Browse articles by topic

RSI to prioritize investments as net loss widens in FY22


Rush Street Interactive (RSI) said it will continue to be “selective” with investments after the group reported an increased net loss for its 2022 financial year.

Shortly after the third quarter, RSI said it had become more “disciplined” and “efficient” with its marketing spend, with the aim of targeting markets in which it could experience the highest returns.

While marketing spend increased in the final quarter of the year, chief executive Richard Schwartz said the operator remained committed to a more selective way of spending, with the idea of prioritizing investments in certain areas.

“Looking forward, we remain disciplined in our approach,” Schwartz said. “We see this in our results. Marketing efficiency as measured by our cost to acquire players improved by one-third in the second half compared to the same period last year.

“We are data-driven and focused on what we get for the spend. We continue to focus on earning and retaining customer loyalty by treating them well, being thoughtful and by leveraging our development expertise to create seamless experiences and reduce friction at every possible touch point.

“We will remain efficient in both existing and any new markets we enter. We have built our platform and culture around this operating philosophy, and we believe it is imperative to achieving sustained long-term profitability.”

Fourth quarter

Breaking down RSI’s performance and beginning with the fourth quarter, revenue for the three months to December 31 was $165.5m, up 26.7% from $130.6m in the previous year.

Total operating costs for the quarter climbed 15.7% to $193.9m, which led to an operating loss of $28.4m, though this was shorter than the $37.1m loss posted at the end of Q4 in 2021.

RSI received $91,000 in interest income, meaning pre-tax loss was $28.3m, compared to $37.2m in the previous year. The operator paid $2.8m in income tax, which left a net loss of $31.1m, an improvement on $38.1m in the corresponding period in the previous year.

However, RSI noted that $22.1m of this loss attributable to non-controlling interests, which meant that total net loss attributable to RSI was $9.0m, compared to $10.4m in 2021. In addition, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss improved from $31.2m to $17.3m.

Full year

Turning to the full year, revenue amounted to $592.2m, a 21.3% increase on the previous year and a new record for the business.

Operating costs were up 35.7% year-on-year to $717.0m, leaving an operating loss for the year of $124.8m, compared to $94.3m in 2021.

After including $573,000 net in interest expenses, pre-tax loss amounted to $125.4m, far wider than $66.4m at the end of the previous year. RSI paid $9.0m in income tax, which meant net loss was $134.3m, compared to $71.1m in the 2021 financial year.

However, when removing a $95.7m loss attributable to non-controlling interests, this lowered net loss attributable to RSI to $38.6m, though this was still wider than the $19.5m net loss posted in 2021. Adjusted EBTIDA loss also widened from $65.1m to $91.8m.

RSI also published guidance for the 2023 financial year, with revenue expected to reach between $630.0m and $700.0m, with the midpoint of this range – $665.0m – representing a 12.0% year-on-year rise and another new record for the group.

“Looking forward, we will continue to focus on earning and retaining customer loyalty, by treating them well, being thoughtful, developing seamless experiences and reducing friction at every possible point,” Schwartz said.

“We have built our proprietary platform and culture around a disciplined operating philosophy, which is reflected in our results.”