Rush Street (RSI) Q1 2026 Earnings Transcript

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Date

Tuesday, April 28, 2026 at 6 p.m. ET

Call participants

• Chief Executive Officer — Richard Schwartz
• Chief Financial Officer — Kyle Sauers

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Takeaways

• Total revenue -- $370.4 million, up 41% year over year, marking the fastest growth rate in over four years.
• Adjusted EBITDA -- $60.2 million, representing 81% year-over-year growth and over 16% margin.
• Gross margin -- 35.7%, an 80 basis point increase year over year.
• Marketing expense -- $46.2 million, up 19% year over year, accounting for 12.5% of revenue versus 14.8% a year ago.
• General & administrative expense -- $25.8 million or 7.0% of revenue, down from 7.4% last year.
• North American monthly active users (MAUs) -- 296,000, a 46% year-over-year increase, with iCasino markets accelerating to 62% growth.
• Latin American MAUs -- 543,000, rising 54% year over year, with Colombia posting its fastest MAU growth in four quarters.
• North America ARPMAU (average revenue per MAU) -- $317, down 14% year over year, attributed to the influx of new users.
• Latin America ARPMAU -- $54, up 51% year over year, boosted by growth in Mexico and reduced bonusing in Colombia.
• Online casino revenue growth -- 39% year over year, with online sports betting revenue up 47% in the same period.
• Regional revenue performance -- North America revenue grew 26%; Latin America revenue increased 134%.
• Cash position -- $331 million in cash at quarter end and no debt outstanding.
• Share repurchase -- No shares repurchased under the $50 million program during the quarter.
• Guidance raised -- 2026 revenue outlook increased to $1.49 billion–$1.54 billion; adjusted EBITDA raised to $230 million–$250 million.
• Alberta launch -- Regulator set July 13 for launch; anticipated to add modest revenue and included in full-year guidance.
• Colombia regulatory update -- Original 19% VAT declared unconstitutional; new emergency decree imposes a temporary 16% tax on GGR from mid-March.
• Mexico expansion -- Revenue in Mexico grew over 100% for four consecutive quarters; competitive landscape remains favorable for casino-first strategy.
• Market share -- Approximately 90 basis points sequential market share gain in North American online casino markets of operation.
• Marketing efficiency -- Cost to acquire players is now at its lowest point since going public over five years ago.
• Player acquisition -- Record first-time depositors this quarter, surpassing previous quarterly records by a wide margin.

Summary

Rush Street Interactive (NYSE:RSI) delivered record quarterly revenue and adjusted EBITDA growth driven by surging monthly active user counts across North American and Latin American markets. Management raised full-year revenue and EBITDA guidance, attributing revisions to increased iCasino market share, ongoing gains in Latin America, and the upcoming Alberta market entry. ARPMAU trends reflected a deliberate and efficient acquisition of new player cohorts, especially in North America where lower initial spend per user was offset by strong retention and value potential. The updated regulatory landscape in Colombia reduced the tax rate impacting gross revenue, while Mexico’s rapid user and revenue growth further diversified regional performance. Continued marketing efficiency improvements drove acquisition costs to historic lows, fueling both record new depositor counts and margin expansion without diluting brand investment.

• Management noted that "average revenue per monthly active user" in North America declined due to the high proportion of new players, who initially spend less but are expected to yield lifetime value as they mature.
• Temporary regulatory relief in Colombia provided a tax holiday on gross gaming revenue during the initial 2.5 months of the quarter before the new 16% emergency tax took effect mid-March.
• Richard Schwartz credited its "casino-first" approach for compounding revenue and profitability advantages, citing retention and engagement as primary differentiators.
• The company explicitly incorporated the planned Alberta launch into guidance, with anticipated marketing investment and initial launch costs moderately tempering 2026 profit expectations.
• Latin American growth outpaced North America, with Mexico positioned ahead of Colombia in both ramp speed and long-term market opportunity according to the current post-launch trajectory.
• Mexico’s market dynamics were influenced by the exit of major sports-focused competitors, creating "us to acquire some customers from them that previously maybe weren't aware of our brand."
• Management is monitoring the Colombian political and regulatory process, noting future upside potential should the 16% tax be revisited following the upcoming elections or constitutional review.
• Rush Street Interactive reiterated its pursuit of product innovation, with CEO Schwartz stating the app is "the highest rated app in the store, a 4.9 out of the 5 being the highest level," suggesting a competitive moat in player experience and retention mechanics.

Industry glossary

• MAU (monthly active user): Unique player who engages with the platform at least once in a one-month period.
• ARPMAU (average revenue per monthly active user): The average amount of revenue generated per MAU over a defined time period.
• iCasino: Online casino gaming vertical, as differentiated from online sports betting operations.
• GGR (gross gaming revenue): Total gaming wagers less player payouts before taxes and operating costs.
• VAT (value added tax): Indirect tax applied on gross gaming revenue by local regulators in Latin America.

Full Conference Call Transcript

Kyle Sauers: Thank you, operator, and good afternoon. By now, everyone should have access to our first quarter 2026 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact and are usually identified by the use of words such as will, expect, should or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We assume no responsibility for updating any forward-looking statements.

Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

We will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain onetime or nonrecurring items and other adjustments that are either noncash or not related to our underlying business performance. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our first quarter 2026 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. For purposes of today's call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we're referring to those items on a non-GAAP adjusted EBITDA basis.

With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call for questions. And with that, I'll turn the call over to Richard.

Richard Schwartz: Thank you, Kyle, and good afternoon, everyone. For the first quarter, we generated record revenue of $370 million, up 41% year-over-year, and a record adjusted EBITDA of $60 million, up 81% year-over-year. Our continued momentum demonstrates the strength of our casino-first strategy, the effectiveness of our operational execution and the powerful momentum we're building across our business. We're scaling revenue off a much larger base at very strong growth rates while improving profitability at about double that pace. The casino-first approach continues to be a fundamental differentiator of our business model, a business model focused on online casino as our primary value driver, with sports betting and poker serving as important complementary products.

This strategic choice delivers meaningful advantages in player economics. Our casino players engage more consistently, demonstrate higher lifetime values and exhibit superior retention characteristics. These structural advantages compound over time, creating a virtuous cycle that drives both growth in revenue and profitability. Our player base expanded dramatically during the quarter, extremely impressive results from our teams. Monthly active users in North America grew 46% year-over-year to 296,000, while Latin America MAUs increased 54% to 543,000. In our North American online casino markets, specifically, MAU growth reached 62%, eclipsing the 51% growth we just experienced last quarter.

We've now seen an accelerating year-over-year player growth in these markets, each of the last 4 quarters demonstrating the powerful underlying strength of our business. We also achieved record first-time depositors this quarter, beating our previous record set in each of the last 2 quarters by a wide margin. The combination of record new player acquisition with improving marketing efficiency creates a powerful dynamic that will drive our business to new heights. We're filling the top of the funnel faster. We're doing it more efficiently than ever, and our retention remains strong. Customer acquisition and retention efficiency continues to be a key pillar of our success.

Our brand awareness is increasing, which gives us a meaningful advantage in acquiring players at favorable rates. This isn't about any single initiative. It's the result of systematic improvements across customer acquisition strategy, product and user experience, loyalty programs, data analytics and customer service. This quarter, we estimate we grew market share sequentially by around 90 basis points in the North American online casino markets where we operate. Our established markets continue performing well, and we're seeing the benefits of our relentless focus on player experience and operational excellence. The consistency of these results across both mature and newer jurisdictions validates that our approach is working well. Latin America also delivered exceptional results.

In Colombia, despite navigating a complex regulatory environment, we posted our fastest MAU growth in the past 4 quarters. The strategic approach we took throughout 2025, absorbing the tax burden through increased bonusing rather than passing cost to players, has proven to be an effective decision. Our commitment to our players and retaining their trust has positioned us well for 2026. As discussed in our prior earnings call, the Constitutional Court suspended the emergency decree of 19% VAT on GGR in late January. Furthermore, there was another positive development earlier this month, whereby the Constitutional Court determined the 19% VAT to be unconstitutional, and therefore ruled that no tax was to be imposed under that decree.

In mid-March, a new emergency decree was implemented that imposed a temporary 16% tax on GGR. This new emergency decree and associated tax decree will also undergo a new and distinct review by the Constitutional Court during the coming months. The result of all this is that the original temporary 19% tax that was determined to be unconstitutional was not applied to us. Therefore, during the first 2.5 months of the first quarter, we had no additional taxes. Moving forward, we have assumed that we will have a new temporary 16% tax from mid-March through the end of the year when considering our raised guidance. Turning to Mexico.

This market continues to ramp nicely and to be more meaningful for us, both from a revenue and profitability perspective. Along with increasing brand awareness, we're seeing strong player acquisition, excellent retention metrics and healthy growth and profitability. The competitive environment remains favorable, and we're gaining share by delivering the superior player experience that has made us successful in other markets. We have grown revenue by over 100% in each of the last 4 quarters and remain excited about the long-term opportunity and a substantial size of this growing market. Looking ahead, we are getting closer to launching Alberta. The regulator has set July 13 as the launch date. This represents a significant expansion opportunity for our business.

As Kyle will also cover, our increased revenue and EBITDA guidance now includes the impact of the Alberta launch for the back half of the year. We expect to begin investing in marketing and brand building ahead of our launch in Alberta. This will occur in the second quarter, and Kyle will have more details. With each new market launch, we build on and improve what we've learned in prior launches. Here, we're taking a deliberate, measured approach to market entry, focusing on building a sustainable business with strong unit economics. This disciplined approach has served us well in other markets, and we're confident it will drive long-term value in Alberta as well.

As we look to the remainder of 2026 and beyond, I'm incredibly excited about the opportunities ahead of us. We're operating from a position of strength with momentum across our business, a clear and focused strategic road map and the operational capabilities to continue executing at a high level. We're continuing to invest in product innovation, technology enhancements and geographic expansion while maintaining the financial discipline that has long characterized our approach. We believe that this balanced strategy positions us to continue to deliver sustainable growth and increasing profitability over the long term. Our first quarter performance and the momentum we're seeing across the business gives us increased confidence.

We remain focused on delivering exceptional player experiences while creating long-term value for our shareholders. With that, I'll turn it back to Kyle to discuss the financial details.

Kyle Sauers: Thanks, Richard. Let me walk through the details of our exceptional first quarter performance. Record first quarter revenue of $370.4 million represents 41% year-over-year growth, a significant acceleration from the growth rates we delivered in 2025 and our fastest growth rate in over 4 years. This performance was driven by strong execution across all aspects of our business, with growth accelerating throughout the quarter. Adjusted EBITDA reached a record $60.2 million, representing 81% year-over-year growth and over 16% margins. This profitability expansion demonstrates the operating leverage in our business model as we continue to scale. Gross margins came in at 35.7%, an 80 basis point improvement year-over-year. Our marketing efficiency continues to improve.

Marketing expenses in the quarter were $46.2 million, an increase of 19% year-over-year and representing 12.5% of total revenue, which compares to 14.8% of revenue in the year ago quarter. Our disciplined marketing spend, combined with record player acquisition levels, demonstrates the competitive advantage we're building within player acquisition channels and our cost to acquire players, which, again, are the lowest they've been since we went public over 5 years ago. G&A for the first quarter was $25.8 million or 7.0% of revenue compared to 7.4% in the prior year period. As forecasted, we are increasing our investments in our people and technology in 2026. But nonetheless, we achieved leverage over the G&A line during the quarter.

The foundation of our financial success is our exceptional user acquisition and retention performance. As Richard mentioned, our user growth this quarter was really impressive, hitting another new record for first-time depositors. In North America, our MAUs of 296,000 demonstrated growth of 46% year-over-year, and online casino markets in North America grew a notable 62% year-over-year. And in Latin America, MAUs of 543,000 grew 54% year-over-year, demonstrating the brand awareness and customer loyalty we're building in these markets. North America ARPMAU was $317 in the first quarter, down 14% year-over-year. Given the record volumes of new players we're adding to the platform, the trend of declining ARPMAU is both healthy and anticipated.

New players initially generate lower ARPMAU than our established customer base, but they represent new high-quality player cohorts that we're acquiring at very attractive levels. The key is that we're acquiring these players efficiently and retaining them effectively, which positions us for strong long-term value creation. In Latin America, our ARPMAU for the first quarter was $54, up 51% year-over-year, largely driven by faster growth in Mexico, which has higher player values than our other Latin American markets and the removal of the VAT bonusing in Colombia which we incurred in 2025. This validates the strategic approach we took throughout 2025 and demonstrates the underlying strength of our Latin American business.

Breaking down our performance by product and geography, we saw continued strength across all segments. In the first quarter, online casino revenue grew 39% and online sports betting revenue grew 47%. Regionally, revenue in North America grew 26% in the first quarter and revenue in Latin America grew 134%. Our balance sheet remains strong with $331 million in cash on hand as of March 31, and we still have 0 debt on our books. During the first quarter, we did not repurchase any shares under our $50 million share repurchase program. Based on the strength of our first quarter performance and our improved visibility into the remainder of the year, we are raising our full year 2026 guidance.

We now expect revenue to be in the range of $1.49 billion to $1.54 billion, representing year-over-year growth of 31% to 36%. At the midpoint of $1.515 billion, this represents a $115 million increase from our initial 2026 guidance and 34% year-over-year growth. This is a meaningful increase from the guidance we offered in mid-February. So where is this coming from? In order of impact, as we mentioned earlier, we grew iCasino market share substantially in North American markets during the first quarter. This outsized growth had a positive impact on Q1, but also sets us up well for the remainder of the year. And our significant growth in North American iCasino users supports that confidence.

Next, while we had a lot of confidence in our growth prospects for Latin America heading into the year, that entire market continues to outperform both in player growth and top line revenue. In the first quarter, we also benefited from better sports outcomes in both North America and Latin America. Lastly, we have included in our guidance the Alberta launch expected in July, which will add some modest revenue in the back half of the year. Turning to profitability guidance. We now expect adjusted EBITDA to be in the range of $230 million to $250 million, representing year-over-year growth of 50% to 63%.

At the midpoint of $240 million, this represents a $20 million increase from our initial 2026 guidance and 56% year-over-year growth. This is a 9% increase in our EBITDA guide and reflects the benefits of all the reasons I mentioned for raising revenue guidance, plus the benefits of the new temporary tax in Colombia being a bit lower than the prior 19% temporary tax that was overturned, and partly offset by significant investments planned for Alberta and modestly higher marketing spend and G&A costs than expected earlier in the year. Even with these plans for increased spend, at the midpoint of our guidance, we do expect to get meaningful leverage over marketing spend and modest leverage over G&A as well.

It's worth noting that our EBITDA guidance raise would have been closer to $30 million without the effect of our Alberta investment now being included in guidance. This will be a 14% increase over our previous guidance. Our first quarter results demonstrate the strength of our business model and our ability to execute. We're growing rapidly. We're growing profitably, and we're doing so in a way that positions us well for sustained success. The continued momentum we're seeing across player growth, marketing efficiency and profitability gives us confidence in our ability to deliver on our raised guidance and create long-term shareholder value. So with that, operator, we're ready to take questions.

Operator: [Operator Instructions] Your first question comes from the line of Dan Politzer with JPMorgan. Dan, your line is now open. Please go ahead.

Daniel Politzer: I wanted to touch first on the MAU and monthly active users in North America. I mean, it's been a pretty impressive acceleration over the last 5 quarters there, the 46% growth this quarter. Can you just talk about who these customers are that you're acquiring? Are they from different platforms? Is there a different demographic? Are they concentrated in 1 state versus another. It's just -- it's obviously pretty impressive growth. So just better understanding, I think, would be helpful.

Kyle Sauers: Yes. Thanks, Dan. I'll take that one. We are very pleased with the progress there. And I'll point out that the growth in markets that have iCasino in North America are actually growing faster than the total numbers that you mentioned. So we've been really pleased with that. We're filling the top of the funnel faster than we ever have, 3 straight quarters of record first-time depositors. The players we're acquiring, look -- I mean, if you look at our average revenue per monthly active user, while that's come down a little bit in recent quarters, that's because we're diluting it so much with these new players.

New players that may not be around for a full month, new players that are getting bonusing when they start out and take longer to build value over time. So I'd say the players look a lot like the ones that we've acquired before. Surely, there's some additional kind of casual player base that we're adding, but we're seeing only modest lowering of the expected long-term value in all these new players that we're bringing on. And it's coming from a bunch of different channels. Our marketing team just continues to optimize where we spend, what the messaging looks like and continuing to track a lot of players.

I think one of the benefits for us, even though we're growing much faster than the industry is, there's a lot of players who still don't know who that BetRivers is in North America. So there's a lot of opportunity for us to go after players who maybe haven't played iCasino before, but also played with some of our competitors and give them a shot to play on one of the best platforms, if not the best platform that's out there.

Daniel Politzer: Got it. That's helpful. And then just turning to Alberta, I think that you mentioned, I think it was implied, about a $10 million launch cost or EBITDA impact in the year. Can you talk about, I guess, what you're underwriting there in terms of market share? Is it predominantly going to be iGaming? And then just maybe talk about expectations for the competitive environment.

Kyle Sauers: Sure. So we expect it to be competitive, just like Ontario has been competitive. It also has incumbent great market operators that all the new entrants like us will be dealing with. I don't think we want to put a market share bogey out there just yet. Ontario, which has been a great market for us, We've grown really nicely. We're taking share there, but we're still relatively small in the scope of the entire market. that's probably a good target for us early on. But I'll also say we've had a lot of lessons operating in Ontario, and we think we'll do really well launching in Alberta.

Operator: Our next question comes from the line of Bernie McTernan with Needham.

Bernard McTernan: Great. Maybe just to start, just piggybacking on the question on the strong MAU growth. What customer acquisitions channels are working in particular? Is anything performing better? I know you brought in a Chief Marketing Officer not too long ago. Just the fact that we continue to see nice growth here on a sustained basis, just want to see what's working. And then I have a follow-up.

Kyle Sauers: Yes. Great. And yes, we did bring in our first CMO a couple of years ago now. We've added a lot of great talent to the team, supplemented the great people we already have there, both in North America and Latin America. So they're doing a fantastic job. I'll say we're trying a lot of different channels, trying a lot of different things. And clearly, it's working really well. The ones that are working exceptionally well, I'm not sure that I want to highlight that on a public call, though.

Bernard McTernan: Fair enough. And then I wanted to ask on just the World Cup, just any -- I'm assuming that you will see the impact greater in the financials in LatAm over the U.S., but just -- any commentary on what's contemplated in the guide would be helpful.

Kyle Sauers: Yes. So without being super specific on exactly what's in the guide, we have built in some upside from the World Cup and the extra games that will be played because it's largely incremental to the whole soccer calendar for the year. But I think we're -- so we're very excited about that. We're very excited about the player acquisition that comes along with it. So hopefully, that will turn into a bigger impact than what we've modeled and what we've guided to. So that could be exciting. I'll say -- I think one point of it. I referenced it'd be interesting.

The [ Copa ] America in 2024 that summer, we saw our monthly active users in Colombia increase by an average of 170% year-over-year in June and July, which is the 2 months where that event happened. So that was a big driver of the future growth for us in Colombia. So we're hoping for a great World Cup, a lot of engagement from new players and existing players, but also sustained growth in our player base afterwards for both sports and for iCasino.

Richard Schwartz: If I could just add that this is a unique World Cup and that is taking place in 3 countries, and all 3 of them are countries where we operate. And we're excited that it's less than 45 days away from the first match, which will open up on June 11 in Mexico City, a great market where we're operating in Mexico is going to play a host game. So I think there's a lot of excitement because of that.

But also the time zones for all of our players in the Americas will be the same time zones that are awake, which is rare compared to how it's been about several World Cups even over in Europe or the Middle East, even. So I think this is a chance for us to really capture a large amount of interest from bettors in these markets because we know it expands the pie of recreational users who we can then cross-sell, as Kyle just said, to casino.

Operator: Our next question comes from the line of Jordan Bender with Citizens.

Jordan Bender: I want to touch on the comments around your [ macro ] in Colombia and the fastest you've seen in the last 4 quarters. You kind of talked about what you're doing and what's going right there. But can you maybe just kind of tell us or explain like what the exit rate is in the country kind of exiting the VAT tax? And do you think that you're gaining overall share just based off on the adjustments that you've made to the business model in recent quarters?

Kyle Sauers: Yes, sure. So we talked about it in the prepared remarks, but we're very pleased with how the strategy we used last year to kind of combat that, the deposit tax on the players. And we had a lot of extra bonusing, which was a little painful in 2025, but it served us really well and because we treated customers the right way. So the business grew at a handle GGR player count base really nicely last year. And we're seeing more of that flow through to the net revenue line this year because there's less of that bonusing. We have increased our marketing spend in Latin America.

So that's been certainly impactful on growing the player counts down there and having a faster growth. There's not -- in any of the Latin American countries, we don't have good reported data from the regulators. It would be really hard to imagine that we are not taking share in all 3 of those markets, given our performance. So we're pretty confident that, that's happening.

Jordan Bender: Great. And then just sticking with Colombia, that's clearly been a standout market for you guys over the last couple of years. Are you seeing similar MAU growth, engagement monetization trends in Peru and Mexico at their point in their life cycles similar to kind of what you saw in Colombia in early days?

Kyle Sauers: Yes. So I'll say it this way. So Mexico is ahead of Colombia in terms of where we were this quarter relative to the launch date and then comparing that to Colombia versus our original launch date down there. So we're ahead in Mexico from that perspective on this quarter and in aggregate since launch. Now Mexico is a larger market. So I think we've got a much bigger opportunity there potentially. And then in Peru, it's probably a little bit behind where Colombia was post launch. But all of them still growing really, really nicely and we're very excited about.

Operator: Our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital.

Ryan Sigdahl: If I look at industry eye casino growth in the U.S., well, continues to be very durable and strong, if decelerating a bit. Your growth is accelerating. You're doing that despite disciplined spend. Many of your competitors are still there aggressively spending. I think I ask this every quarter, but I'm going to ask it again. I guess, how -- it feels like things are getting easier for you guys with accelerating growth when it feels like it's getting harder for everybody else?

Kyle Sauers: Yes. So thanks for the comments. I wouldn't say it's getting easier, Ryan. I think our teams work really hard and really smartly. I do think we're doing a lot of things much better than we were a year ago or 2 years ago, but that doesn't mean that there's not a lot of things we can keep doing better. But it is -- I think we've said it all, and there's probably no new answers from your question last time. We're acquiring players faster. So more of them coming in to fill the top of the funnel. We're doing it at lower rates per player. And retention is still really, really good.

We try to be really fair with bonusing and we're trying to continue to optimize that, make sure that players are getting a meaningful experience with their bonusing and promotions, but again, an area we can continue to optimize. And just the whole life cycle and journey for a player from the time they hear about us to the time they start playing on our industry-leading product, we try to make it as great of an experience for them as we can. And then obviously, we've got a great customer service team that takes care of the players because there's always going to be issues that you have to deal with.

Richard Schwartz: Ryan, I would add a couple of things. One of our goals is to create a fun and fair experience for our players. And when you consistently see their feedback to us, whether it's to our customer service team or in their public comments on our apps in the app store, that they themselves without knowing that's our strategy, when they repeat themselves that you guys are fun and fair and fast, things that they care about, that just reinforces that we're delivering the experience and meeting the expectations or hopefully exceeding them.

I think a lot of this comes from an ideation process of having a lot of insights from the consumer, really understanding the audience, having the technology capabilities to deliver leading experiences that are new to the industry, not just here in the Americas but globally. And then delivering experiences that are differentiated for the player that they enjoy enough to sustain their play with us versus others. So I think it's just a consistency of leading having the confidence to build new experiences. Our team is tremendous at understanding how to translate insights into products that the user wants to play.

And of course, making sure the service element is always there to remind those players that we're thoughtful living company that's really treating players fairly.

Ryan Sigdahl: Well done, guys. For my follow-up question just on Colombia. Constitutional Court declared that there needs to be a refund mechanism for the VAT collected in 2025. Curious if you think you guys will be entitled to refunds, if you're able to quantify that? And if you're able to provide any kind of additional detail on that process?

Kyle Sauers: Yes. So I think you're referring to payments that would have been made in 2026 related to the 19% emergency VAT that was declared right at the end of December. So there is -- the court did -- had suggested that, that money needs to go back to operators that have paid it. We did not pay any of that VAT into the system from the 2026 19% tax that was ultimately deemed to be unconstitutional, so not really relevant for us.

Operator: Our next question comes from the line of Mike Hickey with StoneX.

Michael Hickey: Richard, Kyle, congrats guys. Amazing quarter. Great start to the year. Just curious on Mexico. It seems like you're having a tremendous amount of success there. And the market, of course, looks like to be about nearly 10x Colombia. You're already a top 5 share position in the market, but I think your probably overall share is still pretty small given that. I think 1 operator has the majority of it. So just curious, the competitive dynamics that you're seeing in Mexico and your ability, you think, over time to take meaningful share in that market? And how big, obviously, the World Cup can be in sort of supercharging you to that point?

Because it seems like on paper, given the success in Colombia, you could do 10x the business in Mexico.

Richard Schwartz: Mike, I'll start and maybe Kyle will add in a little bit. We really like Mexico for the opportunity to really differentiate on the casino side. I think a lot of the players there, especially the largest market share, operators really historically focused on sports and has more in their DNA than they do casinos online. So we're very excited to be able to continue to invest in all the things that are necessary to show those casino players there. Don't forget, that country has a very large legacy retail casino marketplace that we'll be able to leverage those players to help deliver this experience online that is, I think, superior to what you typically would see.

So from that standpoint, we are leaning in on our casino experience, naturally relying on the sportsbook to acquire customers during high-profile events such as [ Copa ] America that Kyle referenced in the past, but also more exciting for the upcoming World Cup that I mentioned will be opening up in on June 11 in Mexico City.

So I think the competitive situation there really favors a casino-first operator like us, and we're continuing to try to make sure we do all the little things necessary to deliver the type of experience, not just from the casino experience, but all the little local localizations you need to constantly improve upon to ensure you're staying current with the latest state of the technology that you need to reduce friction for the players in that market. Kyle, did you have something to add on? Or you could...

Kyle Sauers: I won't hear title. But I'd have to say something. No. I don't think I'll react to your [ 10x ] just yet, give us a little time, but I'll remind you that we started later than others did in Colombia. We came into a market that was already existing, and we've secured ourselves as the #2 operator in Colombia and growing really quickly. So we're certainly optimistic that Mexico can bring really good success over the coming years.

Michael Hickey: Just a quick follow-up on at and I think you teased us before about maybe looking to open a new market in LatAm. Just curious, your appetite this year or next year to do that still?

Richard Schwartz: Yes. We have mentioned in the past, we do continue to see a broad set of attractive growth opportunities across Latin America. We are actively progressing those efforts. I think we're -- given our strong performance in existing markets, which -- the 3 countries that we're operating cover a population of 220 million people, we still have the flexibility to be deliberate and pursue those opportunities with discipline, which is what we're doing. So we still have opportunities. We're continuing to advance those opportunities, but we're not ready to share anything at this point in time.

Operator: Our next question comes from the line of Jed Kelly with Oppenheimer.

Jed Kelly: Great. Just on North American ARPMAU. Is that entirely being driven by just the accelerating users you're seeing? Or is that the decline in ARPMAU is also being driven by the way you're bonusing?

Kyle Sauers: I want to make sure I'm understanding the question. Mike -- or I'm sorry, Jed, you're asking if the decline in the value of the player is in North America is just because of bonusing of new players?

Jed Kelly: No. Is it due because you're seeing just an accelerating of users, and those first-time users are causing the faster than -- is that -- or is it -- is there something else you're doing in the bonus? And I'm just wondering about the ARPMAU trends you can speak to.

Kyle Sauers: No. It's largely a factor of new players coming in. We added 60% year-over-year in iCasino markets, which is where most of our focus is. Any one of those players might be coming in, in the last part of a month. That goes into that average calculation of the value they're providing. Most players have negative value early on in their life cycle because they're moving through the bonusing that we give them. So that's the largest factor there, a great problem to have. We're certainly not going to grow player counts 60% year-over-year forever.

So as that slows down and the players that we're bringing in are maturing, retention improves with those players that stay around longer, we'd expect that number to move back up over time.

Jed Kelly: Got it. And I think you said earlier that you're seeing pretty favorable CPAs. Is that being driven more by what your marketing team is doing, maybe around AI and certain investments? Or do you think some of your competitors might be focusing on other product launches coming up?

Kyle Sauers: Yes. So it's a good question. I don't know that we've seen a big change in the competitive intensity for the marketing assets that we're going after. Obviously, any one competitor might ebb and flow with what they're doing. Could some of them be allocating marketing dollars someplace else, certainly towards new market launches and pulling away some place? I suppose that's possible. I don't think that's as much of it as it is. Our team is doing a great job. We continue to improve the player journey. So it's not just about getting people to show up to the app store. They got to download, they got to register, they got to go through KYC.

It's got to be easy for them to get a deposit on the platform. So all of that, it seems so simple, but it's pretty complicated, and our team does a great job, and we're making it better and better. So there's a lot of different things involved. But I think probably the competitive intensity for marketing assets is not a big driver in all that. I think it's more about what we're doing.

Operator: [Operator Instructions] Our next person to ask a question will come from the line of Zach Silverberg with Wells Fargo.

Zachary Silverberg: Just one on Mexico. So there was an article that stated that a couple of your competitors had their gaming license blocked during the quarter. What are you seeing there post this event? And is it an opportunity to kind of take share from those operators?

Richard Schwartz: Yes. Sure. Zach, yes, that 365 in [ Metanor ], the 2 of the operators that you're referencing, but they actually, I think, have their license closed earlier than this quarter. And so I think there are absence from the market, both were meaningful market share contenders. And so I think their exit from the markets certainly have helped us to acquire some customers from them that previously maybe weren't aware of our brand and they didn't know who we are. . Certainly, I think in both those cases, though, there are companies that are primarily, I think, stronger in sports. So what I said earlier about us being a casino-first operator still holds true.

And we think competitively with an environment that we're continuing to kind of be able to grow our casino player volumes. And as we know, those players tend to generate a larger revenue per active user and ultimately, the type of player engaged, higher-level player engaged with the type of players that we like and are very strong at retaining. So we feel pretty strong about the market opportunity there, and it certainly has helped us to have those 2 operators out of the market.

Zachary Silverberg: And just for my follow-up. [ Next ], in Colombia, excuse me, there's an election coming up in a few weeks. Is there anything you guys are looking out for there? And anything you guys are handicapping to the election in terms of the future outlook of the 16% consumption tax?

Kyle Sauers: Yes. Thanks, Zach. Certainly, we're watching it very closely. There's the initial round here coming up in a few weeks, and then the final election will be in June. So we are watching it closely. We're not handicapping it necessarily. Certainly, there's an opportunity there. We talked earlier about the 16% tax, that it's -- there's a mandated constitutional review of the emergency decree that allow that tax to be put in place and then also a review of the tax itself.

And then another opportunity for that to be relooked at would be the next administration that comes into office and how they view the emergency decree, assuming it doesn't get overruled, how they view that decree and the associated taxes. So potential opportunity for upside for us there.

Operator: Our next question comes from the line of Joseph Stauff with Susquehanna.

Joseph Stauff: Richard, I was wondering if you could comment on maybe the state of product parity for iCasino. I think it's fair to say for OSB, it everyone is sort of approaching some level of product parity versus each other. I'm wondering -- your observation, obviously, you've always been front-footed about product development. Have others caught up in terms of offering jackpots, offering bonus spins? What's your assessment of the industry today?

Richard Schwartz: Well, it's a big question, Joe. I'll try to answer it efficiently with that. We continue to sort of lead away our opinion on creating innovative features. And while others are investing more resources the casino experience, largely, we've seen things that are very me too is what -- how I would describe it, where everyone kind of just copies each other. And if someone offers a free-to-play game as part of the promotion, when you first register every day, everyone does the same thing. People improve the lobby, everyone improves the lobby.

Those are real simple things ultimately to improve upon, but they're still important and valuable, but I would say that it's sort of a mass mentality are sort of doing the same improvements in the same area. So I referenced the lobby, I referenced the free game, I referenced the jackpots. I think we were one of the first ones to have a site-wide jackpot across all of our products. Others are doing some jackpots that are site-wide, but our execution, I still think is more interesting for a player than the others are, and I won't get into the reasons why.

But I think we have good insights into what values we're delivering and why we make the decisions that we do. I think what validating ultimately is the app scores in the store.

We are the highest rated app in the store, a 4.9 out of the 5 being the highest level, which is rare to achieve from a casino app, largely because a large number of players are already going to -- you can't penalize them like a casino operator on the basis that they lose playing the -- after they may not feel like it was a experience that was positive for them, where it's not like a sportsbook app, primarily where the better makes, that's based on skill and ultimately doesn't really blame the operator if they get the outcome wrong, whereas in the casino world, it's a little bit different.

So the fact that we have such a high score on the app, I think it's very validating to the quality of experience we offer. And as I've shared before, we've been building this technology since 2012, modernizing it along the way, constantly bringing new experience to players. So it's not just 1 or 2 things that we have built, but we've built dozens of features that are still unique to the industry. And it takes a long time to build it, and it's hard to build. Even if you know they're going to try to copy something, it's hard to get the copy to reflect the quality of experience that we have built.

So we feel pretty strongly that we have those nice moats around our product experience in the casino space. And having said that, we're always pushing the limits and we're never going to be satisfied and we're constantly looking to improve. And we have lots of opportunities to get better, and that's what our team is focused on.

Joseph Stauff: And do you think those higher app scores, is that a function of your retention engine and mechanics and capabilities? Or is it a variety of factors, including, say, product depth and so forth? Do you think the retention capabilities that you have really are, say, a difference maker versus, say, other iCasino products that are out there?

Richard Schwartz: I think what's different about us or what's unique for us is from the very beginning from day 1 and when I started the business, the #1 goal was to retain customers. It was less about acquisition. It was more about how to deliver an experience that offers the same quality and quantity of high-quality games. But how can we create differentiation and experience that drives users to prefer to play with us over other apps they may be playing with? So ultimately, when you do little things right, you pay attention to the details and you get the customer service team doing a great job as our team does, combined with the innovative experience that's unique for the players.

Ultimately, you encourage greater retention, which delivers the kind of results that we're seeing. So I think it's really just a matter of paying attention to details. They all matter. And as I said in the prepared remarks, every thing we do is systematic across all parts of the journey, and all the touch points where you interface with the customer matter. And if we are constantly improving each of one of those, paying attention to every detail along the way, you ultimately end up with experience to come together, and the players notice it.

And we think that's a big part of why a large percentage of our players prefer to play with us, we believe, versus other apps for the also other accounts, but are probably playing at the same level that they play with us.

Operator: [Operator Instructions] Our next question comes from the line of Chad Beynon with Macquarie.

Chad Beynon: Wanted to ask about Virginia, given your current OSB license and the fact that Rush Street land-based gaming has a property there. From what we've heard, it sounds like there were a lot of constituents that were in favor. Obviously, it didn't get across the goal line. But wondering if you think the progress that was made there sets Virginia up for higher likelihood in '27? And if you guys would have interest if that opened from an iGaming standpoint?

Richard Schwartz: Well, great. Thanks for asking that question because it definitely would be a very exciting market for us, and we are very interested in that opportunity. We remain focused on expanding online casino into a large number of states that have shown recent interest, but Virginia being a key example. We view Virginia as a real opportunity. It's encouraging the legislation progressed as far as it did this year, with versions passing both the Senate and the House. And so it's a market that we have -- we're working with -- collaborating with our peers. And it seems like a really exciting opportunity potentially for us in the next year.

In addition, as we noted in our prepared remarks, we are advancing plans to bring our platform to Alberta. So we have plenty of exciting things happening in the next couple of months. But we are viewing Virginia in partnership with our -- the land-based property, Rivers Casino there was a great opportunity for us.

Kyle Sauers: And maybe I would just add to that, Chad, just to think about the opportunity there, maybe not to put exact numbers around it, but not dissimilar in size from a Michigan. Unclear exactly how many licenses they'll be. But that's a market where we started off with mid-single-digit share, and we've grown it to high single-digit share over time. And we did that with a lot of brand awareness or any brand awareness when we launched and no access to a strong database of players. So we have some real advantages in Virginia that we haven't had in a lot of other markets. So it's very exciting for us as that moves along.

Chad Beynon: Okay. Great. And then lastly -- and this is probably assumed based on your user growth that we've talked about throughout the call. But prediction markets. I guess, 1 of your -- 1 of the other digital operators said that CPAs had increased. They didn't grow users as much as you guys did. So is it safe to say that you're just not seeing any pressure -- or you're not seeing significant pressure from CPA standpoint or just from a user standpoint? And do you think that could potentially change as some of these production companies just develop their technology throughout the year?

Kyle Sauers: Yes, I think it's fair to say that we haven't seen -- from a marketing asset, CPA, we haven't seen pressure from those entrants. I think a lot of that is that we're searching for different types of players, and we're searching for them in different places. So I don't think that's impacted our business. And certainly, you said it, but it's with our CPAs going down being the lowest they've been, that's probably a pretty good indication of that.

Operator: Our last question comes from the line of David Katz with Jefferies.

David Katz: I wanted to just finish off with a discussion on sort of flow-through and aspirational margins. Obviously, not in any kind of a time or guided way. The increase in guidance on the revenue side of $100 million and EBITDA around 20, just I think begs the question of where do you think an aspirational flow-through level could be? And do you have sort of margin targets out there in the future that you're able to talk about with us?

Kyle Sauers: Yes. So on the longer-term margins, we still think that we can get to kind of low to mid-20%. And obviously, that means we're going to have some decent flow-through over the coming years. We need a couple more markets -- high casino markets in North America likely to get to that point and have them mature a little bit. On flow-through in general, we look at 2026, let's say, at the midpoint of our guide, flow-through is very solid at kind of mid-20%.

A couple of things to keep in mind that because of the deposit tax and that associated bonusing going away in Colombia from last year, but with this new tax on revenue, which impacts our gross margins, we've got a bigger improvement in revenue than we do in operating margins in Colombia. So that impacts that metric a little bit. And then I think maybe you alluded to this, but adding Alberta to our guidance, both a little bit of revenue, but also all of the launch costs impacts that as well. We don't expect Alberta to be profitable in 2027. Having said all that, I'll also point out that we've -- we're always trying to consistently outperform our expectations.

So we're going to continue to strive to do that.

Operator: There are no further questions at this time. I will now turn the call back to Richard Schwartz for closing remarks.

Richard Schwartz: Well, thank you for joining us today. We look forward to updating you on our progress when we share our second quarter results in the summer.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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