Rush Street Interactive(US:RSI)2025-07-31 20:42markdown [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended June 30, 2025, show significant revenue growth and a shift to profitability, with total assets increasing to $543.0 million and a substantial Tax Receivable Agreement (TRA) liability recognized [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $240,592 | $229,171 | | Deferred tax assets, net | $145,388 | $522 | | **Total assets** | **$543,021** | **$379,466** | | **Liabilities & Equity** | | | | Total current liabilities | $161,160 | $163,130 | | Tax receivable agreement liability, non-current | $112,707 | $739 | | **Total liabilities** | **$290,780** | **$181,150** | | **Total stockholders' equity** | **$252,241** | **$198,316** | - Total assets grew significantly, primarily driven by a substantial increase in net deferred tax assets from **$0.5 million to $145.4 million**[16](index=16&type=chunk) - Total liabilities increased, mainly due to the recognition of a **$112.7 million** non-current liability related to the Tax Receivable Agreement (TRA)[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 (Unaudited) | Q2 2024 (Unaudited) | Six Months 2025 (Unaudited) | Six Months 2024 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $269,217 | $220,379 | $531,624 | $437,807 | | Income from operations | $24,324 | $4,197 | $39,246 | $5,729 | | Tax receivable agreement expense | ($112,692) | $0 | ($113,037) | $0 | | Income tax (benefit) expense | ($115,017) | $6,396 | ($109,952) | $11,696 | | **Net income (loss)** | **$28,830** | **($282)** | **$40,041** | **($2,491)** | | Diluted EPS | $0.12 | ($0.00) | $0.17 | ($0.01) | - Revenue for Q2 2025 increased **22%** year-over-year to **$269.2 million**[18](index=18&type=chunk) - The company reported a net income of **$28.8 million** in Q2 2025, compared to a net loss of **$0.3 million** in Q2 2024, significantly impacted by a **($112.7 million)** TRA expense and a **($115.0 million)** income tax benefit[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,499 | $51,118 | | Net cash used in investing activities | ($19,111) | ($18,919) | | Net cash used in financing activities | ($33,851) | ($455) | | **Net change in cash, cash equivalents and restricted cash** | **$9,196** | **$27,877** | - Net cash from operating activities remained stable at **$54.5 million** for the first six months of 2025[26](index=26&type=chunk) - Cash used in financing activities increased significantly to **$33.9 million**, primarily due to **$24.2 million** for employee taxes on share vesting and **$7.6 million** for stock repurchases[26](index=26&type=chunk)[192](index=192&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Revenue by Type - Six Months Ended June 30 (in thousands) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Online casino and online sports betting | $528,401 | $434,471 | | Retail sports betting | $791 | $1,169 | | Social gaming | $2,432 | $2,167 | | **Total revenue** | **$531,624** | **$437,807** | Revenue by Geography - Six Months Ended June 30 (in thousands) | Geographic Region | 2025 | 2024 | | :--- | :--- | :--- | | United States and Canada | $457,475 | $377,050 | | Latin America, including Mexico | $74,149 | $60,757 | | **Total revenue** | **$531,624** | **$437,807** | - The company recognized a TRA liability of **$113.8 million** as of June 30, 2025, resulting in a TRA expense of **$113.0 million** for the first six months of the year, primarily due to RSILP Unit exchanges and the determination that deferred tax assets are likely to be utilized[93](index=93&type=chunk) - A significant income tax benefit of **$110.0 million** was recorded for the first six months of 2025, primarily due to the release of the valuation allowance on U.S. deferred tax assets based on current and forecasted future income[87](index=87&type=chunk)[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the strong performance to continued growth in existing markets and expansion into new ones, with Q2 2025 revenue growing 22% YoY to $269.2 million and Adjusted EBITDA reaching $40.2 million, while maintaining a strong liquidity position [Trends in Key Metrics](index=31&type=section&id=Trends%20in%20Key%20Metrics) - Average Monthly Active Users (MAUs) in the United States and Canada increased for the six months ended June 30, 2025, compared to the same period in 2024, due to growth in existing markets and effective marketing[121](index=121&type=chunk) - Average Revenue Per MAU (ARPMAU) in the United States and Canada also increased year-over-year, driven by growth in online casino markets and a focus on retaining quality players[126](index=126&type=chunk) - In Latin America, MAUs increased due to growth in Colombia, Mexico, and expansion into Peru, though ARPMAU decreased primarily due to increased bonusing related to a new value-added tax in Colombia and unfavorable foreign exchange rates[123](index=123&type=chunk)[129](index=129&type=chunk) [Non-GAAP Information](index=34&type=section&id=Non-GAAP%20Information) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $28,830 | ($282) | $40,041 | ($2,491) | | Adjustments | $11,419 | $21,725 | $33,434 | $40,992 | | **Adjusted EBITDA** | **$40,249** | **$21,443** | **$73,475** | **$38,501** | - Adjusted EBITDA for Q2 2025 was **$40.2 million**, an **88%** increase from **$21.4 million** in Q2 2024[133](index=133&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $269,217 | $220,379 | $48,838 | 22% | | Costs of revenue | $174,147 | $144,477 | $29,670 | 21% | | Sales and marketing | $37,132 | $36,944 | $188 | 1% | | General and administrative | $23,787 | $27,206 | ($3,419) | (13)% | | Income from operations | $24,324 | $4,197 | $20,127 | n/m | - Q2 2025 revenue increased **22%** YoY, driven by growth in existing markets and expansion into new markets like Peru[155](index=155&type=chunk) - Sales and marketing expense as a percentage of revenue decreased from **17% to 14%** in Q2 2025, reflecting a strategy to rationalize marketing spend[157](index=157&type=chunk) - General and administrative expense decreased by **13%** in Q2 2025, primarily due to lower share-based compensation expense[158](index=158&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's principal sources of liquidity are cash on hand (**$240.6 million** as of June 30, 2025) and cash flows from operations[177](index=177&type=chunk)[178](index=178&type=chunk) - Material cash requirements for the next 12 months include **$10.9 million** for marketing, **$4.3 million** for license/market access fees, and **$2.6 million** for leases[179](index=179&type=chunk) - Future obligations include payments under the Tax Receivable Agreement (TRA), which are expected to be substantial but are mostly non-current, and tax distributions to RSILP unitholders as profitability increases[180](index=180&type=chunk)[181](index=181&type=chunk) - The company believes existing cash and operating cash flow are sufficient to fund operations and capital expenditures for at least the next 12 months[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including interest rates, foreign currency exchange, and inflation, but currently considers these risks not to be material to its financial condition or results of operations - The company is exposed to interest rate, foreign currency exchange, and inflation risks, but currently considers them not material[196](index=196&type=chunk) - Foreign currency exposure is mainly from the Colombian Peso, Canadian Dollar, and Mexican Peso, which collectively accounted for less than **20%** of revenue in the first half of 2025[198](index=198&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[201](index=201&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[202](index=202&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is not a party to any material legal proceedings and is not aware of any material pending or threatened claims, with current proceedings not expected to materially affect its financial condition or results - The company states that the amount of ultimate liability from any current legal actions is unlikely to materially affect its financial condition, results of operations, or liquidity[205](index=205&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report have occurred[206](index=206&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company continued its stock repurchase program, authorized for up to $50 million, repurchasing 234,397 shares of Class A Common Stock for approximately $2.5 million during Q2 2025 Share Repurchases - Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining | | :--- | :--- | :--- | :--- | | April 1 - 30, 2025 | 234,397 | $10.55 | $42,366,000 | | May 1 - 31, 2025 | 0 | N/A | $42,366,000 | | June 1 - 30, 2025 | 0 | N/A | $42,366,000 | | **Total** | **234,397** | **$10.55** | **$42,366,000** | - The Board of Directors authorized a stock repurchase program of up to **$50 million** on October 24, 2024[207](index=207&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, Paul Wierbicki, the company's Chief Legal Officer and Director, adopted a Rule 10b5-1 trading plan for 35,000 securities, effective from August 5, 2025, to August 5, 2026 - Paul Wierbicki, Chief Legal Officer and Director, adopted a Rule 10b5-1 trading plan on May 5, 2025, for the potential sale of **35,000** securities[209](index=209&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 and XBRL data files - The exhibits filed with this report include CEO and CFO certifications under Sections **302** and **906** of the Sarbanes-Oxley Act[212](index=212&type=chunk)