Q1 2025 Rush Street Interactive Inc Earnings Call
Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive First Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, April 30th, 2025.
Good day, ladies and gentlemen, thank you for standing by and welcome to the rest Street Interactive first quarter 2025 earnings Conference call.
All participants are in a listen only mode.
A question and answer session will follow the formal presentation.
Please note that this conference call is being recorded today April 32025 now.
Kyle Sauers: I'll now turn the call over to Kyle Sauers, Chief Financial Officer. Thank you, Operator, and good afternoon. By now, everyone should have access to our first quarter 2025 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at RushStreetInteractive.com.
Speaker Change: Now I'll turn the call over to Kyle Sauers, Chief Financial Officer.
Speaker Change: Thank you operator, and good afternoon by now everyone should have access to our first quarter 2025 earnings release. It can be found under the heading financials quarterly results in the investors section of the Rsi website at restaurant interactive Dot com some of our comments will be forward looking statements within the meaning of the federal securities.
Kyle Sauers: 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, should, or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them.
Speaker Change: Laws 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 are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
Speaker Change: 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 and financial condition during.
Kyle Sauers: We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.
Kyle Sauers: 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. We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain one-time or non-recurring items, and other adjustments that are either non-cash or are not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP is available in our first quarter 2025 earnings release and our investor deck, which is available in the investor section of the RSI website at rushstreetinteractive.com.
Speaker Change: 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, we will 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 nonrecurring items and are there adjustments that are either non cash or not related to our underlying business performance.
Speaker Change: Reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our first quarter 2025 earnings release, and our Investor deck, which is available on the investors section of the Rsi website at Rush Street Interactive dotcom.
Kyle Sauers: For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA, or other income statement measures other than revenue, we're referring to those items on a non-GAAP-adjusted EBITDA basis.
Speaker Change: As 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. We 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 and with that I'll turn the call over to Richard.
Richard Schwartz: And with that, I'll turn the call over to Richard. Thanks, Kyle. Good afternoon.
Richard Schwartz: Thanks, Kyle good afternoon, and thank you for joining us today for our first quarter 2025 earnings call.
Richard Schwartz: And thank you for joining us today for our first quarter 2025 earning We have started the year with strong momentum, continuing to build on our success from last year. Our first quarter revenue was $262 million, up 21% year-over-year, and adjusted EBITDA was $33 million, almost double compared to the same period last year. We continue to achieve strong results by prioritizing innovation and the quality of our player experience. while at the same time excelling in the efficient acquisition and retention of high value players. In essence, we are consistently adding more players to our platform. These players are of higher value.
Richard Schwartz: We have started the year with strong momentum continuing to build on our success from last year.
Richard Schwartz: First quarter revenue was $262 million up 21% year over year.
Richard Schwartz: Adjusted EBITDA was $33 million almost double compared to the same period last year.
Richard Schwartz: <unk> achieved strong results by prioritizing innovation and the quality of our player experience.
Richard Schwartz: At the same time, it's selling in the efficient acquisition and retention of high value players.
Since we are consistently adding more players through our platform.
Richard Schwartz: These players are of higher value.
Richard Schwartz: and we are acquiring them as efficiently as ever. This growth is driving significant profitability and reinforcing our strong momentum. During the first quarter, we continued to experience solid growth in both our online casino and online sports verticals. Online casino grew by 25% while sports betting grew by 11%. The growth in sports betting occurred despite player-friendly outcomes throughout March from admin. as well as the Philadelphia Eagles Super Bowl win, which impacted us because of our large sports betting player base in the Delaware, South Jersey, and Pennsylvania areas. The balanced expansion across product verticals. is a proof point to our persistent efforts to enhance the user experience across all product verticals and customer touch.
Richard Schwartz: We are acquiring them as efficiently as ever.
Richard Schwartz: This growth is driving significant profitability and reinforcing our strong momentum.
Richard Schwartz: During the first quarter, we continued to experience solid growth in both our online casino and online sports verticals.
Richard Schwartz: Casino grew by 25%.
Richard Schwartz: Sports betting grew by 11%.
Richard Schwartz: The growth in sports betting occurred despite player friendly outcomes throughout March madness, as well as the Philadelphia Eagles Super Bowl win which impacted us because of our large sports betting player base and the Delaware South Jersey in Pennsylvania areas.
Richard Schwartz: Balanced expansion across product verticals.
Richard Schwartz: As a proof point to our persistent efforts to enhance the user experience across all product verticals.
Richard Schwartz: Customer touch points, as we attract and retain high value players.
Richard Schwartz: as we attract and retain high-value players. Our strategy of differentiating our offerings continues to pay off, driving engagement and retention on our platform. In North America, mouth growth per quarter was 17% year over year. And in Latin America, our mouths continue to expand at a high rate, growing 61% year over year compared to last year's quarter. In fact, March was the second highest level of mouths in Latin despite the tax situation in Colombia. trailing only last July when Columbia played in the finals of the Copa America. I will touch more on the tax situation in Colombia in a few minutes to provide an update from our last call.
Richard Schwartz: Our strategy of differentiating our offerings continues to pay off driving engagement and retention on our platform.
Richard Schwartz: In North America, MAU growth for the quarter was 17% year over year.
Richard Schwartz: And in Latin America, our miles continue to expand our high rate growing 61% year over year compared to last year's quarter.
Richard Schwartz: In fact March was the second highest level of miles in Latam. Despite the tax situation in Colombia trailing only last July when Columbia played in the final until the Copa America.
Richard Schwartz: I will touch more on the tax situation in Colombia in a few minutes to provide an update from our last call.
Richard Schwartz: First, a few takeaways worth noting that underlie the strong results. Domestically, we saw very solid growth across the board, with year over year revenue growth in 15 out of our 16 North American online markets. This despite the challenging sports mode in Q1 of this year that I referenced earlier. are markets with both online casino and online sports betting, such as Michigan, Delaware and New Jersey. continue to perform exceptionally well. For example, in Michigan, we demonstrated impressive growth with revenue up 40% during the quarter. In Delaware, this was our first quarter with year-over-year comparisons and the revenue growth exceeded 80%.
Richard Schwartz: First if you take away, it's worth noting that underlie the strong results.
Richard Schwartz: Basically we saw very solid growth across the board.
Richard Schwartz: With year over year revenue growth in 15 out of our 16, North American online markets.
Richard Schwartz: The challenging sports hold in Q1 of this year that I referenced earlier.
Richard Schwartz: Our markets with both online casino and online sports betting such as Michigan, Delaware and New Jersey.
Richard Schwartz: Continued to perform exceptionally well.
Richard Schwartz: For example, in Michigan, we demonstrated impressive growth with revenue up 40% during the quarter.
Richard Schwartz: In Delaware This was our first quarter with year over year comparisons and the revenue growth exceeded 80%.
Richard Schwartz: while we anticipate facing tougher comparisons as the year progresses. These Q1 results underscore our continued enthusiasm for this market. New Jersey also remains a strong contributor, growing 27% during the quarter.
Richard Schwartz: While we anticipate facing tougher comparisons as the year progresses.
Richard Schwartz: These Q1 results underscore our continued enthusiasm for this market.
Richard Schwartz: New Jersey also remains a strong contributor growing 27% during the quarter.
Richard Schwartz: As the industry approaches the 12th year of legalized online casinos in the state of New Jersey, the market has shown consistent year-over-year revenue growth, and we believe it serves as a prime example of the long-term prospects and durability of the online casino industry.
Richard Schwartz: As the industry approaches the 12th year of legalized online casinos in the state of New Jersey. The market has shown consistent year over year revenue growth and we believe it serves as a Prime example of the long term prospects and durability of the online casino industry.
Richard Schwartz: Internationally, we continue to generate strong results. In Mexico, growth accelerated from Q4 and we are seeing year-over-year growth near 50% as we begin our third full year. In Columbia, our GGR was up 55% in local currency. While we've been navigating a temporarily imposed 19% value added tax on player deposits. On our last earnings call, we were only a few days into the new Colombian VAT tax, and we're uncertain about how we'd approach the change and the impact on us and the broader market. In response, at least up to this point, similar to others in the market, we have been absorbing attacks through higher bonusing rather than passing the cost on to our players.
Richard Schwartz: Internationally, we continued to generate strong results in Mexico growth accelerated from Q4, and we are seeing year over year growth near 50% as we begin our third full year.
Richard Schwartz: In Colombia, our GTR was up 55% in local currency.
Richard Schwartz: While we've been navigating a temporarily imposed 19% value added tax on player deposits.
Richard Schwartz: On our last earnings call, we were only a few days into the new Columbian VAT tax and we're uncertain about how we'd approach to change and the impact on us and the broader market.
Richard Schwartz: In response at least up to this point.
Richard Schwartz: Others in the market, we have been absorbing attacks through higher bonus thing rather than passing the cost onto our players.
Richard Schwartz: This approach has allowed us to retain our market share, maintain strong player activity, and keep GGR levels near all-time highs, albeit with lower NGR.
Richard Schwartz: This approach has allowed us to retain our market share and maintain strong player activity and keep GTR levels near all time highs, albeit with lower MGR.
Richard Schwartz: To provide clarity on the upcoming timeline, we call that the Colombian president issue two emergency decrees. One declaring a state of emergency in the Katatumbo region due to increased guerrilla activity, which would be the basis to institute emergency tax increases. and another imposing the actual 19% VAT. to fund efforts against the guerrilla threat. Just recently, the president chose not to renew. State of Emergency decree as of April 24th. Both decrees are under automatic review by the Columbian Constitutional Court. A summary of the court's ruling on the first decree was released yesterday, providing that the first decree was declared constitutional in limited parts.
Richard Schwartz: To provide clarity coming timeline because of the Colombian president issued two emergency decrease.
Richard Schwartz: One declaring a state of emergency in Khartoum more region due to increased guerrilla activity, which would be the basis to institute emergency tax increases and another imposing the actual 19% that tax refund.
Richard Schwartz: Efforts against the gorilla threats.
Richard Schwartz: Just recently, the president chose not to renew.
Richard Schwartz: Date of emergency decree as of April 24th.
Speaker Change: Both the creeds or under automatic review by the Colombian constitutional courts.
Speaker Change: In summary of the courts ruling on the first degree with released yesterday, providing of that first decree was declared constitutional and limited parts.
Richard Schwartz: We will review the court's full opinion on this decree once available. Regardless, the court must separately and independently rule on the second decree's constitutionality, which is likely by late May or June. Depending on these court rulings, we and our competitors may adjust the bonusing strategies to better suit our purposes.
Speaker Change: We will review the towards full opinion on this decree once available.
Speaker Change: Carlos the court must separately and independently rule on the second decrease constitutionality, which is likely by late may or June.
Speaker Change: Depending on these court rulings, we and our competitors may adjusted bulldozing strategies to better suit the operators.
Richard Schwartz: Regarding legislative activity, there has been exciting progress in online gaming legislation in Alberta. The iGaming Alberta Act, known as Bill 48, has advanced to the third step of a five-step legalization process. Moving to the committee stage. This bill aims to establish an open market for online sports betting and online casinos in the province of Alberta, transitioning from the current monopoly model operated by state-owned PlayAlberta. The bill proposes creating the Alberta iGaming Corporation to manage contracts with while regulation will be handled by the Alberta Gaming, Liquor, and Cannabis. These changes are designed to bring unregulated operators under a regulated market, similar to Ontario's model.
Speaker Change: Regarding legislative activity. It has been exciting progress in online gaming legislation in Alberta.
Speaker Change: Giving Alberta Act known as build 48 has advanced the first step of this five step legalization process moving to the committee stage.
Speaker Change: This bill aims to establish an open market for online sports betting and online casinos in the province of Alberta.
Speaker Change: Transitioning from the current monopoly model operated by state owned play out Borda the.
Speaker Change: Bill proposes creating the Alberta gaming corporation to manage contracts with operators, while regulation will be handled by the Alberta gaming liquor and cannabis Commission.
Speaker Change: These changes are designed to bring unregulated operators under a regulated market.
Sure It's Ontario's model.
Richard Schwartz: We are excited about the progress made and expect to be operating online casino and sports betting in this market next year, leveraging our success in online casino markets in North America. We continue to monitor sessions in various U.S. states. increasingly challenging economic realities faced by states, combined with the proven financial and consumer protection benefits of our regulation, and the fact that unregulated online casinos in the form of online casino sweepstakes and offshore casino sites already exist in the states, creates a compelling case for the legalization, regulation, and taxation of online. The reality is that legalizing online casino remains one of the best options for state governments to make up any near or long-term budget deficit.
Speaker Change: We are excited about the progress made and expect to be operating online casino and sports betting in this market next year.
Speaker Change: <unk> our success online casino markets in North America.
Speaker Change: We continue to monitor sessions in various U S states the increasingly challenging economic realities faced by states combined with a proven financial and consumer protection benefits of regulation and the fact that unregulated online casinos in the form of online casino sweepstakes and offshore casino sites already.
Speaker Change: Just in the space.
Speaker Change: <unk> is a compelling case for the legalization regulation and taxation of online casinos.
Speaker Change: The reality is that legalizing online casino remains one of the best options for state governments to make up any near or long term budget deficits, it's reliable proven and straightforward for states to implement <unk>.
Richard Schwartz: It's reliable, proven, and straightforward for states to implement. In short, legalizing online casinos would be an additive contributor to state budgets. generate large and meaningful tax amounts. and in states where land-based casinos already exist. grow the overall private gaming revenues for those. as more states recognize the dual benefits of protecting their citizens and generating substantial tax revenue.
Speaker Change: In short legalizing online casinos would be an additive contributor to state budgets generate large or meaningful tax amounts for states and in states, where land based casinos already exist.
Speaker Change: Grow the overall pie of gaming revenues for those states.
Speaker Change: As more states recognize the dual benefits of protecting their citizens and generating substantial tax revenues.
Richard Schwartz: We believe that iGaming legalization will gain momentum in the coming years. Reflecting on the current economic macro situation, we are a well-positioned peer play in the online casino and OSP. Our digital platform offers a very high quality entertainment. along with affordability and convenience. This makes it an attractive option for... especially during challenging economic. The accessible nature of our content makes it an appealing source of entertainment. positioning us as a resilient and well-positioned, among other consumer-facing industries. We believe that our focus on delivering consistent performance and driving value for our shareholders will continue to make us a strong performer.
Speaker Change: We believe the I gaming legalization.
Speaker Change: Gained momentum in the coming years.
Speaker Change: Reflecting on the current economic macro situation.
Speaker Change: We are a well positioned pure play online casino in OSB space.
Speaker Change: All of this digital platform offers a very high quality entertainment.
Speaker Change: Along with affordability and convenience this makes it an attractive option for consumers, especially during challenging economic times.
Speaker Change: Festival nature of our content makes it an appealing source of entertainment.
Positioning us as a resilient and well positioned among other consumer facing industries.
Speaker Change: We believe that our focus on delivering consistent performance and driving value for our shareholders will continue to make us a strong performer, our platform's ease of use affordability and innovation.
Richard Schwartz: Our platform's ease of use, affordability, and innovation, combined with our award-winning customer service, are key factors that are helping us to excel during these challenging times. and will contribute to us continuing to be an outperformer.
Speaker Change: Binds with our award winning customer service are key factors that are helping us to excel during these challenging times and will contribute to us continuing to be an outperformer.
Richard Schwartz: I want to emphasize our unwavering commitment to delivering value to our shareholders and providing an unparalleled gaming experience to our users. Our success over recent years has set a strong foundation, and we are optimistic about building on this foundation going forward. Thank you for your continued support and confidence in Rush Street Interactive.
Speaker Change: I want to emphasize our unwavering commitment to delivering value to our shareholders and providing an unparalleled gaming experience to our users.
Speaker Change: Our success over recent years has set a strong foundation and we are optimistic about building on this foundation going forward.
Speaker Change: Thank you for your continued support and confidence and Rush Street interactive.
Kyle Sauers: With that, I'll turn the call over to Kyle. Thanks, Richard. First quarter revenue was $262.4 million, up 21% year-over-year, driven by strong growth of approximately 25% year-over-year in online casino, and approximately 11% in online sports.
Kyle Sauers: With that I'll turn the call over to Kyle.
Kyle Sauers: Thanks Richard.
Kyle Sauers: First quarter revenue was $262 4 million up 21% year over year, driven by strong growth of approximately 25% year over year in online casino and approximately 11%.
Kyle Sauers: It was very encouraging to see that our first quarter results were also strong across market advantages and job security.
Kyle Sauers: Sports It was very encouraging to see that our first quarter results were also strong across market vintages and geographies.
Kyle Sauers: In the first quarter, North American miles were 203,000, up 17% year over year, while art mile in North America increased to $368, up 3% year over year. The fast growth in players while maintaining an even increase in our leading art mile level is a testament to our underlying strategic focus on user engagement and retention. As you would expect, our player growth is faster in the higher-value markets that include iCasino, since that's where we invest more of our retail. In Latin America, as Richard mentioned, we continue to experience high levels of player growth with our mouse increasing year over year by 61% to 354,000.
Kyle Sauers: In the first quarter, North American miles were 203000 up 17% year over year.
Kyle Sauers: While in North America increased to $368 up 3% year over year.
Kyle Sauers: The fast growth in players, while maintaining and even increasing our leading art mall level is a testament to our underlying strategic focus on user engagement and retention.
Kyle Sauers: You would expect of a player growth is faster in the higher value markets that include a casino.
Kyle Sauers: That's what we invest more of our resources.
Speaker Change: In Latin America as Richard mentioned, we continued to experience high levels of player growth with our mouths increasing year over year, a 61% to 354000. This player base is a new quarterly record for Latam in total, but also a new quarterly records for Columbia, even in the face of the temporary that tax implementation.
Kyle Sauers: This player base is a new quarterly record for LATAM in total, but also a new quarterly record for Columbia, even in the face of the temporary VAT tax implementation. Our ARPMAU in this region was $36. As you would expect, ARPMAU in LATAM was impacted by the higher bonusing in Columbia that Richard explained earlier.
Speaker Change: Our art mile. In this region was $36 as you would expect art model in Latam was impacted by the higher bonuses in Colombia that Richard explained earlier.
Kyle Sauers: For those that track our MAU and ARPMAU trends, We've added a table on the back of our investor deck that shows historical trends. I'll point out that we've made some new material changes to the historical numbers to be consistent in all markets by only including players who have placed real money wagers in that data, essentially excluding players who have only placed wagers with bonus money. Moving to gross profit margins, in the first quarter they increased by 125 basis points compared to last year to 34.9%. This improvement was driven by ongoing trends in revenue diversification and higher revenue growth in our more profitable markets.
Speaker Change: For those that track our mall trends closely we've added a table in the back of our investor deck that shows historical trends I'll point out that we've made some material changes to the historical numbers to be consistent in all markets by only including players who have place real money wagers in that data essentially excluding players who have only placed wagers with Boeing smoking.
Speaker Change: Moving to gross profit margins in the first quarter, they increased by 125 basis points compared to last year to 34, 9%. This.
Speaker Change: This improvement was driven by ongoing trends and revenue diversification and higher revenue growth in our more profitable markets.
Kyle Sauers: On the marketing front, we remain disciplined and deliberate with our spend. We are allocating more resources to markets with better return opportunities while maintaining flexibility in our investments. In the first quarter, we increased marketing spend by 3% compared to last year, yet achieved leverage over our marketing spend and delivered another record EBIT a quarter. First quarter marketing spend was $38.8 million, or 15% of revenue, compared to 17% of revenue during the first quarter last year. Our cost to acquire players in North America continue to be near the lowest they've been since going public. And just as important, our first-time depositors in North American-eye casino markets, even when we exclude our newest market, Delaware, continue to grow nicely year over year, even while the markets become warmer.
Speaker Change: On the marketing front, we remain disciplined and deliberate with our spend we are allocating more resources to markets with better return opportunities, while maintaining flexibility in our investments in the first quarter, we increased marketing spend by 3% compared to last year, yet achieved leverage over our marketing spend and delivered another record EBITDA quarter.
Speaker Change: First quarter marketing spend was $38 8 million or 15% of revenue compared to 17% of revenue during the first quarter of last year, our cost to acquire players in North America continue to be near the lowest they've been since going public and just as important our first time depositors in North American casino markets, even when we exclude our newest market.
Speaker Change: Delaware continue to grow nicely year over year, even while the markets become more mature.
Kyle Sauers: testament to the expanding size of these markets, our ability to refine our marketing approach and success continuing to find new valuable players.
Speaker Change: Estimate to the expanding size of these markets our ability to refine our marketing approach and success continuing to find new valuable players.
Kyle Sauers: For the full year, we plan to continue our disciplined approach, making investments where we see opportunities and expecting incremental leverage over our marketing spend again in 2025, with marketing spend continuing to grow at a lower rate than revenue. G&A expenses for the first quarter were $19.5 million, or 7.4% of revenue, compared to 8.4% last year. For the full year, we continue to expect to achieve modest leverage over our G&A expenses. Adjusted EBITDA for the first quarter was $33.2 million. reflecting the revenue growth and increased leverage over expenses, partially offset by the increased bonusing costs in Colombia.
Speaker Change: For the full year, we plan to continue our disciplined approach, making investments, where we see opportunities and expecting incremental leverage over our marketing spend again in 2025 with marketing spend and continuing to grow at a lower rate than revenue.
Speaker Change: G&A expenses for the first quarter were $19 5 million or seven 4% of revenue compared to eight 4% last year.
Speaker Change: For the full year, we continue to expect to achieve modest leverage over our G&A expense.
Speaker Change: Adjusted EBITDA for the first quarter was $33 2 million, reflecting the revenue growth and increased leverage over expenses, partially offset by the increased bonus and cost in Colombia.
Kyle Sauers: We ended the quarter with $228 million in unrestricted cash and no debt. We generated approximately $25 million in cash during the excluding stock repurchases and stock withheld for employee tax obligations on best. During the quarter we repurchased approximately 500,000 shares at an average price of $10.35 under our previously announced $50 million share repurchase vote. Subsequent to quarter end, we've purchased an additional 234,000 shares at an average price of $10.55, leaving approximately $42 million remaining on our repurchase program.
Speaker Change: We ended the quarter with $228 million in unrestricted cash and no debt, we generated approximately 25 million in cash during the quarter, excluding stock repurchases and stock withheld for employee tax obligations on vessels.
During the quarter, we repurchased approximately 500000 shares at an average price of $10.35 under our previously announced $50 million share repurchase program Subsys.
Speaker Change: Subsequent to quarter end, we purchased an additional 234000 shares at an average price of $10 55, leaving approximately $42 million remaining on our repurchase program.
Kyle Sauers: We are reiterating our full year revenue and adjusted EBITDA guidance for 2025. We continue to expect 2025 revenue to be between $1,010,000,000 and $1,080,000,000 with a midpoint of $1,045,000,000, representing a 13% year-over-year increase. For the full year, we anticipate adjusted EBITDA to be between $115 million and $135 million, which represents $125 million at the midpoint, up 35% year-over-year. With regard to how we performed relative to guidance since our last call, while Columbia is actually performing above our base expectations for player counts, handle and GGR, it's below our base expectations for net revenue due to the higher bonus.
Speaker Change: We are reiterating our full year revenue and adjusted EBITDA guidance for 2025, we continue to expect 2025 revenue to be between 1 billion 10, 1 billion to 80 with a midpoint of a $1 45, representing a 13% year over year increase for.
Speaker Change: For the full year, we anticipate adjusted EBITDA to be between $115 million and $135 million, which represents a $125 million at the midpoint up 35% year over year.
Speaker Change: With regard to how we performed relative to guidance since our last call.
Speaker Change: Colombia is actually performing above our base expectations for player accounts handle and G. G. R. It's below our base expectations for net revenue due to the higher bonus thing. This has been offset by the continued outperformance in North America, and I casino markets and the positive trends in players and revenue in those jurisdictions.
Kyle Sauers: This has been offset by the continued outperformance in North American iCasino markets and the positive trends in players and revenue in those jurisdictions. Our guidance ranges for revenue and EBITDA continue to include a range of potential outcomes from the recent tax changes in Colombia, with the assumption that the tax lasts through the end of the year. Given how strong the volumes have been in Colombia, should the temporary back tax go away prior to year-end, we could see meaningful upside to both revenue and EBITDA.
Speaker Change: Our guidance ranges for revenue and EBITDA continue to include a range of potential outcomes from the recent tax changes in Colombia with the assumption that the tax last through the end of the year.
Speaker Change: Given how strong the volumes have been in Colombia should the temporary that tax go away prior to year end, we could see meaningful upside to both revenue and EBITDA.
Kyle Sauers: And one last reminder, our guidance includes only those markets that are live as of today.
Speaker Change: One last reminder, our guidance includes only those markets, but are live as of today.
Operator: And with that, Operator, we can open the line for questions. Absolutely. We will now open the line for questions. If you'd like to ask a question, please dial star 1 on your telephone keypad. If for any reason you need to remove your question, you can dial star 2.
Speaker Change: And with that operator, you can open the line for questions.
Speaker Change: Absolutely we will now open the line for questions if you'd like to ask a question. Please dial star one on your telephone keypad.
Speaker Change: Any reason you need to remove your question you can dial start too.
Bernard McTernan: The first question is from the line of Bernie McTernan with Needham and Company. Your line is now open. Great. Thanks for taking the questions.
Speaker Change: The first question is from the line of Bernie Mcternan with Needham <unk> Company. Your line is now open.
Bernie Mcternan: Great. Thanks for taking the questions, maybe just to start with love to touch on Colombia, a little bit more on <unk>.
Richard Schwartz: Maybe just to start, we'd love to touch on Columbia a little bit more and understand the investments that you guys are, that the company's making. What are you seeing from a competitive standpoint? Are other operators also, you know, offsetting that tax for consumers? And importantly, do you think you're taking share of MAUs and handle in the region? And then I have a follow-up.
Speaker Change: I understand the investments that you guys are that the company is making what are you seeing from a competitive standpoint.
Speaker Change: Our other operators also offsetting that tax for consumers and importantly, do you think youre, taking share of MH and handle in the region and then I have a follow up.
Richard Schwartz: Sure, hey Bernie, I'll take it and see if Kyle wants to add anything, but yeah, we are bonusing at higher rates, as we mentioned, and passing the cost on to other players, which is consistent with what all the other players in that market are doing as well. We are, as we also mentioned, having all kinds of record performance on GGR, volume handles, so we feel very confident that our decision to do that has been a good one because it's continuing to ensure that we retain or possibly grow share, as you know, the market share information isn't disclosed in that market, so it's not something we can speak to directly, but we are feeling like we're doing everything within our control to make sure we're managing it smartly.
Barry: Sure, Hey, Barry I'll take it and see if a carlos add anything but yes.
Barry: We our bonuses at higher rates as we've mentioned in passing the cost onto other players, which is consistent with what all the other players in that market.
Barry: Doing as well we are as we also mentioned having all kinds of record performance on GTR volume handles. So we feel very confident that our decision to do that has been a good one because it's continuing to ensure that we retain or possibly grow share as you know the <unk>.
Barry: Market share information isn't disclosed in that market. So its something we can speak to directly but we are feeling like we do.
Barry: Doing everything within our control.
Barry: To make sure we're managing a smart I think that in a day.
Richard Schwartz: I think that at the end of the day, as I tell our team often, we can focus on execution and what we can control, and I think we're doing a really nice job there of managing that business through this challenging period. understood.
Barry: Our team often we can focus on execution and what we can control and I think we did a really nice job there managing that business through this challenging period.
Richard Schwartz: And then I wanted to touch on Delaware, which I think has been a major success story for Rush Street. You know, lots of growth last year, how should we think about growth in 25? And frankly, beyond two in terms of, you know, I think it was a large contributor to consolidate growth last year. Should it, you know, slow down as a tough comparison? Like how should how should investors think about, you know, Delaware?
Speaker Change: Understood and then I wanted to touch on Delaware, which I think has been a major success story for our Rush Street.
Speaker Change: Lots of growth last year, how should we think about growth in 'twenty, five and frankly beyond two in terms of.
Speaker Change: I think it was a large contributor to consolidated growth last year.
Speaker Change: It slowed down is that tough comparison like how should how should investors think about Delaware in 'twenty five.
Richard Schwartz: Yeah, I'll take that. Appreciate the question. And you're right, Delaware has been a great win for us, and it continues to be performing really well. Our expectation is that we'll continue to see really nice growth out of Delaware. As you point out, we've lapped now the launch of Delaware for us, which was right at the end of 2023, so call it the beginning of 2024. So as the year goes on, it's logical that the growth rate will slow down in that market specifically. But we feel like there's a long road ahead for Delaware. We probably mentioned it before, but if you just triangulate around how other markets have performed that have iCasino, look at adult population and income levels, this could be approaching a $300 million GGR market in a few years.
Speaker Change: Yes, I'll take that.
Speaker Change: I appreciate the question and you're right Delaware has been Ah.
Speaker Change: Great win for Us and it continues to be performing really well.
Speaker Change: Our expectation is that we'll continue to see really nice growth out of Delaware as you point out we've.
Speaker Change: <unk> now the launch of Delaware for US, which was right at the end of 2023, so call. It the beginning of 2024.
Speaker Change: As the year goes on its logical that.
Speaker Change: The growth rate will slow down in that market specifically.
Speaker Change: We feel like there's a long road ahead for Delaware, and we probably mentioned it before but if you. If you just triangulate around how other markets have performed that have casino look at adult population and income levels.
Speaker Change: This could be.
Gigi: Approaching $300 million Gigi.
Speaker Change: <unk> market.
Bernard McTernan: And maybe there's a little discount off of that because there's not as much competition there. But that's a long ways from where we're running today. So there's a lot of upside in Delaware still. Understood. Thank you both. Thank you. Thanks. Thank you.
Speaker Change: In a few years in.
Speaker Change: Maybe there's a little discount off of that because theres not as much competition, there, but that's a long ways from where we're running today. So there's a lot of upside in Delaware still.
Speaker Change: Understood. Thank you both.
Speaker Change: Thank you thanks.
Speaker Change: Thank you. The next question is from Jordan Bender with citizens. Your line is now open.
Jordan Bender: The next question is from Jordan Bender with Citizens. Your line is now open. Hey, everyone. I want to stick with Columbia here for a second.
Speaker Change: Maybe everyone honest stick with Columbia here for a second so net revenue coming in below your expectations, but are there any early learnings that you can use to adjust the business model as the year goes on to better tailor, what youre doing in the market to improve those NGL results would be more in line with.
Richard Schwartz: So net revenue coming in below your expectations, but are there any early learnings that you can use to adjust the business model as the year goes on to better tailor what you're doing in the market to improve those NGR results to be more in line with the range that you gave when you gave guidance last quarter? Thank you. Yeah, thanks, Jordan. So we're continuing to adjust. And obviously, the competitive landscape, and how our competitors are treating customers is an important part of that and making sure that we're keeping players excited beyond the great platform that we provide to them.
Speaker Change: The range that you gave when you gave guidance last quarter. Thank you.
Jordan: Yes, Thanks, Jordan so we're.
Speaker Change: Continuing to adjust and.
Jordan: Obviously, the competitive landscape and.
Jordan: And how our competitors are treating customers.
Jordan: As an important part of that and making sure that we're.
Jordan: We're keeping players excited.
Jordan: Beyond the great platform that we provide to them.
Richard Schwartz: As I think you understand, the tax itself that players are responsible for, but that we're making up for with a cashback bonus, is a tax on deposits. So there is a bit of a multiplying effect there if there are multiple deposits, and there's withdrawals. So one of the things we've done that we've been proud of is adjust to that and make sure that we're reducing that deposit turnover as much as possible. We have reduced our marketing spend a little bit down there in response to this. But we'll continue to monitor what the competitors are doing.
Jordan: As I think you understand the tax itself that players are responsible for but we're making up.
Jordan: For with a cash back bonus as a as a tax on deposits.
Jordan: So there is a bit of a multiplying effect there if there are multiple deposits and withdrawals. So so we've one of the things we've done that we've been.
Jordan: I'm proud of is adjust to that and make sure that.
Jordan: We're reducing that deposit turnover as much as possible.
Jordan: We have reduced our marketing spend a little bit down there in response to this but we will continue to monitor what the competitors are doing and if if it.
Richard Schwartz: And if this tax does appear like it's last through the end of the year, then, you know, we'll see how the competitors respond and, and, and think about what our response might be. But we're doing everything we can to, to maximize that net revenue off of what is a growing GGR base.
Jordan: If this tax does appear like it's going to last through the end of the year.
<unk>.
Jordan: We will see how the competitors respond in and think about what our response might be but we're doing everything we can to.
Jordan: To maximize that net revenue off of what is a growing <unk> base.
Kyle Sauers: I mean, one of the previous question was about market share. And Richard pointed out that we, you know, we don't know for sure, if we're taking market share, but GGR up 55% in Q1. And it's actually up even more than that, in April, unless you unless you assume the market's growing at that rate, you have to assume that our strategy and our product is taking a share for sure.
Richard Schwartz: The previous question was about market share and Richard pointed out that we we don't know for sure. If we're taking market share, but <unk> up 55% in Q1.
Richard Schwartz: And it's actually up even more than that.
Richard Schwartz: April unless you unless you assume the market is growing at that rate you have to assume that.
Richard Schwartz: Our strategy and our product is taking share for sure.
Jordan Bender: Great.
Jordan Bender: Switching gears here, Pennsylvania just joined the multi-state internet gaming agreement, which should help liquidity across your platform. I don't think poker is a huge driver of revenue, but curious to get your thoughts around another large state added to the agreement and how that could help cater to the segment of your database that participates in poker. Thank you. Sure, thanks. Yeah, I know we're all excited for the launch that we achieved in Pennsylvania, a successful debut of a poker platform, which is hard to achieve, and it's one of the, it is the newest platform in the industry, and we're very proud of what we've been able to do there.
Speaker Change: Great switching.
Speaker Change: Switching gears here, Pennsylvania, just join the Multistate Internet game, an agreement, which should help liquidity across your platform.
Speaker Change: I don't think Theres, a huge driver of revenues, but curious to get your thoughts around another large state added to the agreement and how that could help cater to the segment of your database. It participates in poker. Thank you.
Speaker Change: Sure. Thanks, Yes, we're excited for the launch that we achieved in Pennsylvania with a successful debut of poker platform, which is hard to achieve and it's one of the it is the newest platform in the industry and were very good.
Speaker Change: Proud of what we've been able to do there but.
Richard Schwartz: But the goal for us, though, was to be ready and to make sure that platform was capable of handling all the multiple states with player liquidity that now, fortunately, is available to us. So we will be expanding in the future states. We've made a statement earlier this week to those, to that effect. And as you probably know, our strategy for the poker has really been more of an amenity, ultimately, and we're using it as a cross out to casino and sports. So it's easy to say that, but it's hard to deliver that on the actual way the product works.
Speaker Change: For us, though is to be ready and to make sure that platform is capable of handling all the multiple states with plenty of liquidity right. Now Fortunately is available to us. So we will be expanding in the future States. We've made a statement earlier this week to those to that effect and as you probably know our strategy for the poker has really been more of an amenity.
Speaker Change: He ultimately and they're using it as a cross sell to casino and sports so.
Speaker Change: Easy to say that but it's hard to deliver that on the actual way the product works. We've done all kinds of really nice features and functions. We have added to the platform to make it really easy for a user to to play the other products and achieve that result that we've set up for ourselves.
Richard Schwartz: We've done all kinds of really nice features and functions we've added to the platform to make it really easy for a user to play the other products and achieve that result that we've set up for ourselves. The purpose of that is to be able to attract customers that want to play poker, and once they're playing poker with us, have the other great offerings available to them and the other product verticals, and also, of course, to ensure that players that enjoy our casino and sports book stay with us when they want to play poker. And so between the two Phil's that we've, who are our brand ambassadors for poker, Phil Galfond and Phil Hellmuth, we've been really able to really reach a nice audience and there's a lot of enthusiasm and around this poker vertical for us and we will be and are excited to be able to expand that into other states in the near future.
Speaker Change: The purpose of that is to be able to attract customers that want to play poker Windsor plant poker with us the other great offerings available to them and the other product verticals and also of course to ensure that players enjoy our casino and sports book stay with us when they want to play poker and so between the two of fill.
Speaker Change: Phil is that we have.
Speaker Change: Our brand ambassadors with poker fill got funding. So helmet, we've been really able to really reached a nice audience and theres a lot of enthusiasm and excitement around this poker vertical for us and we will be and are excited to be able to expand that into other states in the near future.
Jordan Bender: Thank you very much. Thank you.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Ryan Sigdahl: The next question is from the line of Ryan Sigdahl with Craig Hallam. Your line is now open. Good afternoon. This is Will on for Ryan. Thanks for taking our questions. Just a quick one on Columbia, and then I'll have a follow-up.
Speaker Change: Next question is from the lineup Ryan <unk> with Craig Hallum. Your line is now open.
Good afternoon. This is will on for Ryan. Thanks for taking our questions. Just a quick one on Colombia, and then I'll have a follow up.
Kyle Sauers: Could you quantify how much the increased promotions to match that VAT tax impacted revenue in ARPDAU in the quarter? Sure. So I give a couple of stats that I'll expand upon, or a couple of stats a minute ago. So Q1, GGR was up 55%. And I mentioned that April, that GGR growth rate's even higher than that. And this, if you look at that growth rate, that's fairly consistent with what we've been seeing in Columbia for the last couple of years. And during that time, our GGR and our net revenue have grown at a fairly similar pace, which tells you that the bonusing, in total, the bonusing hadn't changed a whole lot over the last couple of years.
Could you quantify how much the increased promotions to Matt that that that tax impacted revenue in ARP DAU in the quarter.
Speaker Change: Sure. So I gave a couple of stats that I'll expand upon.
Speaker Change: A couple of stats in a minute ago. So Q1, <unk> was up 55%.
Speaker Change: I mentioned that April that GCI growth rates, even higher than that.
Speaker Change: And if you look at that growth rate, that's that's fairly consistent with what we've been seeing in Colombia for the last couple of years.
Speaker Change: And during that time, our <unk> and our net revenue have grown at a fairly similar pace, which tells you that the bonus in.
Speaker Change: In total the bonus and hasn't changed a whole lot over the last couple of years.
Kyle Sauers: But to your question, in each of March and April, our net revenue growth was significantly impacted. So in March, our net revenue in U.S. dollars was actually down slightly year over year. And in April, it's been about flat year over year. So we've got a market that may have otherwise been growing at 50% plus that's now relatively flat year over year because of this temporary VAT tax. So I think there's a couple takeaways from that. The first is the removal of the VAT tax should be a very meaningful driver of growth for us when that happens and when we have those as comparables with when the tax was in place.
Speaker Change: But to your question in each of March and April our net revenue growth with.
Speaker Change: With significantly impacted so in March our net revenue in U S dollars was actually down slightly year over year and in April it's been about flat year over year. So we've got a.
Speaker Change: Market that may have otherwise been growing at 50% plus that is now relatively flat year over year because of.
Speaker Change: This temporary VAT tax so I think there is there is a couple of takeaways from that the first is the removal of the VAT tax.
Speaker Change: Should be a very meaningful driver of growth for us when that happens and when we when we have those.
Speaker Change: Comparable with with when the tax was in place.
Ryan Sigdahl: And I think the other piece is, and we said this in the prepared remarks, that the rest of the business is performing very, very well, such that we outperformed in Q1 and reiterated the guidance for the year, even in the face of the additional bonusing in Columbia. got it. Thanks for the color there. Maybe a quick one.
Speaker Change: The other pieces and we said this in the prepared remarks that the rest of the business is performing very very well.
Speaker Change: Essentially we outperformed in Q1 and reiterated the guidance for the year, even in the face of the additional bonus and in Colombia.
Speaker Change: Got it thanks for the color there maybe.
Speaker Change: Maybe a quick one.
Kyle Sauers: on the constitutional decree. So you said the first one was found partially constitutional and the second one obviously related to the tax is kind of up for debate right now. If we do see that continue out until the end of the Could it be renewed or is it pretty much transitory until that time? Sure, yeah, the limitations of the emergency decree are that you can only extend it to a certain period of time. And that's one of the decisions the court will make, whether it's a six-month period or throughout the rest of the calendar year.
Speaker Change: The constitutional decrease so you said the first one was down partially constitutional and the second one obviously related to the taxes kind of up for debate right now.
Speaker Change: If we do see that continue out until the end of the year.
Speaker Change: Could it be renewed or is it pretty much transitory until that point.
Speaker Change: Thanks.
Speaker Change: Sure Yes.
Speaker Change: The limitations of the emergency decree or that you could only extended to a certain period of time and Thats one of the decisions that we'll make where theres a six month period or.
Speaker Change: Throughout the rest of the calendar year.
Kyle Sauers: In terms of being able to exceed beyond that, you wouldn't be able to proceed without that per the guidance unless you have a congressional support for that, which in the past has been absent. So it does feel fairly. likely that it would end either after six months, so still a few months before the end of the year, or at the end of the year, at the end of the calendar. Great, thanks. Thank you.
Speaker Change: Terms of being able to see beyond that.
Speaker Change: You wouldn't be able to proceed without that.
Speaker Change: The guidance unless you have a congressional.
Speaker Change: Support for that which in the past has been absent so it does feel.
Speaker Change: Really.
Speaker Change: Likely that it would either after six months, so still a few months before the end of the year or at the end.
Speaker Change: We ended the year.
Speaker Change: The calendar year.
Speaker Change: Great. Thanks, guys.
Speaker Change: Thank you the.
Jed Kelly: The next question is from Jed Kelly with Oppenheimer. Your line is now open. Hey, great, great. Thanks for taking my questions. Seeing really nice marketing leverage, you know, we have Kyle, some of the larger land-based casino players start to grow their product, too, for iGaming. Can you just kind of expound more on what's sort of driving the marketing leverage, even though the market remains pretty competitive, because it continues to be pretty impressive? Yeah, sure. Hey, Jed. At the end of the day, it comes down to a real simple business here of can we have a reasonable rate of investment to acquire customers, and then we let their experience take over.
Speaker Change: Next question is from Jed Kelly with Oppenheimer. Your line is now open.
Jed Kelly: Great great. Thanks for taking my questions.
Speaker Change: Seeing really nice marketing leverage we have seen.
Speaker Change: Some of the larger land based casino players start to grow their product to our I gaming can you just kind of expound more on what's sort of driving the marketing leverage even though the market remains pretty competitive.
Speaker Change: To be pretty impressive.
Jed Kelly: Yeah, sure Hey, Jed.
Jed Kelly: The other day it comes down to the run simple business here can we.
Jed Kelly: I have a reasonable rate of investment to acquire customers and then we let that our experienced takeover.
Kyle Sauers: And I think the quality of our experience continues to be the reason why we're able to achieve that result, the results that we are, despite not having the strongest brand in the market, and not having the largest budget. and not having a land based property driving traffic to us consistently at the levels that you see in some of the larger land based casino groups are reported earlier this week. So at the end of the day, we focus on experiences, and how can we differentiate those experiences to the point where a player who has signed up for multiple accounts...
Jed Kelly: I think the quality of our experience continues to be.
Jed Kelly: The reason why we're able to achieve that reserve the results that we are despite not having the strongest brand in the market.
Jed Kelly: And not having the largest budget.
Jed Kelly: And not having a land based property driving traffic to us because it's only at the levels that you've seen some of the larger land based casino groups reported earlier. This week. So I think that day, we focus on.
Jed Kelly: Experiences and how can we differentiate those experiences to the point, where a player who sign up for multiple accounts.
Jed Kelly: Most of the players have multiple accounts.
Kyle Sauers: What's going to motivate them to spend a higher percentage of their entertainment budget with us? And what it comes down to is, can we offer them an experience that is unique and compelling and fun in a way that's not available elsewhere? And the answer has been and continues to be, yes, we do offer something unique and something that's entertaining and engaging for customers in a more sophisticated fashion than most other products in the industry, which are mostly just offering, you know, a game library from a game lobby where we have all kinds of fun experiences, whether it's community chat, engagement, or whether it's all about promotional engines that lead players to engage with each other in fun promotional games.
Jed Kelly: To motivate them to spend a higher percentage of their entertainment.
Jed Kelly: Entertainment budget with us.
Jed Kelly: And when it comes down to is can we offer them an experience that is unique and compelling and fun in a way that's.
Jed Kelly: Not available elsewhere and the answer has been and continues to be yes, we do offer something unique something.
Jed Kelly: Entertaining and engaging for customers and a more sophisticated fashion than most other products to the industry, which are mostly just offering.
Jed Kelly: Game Library from the game lobby, where we have all kinds of fun experiences where theres community.
Jed Kelly: Engagement or whether it's all of them promotional engines.
Jed Kelly: <unk> players to engage with each other and fund promotional games.
Kyle Sauers: I think at the end of the day, the players who are playing often and frequently notice these features and they stay active with us because of that. Got it. That's helpful. And then just real quickly on the guidance, you know, I see you're maintaining your revenue guidance. However, I think 1Q was 21% revenue growth kind of implies a deceleration, even though you have similar comps throughout the year versus 1Q. So can you talk about anything we should be watching for for the balance of the year? Yeah, thanks, Jed.
Jed Kelly: I think the other day the players who are playing often and frequently notice. These features and they stay active with us because of that.
Speaker Change: Got it that's helpful. And then just real quickly on the guidance.
Speaker Change: I see you're maintaining your revenue guidance. However, I think <unk> was 21% revenue growth kind of imply.
Speaker Change: Celebration, even though you have similar comps throughout the year versus one.
Speaker Change: Can you talk about anything we should be watching for for the balance of the year. Thanks.
Speaker Change: Yes, thanks, Jess so.
Kyle Sauers: So maybe just to frame that, I think, given the guidance that we've offered, if you're looking at the midpoint, it is likely that revenue would be lower in Q2 and Q3 than it was in Q1, and that then Q4 would be the largest revenue quarter of the year. I think the things to think about, one is that I mentioned that a previous question is just lapping Delaware. And while we still expect really nice growth out of Delaware, the growth rate in Delaware is likely to be slower as the year goes on. And then another piece just really, I'll say kind of Q1 specific, is that the VAT tax in Columbia went into effect about almost two-thirds of the way through the first quarter.
Speaker Change: Maybe just to frame that I think given the guidance that we've offered if youre looking at the midpoint.
Speaker Change: It is likely that revenue would be lower in Q2 and Q3 than it was in Q1.
Speaker Change: And that then Q4 would be the largest.
Speaker Change: Revenue quarter of the year I think the things to think about one is that.
Speaker Change: I mentioned on a previous question is just lapping Delaware and while we were.
Speaker Change: We still expect really nice growth out of Delaware the growth rate in Delaware.
Speaker Change: There is likely to be slower as the year goes on.
Speaker Change: And then another piece just really.
Speaker Change: I'll say kind of Q1 specific is that the VAT tax in Colombia went into effect.
Speaker Change: Almost two thirds of the way through the first quarter. So we didn't have the headwind of that that tax and that bonuses.
Kyle Sauers: So we didn't have the headwind of that tax and that bonusing for most of Q1. And under the guidance that we've offered, assuming that the tax lasts through the end of the year, that tax burden will be there, or the bonusing burden will be there throughout all of Q2 and the other quarters. So that would be a headwind relative to Q1. And then maybe the last thing, just building in some potential changes in consumer behavior. I think Richard pointed out, we haven't seen anything in our data or our experience that's suggesting any consumer changes, but certainly there's a lot of rhetoric and discussion around that topic.
Speaker Change: For most of Q1.
Speaker Change: And under our under the guidance that we've offered assuming that the tax last through the end of the year that tax burden will be there or the bonus and burden will be there throughout all of Q2 and the other quarters. So.
Speaker Change: That would be a headwind relative to Q1.
Speaker Change: And then.
Speaker Change: The last thing just.
Speaker Change: Building and some potential changes in consumer behavior.
Richard Schwartz: Richard pointed out we haven't seen anything in our data or our experience, that's suggesting any any consumer changes, but certainly theres a lot of rhetoric and discussion around that topic.
Kyle Sauers: So we just want to be mindful to keep that in mind in the thoughts and the guidance. Got it.
Richard Schwartz: So we just want to be mindful to keep that keep that in mind and the thoughts on the guidance.
Kyle Sauers: And then just real quick, what's the tax rate we should assume for your adjusted EPS? Let me get back to you on that, Jed, because there's some moving parts there, part of it being that, you know, Columbia is changing pretty quickly. And at the moment, Columbia is the only market where we're paying any meaningful income tax. So I'll come back to you on that. All right, thank you. Thank you.
Speaker Change: Got it and then just real quick what is the tax rate, we should assume for your adjusted EPS.
Jed Kelly: Let me get back to you on that Jed because there are some moving parts there.
Speaker Change: Part of it being that.
Speaker Change: Colombia is changing pretty quickly.
Speaker Change: At the moment Columbia is the only market, where we're paying any meaningful income tax.
Speaker Change: So I'll come back to you on that.
Speaker Change: Alright, thank you.
David Katz: The next question is from David Katz with Jeffreys. Your line is now open. Hi, good evening, thanks for taking my question.
Speaker Change: Thank you the.
The next question is from David Katz with Jefferies. Your line is now open.
David Katz: Hi, good evening, Thanks for taking my question.
Richard Schwartz: You know, one of the areas that I guess we were obligated to discuss is the prediction market. And, you know, on the one hand, you know, is that something that you would contemplate engaging in, in some fashion? And second, if you have any perspective on how you think that evolves in the U.S. and whether it has any kind of meaningful impact on what you're doing on the sports betting side. That'd be helpful.
David Katz: One of the areas that that.
Speaker Change: I guess, we were obligated to discuss his prediction markets.
David Katz: <unk>.
David Katz: On the one hand is that something that you would contemplate engaging in in some fashion.
David Katz: <unk>.
And if you have kind of any perspective on.
David Katz: How you think that evolves in the U S and whether it has any.
David Katz: Any kind of meaningful impact on what youre doing on the sports betting side.
David Katz: That'd be helpful. Thank you.
Richard Schwartz: Sure, I'll take that one. We've been very focused on wrapping up our education on that market opportunity, making sure we are aware of all possibilities, should that market persist and grow into a legal market that us and others are able to participate in. Clearly, as others have noted, you know, right currently today, there's a limited amount of liquidity and a limited number of markets that have enough liquidity to offer bets, but you would expect over time that that could and would grow to a greater variety of options. So it is something that we are, like I said, very aware of and very focused on understanding all the aspects of it.
Speaker Change: Sure Hey, David I'll take that one.
Yeah, we've been very focused on.
Speaker Change: Ramping up our education on that market opportunity, making sure. We are aware of all possibilities should that market persists and grow into the legal market that us and others are able to participate in.
Speaker Change: Clearly as others have noted.
Speaker Change: Currently today there is a.
Speaker Change: Limited amount of liquidity and a limited number of markets that have enough liquidity to offer that's but you would expect over time that that.
Speaker Change: It would grow to a greater variety of options. So it is something that we are like.
Speaker Change: Like I said very.
Speaker Change: Aware of very.
Speaker Change: <unk> focused on understanding all the aspects of it and should there be an opportunity.
Richard Schwartz: And should there be an opportunity where licensed operators like us on a state by state level are able to participate in that market, that's certainly something we would consider at that time. I'm just, thanks very much.
Speaker Change: We're licensed operators like us on a state by state level are.
Speaker Change: But to participate in that market, that's certainly something we would consider at that time.
Speaker Change: Understood Thanks very much.
Chad Beynon: Thank you. The next question is from the line of Chad Beynon with Macquarie. Your line is now open. Good afternoon. Thanks for taking my question. Richard, Kyle, I wanted to ask about some of the other international markets. I guess Mexico and Peru specifically, are the TAMs that we've been thinking about before, do you still believe those to be true? How are those markets ramping? And then also adjacent to that, are there other international markets that you have your eye on at this time?
Speaker Change: Thank you.
Speaker Change: The next question is from the line of Chad Beynon with Macquarie. Your line is now open.
Chad Beynon: Hi, good afternoon. Thanks for taking my question Richard.
Speaker Change: Richard Kyle I wanted to ask about some of the other international markets.
Mexico, and Peru, specifically.
Speaker Change: Are the or the Tam that we've been thinking about before do you still believe those to be true.
Speaker Change: How are those markets ramping and then also adjacent to that are there other international markets that you have your eye on at this time.
Richard Schwartz: Yeah, sure. Hey, I'll start maybe Kyle can feel free to add some extra context. But in terms of Mexico, as you heard, we're really seeing a lot of great growth out of the market. It's continuing to be one that really excites us and things are moving in a really great direction for us there. As we've noted before, we expect over time it will be One of the largest markets in LATAM, larger than Colombia, ultimately. And for us, specifically, as we've mentioned before, post-launch, Mexico is still tracking ahead of where Colombia was in revenues after the same period of time after launch.
Speaker Change: Sure Hey, yes.
Yes, I'll start then maybe Karl can feel free to add extra contexts, but.
Speaker Change: In terms of Mexico as you heard we're really.
Speaker Change: <unk> seen a lot of great growth out of that market.
Speaker Change: Seems to be one that really excites us and things are moving in a really great direction for us there.
Speaker Change: We have noted before we expect over time it will be.
Speaker Change: One of the largest markets in Latam with larger than Columbia ultimately.
Speaker Change: And for Us specifically.
Speaker Change: Actually before post launched Mexico still tracking ahead of our Columbia was in revenues. After the same period of time after launch so we feel really optimistic about Mexico.
Richard Schwartz: So we feel really optimistic about Mexico.
Richard Schwartz: Peru has been a story where we haven't invested much in marketing yet because we're continuing to optimize the experience and localize it. It's something that we continue to feel positive about, but it has been a market that we haven't ramped up yet. And so it's still something that we're excited to be able to do in the future given the relatively large population that country has.
Speaker Change: Peru is.
Speaker Change: Story, where we've.
Speaker Change: Having invested much in marketing yet because we are continuing to optimize the experience and localize it's something that we continue to be filled.
Speaker Change: Feel positive about that has been a market that we havent ramped up yet so it's still something that.
Speaker Change: We're excited to be able to do in the future given the relatively large population that country has.
Richard Schwartz: There are other LATAM markets as well that we have our – we're focused on, have our attention on, and have been evaluating ways to enter those markets. We haven't announced anything, and so I won't be able to share anything with you today. But certainly, as you can imagine, once you have a great brand, a great platform, a great team, great marketing team, operations, local knowledge of experiences in those regions, it becomes a lot easier for us to be able to add and be successful in future markets. So there is great opportunities ahead in that region, but we're being very selective in making sure that we don't move faster than we need to because there's still a lot of growth in existing markets that we're operating in.
Speaker Change: There are other Latam markets as well that we have are.
Speaker Change: We're focused on of our attention on and evaluating ways to enter those markets, we haven't announced anything and so we won't be able to share anything with you today, but certainly as you can imagine once you have a great brand a great platform a great team great marketing team operations local knowledge of experiences in those region.
Speaker Change: It becomes a lot easier for us to be able to add in.
Speaker Change: And be successful in future market. So there is great opportunities ahead in our region, but we're being very selective and making sure that we don't.
Speaker Change: Moved faster than we need to because it's still a growth in existing markets that we're operating in.
Richard Schwartz: Okay, great.
Speaker Change: Okay, Great and then on OSB product growth you mentioned.
Kyle Sauers: And then on OSB product growth, you mentioned, you know, the, the Eagles, March Madness, some of the pressure that you saw in the quarter there that, that put a ceiling on on the OSB growth for the quarter. But just thinking about single game part lays, hold rates, etc. Were those up meaningfully for the quarter? And should we expect for those to be up? You know, as we as we look through the rest of the year? Thank Yeah, so I can start and if there's anything you want to add, Richard, feel free. But our, you know, our hold rates, Chad, as you mentioned, they've continued to improve.
Speaker Change: The Eagles March madness, some of the pressure that you saw.
Speaker Change: In the quarter, there that that put a ceiling on the OSB growth for the quarter.
Speaker Change: But just thinking about single game parlays hold rates et cetera.
Speaker Change: Were those up meaningfully for the quarter and should we expect for those to be up.
Speaker Change: As we as we look through the rest of the year. Thank you.
Speaker Change: Yes, so ill.
Richard: I can start and if there's anything you want to add Richard feel free, but our our hold rates chat.
Chad Beynon: Chad as you mentioned, they've continued to improve and it's because of it.
Kyle Sauers: And it's, it's because of the improvements in the product and merchandising and improvement in the bet mix towards parlays, same-game parlays, you know, our Prop Central prop packs, all that drive the higher margin betting. So we have continued to improve our overall sports hold. And that can apply to both the US and to Latin America. But as you point out, we have a little bit of a headwind here in the US from the Super Bowl and March Madness. Great. Thanks, Kyle. Nice quarter, guys. Thank you.
Chad Beynon: The improvements in the product and merchandising and improvement in the bed mix towards parlays same game parlays.
Chad Beynon: <unk> central.
Chad Beynon: <unk> all that drive.
Chad Beynon: The higher margin bedding. So we have continued to improve our overall sports hold.
Chad Beynon: And that can apply to both the U S and Latin America, but as you pointed out we had a little bit of a headwind here in the U S from the Super Bowl and March Madness.
Chad Beynon: Great. Thanks, nice quarter guys.
Chad Beynon: Thank you.
Joe Stauff: The next question is from the line of Joe Stauff with Susquehanna. Your line is now open. Thanks a lot. Hello, Richard and Kyle. I wanted to ask on, you know, the user growth in the quarter in North America, 17%. That's, you know, strong number.
Thank you. The next question is from the line of Joe Stauff with Susquehanna.
Chad Beynon: Your line is now open.
Speaker Change: Thanks, a lot Hello, Richard Kyle.
Speaker Change: I wanted to ask on the user growth in the quarter in North America, 17%.
Speaker Change: Strong number.
Richard Schwartz: I guess it's fair to assume, you know, a heavy portion of that is Delaware, but I was wondering if you can give us, you know, some idea of the concentration in terms of Delaware and maybe non-Delaware. And then the second question I wanted to understand if could, is, you know, Richard, you had given the growth in Michigan, Delaware, New Jersey. And I was curious about Pennsylvania. That's, you know, that's a pretty big state for you guys. I was just wondering how that you know, is growing in terms of, again, your 16 states.
Speaker Change: Okay.
Speaker Change: I guess, it's fair to assume.
Speaker Change: Heavy portion of the Delaware, but I was wondering if you can give us.
Speaker Change: Some idea of the concentration in terms of Delaware and maybe non Delaware and then.
Speaker Change: The second question I wanted to understand if I could.
Speaker Change: Is.
Speaker Change: Richard you had given.
Speaker Change: The growth.
Speaker Change: And Michigan, Delaware, New Jersey.
Speaker Change: And I was curious about Pennsylvania.
Speaker Change: That's a pretty big state for you guys I was just wondering how that.
Speaker Change: Is growing in terms of again your 16 states.
Richard Schwartz: Yeah, thanks, Joe. So on the first piece on the mile growth during the quarter, so Delaware, Delaware made up kind of mid single digits of that 17%. So I think it was somewhere around 6%. And then the remainder would have been from all the other North American markets. Most, I think, actually, almost all of the rest of the growth came from markets that have iCasino, probably not a surprise, since that's where we have put most of our, most of our marketing efforts, that that's where a lot of that growth is coming from. And, you know, not coincidentally, those are higher value players and helping to drive, drive the revenue growth for sure.
Speaker Change: Yes, Thanks, Joe.
Speaker Change: So.
Speaker Change: The first piece on the MAU growth during the quarter, So Delaware, Delaware made up kind of mid single digits of that 17%. So I think it was somewhere around 6%.
Speaker Change: And then the remainder would have been from all the other north American markets.
Speaker Change: Most I think actually almost all of the rest of the growth came from markets that have a casino probably not a surprise since.
Speaker Change: Thats, where we have.
Speaker Change: Put most of our <unk>.
Speaker Change: Most of our marketing efforts.
Speaker Change: A lot of that growth is coming from and not coincidentally those are higher value players.
Speaker Change: In helping to drive drive the revenue growth for sure.
Richard Schwartz: On the second question, Pennsylvania, it was a grower for us year over year, but low single digits, I think something like two or 3%. You know, no, no surprise. Again, again, I think that that's a market that has much lower margins for us. So there's not as much investment going in there. So that's certainly a drag on the overall revenue growth rate.
Speaker Change: On the second question, Pennsylvania, It was a grower for us year over year, but low single digits, I think something like two or 3%.
Speaker Change: No no surprise I guess again I think that that's a market that has a much lower margins for us so theres not as much investment going in there.
Speaker Change: Certainly a drag on the overall revenue growth rate.
Joe Stauff: But the revenue growth that we are achieving is coming from our higher margin markets. Got it. Thanks a lot. Very helpful. Thank you.
Speaker Change: But the revenue growth that we are achieving its coming from our higher margin markets.
Speaker Change: Got it thanks, a lot very helpful.
Speaker Change: Thank you.
Mike Hickey: The next question is from the line of Mike Hickey with Benchmark Company. Your line is now open. Hey, Richard, Kyle, thanks for taking our questions and congrats on a strong Q1. The first question, Kyle, can you quantify I can't remember if you did last quarter or not, but can you quantify the tax impact from Columbia that's baked into your 25 guide thinking about the impact on EBITDA? Yeah, we didn't quantify it in terms of E, but I think the way I framed it earlier is probably the best way to think about it is that, you know, our GGR is growing, you know, in Q1, at least in local currency, grew 55%.
Speaker Change: The next question is from the line of Mike Hickey with Benchmark Company. Your line is now open.
Speaker Change: Hey, Richard Kyle Thanks for taking our questions and congrats on a strong Q1.
Speaker Change: First question.
Speaker Change: Can you quantify I can't remember, if you did last quarter or not but.
Speaker Change: Can you quantify the.
Speaker Change: Tax impact from Colombia, that's baked into your 25 guide thinking about the impact on EBITDA.
Speaker Change: Yes, we didn't we didn't quantify it in terms of EBITDA I think the way.
Speaker Change: The way I framed it earlier is probably the best way to think about it is that.
Speaker Change: <unk> is growing in Q1 at least in local currency grew 55%.
Kyle Sauers: It's a little bit lower than that in USD. In April, it's growing a little faster than that, actually. So we've seen acceleration in GGR growth. But the net revenue was down a little bit in March. It was up for Q1. In April, it's kind of flat net revenue compared to higher than 50% GGR. So that gap is really the impact for us on revenue. And we've got, obviously, some different scenarios, higher and lower than that, are built into the guidance for the year. So hopefully, that's helpful for you to think about how to frame the impact.
Speaker Change: And that's a little bit lower than that in USD in April it's growing a little faster than that actually so we've seen an acceleration in <unk> growth but.
Speaker Change: Net revenue was <unk>.
Speaker Change: Down a little bit in March it was up for Q1.
Speaker Change: April is kind of flat.
Speaker Change: Net revenue compared to higher than 50% <unk>. So that that gap is really the impact for us on on revenue.
Speaker Change: And we've got obviously some different scenarios.
Speaker Change: Higher and lower than that that are built into the guidance for the year.
Speaker Change: So hopefully thats helpful to for you to think about how to frame frame the impact I think.
Kyle Sauers: I think I said it before, but, you know, when this tax goes away, it's obviously a very meaningful driver of growth in revenue and profitability. And certainly, when we compare to the months that had the tax in 2026. And just to clarify, Kyle, from what I heard, it sounds like it would be, we don't know when it's going to end this year, maybe worst case end of year, but it seems like it would be very unlikely to see a similar tax scheme carried through into 26. It would require another emergency decree, I think, at that point.
Speaker Change: Said it before.
Speaker Change: But.
Speaker Change: When this tax goes away, that's obviously, a very meaningful driver of growth in revenue and profitability.
Speaker Change: And certainly when we when we compare to these the months that had the tax in 2026.
Speaker Change: And just to clarify call it from what I heard it sounds like it would be we don't know when it's going to end. This year, maybe worst case end of the year, but it seems like it would be.
Speaker Change: Very unlikely to see a similar tax scheme.
Speaker Change: Carried through into 2006, it would require another emergency decree I think at that point is that a fair assessment of what Youre thinking.
Richard Schwartz: Is that a fair assessment of what you're thinking?
Richard Schwartz: Yeah, Mike, this is Richard. That is an accurate assessment.
Speaker Change: Yes, Mike This is Richard.
Speaker Change: Is it accurate assessment.
Mike Hickey: Last question from us. You've highlighted before the strength of casino plus OSB and I think in the most recent data you're saying that the combo, in terms of the player combo, participating across both verticals, you get 16 times. the GGR from OSB player alone. Curious what percentage Richard of your player base does participate in both verticals, obviously that necessitates a strong sports betting product as well as is iGaming. I'm curious where you are in terms of mix. where it's trending and what strategies you have in place to sort of get that dual player just given how better the economics are.
Speaker Change: Okay.
Our last question from Us you've highlighted before the.
Speaker Change: The strength of casino plus OSB.
Speaker Change: The most recent data youre, saying that the <unk>.
Speaker Change: Combo in terms of the player combo participating across both verticals you get 16 times.
Speaker Change: The GDR from OSB player alone curious what percentage Richard your player base does participate.
Speaker Change: In both verticals, obviously that necessitate the strong sports betting product as well as high gaming curious where you are in terms of mix.
Speaker Change: Where it's trending and what.
Speaker Change: <unk> you have in place to sort of get that dual player just given how bad are the economics on thanks guys.
Richard Schwartz: Thanks, guys. Hey, Mike, first, if you notice from that slide in our investor deck, it has improved, increased over time that multiple of what you get from the value of a player that plays both casino and sports versus a player that only bets on sports books. So you're hitting on a topic that we're aware of and by strategy or designing products around ensuring you get that cross sale. So to answer your question on what we've done, we've created a mini game lobby, not only to create a frugal let me start again, we actually created launching games initially to allow that cross that have become very easy for a player who's betting on sports to be able to play casino games by having a little icon on their on the sports book that lets them open up a game.
Mike Hickey: Hey, Mike.
Mike Hickey: If you noticed from that slide in our Investor deck. It has improved to decrease over time that that multiple of what you get from a value.
Mike Hickey: Player that plays both.
Mike Hickey: It's for us versus a player that when we've had some sports books, so youre hitting on a topic that we're aware of and by strategy are designing products around ensuring we get that cross sell so to answer your question on what we've done we've created a.
Mike Hickey: Many game lobby.
Mike Hickey: Not only to be creative.
Mike Hickey: Let me start again, we actually created launching games initially to allow that cross that have become very easy for a player who is putting on sports debuted a play casino games, so having little icon on there on the sports book I'll, let some open up a game and then we've done more recently is credit came lobby, where you have a variety of games there they are easier to navigate between ensuring that you offer.
Richard Schwartz: And then what we've done more recently is created a game lobby where you have a variety of games there that are easy to navigate between ensuring that you offer optimal number and variety of game casino game types available for players, they may not just want to play a blackjack, they may want to play a roulette game or a slot game and we're finding is having a greater variety of that has been helpful for us.
Mike Hickey: To a number and variety of game casino game types available for players they may not want to play blackjack and they want to play.
Mike Hickey: That game or a slot game and what we're finding is having a greater variety of that has been helpful. For us. So I think we haven't really we've never shared our our breakout between number percentage of players that you asked for but I will tell you that we obviously recognize the cross sell opportunity and build our product and platform to reduce friction for users.
Richard Schwartz: So I think that in a day we haven't really we've never shared our, our breakout between a number of percentage of players that you asked for. But I will tell you that we obviously recognize the cross opportunity and built our product and platform to reduce friction for users to optimize the number of players who will cross on play knowing that something that a differentiator between us and most of our peers, and something that we think we can continue to take advantage of given our focus on the technology it's enabled is kind of unique play playing multiple products at the same time from a single experience.
Mike Hickey: To optimize the number of players who will cross sell them play knowing thats something thats, a differentiator between us and most of our peers and something that we think we can continue to take advantage of given our focus on the technology to enable this kind of unique player playing multiple products at the same time from a single experience.
Richard Schwartz: Richard, is the cross sell, is that starting primarily with iGaming, which is your core product to sports betting? Or are you actually reversing that and bringing in the sports betting and then crossing them to iGaming? a little bit of both. But obviously, we also have poker that's driving a lot of the crossover in Pennsylvania. We're trying to ramp it up. And as we said earlier, we're going to launch multi-state poker and share liquidity across multiple states in the future. But I would say that it goes both ways. But there is a lot of sportsbook to casino action.
Mike Hickey: And Richard just the cross sell is that starting primarily with gaming, which is your core product to sports betting or you're actually reversing that and bringing in the sports betting and crossing them by gaming.
Mike Hickey: It's a little bit of both but obviously, we also poker that's driving a lot of the cross sell in Pennsylvania.
Mike Hickey: To ramp that up and as we said earlier, we're going to launch multi state poker share liquidity across multiple states.
Future, but I would say that it goes both ways, but there is a lot of sports book to casino.
Richard Schwartz: And there's a lot of from poker, you get a lot of players going over to casino from poker. So it really is a works in multiple ways through multiple journeys.
Mike Hickey: Action and there's a lot of from poker, you're getting a lot of players going over to casino from poker. So it really is a works in multiple ways through multiple journeys players.
Mike Hickey: Nice. Thanks, guys. Thanks, Mike. Thank you.
Mike Hickey: Alright, thanks, guys.
Mike Hickey: Thanks, Mike.
Operator: There are no further questions in queue. As a reminder, it is star one if you'd like to ask a question.
Speaker Change: Thank you there are no further questions in queue. As a reminder, it is starwood if you'd like to ask a question.
Operator: There are no further questions.
Speaker Change: There are no further questions I'll hand, the call back over to Richard Schwartz for concluding remarks.
Richard Schwartz: I'll hand the call back over to Richard Schwartz for concluding remarks. Thank you again for joining us today. We look forward to updating you on our progress when we share our second quarter results in the summer.
Richard Schwartz: Thank you again for joining US today, we look forward to updating you on our progress when we share our second quarter results in the summer.
Operator: That concludes today's conference call. Thank you for your participation.
Richard Schwartz: That concludes today's conference call. Thank you for your participation you may now disconnect your lines.
Operator: You may now disconnect your line.