Rush Street Interactive (RSI) said it still expects to achieve its longer-term earnings targets despite posting an increased net loss and negative adjusted earnings before interest, tax, depreciation and amortisation (EBTIDA) during the second quarter and first half.
Speaking after the business published its results for the two operating periods, RSI’s chief executive Richard Schwartz said that the operator continues to move towards becoming profitable.
Schwartz said RSI experienced profit across six of its markets during the second quarter of its 2022 financial year, with the states of New Jersey, Pennsylvania, Illinois and Michigan, along with Colombia in South America, being profitable in the quarter. In addition, West Virginia also turned profitable after only four full quarters of operation in the state.
“We are continuing to build a global business,” Schwartz said “With the recent launches in Ontario in Canada and Mexico, we are now live in a total of four countries. This gives us a diverse set of growth opportunities.
“With our continued growth in both the United States and international markets, we are well-positioned to achieve our goal of adjusted EBITDA profitability for the second half of 2023.”
Rising costs
Looking at RSI’s results, revenue for the three months to June 30 was 17.0% higher year-on-year at $143.7m, a new all-time-high quarterly total and the 13th consecutive quarter in which RSI has set a new record.
However, operating expenses also increased by 25.6% to $169.5m. Costs of revenue were the largest expense, up 23.8% to $104.9m. After also including an additional $223,000 in other costs, this left a pre-tax loss of $26.0m, compared to $12.2m last year.
RSI paid $2.3m in income tax, leaving a net loss of $28.3m, compared to $14.0m in Q2 2021. RSI noted that $20.0m of this loss was attributable to non-controlling interests, with only $8.3m attributable to RSI. However, the operator also said adjusted EBITDA was negative $18.6m, compared to negative $6.6m last year.
Turning to the first half, revenue was 18.8% higher at $278.7m during the six months to the end of June.
Operating costs increased by 29.3% to $354.5m, which, when coupled with $445,000 worth of other expenses, resulted in a pre-tax loss of $69.3m, much wider than the loss of $11.5m last year.
After paying $4.3m in tax, this left a net loss of $80.6m, much wider than $14.0m in 2021. Some of $57.6m of which RSI said was attributable to non-controlling interests, with the remaining $23.0m for RSI.
It also reported negative EBITDA of $62.0m, compared to negative $21.7m in H1 of 2021.
Meanwhile, based on its performance both in Q2 and the first half, RSI lowered the upper range of its full-year guidance. The operator now expects revenue to amount to between $600m and $630m, with the midpoint of this range at $615m representing a 26.0% year-on-year increase on $488m in 2021. Its previous guidance had been between $600m and $650m.
“Looking forward, we are confident heading into the back half of the year and what it holds for RSI, as many of our recently launched markets will be entering their first full football and soccer seasons,” Schwartz said.