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RSI names Schwartz as new chief executive, cuts net loss in first half


Rush Street Interactive (RSI) has appointed its co-founder and president Richard Schwartz as its new chief executive, while the online casino and sports betting operator also revealed that a 134.1% rise in revenue in the first half led to a significant drop in net loss.

Schwartz has been promoted to the new role with immediate effect and will also join RSI’s board of directors.

Having founded RSI in 2012, Schwartz served as president since inception, overseeing the product, operations, business development, regulatory compliance and legal functions for the operator.

Prior to this, Schwartz started and led the interactive business for WMS Industries, now Scientific Games, and before joining the gambling industry, was an executive at Telecom Italia Lab USA.

Greg Carlin, who previously led RSI as chief executive, moves into the role of vice chairman.

“I am honored to lead RSI at this time of tremendous growth for our company and industry and am humbled by the trust that Greg and the board have placed in me,” Schwartz said.

“Greg has positioned RSI for success and our opportunities continue to expand, from new market launches to innovative product offerings and strategic marketing programs.”

Carlin added: “Richard has been a key partner in building RSI’s award-winning proprietary technology platform and online operations. His deep understanding of the online gaming space and passion for our business will be critical in continuing to drive value for our shareholders for years to come.”

Meanwhile, RSI published financial results for the first half of its 2021 financial year, during which revenue increased 134.1% year-on-year to $234.6m.

The large increase was primarily down to the impact of the novel coronavirus (Covid-19) in the corresponding period last year, which saw sports betting options severely limited as almost all sports were cancelled or postponed from mid-March due to the pandemic.

Covid-19 also led to the closure of retail sites in H1 of 2020, meaning players were limited to online gambling in the second part of the period.

The six-month period to June 30 saw RSI accumulate $274.1m in operating costs, up 67.4% on last year as the reopening of retail and the return to a normal sports calendar saw RSI spend more on operations.

While operating loss improved from $63.4m to $39.5m, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell from $4.7m in 2020 to a loss of $21.7m this year.

However, RSI did benefit from $28.0m in other income, primarily from $41.8m in changes in fair value of its warrant liabilities, but this was partly offset by $13.7m in the change in fair value of its interest liabilities.

This resulted in a pre-tax loss of $11.5m, a significant improvement on $63.5m last year, while after also accounting for $2.6m in tax payments and an $892,000 loss from foreign currency translation, comprehensive loss was reduced from $63.8m to $14.9m.

RSI noted that $10.9m of this loss was attributable to its non-controlling assets, with only $4.0m in comprehensive loss attributable to the operator itself, compared to $63.8m last year.

Turning to the second quarter and revenue was up 88.9% year-on-year to $122.8m, as the operator felt the benefits of a traditional sports betting calendar and near-normal retail activities.

Operating cost in the three months to June 30 were up 16.8% to $135.0m and while RSI saw operating loss improve from $50.6m to $12.2m, adjusted EBITDA declined from $3.7m to a loss of $6.6m.

RSI only noted $17,00 in interest expense for the quarter, which meant its pre-tax loss also reached $12.2m. The operator paid $1.8m in tax and accounted for $268,000 in foreign currency translation, which left a comprehensive loss of $14.2m, compared to $50.5m at the same point last year.

Again, RSI said $10.4m of this loss came from non-controlling assets and the comprehensive loss attributable to the operator was much lower at $3.8mm, an improvement on $50.5m in 2020.

“We are very pleased with the continued execution of our business strategy and remain focused on providing a premiere user experience for our customers,” Schwartz said. “In addition to successfully growing revenues in existing markets, we have made significant progress in securing access opportunities to new markets.”

RSI said its performance in the first half led it to increase full-year guidance, with revenue for the 12 months to December 31 now expected to reach between $465m and $495m, up from a previous forecast of between $440m and $480m.

At the midpoint of this range, revenue of $480m would represent a 72% year-on-year rise when compared to $278.5m in 2020. This, RSI said, reflects its strong first half 2021 results and anticipated growth in recently opened and existing markets.