Rush Street Interactive, Inc. (RSI) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded today, July 29, 2026. I will now turn the call over to Kyle Sauers, President and Chief Financial Officer. Please go ahead.

Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2026 earnings release. It can be found under the heading Financials, Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as "will," "expect," "should" 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. 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 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 nonrecurring items and other adjustments that are either non-cash or not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our second quarter 2026 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis. With me on the call today, we have Richard Schwartz, Chief Executive Officer. He will first provide some opening remarks and then open the call to questions. And with that, I'll turn the call over to Richard.

Thanks, Kyle, and good afternoon, everyone. Before I dive into our second quarter results, I want to take a moment to acknowledge that while Kyle and I have the opportunity to present these results each quarter, our continued success is driven by the exceptionally smart, dedicated and experienced management team we work with every day as well as our talented employees across the organization. I want to thank the entire team for all their hard work and dedication and for once again delivering record revenue and adjusted EBITDA, which continues our consistent track record of strong performance. I'm particularly proud that we delivered our fastest quarterly revenue growth in over 4 years, even while operating from a significantly larger revenue base. We generated revenue of $393.8 million, up 46% year-over-year and adjusted EBITDA of $64.6 million, up 61% year-over-year. Our results this quarter reflect the continued strength of our casino-first strategy, disciplined execution across operating regions, alongside a well-planned and strongly executed World Cup period. Our casino-first approach remains the foundation of our business model. Online casino continues to be our primary value driver with sports betting and poker serving as important complementary products to drive incremental profitability, brand awareness and bring new players into our ecosystem. Online casino continues to be our fastest-growing product segment in both North America and Latin America. This quarter, online casino represented 72% of our revenue with online sports betting contributing most of the remaining 28%, a mix that continues to support the consistent engagement, higher lifetime values, and stronger retention that comes with our casino players. Player growth remained strong across both regions. Monthly active users in North America grew 51% year-over-year to over 296,000, with growth in our North American online casino market reaching 64% year-over-year. In Latin America, which includes Mexico, MAUs grew 62% year-over-year to over 652,000. Across the company, we again delivered record first-time depositors and continue to deliver attractive player acquisition costs, reflecting the ongoing advancements in our brand awareness and marketing efficiency. We just finished a month of exciting World Cup soccer, and I'm incredibly proud of our teams and the results we produced. There was incredible effort and execution that went into our marketing programs, player engagement and operations, merchandising our offerings in a compelling way to our players and, of course, ensuring our technology performed fast and reliably at record volumes. The end result was very successful outcomes, both in terms of near-term financial impact and, more importantly, impressive acquisition and reactivation efforts, especially in Latin America. In June and so far in July, our monthly active users in Latin America are up over 80%. Another good sign is that more than 25% of our new first-time depositors that joined us during the World Cup have engaged with our casino product as well. This is about 50% higher than what we saw during the Copa America 2 years ago. So this is an encouraging sign and validating that the work we've put into improving the cross-sell flows have delivered positive results. When it comes to the specific results, both handle and hold came in very nicely for the World Cup in June. In fact, Q2 was the highest sports hold in Colombia since inception, driven by solid World Cup results. In North America, we also again had our highest sports hold since inception, driven by both NBA playoffs and positive World Cup results. This wasn't just good outcomes. It's a reflection of an improving product and improving mix of parlays and prop bets that drive higher hold. Turning to the political situation in Colombia specifically. In June, Colombia held its widely anticipated presidential election. With the winning candidate scheduled to take office at the end of next week, we believe that his pro-business agenda will provide a constructive backdrop for our industry and for the broader operating environment in the country. These policies appear to be in stark contrast to the existing and opposing party. To be clear, the results of this election have no impact on our reported numbers or guidance today. The new government's broader review of prior tax decrees and future budgeting decisions remain outstanding. Therefore, consistent with our prior earnings call, our full year guidance continues to assume that the 16% GGR tax remains in effect through year-end. We'll keep you updated if there are changes on the regulatory front within Colombia. We're also excited to announce that we successfully launched online casino and online sports in Alberta on July 13. And while it's still very early days, we're encouraged by what we've seen so far. As a reminder, Alberta is transitioning out of an unlicensed market. So consistent with our experience in Ontario, we expect this to be a gradual build. On a population-adjusted basis, first-time depositors and daily active users are currently tracking at approximately twice the levels we saw in Ontario at the same point following launch. It's, of course, very early, but we are excited to watch the Alberta market build over the coming quarters. Moving on to the topic of prediction markets. This past quarter, we filed an application for a CFTC designated contract market license. As we have stated previously, we continue to operate with a casino-first focus and do not intend to lean into the crowded sports-focused prediction market space. However, the prediction market landscape is highly dynamic, and we will continue to monitor developments in this space. And this filing ensures we have the flexibility to navigate all possible outcomes. As we look to the second half of 2026, we remain confident in the strength and continued durability of our business. We're executing well and taking market share across our core markets. We're off to a strong start in Alberta, a market with meaningful long-term opportunity, and we see continued significant growth ahead in the other markets where we operate. With that, I'll turn it back to Kyle to discuss the financial details.

Thanks, Richard. Let me walk you through the details of our second quarter performance. Record second quarter revenues of $393.8 million represents 46% year-over-year growth, a continuation of our accelerating growth and a new watermark for our fastest growth rate in over 4 years. This performance was driven by strong execution across all aspects of our business, particularly in our 2 areas of primary focus, online casino and Latin America. Gross margins for the quarter came in at 35.5%, a continuing improvement reflective of our faster growth in higher-margin markets, but still negatively impacted by the temporary tax in place in Colombia. Marketing efficiency continues to be a key component of our success with marketing expenses of $48.6 million in the quarter, an increase of 34% year-over-year and representing 12.3% of total revenue compared to 13.4% in the prior year period. As Richard mentioned, we continue to see attractive player acquisition costs alongside strong player growth. Therefore, we expect to continue investing marketing dollars throughout the second half of the year, particularly as we ramp in Alberta. In fact, because our efficiency continues to improve, even as we have been scaling up, we now expect to spend more on marketing than previously planned in the second half. As we've always said, when we find strong ROI opportunities, we will increase our marketing spend. G&A for the second quarter was $26.5 million, or 6.7% of revenue compared to 7% in the prior year period. As previously discussed, while we're achieving leverage over this line item, we have been increasing our investments in people and technology in 2026 to support our growth. Turning to profitability. Adjusted EBITDA reached a record $64.6 million, representing 61% year-over-year growth and 16.4% margins. We continue to demonstrate scalable profitability expansion through the operating leverage built into our business model. Additionally, while our year-over-year adjusted EBITDA growth remains strong, it's worth noting that on a sequential basis, Q1 had the benefit of no extra tax in Colombia for about 2.5 months during the Constitutional Court's reversal of the prior emergency decree, whereas Q2 and the remainder of 2026 assumes a 16% VAT in Colombia. And for context, that benefit in the first quarter was around $7 million. Net income for the period was $29.3 million compared to $28.8 million in the prior year period, representing a 2% year-over-year increase. User acquisition and retention continue to be key pillars of our success. As Richard mentioned, our user growth this quarter hit record levels once again while also setting another record for first-time depositors. In North America, monthly active users grew 51% year-over-year to over 296,000, with MAUs in online casino markets growing 64% year-over-year. In Latin America, MAUs grew 62% year-over-year to over 652,000. North American ARPMAU was $320 in the second quarter, down 18% year-over-year, but up modestly from the first quarter. As we discussed last quarter, this reflects the impact of our player acquisition levels. Newer player cohorts start at lower value than our established base, but we continue to see this as both healthy and consistent with our historical experience as these cohorts mature over time. In Latin America, ARPMAU was $55, up 82% year-over-year, reflecting continued strength across the region, the elimination of bonusing in Colombia to offset last year's VAT on deposits and favorable movements in the Colombian currency. Breaking down our performance by geography and product, we saw continued strength across all areas. In the second quarter, online casino revenues grew 40% and online sports betting revenue grew 64%. Regionally, revenue in North America grew 23% in the second quarter and revenue in Latin America grew 195%. Growth remained broad-based across regions and products, and we continue to see the benefits of the brand awareness and player loyalty that we continue to build. Our balance sheet remains strong with $340 million in cash on hand as of June 30, and we still have 0 debt on our books. In May, we completed a secondary offering of which we repurchased approximately $29 million worth of shares under our $50 million share repurchase program. And in addition, our Board authorized a new $100 million share repurchase program, which allows us to continue to be opportunistic with share repurchases. Now turning to guidance. We now expect revenue in the range of $1.56 billion to $1.60 billion, representing year-over-year growth of 38% to 41%. At the midpoint of $1.58 billion, this represents a $65 million increase from our previous guidance and 39% year-over-year growth. This increase reflects continued share gains in North American iCasino, sustained outperformance across Latin America and a well-managed World Cup period. For adjusted EBITDA guidance, we now expect it to be in the range of $245 million to $265 million, representing year-over-year growth of 59% to 72%. At the midpoint of $255 million, this represents a $15 million increase from our previous guidance and 66% year-over-year growth. This is inclusive of our plans to further lean into that efficiency by increasing our marketing investments in the second half of the year. We're pleased by the continued strength of our business. We're growing both rapidly and profitably, and we remain confident in our ability to deliver on our full year guidance. And with that, operator, we're ready to take questions.

[Operator Instructions] Your first call is from Bernie McTernan from Needham.

Just had a question on the World Cup customers that you were acquiring. Any thought -- I know it's early days, but any thoughts on the LTV of those customers maybe versus customers you were acquiring previously? And then I have a follow-up.

Yes, it's a good question, Bernie. I think you're right. It is probably too early to tell for sure. Certainly, you're going to have some players who are joining just for the cultural moment and the excitement around their country and their team. But I think we've proven in the past that in events like this, we can bring people in, get them excited about the platform and keep them around. We mentioned on the prepared remarks that we had really good success early on with cross-sell in Latin America over to the casino side, quite a bit more so than we did in the Copa America a couple of years ago. So we're really excited about that. But you're right, it's pretty early on that.

And then I just wanted to double-click on the marketing commentary in the second half of the year, now investing more than previously planned. Can you just dive into that a little bit more? Is that all Alberta or anywhere else that you're spending?

Yes. No, good question. I think as you already know, we've increased marketing pretty significantly this year. I think we're up for the whole first half, maybe it's around 25%, 26% so far. But I think as the data we've continued to share, the results are really, really strong out of our marketing teams and the strategies they're using. So we just feel like it makes sense to push harder. The player values are still really good. We've continued to push our cost to acquire players lower. So certainly, there's more spend because of Alberta and because of that launch a couple of weeks ago. But really, what we were referencing in the call is that we're going to push harder on spend in other markets where we see opportunities. And we're going to, like we always have, we're going to move quickly and be dynamic. So if something isn't working, we'll probably pull back. And at the same time, if other things are working really well, we're going to lean in further. So maybe just to put a number around it, which I'll go back to the fact that we're going to remain flexible, but maybe sequentially from Q2 to Q3, we might spend something like $7 million to $10 million more on marketing in Q3 compared to Q2. And that's inclusive of the Alberta launch.

Your next question is from the line of David Katz at Jefferies.

Maybe go to the next person, operator, and we can circle back to David.

Your next call is from Zach Silverberg at Wells Fargo.

In the press release and some of the management commentary, you mentioned that you continue to see meaningful long-term opportunities ahead of you guys to drive shareholder value. Can you maybe quantify or qualify some of that and provide some color on what those opportunities might be?

Zach, it's Richard. I think the 2 areas that I would just focus on clearly is that we have a large percentage of the population in Americas, North America that are not yet legal for online casino and Alberta just launching on July 13 and represents a really meaningful new opportunity for us. But I would also indicate is that within existing markets where we're operating today, I think because historically, our brand doesn't have the same high awareness as some of the other brands we compete with, there's a large percentage of the population in these jurisdictions that haven't really had their first experience with us. And when they do have it, it's a positive experience for the most part, which is why we've been able to deliver the type of results where we're growing share and getting exposure from new players to our platform for the first time in many cases. So I think we're really excited for the ability to us to continue to grow share in our existing markets. And also, naturally, we have these other 88% of the U.S. population, which today is not yet able to play online casino. So I think between those things and [ even bring the ] Latin America, all the jurisdictions down there that are legal and regulated that we haven't entered yet, we certainly are really excited by all the opportunities ahead of us.

Yes. And the only thing I would add to that is that's going to drive the top line, which is obviously key to the success. But as we have been doing for several years now pretty consistently, we'd expect to be able to get leverage over all of our different P&L line items as we continue to grow.

And just for my follow-up, maybe if you guys have any updated view or outlook on the potential legalization landscape. We've heard from one of your peers that they're expecting Virginia, D.C. Obviously, we know about Maine, Maryland. Maybe just any commentary on that would be great.

Sure. For us, each new online casino market is meaningful to us. So we're working hard, as we've said in the past, to try to educate legislators to try to improve the pace of legalization. We remain optimistic about the long-term outlook for iGaming and believe that additional jurisdictions will legalize over time. I think one of the key drivers is going to certainly be that reduction in federal support and some increased fiscal responsibilities for states over the next 2 fiscal years. It's going to create even more pressure on funding gaps that we think some reductions in major social programs in many states, including some of the very large population states like Illinois and New York, are going to create opportunities for a greater emphasis on new and sustainable sources of recurring revenue. So we believe that's going to drive the discussion around proven revenue-generating policy proposals like online casino legalization. So I think between protecting consumers and for the first time starting in October of this year, you're going to start to see some impact from some of these major social programs reductions. And so I think that's going to become real, and that's going to be in terms of deficits and gaps the states are going to have. And so we feel like it's a good time to have a momentum being built. So we feel -- in terms of specific states, I did note that BetMGM referenced a couple of states yesterday. I think Virginia clearly is one that's progressed further during the 2026 legislative sessions and each chamber passed its own authorization bill before it was not -- they failed to reconcile it before they adjourned, but there's certainly going to be another effort this next year. D.C., you referenced. Certainly, that's an active opportunity. Indiana, Ohio are other markets that we have an eye on and we're monitoring and being active when possible to try to accelerate some of the adoption opportunities there.

Your next question is from the line of Jed Kelly of Oppenheimer.

Just circling back on the MAUs. Are you seeing any change in the CAC or what's going on with the spending? And can you just talk about more where your North American MAUs is coming from? Is it more slots first? Or are you having more success with some of your sports-first customers that that might be a little more table game centric?

No. Good question, Jed. I think the reality is that our cost to acquire players has continued to go down. Most of our spend in North America has been in the markets that include iCasino. And a lot of that is slots-first type creative. Obviously, we welcome all kinds of players, and we're catering to table players as well. And clearly, we're still doing quite well in sports, but most of it is casino first and the cost to acquire players has continued to go down. And the player values continue to hold up as well. So it's the primary reason that we're going to be spending more in the back half because there's a lot of opportunity there.

And then just as a follow-up, when you look at the sports that are getting most of the prediction market share, tennis, I think, is doing about 2x the amount of baseball. Do you have any insight on what's going on there? And are you seeing certain pockets of your sports handle maybe down because it's going more to a sharper player or anything you're seeing in some of -- tennis in particular, if there's anything to call out?

Yes. I don't think we have anything to call out there that we've seen as a big change, but it's an interesting callout.

Your next call is from the line of David Katz from Jefferies.

I appreciate coming back around. It was a misunderstanding with a mute button. I just wanted to go back to the retention of these high volumes of players that you are capturing during the World Cup. I think, Richard, in your prepared remarks, you talked about the ability to cross them over to sports being 50% higher than Copa. But if we look out into the future, your ability to retain those people in your system over time, is there any perspective or any data you can give us to that end?

Yes. So I think it's challenging to have a great comparable to this event. The World Cup, as we all know, was in the right time zone this time around for people in the Americas to watch it and engage in a lot more meaningful way. Our business has changed dramatically since the last World Cup, even since the Copa, which was more of a Lat Am event for us. In North America, we had really good engagement. It was more about a reactivation and using the World Cup as a pop culture event to engage people across the platform. And in Latin America, it was a really big player acquisition opportunity for us, and we're really pleased with how that turned out. One thing I'll point out is that after Copa, even though I just mentioned it's not the greatest comparable because we're so much larger at this point, the product is better, but we saw a nice inflection after Copa in our casino volumes down in Colombia. And so we're certainly hoping to be able to capitalize on a similar situation this time around. So I think good early signals, but too early to give too much detail.

Understood. And if I can ask one follow-up from a longer-term nature. I noticed some of the other Latin American countries that you've listed as potential future opportunities, at least the last couple of quarters in your deck. How far away or what are the gating factors for those to become a reality?

Yes. Thanks for that question. So as you can imagine, we're very thorough here, and we're very focused on making sure that we pick the right markets to enter, and we do so in the proper way where we're prepared for success. And so there are markets down there that, as you know, are legal and regulated that are exciting, but we have a lot of growth, as you see, in our existing markets, and we have to be very thoughtful how we invest in additional markets. But there are thoughts and efforts going into additional expansion in other markets down there. But certainly, it's not something we're prepared to share at this time.

Your next call is from the line of Dan Politzer from JPMorgan.

First, I want to touch on the prediction markets, the application you filed with the CFTC. I know you mentioned that you don't intend to lean into the sports area here. But I guess, can you talk about maybe what does this allow you to do specifically? Do you envision yourself as a taker or maker? Is this just a way to give yourself optionality? How are you thinking about this in the medium or longer term?

Yes. We do view the applications as a way to preserve our strategic flexibility to maintain our optionality, as you just mentioned, and ensure that we're not caught flat-footed should the market or regulatory environment evolve in a way that becomes relevant for our business. So it's really just being prepared and preserving optionality.

And then can you talk about maybe what you're seeing in terms of the competitive environment within iGaming? Obviously, you've been acquiring a lot of users. I know that you're seeing, it sounds like, strong LTVs in CACs. But in Michigan or any other states, have you seen any incremental competition or even wallet impact from prediction markets?

So I think on your last piece on the prediction markets, I think the answer is we don't believe so. Obviously, it's hard to know for sure. I think on the competitive intensity, listen, it depends on the number of operators in a given state or market in North America, of course. But there's really good competition, and we've had to deal with that for a long time. There are some new competitors that have entered in a couple of our markets, which certainly increases the competition. And we've had some of our competitors who have, I think, recognized that iCasino is a great place to focus on and have talked about putting more efforts there. But all the while that that's been happening, we've been consistently growing market share for, I think, 4 straight quarters here. So we're very proud of that.

Your next question is from the line of Ryan Sigdahl from Craig-Hallum Capital Group.