Rush Street Interactive(US:RSI)2023-03-01 16:00Financial Performance - The company reported a net loss of $134.3 million for the year ended December 31, 2022, compared to a net loss of $71.1 million in 2021[347]. - Adjusted EBITDA for 2022 was $(91.8) million, a decline from $(65.1) million in 2021, indicating ongoing challenges in operational performance[347]. - Revenue increased by $104.1 million, or 21%, to $592.2 million in 2022 compared to $488.1 million in 2021, driven by growth in existing markets and expansion into new markets such as Ontario, Canada, New York, Mexico, and Maryland[379]. - Costs of revenue rose by $82.5 million, or 25%, to $414.6 million in 2022, primarily due to expansion and growth in both existing and new markets[380]. - Costs of revenue as a percentage of revenue increased to 70% in 2022 from 68% in 2021[380]. - Net cash used in operating activities was $60.3 million for 2022, compared to $48.2 million in 2021, reflecting a higher net loss of $63.2 million[406]. - Net cash used in investing activities decreased by $8.0 million to $29.0 million in 2022, compared to $37.0 million in 2021[407]. - Net cash used in financing activities decreased by $126.8 million to $1.2 million in 2022, compared to net cash provided of $125.6 million in 2021[408]. User Engagement and Market Expansion - Monthly Active Users (MAUs) increased year-over-year in 2022, driven by strong customer retention in existing markets and expansion into new markets such as New York and Ontario[337]. - The company operates in 15 U.S. states and international markets, providing online casino and sports betting services under the BetRivers and PlaySugarHouse brands in the U.S. and Canada, and under the RushBet brand in Latin America[325]. - The online gaming and sports betting market is expected to grow as more jurisdictions legalize these offerings, with 35 states and the District of Columbia currently authorized for sports betting[350]. - The company’s B2C operations contributed over 98% of total revenue for the years ended December 31, 2022, and 2021, highlighting the importance of direct customer engagement[331]. - The company’s strategic marketing efforts have positively impacted customer acquisition and retention, particularly in established markets[338]. Revenue Streams - Online casino and sports betting revenue increased by $96.5 million, while retail sports betting revenue rose by $7.9 million, with a slight decrease in social gaming revenue of $0.3 million[379]. - The online casino offerings include a full suite of games, with revenue generated through hold or gross winnings, which is less volatile than sports betting revenue[361]. - Online sports betting revenue is generated by setting odds with a built-in theoretical margin, incorporating live streaming and various betting products[364]. Costs and Expenses - Advertising and promotion costs increased by $29.98 million, or 16%, to $220.46 million in 2022 compared to $190.48 million in 2021[379]. - Advertising and promotions expense increased by $30.0 million, or 16%, to $220.5 million in 2022 compared to $190.5 million in 2021, with the expense as a percentage of revenue decreasing to 37% from 39%[381][382]. - General administration and other expense rose by $12.0 million, or 22%, to $67.5 million in 2022, maintaining a flat percentage of revenue at 11%[383]. - Depreciation and amortization expense surged by $10.1 million, or 237%, to $14.3 million in 2022, with the expense as a percentage of revenue increasing to 2% from 1%[384]. - Interest expense, net increased by $0.4 million, or 206%, to $0.6 million in 2022, primarily due to additional imputed interest from deferred royalties[385]. - Income tax expense rose by $4.3 million, or 91%, to $9.0 million in 2022, with the tax expense as a percentage of revenue increasing to 2% from 1%[388]. Cash and Capital Management - As of December 31, 2022, the company had $179.7 million in cash and cash equivalents, excluding customer cash deposits[397]. - The company expects to increase capital expenditures and working capital requirements to support growth, with $21.6 million in non-cancellable purchase obligations in the upcoming 12 months[401]. - As of December 31, 2022, the company had cash, cash equivalents, and restricted cash totaling $206.1 million, primarily consisting of bank deposits and money market funds[434]. Market Risks - The company operates primarily in the United States, Canada, and Latin America, facing market risks including interest rate, foreign currency exchange, and inflation risks[433]. - A 10% increase or decrease in interest rates on cash and cash equivalents would not have a material effect on the company's consolidated financial statements for the year ended December 31, 2022[434]. - The company is exposed to foreign currency exchange risk primarily with the Colombian Peso, Canadian Dollar, and Mexican Peso, with less than 15% and 10% of revenue from these markets for the fiscal years ended December 31, 2022, and 2021, respectively[435]. - A 10% increase or decrease in the value of these currencies compared to the U.S. Dollar would not have a material effect on the consolidated financial statements for the year ended December 31, 2022[435]. - The company does not believe inflation has had a material effect on its business or financial condition for the fiscal year ended December 31, 2022[436]. - Significant inflationary pressures could harm the company's ability to offset higher costs through price increases, potentially affecting financial results[436]. - Customers experiencing inflationary pressures may reduce spending on discretionary entertainment activities, which could negatively impact the company's revenues and operating results[436].