Rush Street Interactive, Inc. Q4 FY2024 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive Fourth Quarter and Year End 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded today, February 26th, 2025. I would now turn the call over to Kyle Sauers, Chief Financial Officer. You may proceed.

Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter and year-end 2024 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. In particular, we will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation, and amortization, share-based compensation, adjustments for certain one-time or non-recurring items, and other adjustments that are either non-cash or are 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 fourth quarter and year-end 2024 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. We will first provide some opening remarks and then open the call to questions. And with that, I’ll turn the call over to Richard.

Thanks, Kyle. Good afternoon and welcome to our fourth quarter 2024 earnings call. I'd like to begin by expressing my gratitude to the entire RSI team for their outstanding efforts. Their dedication and hard work have been instrumental in our success. I couldn't be more proud of the incredible team we've built over the years. Your dedication is a key reason we excel in such a competitive industry. As I reflect on our performance in 2024, this has undoubtedly been our best year ever. We've not only set records in revenue, profitability, cash flow, margins, user accounts, and many other key KPIs, but we also made significant advancements in our technology platform, strategic initiatives, and customer-centric experiences, demonstrating an ability to execute while scaling effectively. Most importantly, we believe we have positioned ourselves for success in the years ahead. We concluded the year with a record-setting quarter in both revenue and adjusted EBITDA, exceeding the high end of our most recent guidance. For the year, we grew revenue 34%. While this top-line growth was impressive, what stands out was our ability to drive 36% of that growth to the bottom line. We expanded gross margin by over 200 basis points, reduced marketing expense compared to last year, and gained leverage over our G&A costs. As a result, we saw an 11-fold increase in adjusted EBITDA for the year. Our long-term focus and expertise in creating differentiated and high-quality user experiences are paying off. We have simultaneously achieved our growth and profitability targets across our entire portfolio, while increasing contributions from all geographies, both iCasino and sports, from our newer and more mature markets. As we take stock of our progress, our focus on three key principles has positioned us for long-term success. First, our customer-centric approach prioritizes a world-class user experience. This is easier said than done. It requires a clear vision, in-house technology, innovative product teams, seasoned operations teams, and deep user insights. Our players notice and appreciate how we take care of them, from exceptional customer service and reducing friction in their journey to our unique real-time rewards system. This proprietary system delights our players in unexpected ways, including offering extra chances to win through fun and engaging in-house developed content that delivers secondary gaming experiences not available elsewhere. Second, our continuous investment in in-house technology supports diverse and innovative product features. These new features often require a deep understanding of our users and sophisticated development. Our commitment to technology will ensure we stay ahead of the curve. Third, as is evident in our results, we leverage operational efficiency to scale and enhance margins. This approach has driven our recent strong results and underscores our commitment to becoming a leader in online gaming across the Americas. Regarding the quarterly results, as investors evaluate our performance, there are a few takeaways worth pointing out. As referenced earlier, we've experienced broad-based growth. Top-line performance was strong once again, with strength across products. Both online casino and online sportsbook each grew over 27%. We are also continuing to experience strength across geographies. North America online grew 29%, while LatAm grew 54%. This growth was in the face of player favorable NFL outcomes in Q4, reinforcing the consistency and diversification of our revenue streams. Underlying these results are strong trends in both player accounts and player values. For the fourth quarter, North American MAUs were at an all-time company record of 205,000, up 28% year-over-year, marking another consecutive quarter of accelerating growth. ARPMAU in North America increased to $346. The fast growth in players, while maintaining our leading ARPMAU level is a true testament to our underlying strategic focus on user engagement and retention. In Latin America, we continued to experience high levels of growth, with our MAUs increasing year-over-year by 71% to 348,000. This increase highlights the effectiveness of our localized strategies and teams and our ability to attract and retain users. Our ARPMAU in the region was $39. When measured in local currency, this increased both sequentially and year-over-year. Our marketing efforts continue to yield positive results, building on the strong foundation laid in previous quarters. Our MAU and ARPMAU trends are being driven by our targeted and data-driven marketing efforts. Our campaigns have effectively leveraged a mix of traditional and digital channels, allowing us to reach a broad audience and attract new users at a very solid pace. While we made tremendous improvements in our marketing efficiency over the past couple of years, we continue to improve and find new strategies to maximize effectiveness. Overall spend continues to deliver strong results, as evidenced by our continued momentum in MAUs and ARPMAUs. We are closely monitoring the 2025 legislative sessions in several US states and Canadian provinces for potential online casino legalization and expansion opportunities. We cannot predict specific outcomes, but there is a growing recognition that online casino gambling is already happening in these places. And across the United States and Canada, through offshore, unregulated, and unlicensed sites, including online sweepstakes casinos that offer real money games that look and feel exactly like regulated sites but pay no taxes and lack player safeguards and protections. Regulation is a proven way to protect players and generate significant tax dollars to fund critical government budget initiatives like education, health care, and other important programs. We remain dedicated to delivering value to our shareholders and providing an unparalleled gaming experience to our users. The success we experienced in 2024 sets a strong foundation, and we are optimistic about maintaining our strong momentum into 2025. Our focus will remain on delivering consistent performance and driving value for our shareholders. With that, I'll turn the call over to Kyle.

Thanks, Richard. Fourth quarter revenue was $254.2 million, up 31% year-over-year, leading to full year 2024 revenue of $924.1 million, up 34% year-over-year. Our growth in the quarter and the full year was well balanced across both iCasino and sports and also across geographies. In the fourth quarter, gross profit margin increased to 36.5%. We continued the improvement in our revenue diversity and drove higher revenue growth in our more profitable markets. For the full year, gross profit margin was ahead of plan at 35.0%, an improvement of over 200 basis points versus the prior year. We achieved sequential improvement in gross margin in each quarter throughout the year. For 2025, we expect our gross margins to continue to improve as the revenue mix continues to improve and we execute on cost improvements. On the marketing side, we continue to stay disciplined and refine our spend. We are spending more in markets where we see better opportunities for turns, and we will continue to be flexible with those investments. In fact, in Q4, we increased marketing spend once again and had our highest spend in the last seven quarters, while importantly, still achieving leverage over our marketing spend and delivering another record EBITDA quarter. Fourth quarter marketing spend was $43.1 million or 17% of revenue compared to 17.8% of revenue last year. For the full year, adjusted advertising and promotion spend was $155.8 million, down from $158.4 million last year. We see the efficiencies evident in our growing active user count and getting a larger share of wallet from our players measured by increasing ARPMAU. Looking ahead to 2025, we expect you'll see continued discipline from our marketing efforts. And while we won't be shy about making investments when we see the opportunities, we do expect to get incremental leverage over our marketing spend again in 2025, so marketing spend that grows at a lower rate than revenue for the year. G&A for the fourth quarter was $19 million or 7.5% of revenue compared to 8.4% last year. And then for the full year was $74.8 million or 8.1% of revenue, which compares to 8.8% last year. For 2025, we expect to get some modest leverage over our G&A expense and come in less than 8.1%, similar to years past, much of the run rate increase in G&A will come in the first quarter as we have our annual compensation adjustments for employees. Our adjusted EBITDA for the fourth quarter was $30.6 million, reflecting a significant increase of over 2.5 times compared to the prior year. For the full year, adjusted EBITDA of $92.5 million increased more than 11-fold compared to the prior year. In 2024, we made a tremendous leap in obtaining benefits from the increasing scale in our business. We were also able to demonstrate a strong flow-through from earnings to cash flow, highlighting what we see as a very high quality of earnings. We ended the year with $229 million in unrestricted cash and no debt, an increase of approximately $61 million for the year. During the fourth quarter, we did not buy back any shares under our repurchase authorization. We are initiating full year revenue and adjusted EBITDA guidance for 2025. We currently expect revenue to be between $1.01 billion and $1.08 billion, which represents $1.045 billion at the midpoint, up 13% year-over-year. For the full year 2025, we currently expect adjusted EBITDA to be between $115 million and $135 million, which represents $125 million at the midpoint, up 35% year-over-year. Our guidance ranges for revenue and EBITDA include a range of potential business impacts from the recent tax changes in Colombia with the assumption that the tax lasts through the end of the year. As you saw in our 8-K from last week, the Colombian President has issued an emergency decree to, among other things, levy a tax on players for deposits made into online betting accounts. There is currently a review of the constitutionality of this decree, the applicability of the tax, and the temporary timeframe over which it can be administered. Including the court's automatic review that is expected during the next few months, we anticipate several strong legal challenges on constitutionality. If the tax were to be repealed or shortened, we would expect to see upside to our guidance ranges. In addition to the Colombian tax, other considerations that help bridge the difference between the low and high ends of our revenue and EBITDA guidance include the growth of the markets that we are in, our ranges of continued success in attracting, and monetizing existing players, our varying levels of marketing investment, and potential currency movements in our non-US markets. And as a reminder, our guidance includes only those markets that are live as of today. With that, operator, please open the lines for questions.

Thank you. We will now begin the question-and-answer session. The first question is from the line of Dan Politzer with Wells Fargo. You may proceed.

Hey, good afternoon, everyone. Thanks for taking my question. First, just a follow-up on the guidance. Kyle, you mentioned that it does include Colombia. Is there any way to quantify that what's being baked in right now? And then separately, along those same lines, as you think about that kind of midpoint of 13% revenue growth for 2025, is there any way that you could kind of further unpack that between Latin America and US or even within the US iGaming and how you're thinking about the growth for 2025? Thanks.

Sure. I'll begin with the situation in Colombia to clarify that both ends of our revenue and EBITDA projections take the VAT impact into account, assuming it remains in effect until the end of the year. It's important to note that if the tax is reversed or reduced, it could positively affect both the lower and upper ends of our guidance. Regarding our expectations for Colombia, we are just a few days into this situation, and we are assessing the potential impact as we proceed. At the lower end of the guidance, I would consider that a rather unfavorable outcome for Colombia for the year. Conversely, the higher end suggests a more positive scenario given the circumstances. For the other 85% of our business concerning revenue, we anticipate growth in nearly all our markets, with a significant portion of our overall growth expected to come from markets that include iCasino. This is where we have been focusing our marketing investments, seeing higher player values, providing strong product differentiation, and continuing to experience considerable success in Q4 and at the start of Q1.

Got it. That's helpful. And then just for my follow-up, obviously it's been a pretty heavy headline cycle in terms of taxes and proposed increases for sports betting and iGaming. I guess, is your guidance baking in anything along those lines? And I guess, more broadly, how do you think about that risk across the myriad of states that have proposed something in some form versus maybe the upside risk of a past the legalization for iGaming in some of these states?

Yes. I'll address the guidance aspect. Apart from Colombia, where we have assumed the VAT deposit tax for the entire year, we have not factored in potential tax changes in other markets where we operate. Similar to our approach with new markets that may launch later this year, we are not including any proposed tax legislation in our guidance. If any changes were to be approved and enacted in the future, we would certainly take that into account for our future guidance. However, the guidance we currently have does not reflect any tax changes. Now, I’ll let Richard comment on the landscape.

Sure. Hey Dan. On the subject of tax increases, there's no doubt a substantial tax increase is a near-term setback, but we view it as a clear display of the need for states to raise taxes. And while states are looking at the online gaming industry to raise funds, it cuts both ways. And in some ways, including on a net-net basis, we believe it's actually really beneficial for our industry and for us, especially if it accelerates expansion of opportunities. And so we know that the legalization of online casino is one of the most attractive and proven options to raise funds. And let's not forget that 88% of the U.S. adult population can't play regulated online casino today. It's a large population available for us to sort of be able to work towards legalization efforts. So while in the near term, you might have a couple of hiccups, ultimately, we think that the net-net is positive for us as you start to see the needs for the states accelerate the revenue generation and online gaming can represent a very substantial way for them to achieve their goals.

Thanks. Makes sense. Thanks so much for all the detail.

Thanks, Dan.

The next question is from the line of Ryan Sigdahl with Craig-Hallum Capital. You may proceed.

Hey. Good afternoon, guys. Really nice results. I want to stay on Colombia for a minute. So I know it's early. I know it's the first few days. It looks like at least one of your competitors is passing on the cost directly to the consumer to not a lot of fanfare there. Many others are straight-out absorbing the cost. RushBet appears to be somewhere in the middle, kind of passing along but offering a VAT bonus to the consumer. I guess thoughts on how you think this is working thus far in the first couple of days from a retention standpoint, competitive standpoint? And then if you're willing to kind of how much of that cost you think you can mitigate with the strategy?

Sure, I'll begin and then Kyle can add to the mitigation aspect. The competitors, like us, are trying to determine the most effective way to manage the situation. There are various approaches, some more sophisticated than others. I'm feeling very positive about our situation due to our technology and the capabilities of our platform, which allow us to implement common functions like segmentations to ensure the right players receive bonuses. Owning our platform gives us the flexibility to be agile and strategic, particularly with our bonus strategies. We've already seen some operators shift their approaches significantly. We're focused on staying the course while making adjustments and monitoring circumstances to prioritize the players that are most important to our business. It's still early, and it's challenging to provide too much detail since things are so dynamic. However, I am confident that we have the best team in the industry and a high-quality platform that will enable us to navigate this better than our competitors.

Yes, regarding the mitigation, as you pointed out, it's very early. Things are performing well down there. We've already implemented some immediate actions. You're correct that we're adjusting our approach to promotions. We and others in the industry can reduce marketing expenses, and we are doing so. We're also looking to our vendor partners to help absorb some of the impact. Many of our costs are tied to revenue. As Richard highlighted, we believe we have some advantages because we own our own platform and our proprietary bonus engine, which allows us to implement strategies differently than our competitors to attract and retain players. We are well-capitalized and have a strong player-friendly brand down there. Therefore, we are optimistic that things will turn out better than expected, and everything is holding up quite well so far.

Great. For my second question, just want to move over to Delaware specifically. So really impressive results; basically grew almost every month sequentially up, up triple digits, et cetera, all the way through January of last month. So I guess, as you think about that market, it's continuing to outperform, is 2025 the year of let's continue to lean in and invest in that market? Or is it the year where you can start to really drive margin even better? Thanks.

Yeah. So you're right. I think the data came out for January not too long ago. We've continued to have really strong sequential growth. As you point out, almost month after month like clockwork. And so we're very, very proud of that. We reached a GGR run rate over $125 million in the fourth quarter, and then it grew again in January. So we've got a lot of opportunity still there. And I think from a margin perspective, I think our margins are more fixed there from an operating perspective, not completely, but fairly fixed. So it's going to be more about driving new players and player monetization, which we think there's a lot of room left to grow there. Obviously, our growth rate in the early part of the year from Delaware is going to be more significant than it's likely to be later in the year, just given the launch date right at the end of 2023, but a lot of opportunity still left there.

Very good. Thanks guys. Good luck.

Thanks, Ryan.

Our next question is from the line of David Katz with Jefferies. You may proceed.

Good evening. Thanks for taking my question. I wanted to just raise the issue of sweepstakes, getting a lot of discussion, at least among us. Curious what your perspectives on it are, what it can lead to, what impacts it's having? And any thoughts to that end, I think, would be welcome and helpful. Thanks.

Hi, David. I touched on this a bit earlier. At the end of the day, there's a product that operates like an online casino but is unregulated, untaxed, and unprotected, which is increasingly dominating markets across the country. It's freely available, leading to a surge of unlicensed activity that surprises many, especially when land-based casinos are more focused on opposing regulated online casinos rather than addressing the unlicensed options in their states. This is definitely having an impact, regardless of the research that people may present. Ultimately, this product attempts to bypass gaming laws at the state level. I strongly believe there should be enforcement to create a fair playing field for all participants, ensuring that online casino gameplay is regulated, taxed, and properly protected. Many minors are using these unregulated products, so it is in the industry's interest to push for enforcement and to bring these activities into proper regulatory frameworks. The growth of this unregulated activity highlights the need for states to legalize online casinos to meet tax requirements and protect consumers. There are compelling arguments for accelerating legislation around online casinos to tackle the current issues we face.

Thanks for that. And I wanted to just follow up on the sports betting side. We spend a ton of time talking about sort of product mix and the different kinds of bet offerings, etc., and their abilities to drive margins. I'd love your updated thoughts on things such as in-play betting and just general commentary around your product mix. And that's it for me. Thanks.

Sure. I mean in-play betting is certainly always known to be an important category of sports betting. You see in European markets what every year for almost a decade or two, you've seen improvements, increases in volume and frequency of in-game betting. So certainly, for us, we've invested in that from the very beginning, and a lot of the sports that are very fast-paced that appeal really well to in-game betting like soccer and tennis. We've really achieved some strong results. In fact, we have some podcasts in that area that really drive a lot of volume of traffic and interest in that category, and we've really targeted that audience, knowing that some of our competitors have focused more on historically on the daily fantasy didn't really have the same sophistication in terms of a built-up audience in the tennis and soccer category. So we did focus and have focused on that. I think product mix is critical. But clearly, props are also very popular. And as you've also seen from us and the rest of the industry, single-game parlay has shown they have some staying power, and we've put a lot of effort into improving our experience for our players in that area. But a lot of these innovative promotional tools that we have built that are unique to the industry that I referenced earlier have not been available to play anywhere else are really making a difference for us. So we're continuing to invest in those types of experiences knowing that, at the end of the day, the players realize when you're doing something unique and different for them, and they like something you're doing that isn't available anywhere else, they're going to stay loyal with you, and that's what helps drive our player counts and player values.

Thanks very much. Appreciate it.

Thanks, David.

Next question is from the line of Bernie McTernan with Needham & Co. You may proceed.

Thank you for taking my question. I want to circle back to New Jersey and discuss the impact of potential tax increases. Typically, when there's tighter regulation or higher taxes for Internet companies, larger players tend to increase their marketing efforts. Given your position in New Jersey, how do you plan to operate under a higher tax scenario? Will you reduce your marketing efforts? Additionally, regarding future iGaming and iCasino regulations, it's been quite some time since we've seen states move towards legalization. Do you see any catalysts for this change? We understand the budget deficit and revenue needs, but why has the pace been so slow over the last two years? Thank you.

Jed, maybe I'll take the New Jersey piece first. I think it's probably too early. I mean we obviously have a really strong brand in that area of the country. We've built a really solid customer base. We're well-capitalized. I think we have to evaluate the situation and look at what's happening with the competition. I don't think this level of tax that's being talked about means you've got to dramatically change the way that you're marketing, but you would need to mitigate some of that. So I think it's probably too early for us to say what we do from a competitive standpoint there. And I'll let Richard talk about the kind of the iCasino legislation.

Yes, there are more efforts being put into this than ever before. If you listen to the earnings calls from our competitors recently, you'll notice that everyone is focused on it, which is a significant change from a couple of years ago when there was little mention of efforts to legalize online casinos, with the focus primarily on sports betting. As profits from online casinos have increased and the tax base has grown, there is now much more emphasis on this category. This has led to better alignment among various groups in the industry that are working together towards improving legalization in more markets. However, it's crucial to note that online casinos are already operating in every state in the U.S. without proper tax or regulation, which highlights the need for consumer protection and taxation. Improvements in places like Alberta are promising, with legislative sessions expected to progress in this area. There are also positive developments happening this week. We're optimistic about Alberta progressing further. States are beginning to show pressure on their budgets, particularly as federal funding has decreased. They are seeking additional means to generate income and taxes, and online casinos present an excellent opportunity for that, especially in states where sports betting is already legalized and regulated, making it an easy addition. I anticipate that we will see more movement in this area in the coming year or two due to these factors.

Great. That's helpful. Do you think that message is starting to resonate with the governors?

I think it's starting to more really now you're starting to see the pressure. In fact, the pressure, as I said earlier, for states to start to look for gaming to increase the taxes from our industry is sort of the signs that other states and governors are also looking for ways to increase revenues, and this is an easy way to do it. So I do think that message is starting to percolate. And I think the need is for state revenues to increase is more than it has been in the past years.

Great. Thank you and nice job.

Thanks, Jed.

The next question is from the line of Chad Beynon with Macquarie. You may proceed.

Hi. Good afternoon. Thanks for taking my question. Richard, Kyle, I wanted to ask about M&A opportunities and buybacks. So given the cash that you have at the end of the quarter and the outlook for 2025, this will obviously continue to build. Can you kind of help us think about maybe the magnitude of buyback opportunities? And if you're not participating there, is it because you're in the market looking for tuck-in acquisitions on the M&A side? Thanks.

Sure. Kyle, why don't you take the buyback, and then I'll take the M&A part of it.

Yes, I appreciate the question, Chad. I think we're comfortable with our cash position, and it should continue to grow nicely. However, I wouldn't link our buyback activities to any indication of M&A activity or its timing. While they can impact each other, I don't see a direct correlation. We did not buy back any stock in the fourth quarter after our authorization, but we will remain opportunistic and monitor the situation. Despite the short-term challenges from the temporary tax in Colombia, we believe we provided strong guidance. We are confident in our business trends and are focused on driving shareholder value, which may include returning capital through share buybacks. I'll let Richard discuss the M&A landscape.

Yes. I think we're actively assessing and considering options all the time. It's what you have to do in our business, and we have a very clear focus on sort of line of sight that we have a profitable business in our company. We do have opportunities to improve it in Latin America potentially. We're looking at options, bolt-on opportunities, anything that can add value for the shareholders. Ultimately, having a $229 million now of unrestricted cash and growing our cash flow, great balance sheet gives us a lot of flexibility and a lot of options. And our only focus is on what can we do to invest this capital to deliver the best return for our shareholders. So we do consider all the M&A options, and we have an active team that's always considering different variations and possibilities, I'll say.

Great. Thank you, both. And then on the guidance, not sure if you guys build top-down or bottom-up. But as we think about the sports betting hold improvements, given the product features that continue to drive higher hold, is there an expected sports betting hold increase that's implied in your guidance for 2025? Or are you not building it that way, and you're simply looking at the MAUs and kind of driving a certain amount of revenue out of those customers? Thank you.

Sure, thanks. It's a mix of factors. In our guidance, we've planned for various scenarios, including both. I want to highlight that we improved our sports hold in 2024, and we actually saw an improvement in our sports hold in the fourth quarter of this year compared to the previous year, despite the NFL outcomes we experienced. We made progress as a company in both North America and Latin America, which we're quite happy about. There have been numerous product enhancements and better mix, so we anticipate further hold improvement in 2025 over 2024.

Thanks, Kyle. Nice quarter, guys.

Thanks, Chad.

The next question is from the line of Jordan Bender with Citizens. You may proceed.

Good evening, everyone. Maybe to just follow up on the outlook. The implied flow-through for the year in 2025 is below what you saw in 2024. And from what I understand, Colombia is a pretty variable business model, so that shouldn't hurt too much to the downside. So, is there anything to call out in terms of why that's the case? And is it kind of just conservatism baked into the guidance? Thank you.

Yes. Thanks, Jordan. So, it's a good point. The midpoint of our guide this year flow-through is around 27%, and that compares to what was 36% last year. And so just maybe to think about last year, 2024 benefited from an actual absolute dollar decrease in marketing spend compared to 2023. And we reduced marketing nicely, but still drove that 34% revenue growth. In 2025, we have plans to increase marketing spend. We still plan to get leverage over the marketing line, but that difference is the primary driver of the flow-through between 2024 and 2025.

Great. Thanks. And then a lot of the outlooks from your competitors include commentary around promotions continuing to come down. So, as we see the competitive environment continue to ease around you, are you looking to any states that you're not currently operational as the competitive environment lessons ahead of you?

Jordan, are you asking if we have previously not entered the market from a sportsbook-only perspective and whether we are reconsidering that approach? Is that the main point of your question?

Yes. As the competitive environment in the OSB-only states you're not in starts to ease, does it make it any more attractive for you guys to go operate there?

Yes. We consider several factors for each jurisdiction, such as tax rates and entry costs, as well as the potential for iGaming in the future. In examining the competitive landscape, it's clear that although there may be fewer competitors in certain areas, the companies that are performing well are still actively investing in these markets. We continuously evaluate markets we have yet to enter to determine if we should pursue them. However, unless we see a significant change in outlook, such as a boost in iCasino opportunities in a particular jurisdiction, I don’t anticipate that it will enhance our current opportunities, as we have numerous other promising prospects, including various Latin American markets. Therefore, we are not inclined to pursue a sports betting market late in the game if we don't see strategic long-term value beyond the sports betting sector.

Great. Thank you very much.

Thanks, Jordan.

The next question is from the line of Joe Stauff with Susquehanna. You may proceed.

Thank you. Hi there Richard, Kyle. On the North American growth outlook in 2025, I was curious about how you think about user growth versus the growth in ARPMAU. Is it fair to assume that you would think that ARPMAU is going to grow faster than user growth? And then almost a related topic, I was wondering if you can comment just on the level of penetration, so to speak, within iCasino, it's a pretty finite market right now. You guys have been operating and really doing well in all those states. And I'm wondering, is the opportunity set to grow and to expand the penetration rate of adults that really choose to use iCasino, where are we kind of in that continuum?

I can begin by saying that I expect the growth in MAU and ARPMAU to be influenced by both factors. Looking at our player counts for 2024, we saw a 28% growth in North America this past quarter, which was the highest for the year. While Delaware contributed to those numbers, we still experienced significant user growth even without it, continuing a trend of growth for almost two years. The increase in users has largely come from iCasino markets rather than sports markets. The value derived from our MAU and ARPMAU growth will depend on whether we are attracting more casino players compared to sports players, as casino players tend to be more valuable. Therefore, I see potential for both aspects to contribute to our revenue growth in a balanced manner.

I could discuss the maturity of the markets. Each state exhibits a different level of maturity. New Jersey was the pioneer for iCasino, while Delaware is the most recent. In European markets, where I have past experience, there has been two decades of growth in these regulated markets, marked by consistent expansion. We are witnessing similar trends in the U.S., where all markets are still advancing, and even the most established market in New Jersey continues to thrive at unprecedented rates. There remains a significant portion of the population in many markets that has yet to experience iGaming. As digitalization increases, more individuals are likely to explore and take advantage of digital gaming. Land-based casinos are maintaining their revenue levels, while states will increasingly gain from the growing iGaming player bases that participate in both online and land-based gaming. Additionally, every year, new players reach the legal gambling age, contributing to an expanding audience. Furthermore, existing populations in these states continue to try these activities for the first time. Therefore, looking at the historical growth in European markets, it is not surprising to see consistent growth in the U.S., and I anticipate this trend to continue, drawing from my experiences in European markets prior to the U.S. market opening.

Yes. It feels like all the analysts that have covered this industry have kind of underestimated their estimates on the TAM, and everyone has to keep raising them time after time. So maybe everyone's got it right at this point, but it sure seems like there's opportunity for that to continue to grow.

Yes. And I appreciate that response. And I guess I was wondering maybe for part 3 of the question is like there certainly was a reacceleration in iCasino growth in the second half versus the first half. And I'm wondering, if you can comment on reasons why you think that is in aggregate. I'll leave it at that.

Yes, Joe, we can focus on our own performance, and as you've noticed, we've experienced significant growth. I believe we are continuously improving in all aspects, launching impressive new product features and innovations. Ultimately, it's straightforward: it’s about increasing player counts and enhancing player value, and we've successfully achieved both. By doing this, you can effectively grow your business. This is accomplished by providing an exceptional user experience. Therefore, we concentrate on execution and the elements we can control, which aligns with what I just outlined.

Thank you, guys.

There are currently no questions registered. The next question is from David Hornthal with Private. My apologies. It looks like the last question was our last question. I would now like to pass the conference back over to Richard for any closing remarks.

Appreciate it. Well, thank you again for joining us today. We look forward to updating you on our progress when we share our first quarter results in the spring.

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.