Rush Street Interactive raises 2025 revenue guidance to $1.1B–$1.12B as North American online casino growth accelerates

Earnings Call Insights: Rush Street Interactive (RSI) Q3 2025

MANAGEMENT VIEW

* Richard Schwartz, CEO, opened by stating, "I'm pleased to report on another outstanding quarter that underscores the resilience of our business model and player-first approach. Our third quarter results demonstrate continued momentum and acceleration of growth across key markets, led by our continued outperformance in the online casino space."
* The company announced organizational enhancements, elevating Kyle Sauers to President and CFO, now overseeing marketing, operations, and commercial strategy. Rob Picard was promoted to Chief Strategy Officer.
* Schwartz highlighted, "Revenue reached a record $277.9 million, up 20% year-over-year, marking our 10th consecutive quarter of sequential revenue growth... this growth was driven by very strong player acquisition and player engagement across our higher-value markets."
* North America online casino markets posted a 46% year-over-year MAU growth, with 225,000 MAUs and a record quarter for first-time depositors, surpassing the previous high by more than 10%.
* In Latin America, Mexico revenue grew over 100%, while Colombia GGR increased over 50% but net revenue fell 27% due to player bonusing related to temporary VAT tax.
* Schwartz addressed industry topics: "We are monitoring [prediction markets] closely. As a casino-first company, we see less direct competitive risk than sportsbook heavy operators... the proliferation of unregulated sweepstakes products... presents both a challenge and an opportunity."
* The company is preparing for expansion into Alberta, anticipating a day-one launch upon market opening.
* CFO Kyle Sauers stated, "Online casino revenues grew 34% during the quarter, while online sports betting contracted 16% due to the elevated bonusing in Colombia. Regionally, revenue in North America grew 26%, while revenue in Latin America fell by 11%."
* Sauers emphasized, "Marketing expense of $38.1 million was down 1% year-over-year while increasing sequentially by 5%... We set another new record for first-time depositors... while further decreasing our cost to acquire players in North America by over 10%."

OUTLOOK

* The company raised full year 2025 revenue guidance to between $1.1 billion and $1.12 billion, up $35 million at the midpoint from previous guidance, representing a 20% year-over-year increase.
* Full year adjusted EBITDA guidance is now $147 million to $153 million, up $10 million at the midpoint to $150 million, a 62% year-over-year increase.
* Sauers explained, "The acceleration we've seen in North America online casino markets every month since March gives us confidence that this growth is sustainable and not merely seasonal."
* Guidance includes only markets live as of today.

FINANCIAL RESULTS

* Revenue for Q3 reached $277.9 million, a 20% year-over-year increase.
* Adjusted EBITDA was $36 million, up 54% year-over-year, with a margin of 13%.
* Gross margin was 34.0% for the quarter.
* North American MAUs reached 225,000, a 34% increase year-over-year, while ARPMAU was $365, down 5% year-over-year due to new player acquisition dynamics.
* Latin America MAUs grew to 415,000, up 30% year-over-year.
* The company ended the quarter with $273 million in unrestricted cash and no debt.

Q&A

* Sam, JPMorgan: Asked about Q4 incremental margins and potential impacts beyond marketing spend. Sauers responded, "Increased marketing spend... and just the ongoing VAT tax that goes through the end of the year in Colombia that's impacting gross margins and revenue growth down there."
* Jordan Bender, Citizens JMP: Inquired about promotional activity in sports betting and Colombia NGR decline. Sauers stated, "No big change in strategy... This was about the bonusing that we're doing to offset the VAT tax on the players."
* Ryan Sigdahl, Craig-Hallum: Asked about new payment partnerships and their impact. Schwartz said, "When you can innovate and find ways to solve players' friction, deliver more efficient experiences... it makes a difference."
* Joseph Stauff, Susquehanna: Queried on headwinds from sweepstakes and reinvestment distribution. Sauers noted, "It is concentrated in markets that have iCasino available... that's where our marketing investments should go."
* David Katz, Jefferies: On prediction markets, Schwartz replied, "We aren't going to be a pioneer in this category... but we're certainly monitoring it closely."
* Jed Kelly, Oppenheimer: Asked about iGaming growth drivers. Sauers explained growth is "concentrated in monthly active user growth, differentiated product, and marketing efficiency."
* Chad Beynon, Macquarie: Asked about in-play betting and Colombia VAT tax impact on guidance. Sauers confirmed, "Our sports hold in the U.S. actually hit its highest point in our history in Q3, even with those tougher outcomes."
* Michael Hickey, Benchmark: Inquired about prediction market competition and LatAm expansion appetite. Schwartz said, "No, it doesn't really dampen our interest... we certainly remain very excited for the LatAm market."

SENTIMENT ANALYSIS

* Analysts pressed on regulatory and tax risks, promotional spending, and growth sustainability, with a neutral to slightly positive tone, expressing interest in operational resilience and expansion plans.
* Management maintained a confident tone in both prepared remarks and Q&A, with Schwartz stating, "The fundamentals of our business have never been stronger. We're growing fast, efficiently and profitably."
* Compared to the previous quarter, management's tone remained optimistic, while analysts continued to probe on regulatory and cost headwinds, but recognized momentum in core markets.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full year revenue was raised from $1.05 billion–$1.1 billion in Q2 to $1.1 billion–$1.12 billion in Q3, and adjusted EBITDA guidance increased from $133 million–$147 million to $147 million–$153 million.
* North American online casino MAU growth accelerated from over 30% in Q2 to 46% in Q3, while Latin America MAUs grew 30% in Q3, slightly below the 42% growth in Q2.
* Marketing spend as a percentage of revenue remained below 14% in both quarters, with further efficiency gains in player acquisition noted in Q3.
* Management tone stayed optimistic, with greater emphasis in Q3 on operational leverage and strategic positioning amid regulatory uncertainty.
* Analysts’ focus shifted in Q3 to probing tax impacts in Mexico and Colombia, as well as sustainability of user growth and margins.

RISKS AND CONCERNS

* Management cited regulatory developments in Colombia (potential VAT tax changes) and Mexico (possible gaming tax increases) as ongoing risks.
* Sauers discussed, "the ongoing VAT tax that goes through the end of the year in Colombia that's impacting gross margins and revenue growth."
* Analysts questioned the impact of sweepstakes operators, unregulated competitors, and regulatory uncertainty on future growth and market share.

FINAL TAKEAWAY

Rush Street Interactive delivered record Q3 results with accelerating growth in online casino markets, particularly in North America, and raised its full-year outlook for both revenue and adjusted EBITDA. Management highlighted organizational changes to strengthen strategic focus and operational execution, while addressing regulatory risks in Latin America and ongoing industry shifts. The company remains confident in sustaining profitable expansion, driven by product innovation, marketing efficiency, and robust momentum in its key markets.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/rsi/earnings/transcripts]

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