gotten better at that as well, but we're very pleased with how much better we are, both on the bonusing side and on marketing efficiency. Having said that, I think we've got the ability to be even better.

Richard: High-value players in the right places and doing it at an appropriate cost the same goes on the bonusing that you referenced is we've gotten

Speaker Change: A ton better at making sure that the right bonuses are going to the right players.

Speaker Change: Word.

Richard: giving value to the players that deserve it most. I'm sure others in the industry have gotten better at that as well, but we're very pleased with how much better we are both on the bonusing side and on the marketing efficiency. Having said that, I think we've got

Kyle Sauers: Having said that, I think we've got the ability to be even better still.

Richard Schwartz: One thing to add on the marketing efficiency concept is that there was a recent article about us that recently came out a lot of day or two where we decided to pull back some of the affiliate spend in some markets. The reason we did that is ultimately we want to have the flexibility to spend more with the affiliates in other markets. Make sure we focus on the markets where we get the best ROI. And secondly, there are other channels in the markets where we made a pullback that we see opportunities to do other types of channels to acquire customers.

Richard Todd Schwartz: One thing to add on the marketing efficiency concept is that there were some recent articles about us that came out a day or two ago where we decided to pull back some affiliate spend in some markets. I think that's a really good point. I think that's a really good point.

Richard: got the ability to be even better still. One thing to add on the marketing efficiency concept is that, you know, there was a recent articles about us that recently came out a day or two where we decided to pull back some affiliate spend in some markets.

Kyle L. Sauers: The reason why we did that is, ultimately, we want to have the flexibility to spend more with affiliates in other markets, making sure we focus on the markets where we get the best ROI. And, secondly, there are other channels in the markets where we may have pulled back that we see opportunities to use other types of channels to acquire customers. So we're constantly looking at the data and evaluating the right opportunities to deliver the best ROI for us in those markets. And then just real quick on the back half guidance. Should we assume that the fourth quarter is going to be your high watermark for EBITDA for the year? So, just maybe, a couple things.

Richard: The reason why we did that is ultimately we want to have the flexibility to spend more with affiliates in other markets.

Richard: Make sure we focus on the markets where we get the best ROI. And secondly, there are other channels in the markets where we may have pulled back that we see opportunities to do other types of channels to acquire customers. So we're constantly looking at the data and evaluating the right opportunities to deliver the best ROI for us in those markets.

Richard Schwartz: So we're constantly looking into data and evaluating the right opportunities to deliver the best ROI for us in those markets.

Kyle Sauers: Great, and then just real quick on the backhand off guidance. Should we assume that fourth quarter is going to be your high watermark for even up in the year? So just maybe a couple of things. We do, we expect marketing spend to be higher in Q3 and Q4 than it was in Q2. For all these reasons that Richard talked about, we just see a lot of opportunity to acquire more players. It had very reasonable prices. I'd expect that revenue in Q3, you know, at our midpoint of guidance, the revenue in Q3 would be lower than Q2.

Speaker Change: Great, and then just real quick on the back half guidance, should we assume that fourth quarter is going to be your high watermark for EBITDA for the year?

Speaker Change: So just maybe a couple things. We expect marketing spend to be higher in Q3 and Q4 than it was in Q2.

Speaker Change: For all these reasons that Richard talked about, we just see a lot of opportunity to acquire more players at very reasonable prices.

Speaker Change: I'd expect that revenue.

Speaker Change: In Q3, you know, at our midpoint of guidance, the revenue in Q3 would be lower than Q2, and then Q4 would be the high watermark for revenue.

Kyle Sauers: And then Q4 would be the high watermark for revenue. And certainly possible that Q4 could be the high watermark in EBITDA for the year as well. Thank you.

Speaker Change: And it's certainly possible that Q4 could be the high watermark in EBITDA for the year as well.

Unknown Attendee: Thanks, Chad.

Speaker Change: Thank you.

Jordan Bender: Next question comes from Jordan Bender with the company Citizens, JMP Jordan. The line is not open. Good afternoon, everyone. I want to follow up on Jed's question there around spending less to gain more customers. Is the talk around marketing increasing in the back half of the year, just you being opportunistic based off of, you know, kind of some of those trying to require an easier or was this plan spent, you know, just ahead of one and more important period of the year. Thank you. Well, I think it's a combination of things. As you point out, some of it is kind of an event and seasonally driven.

Kyle L. Sauers: We expect marketing spend to be higher in Q3 and Q4 than it was in Q2. For all these reasons that Richard talked about, we just see a lot of opportunity to acquire more players that are at very reasonable prices. I'd expect that revenue in Q3, you know, at our midpoint of guidance, revenue in Q3 would be lower than Q2, and then Q4 would be the high watermark for revenue. And it's certainly possible that Q4 could be the high watermark for EBITDA for the year as well. Thank you. Thanks, Jed. Our next question comes from Jordan Bender with the company Citizens JMP. Jordan, the line is now open. Good afternoon, everyone.

Speaker Change: Our next question comes from Jordan Bender with the company Citizens JMP. Jordan, your line is now open.

Operator: I want to follow up on Jed's question there on spending less to gain more customers. Is the talk around marketing increasing in the back half of the year, just you being opportunistic based off of, you know, kind of some of those trends we're acquiring easier? Or was this plan spent, you know, just ahead of one of the more important periods of the year? Thank you. Well, I think it's a combination of things.

Jordan Maxwell Bender: Good afternoon, everyone. I want to follow up on Jed's question there around spending less to gain more customers.

Jordan Maxwell Bender: Is the talk around marketing increasing in the back half of the year, just you being opportunistic based off of, you know, kind of some of those trends we're acquiring easier, or was this plan spent, you know, just ahead of one of the more important periods of the year? Thank you.

Kyle L. Sauers: As you point out, some of it is kind of an event and seasonally driven. Richard pointed out in his prepared remarks, and then I think we highlighted it again, the Olympic campaign that we have going on in Canada here in Q3, and that's driving some increased costs. It's not in response to any competitive forces as much as it is leaning into what's going really well for us and driving more user count for future year growth. Just to add, Jordan, you know, we keep things simple.

Speaker Change: Well, I think it's a combination of things. As you point out, some of it is.

Kyle Sauers: Richard pointed out in his prepare remarks, and then I think we highlighted it again, the Olympic campaign that we have going on in Canada here in Q3. And that's driving some increased costs. Obviously, there's a lot of opportunity around the start of football season to put money to work. And it is; I'd say it's more dynamic than it is opportunistic. We've done our marketing team is done such a fantastic job of driving down costs and finding the right place to get new players that it makes sense for us to make some additional smart investments in marketing.

Speaker Change: Richard pointed out in his prepared remarks, and then I think we highlighted it again, that the Olympic campaign that we have going on in Canada here in the U.S. is a very important part of what we're doing.

Speaker Change: in Q3, and that's driving some increased costs.

Speaker Change: Obviously, there's a lot of opportunity.

Speaker Change: Around the start of football season to put money to work and it is.

Speaker Change: I'd say it's more dynamic than it is opportunistic.

Speaker Change: We've done, our marketing team has done such a fantastic job of driving down costs and finding the right place to get new players.

Kyle Sauers: It's not in a response to any competitive forces as much as it is leaning into what's going really well for us and driving more user count for future year growth. Just to add, Jordan, you know, we keep it simple. We just modify based on the value of the players and the cost to attract them. Got it. Okay.

Speaker Change: that it makes sense for us to make some additional smart investments in marketing.

Speaker Change: It's not in a response to any competitive forces as much as it is leaning into what's going really well for us and driving more user count for future year growth.

Speaker Change: And just to add, Jordan, you know, we keep things simple. We just modify based on the value of the players and the cost to attract them.

Richard Todd Schwartz: We just modify based on the value of the players and the cost to attract them. Got it. Okay. And then for my question, just given the relative size and scale of the company now and the inflowing free cash flow, are you getting to a point where it makes sense to start bringing in some of your tech stack that you don't own in house? Thank you.

Richard Schwartz: And then for my question, just given the relative size and scale of the company now and the inflecting free cash flow, are you getting to a point where it makes sense to start bringing in some of your tech stack that you don't own in house. Thank you. Well, we actually own almost all the tech stack. We're really heavily invested in all kinds of technology and features from the apps, the player count managers. Then we built poker. We have our promotional rewards engine in house. It's really innovative and unique in the industry. The only thing we haven't brought in house is sports book platform, which we integrate through can be for many years.

Jordan Maxwell Bender: Got it. Okay. And then for my question, just given the relative size and scale of the company now and the inflecting free cash flow, are you getting to a point where it makes sense to start bringing in some of your tech stack that you don't own in-house?

Richard Todd Schwartz: We actually own almost all the tech stack. We're really heavily invested in all kinds of technology and features from the apps, the player account management system, we built poker, we have our promotional rewards engine in-house, it's really innovative and unique in the industry. The only thing we haven't brought in-house is Sportsbook platform, which we integrate through Canby for many years, and as I've shared previously, it's probably been a while, and our philosophy on that relationship is that we like to get the bread and butter from Canby, but we have a development team internally that adds our own flavor, our own twist, our own innovation on top of the Sportsbook, so we get the benefit, I think, of a core, fundamentally strong core technology, and we differentiate by building our own features on top of it, which is things like the squares have worked, and the player props, things we did last year really worked well as well, we have some new ones under development.

Speaker Change: Thank you.

Speaker Change: Well, we actually own almost all the tech stack. We're really heavily invested in all kinds of technology and features from the apps, the player count management system we built.

Speaker Change: Unknown Speaker We have a promotion rewards engine in-house that's really innovative and unique in the industry. The only thing we haven't brought in-house is Sportsbook platform, which we integrate through Canby for many years. And as I've shared previously, it's probably been a while, our philosophy on that relationship is that we like to go sort of...

Richard Schwartz: And as I've shared previous years, private a while. And our philosophy on that relationship is that we like to sort of get the bread and butter from Can be, but we have a development team internally that adds our own flavor, our own twist, our own innovation in the top of the sports books. We have a lot of players, props, and things we did last year that really worked well as well. We have some new ones under development. So there really isn't a plan to bring in at the moment. It's certainly our sports book in-house, but everything else we have developed in-house.

Speaker Change: Get the bread and butter from Canby, but we have a development team internally that adds our own flavor, our own twist, our own innovation on top of the sportsbook, so we get the benefit I think of.

Speaker Change: A core fundamentally strong.

Speaker Change: Core Technology and we differentiate by building our own features on top of it, which is things like the squares

Speaker Change: have worked on the player props, things we did last year that really worked well as well. We have some new ones under development. So, there really isn't a plan to bring in...

Speaker Change: At the moment, certainly our sportsbook in-house, but everything else we have developed in-house. And as you may know, we have that poker platform that we've been developing as well. So again, we have almost all parts. We have our own jackpot system. You know, other companies have gone out and bought entire companies.

Richard Schwartz: And as you may know, we have that poker platform that we've been developing as well. So again, we have almost all parts. We have our own jackpot system, and all the companies have gone out and bought entire companies to have a jackpot system. We built it in-house. So we have a very robust, very thorough, very broad-based technology system in house, really. I would say 95% of everything is in house. Really, I think we don't have in house. Maybe some others do is sports, but we have a lot more in house and other areas that I think most of our competitors.

Speaker Change: to have a jackpot system, we built it in-house. So we have a very robust, very thorough, very broad-based technology system in-house. Really, I would say 95% of everything is in-house. Really, the thing we don't have in-house, and maybe some others do, is sports, whereas we have a lot more in-house in other areas than I think most of our competitors do.

Richard Todd Schwartz: Really, the thing we don't have in-house, and maybe some others do, is sports, whereas we have a lot more in-house in other areas than I think most of our competitors do. Understood. Thank you very much.

Unknown Attendee: I understand.

Unknown Attendee: Thank you very much.

Unknown Attendee: Thanks, Jordan.

Operator: Thanks, Jordan. Our next question comes from Mike Hickey with the company Benchmark Company. Mike, your line is not open.

Speaker Change: Understood. Thank you very much.

Mike Hickey: Next question comes from Mike Hickey with a company Benchmark Company, Mike. You know, I'm not open. Thank you.

Speaker Change: Our next question comes from Mike Hickey with the company Benchmark Company. Mike, your line is now open.

Operator: Hey, Richard, Kyle, great job on the quarter, guys. Two topics. I guess the first topic is Latin America. Kyle, sorry if I missed this, but could you give us some color?

Kyle Sauers: Hey, Richard, Kyle, great job on the quarter, guys. Two topics. I guess the first topic Latin America, Kyle. Sorry if I missed this. But can you give us some color on sort of Latin as a segment in terms of revenue and EBITDA contribution, whether it's a quarter or the first half or maybe how you're thinking about it for the year. Yeah. If you can't give EBITDA, obviously, comment maybe just if it's plus or minus would be helpful. And then before you jump in there, Kyle, just the last piece on Latin America, which sounded like maybe you're incrementally more cautious on entry into Brazil.

Speaker Change: Thank you. Hey Richard, Kyle, great job on the quarter, guys.

Kyle L. Sauers: on sort of the latter end of the segment in terms of revenue, and Eva Derr's contribution, whether it's a quarter, or the first half, or maybe how you're thinking about it for the year. Yeah, if you can't give Eva a comment to obviously comment, maybe just if it's plus or minus, would be helpful. And then before you jump in there, Kyle, it's just the last piece on Latin America, which is kind of like, Maybe you're incrementally more cautious on entry into Brazil. I'm curious if that's the right read-through there, and maybe any sort of updates on the regulatory framework and maybe the challenges that you see in that market. Great, thanks, Mike.

Michael Joseph Hickey: Two topics, I guess the first topic.

Michael Joseph Hickey: Latin America. Kyle, sorry if I missed this, but can you give us some color?

Speaker Change: I'm sort of lat in as a segment in terms of revenue.

Speaker Change: and even their contribution, whether it's a quarter.

Speaker Change: or the first half or maybe how you're thinking about it.

Speaker Change: for the year. Yeah, if you can't give either to obviously comment maybe just if it's plus or minus would

Richard: would be helpful. And then before you jump in there, kind of just the last piece on Latin America, which are kind of like maybe you're incrementally more

Kyle Sauers: Curious if that's the right read to there. And maybe any sort of updates on the regulatory framework and maybe the challenges that you see in that market, not all of us. Great. Thanks, Mike. So, on Latin America, obviously, been highly successful for us. We're really excited about the Peru launch that just happened here. But, you know, the main driver of our growth right now is Colombia, and also very excited about Mexico. So today, or at least in Q2, I think Latin America makes up close to 15% of our revenue now. So a really nice contributor that's been growing, you know, faster than our North American business.

Speaker Change: Cautious on entry into Brazil.

Speaker Change: Curious if that's the right read-through there and maybe any sort of updates on the regulatory framework and maybe the challenges that you see in that market and that follow-up question.

Kyle L. Sauers: So I'm in Latin America, which has obviously been highly successful for us. We're really excited about the Peru launch that just happened here. But, you know, the main driver of our growth right now is Colombia and we are also very excited about Mexico. So today, or at least in Q2, I think Latin America makes up close to 15% of our revenue now. So, really nice contributor that's been growing, you know, faster than our North American business.

Speaker Change: Great. Thanks, Mike. So, on Latin America, obviously, Ben,

Speaker Change: Highly successful for us. We're really excited about the

Speaker Change: The Peru launch that just happened here, but you know the main driver of our growth right now is is Colombia and also very excited about Mexico. So today

Speaker Change: or at least in Q2, I think Latin America makes up close to 15% of our our revenue now. So really nice contributor that's been growing, you know, faster than our North American business.

Kyle L. Sauers: And I think that is likely to continue for some time, certainly given the launch of Peru and Mexico starting to pick up some momentum. In terms of profitability, Latin America is absolutely very profitable for us. Latin America, in general, has higher gross margins than most of our North American markets. So strong growth in Latin America is nicely incremental for us and incremental for the bottom line. But I'll stop short of splitting out EBITDA by market or by territory. And then, Richard, what do you want to comment on? Sure. Yeah. For Brazil, Brazil is a large and exciting market.

Kyle Sauers: And I think that is likely to continue for some time, certainly given the launch of Peru and Mexico starting to pick up some momentum. In terms of profitability, Latin America absolutely is nicely profitable for us. Latin America in total has higher growth margins than most of our North American markets. So strong growth in Latin America is nicely incremental for us and incremental for the bottom line.

Speaker Change: And I think that is likely to continue for some time, certainly given the launch of Peru and Mexico starting to pick up some momentum.

Speaker Change: In terms of profitability, Latin America absolutely is is nicely profitable for us. Latin America in total has

Speaker Change: higher gross margins than than most of our North American markets. So strong growth in Latin America is nicely incremental for us and incremental for the bottom line. But I'll stop short of splitting out.

Richard Schwartz: But I'll stop sort of splitting out EBITDA by market or by territory. And then Richard, you want to comment on? Sure. Yeah, for Brazil. Brazil, the large and exciting market, is lots of moving parts there. It's very important that we sort of remain disciplined and thoughtful about how we approach the market. Now, they would demonstrate how they have a very clear improvement approach for how and when we enter new markets. So we'll plan to update, you know, time was on Brazil. I will say that being first to launch in that market as a regulated operator isn't like winning a gold medal in the Olympics because there's a lot of operators already operating there for many years that are already unregulated.

Speaker Change: Iveta By Market or By Territory and then Richard you want to comment on? Sure. Yeah for Brazil Brazil is a large and exciting market

Richard Todd Schwartz: There are lots of moving parts there. It's very important that we sort of remain disciplined and more thoughtful about how we approach the market. I think we've demonstrated how it's a very clear and proven approach for how and when we enter new markets. So we'll plan to update it, you know, as time goes on in Brazil.

Richard: There's lots of moving parts there. It's very important that we sort of remain disciplined and more thoughtful about how we approach the market. I think we've demonstrated how there's a very clear and proven approach for how and when we enter new markets.

Richard Todd Schwartz: I would say that being the first to launch in that market as a regulated operator isn't like winning a gold medal in the Olympics because there are a lot of operators already operating there for many years that are already in the unregulated gray market that are gonna make this transition already were the first ones in the market. So rather than being first, it's important for us to be the best when we do decide to enter a market, and we'll have to keep you updated on our plan.

Speaker Change: So we'll plan to update, you know, as time goes on on Brazil. I will say that being first to launch in that market as a regulated operator

Speaker Change: Isn't like winning a gold medal in the Olympics.

Richard Schwartz: Great market that I can make this transition already. We're the first ones in the market.

Speaker Change #100: because there's a lot of operators already operating there for many years that are already unregulated, gray market, that are going to make this transition, already were the first ones in the market. So rather than being first, it's important to us to be the best when we do decide to enter a market, and we'll have to keep you updated on our plans.

Mike Hickey: So rather than being first, it's important to have to be the best when we do decide to make into a market, and we'll have to keep you updated on our plans. Nice. Very helpful.

Operator: Very helpful. Second topic, just on the Unknown Attendee, Jed Kelly, Aaron Lee, Joshua Marin, Araceli Moreyra, Selden Ross, Rush Street, Vantage. I mean, it was sort of challenging to bring in multiple operators.

Richard Schwartz: So can topic just on them. The regulatory piece, thinking sort of Delaware. And now on the way to Delaware, obviously a huge success for you guys. Do you feel like now, Richard, you sort of have a sustained life meeting advantage? I mean, it was sort of challenged to bring in multiple operators. It looks like that was shot down. Do you feel like you're in a position here where you're comfortable, or are we going to have to worry? I'm worried about sort of a continual flow of challenges on sort of the monocleague that you have. And then on the Illinois side, I guess just more on the tax side.

Speaker Change #101: Unknown Attendee Nice, very helpful. Second topic, just on the...

Speaker Change #102: the regulatory piece, thinking sort of Delaware and Illinois. Delaware, obviously a huge success for you guys. Do you feel like now, Richard, you sort of have a...

Speaker Change #103: sustain licensing advantage. I mean, it was sort of challenged.

Richard Todd Schwartz: It looks like that, shot down. Do you feel like you're in a position here where you're comfortable? Or are we going to have to worry about sort of an Unknown Attendee, Jed Kelly, Aaron Lee, Joshua Marin, Araceli Moreyra, Selden Ross, Rush Street, and then on the Illinois side. I guess just more on the tax side.

Speaker Change #104: to bring in multiple operators. It looks like that was shot down. Do you feel like, you know, you're in a position here where you're comfortable, or are we going to have to worry about sort of a continual flow of challenges on sort of the monopoly that you have? And then on the Illinois side,

Richard Todd Schwartz: Are you guys more comfortable today with the idea that there could be a contagion here with other states also raising taxes? Like, do you think that's still a concern for investors? We're in a more comfortable spot than maybe a month or two ago. I'll take, I guess, both those questions. Maybe Kyle can add in something else if there's something to add.

Mike Hickey: Are you guys more comfortable today that the idea that there could be a contagion here with other states also raising taxes? Like, do you think that's still a concern for investors? Or do you think we're more comfortable? I want a comfortable spot than maybe a month or two ago. Thanks, guys.

Speaker Change #105: I guess just more on the tax side, are you guys more comfortable today that...

Speaker Change #106: The idea that there could be a contagion here with other states also raising taxes like do you think that's still a concern for investors or do you think we're more in a comfortable spot than maybe a month or two ago? Thanks guys.

Richard Schwartz: I'll take, I guess, both those questions, and maybe Kyle can add in something else if there's something to add. In terms of Delaware, you know, given our success, it's really prudent for us to anticipate that there will be further lobbying efforts in the future. But we remain really confident that best and highest outcome for the state will be to continue along the current path. And we remain committed to closely with the lottery. I know that the other key stakeholders in the state to demonstrate that the current operating model there has been and continues to be in the best interest of Delaware.

Speaker Change #106: I'll take I guess both those questions and maybe Kyle can add in something else if there's something to add. In terms of Delaware

Richard Todd Schwartz: In terms of Delaware, given our success, it's really prudent for us to anticipate that there'll be further lobbying efforts in the future. But we remain really confident the best and highest outcome for the state will be to continue along the current path. And we remain committed to working closely with the lottery and the other key stakeholders in the state to demonstrate that the current operating model there has been and continues to be in the best interest of Delaware.

Speaker Change #107: Given our success, it's really prudent for us to anticipate that there will be further lobbying efforts in the future. But we remain really confident that the best and highest outcome for the state will be to continue along the current path.

Kyle L. Sauers: And we remain committed to working closely with the Lottery and the other key stakeholders in the state to demonstrate that the current operating model there has been and continues to be in the best interest of Delaware.

Richard Schwartz: But bottom line is that if we continue to perform the way we have and the way we believe we will in the future, it makes us that much more compelling for the same structure to remain in place for the future.

Richard Todd Schwartz: The bottom line is that if we continue to perform in the way we have and the way we believe we will in the future, it makes it that much more compelling for the same structure to remain in place for the future. As for Illinois and the possibility that the graduated tax could be a trend as opposed to a sort of a one-off. I've been in this industry a long time, and every state is completely unique with its own set of political considerations, competitors, strategies, financial needs, etc.

Kyle L. Sauers: The bottom line is that if we continue to perform in the way we have and the way we believe we will in the future, it makes it that much more compelling for the same structure to remain in place for the future.

Richard Schwartz: In terms of Illinois and the possibility that the tax impact graduate tax could be trained as opposed to a sort of a one off. You know, I've been in this industry a long time, and every state is completely unique with their own set of political considerations, competitors, strategies, financial needs, et cetera. So I think what I will say, though, is that I don't think it is. I think it's a one-off, and one of the concerns is that you will see in some states where, when you raise taxes, it will have the opposite effect because impacted in that it will lead to less revenues in some cases by the state because you will empower the unregulated operators and the sweepstakes companies to be more aggressive in these markets.

Kyle L. Sauers: In terms of Illinois and the possibility that

Kyle L. Sauers: impact graduated tax could could be a trend as opposed to a sort of a one-off.

Speaker Change #108: I've been in this industry a long time and every state is completely unique with their own set of political implications.

Richard Todd Schwartz: So I think what I will say, though, is that I think it's a one-off. And one of the concerns is that you will see in some states where when you raise taxes, it will have the opposite effect as the one being affected, in that it will lead to less revenue in some cases by the state because you will empower the unregulated operators and the sweepstakes companies to be more aggressive in these markets, therefore really limiting the capital that the states So it's very important to be very cautious when you do this, and I think as you start to look at this example, you might start to see that it doesn't deliver the outcome that you expect. Thanks, Mike. At this time, there are no other questions registered in the queue. Again, if you'd like to ask a question, please press the star followed by one. There are no questions registered in queue at this time.

Speaker Change #109: Considerations competitive strategies financial needs etc so I think what I will say that i think even though we have closed because of a the mosquito

Speaker Change #109: You will see in some states where when you raise taxes, it will have the opposite effect because impacted in that

Speaker Change #109: It will lead to less revenues in some cases by the state because you will empower the...

Mike Hickey: Therefore, really limiting the capital that the states generate. So it's very important to be very cautious when you do this. And I think as you start to look at this example, you might start to see that it doesn't deliver the outcome that everybody hopes it would. So I would just say that every state is unique. I don't think there is any trend that's been established. I think it's more of a one-off. Thanks, guys. Thanks, Mike.

Speaker Change #109: Unregulated Operators, and the Sweepstakes Companies to be more aggressive in these markets, therefore really limiting the capital that the states generate. So it's very important to be very cautious when you do this. And I think as you start to look at this example, you might start to see that it doesn't deliver the outcome that everybody hopes it would. So I would just say that every state is unique, and I don't think there is any trend that's been established. I think it's more of a one-off.

Speaker Change #110: Thanks, guys.

Unknown Attendee: At this time, there are no other questions registered in queue. Again, if you'd like to ask a question, please first start followed by one.

Michael Joseph Hickey: Thanks, Mike.

Unknown Attendee: There are no questions registered in queue at this time.

Operator: I'd like to pass the conference back over to our hosting team for closing remarks. We appreciate the time today, and we'll look forward to having our next conference call for Q3. That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.

Unknown Attendee: I like to pass the conference back over to our hosting team for closing remarks. We appreciate the time today, and we'll look forward to having our next conference call for Q3. That will conclude today's conference call.

Speaker Change #111: There are no questions registered in queue at this time. I'd like to pass the conference back over to our hosting team for closing remarks.

Speaker Change #112: We appreciate the time today and we'll look forward to having our next conference call for Q3.

Unknown Attendee: Thank you for your participation, and enjoy the rest of your day.

Speaker Change #113: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.