RSI (RSI) Q2 2026 Earnings Call Transcript

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DATE

Wednesday, July 29, 2026 at 6 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer - Richard Todd Schwartz
• President and Chief Financial Officer - Kyle L. Sauers

TAKEAWAYS

• Revenue -- $393.8 million, representing 46% growth year over year driven by share gains in online casino and increased sports betting engagement during the World Cup.
• Adjusted EBITDA -- $64.6 million, an increase of 61% year over year reflecting scalable profitability and operating leverage across the business model.
• Online Casino Revenue -- 72% of total revenue for the quarter, supporting consistent player engagement and higher lifetime values compared to sports-only players.
• North American Monthly Active Users (MAUs) -- 296,000, growing 51% year over year with specific growth in online casino markets reaching 64%.
• Latin American Monthly Active Users (MAUs) -- 653,000, a 62% increase year over year driven by expansion in Mexico and a well-executed marketing strategy during the World Cup.
• North American Average Revenue per Monthly Active User (ARPMAU) -- $320, a decrease of 18% year over year due to the high volume of newer player cohorts that typically start at lower values than the established base.
• Latin American Average Revenue per Monthly Active User (ARPMAU) -- $55, an 82% increase year over year reflecting strong regional performance and the elimination of bonusing in Colombia to offset prior taxes.
• Marketing Expenses -- $48.6 million, representing 12.3% of revenue compared to 13.4% in the prior year period as the company achieved higher acquisition efficiency.
• General and Administrative (G&A) Expenses -- $26.5 million, or 6.7% of revenue, as the company increased investments in personnel and technology to support growth.
• Cash and Debt -- $340 million in cash on hand as of June 30, 2026, with the company maintaining zero debt on its balance sheet.
• Full Year 2026 Revenue Guidance -- $1.56 billion to $1.6 billion, a $65 million increase at the midpoint from previous estimates reflecting sustained outperformance in North American iCasino and Latin American markets.
• Full Year 2026 Adjusted EBITDA Guidance -- $245 million to $265 million, representing 59% to 72% year-over-year growth despite plans for increased marketing investments in the second half of the year.
• Alberta Market Performance -- On a population-adjusted basis, first-time depositors and daily active users are tracking at approximately 2-fold the levels observed in Ontario during its initial launch phase.
• World Cup Impact -- June and July monthly active users in Latin America increased over 80%, with more than 25% of new first-time depositors cross-selling into casino products.
• Share Repurchases -- The company repurchased $29 million worth of shares under its existing program, with the board authorizing a new $100 million repurchase program.
• Sports Hold -- Record sports hold levels in Colombia and North America during the quarter, supported by NBA playoffs and World Cup results as well as an improved mix of parlay and prop bets.
• Full Year 2026 Financial Projections -- Management projected depreciation and amortization of $47 million, stock-based compensation of $30 million, and a tax expense of $74 million.
• Adjusted Earnings Per Share (EPS) Guidance -- Approximately $0.62 for the full year 2026 based on the midpoint of current financial guidance and a fully diluted share count of 237 million.
• Colombia Tax Assumption -- Guidance continues to assume a 16% value-added tax on gross gaming revenue remains in effect through the end of 2026.

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RISKS

• Sauers stated, "Gross margins for the quarter came in at 35.5%, a continuing improvement reflecting our faster growth in higher margin markets, but still negatively impacted by the temporary tax in place in Colombia," highlighting the regulatory pressure on profitability in that region.

SUMMARY

Management reported record quarterly revenue and adjusted EBITDA, driven by a casino-first strategy and significant growth in Latin American markets. The company raised its full-year 2026 guidance for both the top line and profitability, reflecting market share gains in North American online casino operations and early success in the newly launched Alberta market. Capital allocation focused on share repurchases, while the balance sheet remained debt-free with $340 million in cash. Management indicated that marketing efficiency has improved, prompting plans for increased investment in user acquisition throughout the second half of the year to capitalize on high return-on-investment opportunities.

• CEO Schwartz noted that 25% of World Cup depositors cross-sold to casino products, stating this is "about 50% higher than what we saw during the Copa America two years ago."
• The company filed for a CFTC designated contract market license to maintain flexibility in the prediction market space, though Schwartz stated the company does "not intend to lean into the crowded sports-focused prediction market space."
• CFO Sauers indicated that third-quarter adjusted EBITDA is expected to be the low point for the year due to "additional marketing spend in Q3, particularly with the Alberta launch."
• Management expressed optimism regarding the 2026 political landscape in Colombia, as Schwartz noted the winning presidential candidate's "pro-business agenda will provide a constructive backdrop for our industry."
• The company is prioritizing online casino legalization in U.S. states facing funding gaps, with Schwartz identifying Illinois and New York as jurisdictions where "new and sustainable sources of recurring revenue" may drive policy changes.
• The Alberta launch on July 13 is tracking ahead of previous regional entries, with daily active users approximately 2-fold higher than Ontario's performance at the same stage.
• Management confirmed that sequential North American monthly active user growth in the second quarter was the first time in six years that player counts rose from the first quarter to the second quarter.

INDUSTRY GLOSSARY

• ARPMAU: Average Revenue per Monthly Active User, a metric measuring the financial contribution of each active customer.
• Copa America: A major international soccer tournament involving national teams from South America.
• FTD: First-Time Depositor, a key acquisition metric representing a new customer who funds their account for the first time.
• GGR: Gross Gaming Revenue, the total amount of money wagered by players minus the winnings paid out to them.
• iGaming: Online casino games including slots, table games, and poker played for real money.
• MAU: Monthly Active User, defined as a unique user who placed at least one real-money bet in a given month.
• VAT: Value-Added Tax, a consumption tax placed on a product whenever value is added at each stage of the supply chain.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive second quarter 26 earnings conference call. All participants are in listen only mode. A question and answer session will follow the formal presentation. Please note that this conference call is being recorded today, July 29, 2026. I will now turn the call over to Kyle L. Sauers, President and Chief Financial Officer. Please go ahead.

Kyle L. Sauers: Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 26 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, 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 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, 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 second quarter 26 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 when discussing profitability, EBITDA or other income statement measures other than revenue, we are referring to those items on a non GAAP adjusted EBITDA basis.

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

Richard Todd Schwartz: Thanks, Kyle and good afternoon, everyone. Before I dive into our second quarter results, I want to take a moment to acknowledge that while Kyle and I have the opportunity to present these results each quarter, our continued success is driven by the exceptionally smart dedicated, and experienced management team we work with every day. As well as our talented employees across the organization. I want to thank the entire team for all their hard work and dedication and for once again delivering record revenue and adjusted EBITDA which continues our consistent track record of strong performance. I am particularly proud that we deliver our fast quarterly revenue growth in over 4 years.

Even while operating from a significantly larger revenue base. We generated revenue of $394 million up 46% year over year. And adjusted EBITDA of $64.6 million up 61% year over year. Our results this quarter reflect the continued strength of our casino first strategy, disciplined execution across operating regions, alongside a well planned and strongly executed World Cup period. Our casino first approach remains the foundation of our business model. Online casino continues to be our primary value driver. With sports betting and poker serving as important complementary products to drive incremental profitability brand awareness, and bring new players into our ecosystem. Online casino continues to be our fastest growing products segment in both North America and Latin America.

This quarter, online casino represented 72% of our revenue, with online sports betting contributing most of the remaining 28%. A mix that continues to support the consistent engagement higher lifetime values, stronger retention that come with our casino players. Player growth remained strong across both regions. Monthly active users in North America grew 51% year over year. To over 296 thousand with growth in our North American online casino market reaching 64% year over year. In Latin America, which includes Mexico, miles grew 62% year over year, to over 652 thousand. Across the company, we again delivered record first time depositors and continue to deliver attractive player acquisition costs. Reflecting the ongoing advancements in our brand awareness, and marketing efficiency.

We just finished a month of exciting World Cup soccer. And I am incredibly proud of our teams and the results we produced. There was incredible effort and execution that went into our marketing programs, player engagement and operations, merchandising our offerings in a compelling way to our players and, of course, ensuring our technology performed fast and reliably at record volumes. The end result was very successful outcomes. Both in terms of near term financial impact and more importantly, impressive acquisition and reactivation efforts. Especially in Latin America. In June and so far in July, our monthly active users in Latin America are up over 80%.

Another good sign is that >25% of our new first time depositors that joined us during the World Cup have engaged with our casino product as well. This is about 50% higher than what we saw during the Copa America 2 years ago. So this is an encouraging sign and validating that the work we have put into improving the cross sell flows have delivered positive results. When it comes to the specific results, both handle and hold came in very nicely for the World Cup in June. In fact, Q2 was our highest sports hold in Colombia since inception. Driven by solid World Cup results.

In North America, we also again, had our highest sports holds since inception, driven by both NBA playoffs and positive World Cup results. This was not just good outcomes. it is a reflection of an improving product and improving mix of parlays and prop bets. That drive higher hold. Turning to the political situation in Colombia specifically, In June, Colombia held its widely anticipated presidential election. With the winning candidate scheduled to take office, at the end of next week, We believe that his pro business agenda will provide a constructive backdrop for our industry and for the broader operating environment in the country. These policies appear to be in stark contrast to the existing and opposing party.

To be clear, the results of this election have no impact on our reported numbers or guidance today. The new government's broader review of prior tax decrees and future budgeting decisions remain outstanding. Therefore, consistent with our prior earnings call, our full year guidance continues to assume that the 16% GGR tax remains in effect through year end. We will keep you updated if there are changes on the regulatory front within Columbia. We are also excited to announce that we successfully launched online and sports in Alberta on July 13th. And while it is still very early days, we are encouraged by what we have seen so far.

As a reminder, Alberta is transitioning out of an unlicensed market So consistent with our experience in Ontario, expect this to be a gradual build. On a population adjusted basis, first time depositors and daily active users are currently tracking at approximately 2x the levels we saw in Ontario, at the same point following launch. it is, of course, very early, but we are excited to watch the Alberta market build over the coming quarters. Moving on to the topic of prediction markets. This past quarter, we filed an application for a CFTC designated contract market license.

As we have stated previously, we continue to operate with a casino first focus and do not intend to lean into the crowded sports focused prediction market space. However, prediction markets landscape is highly dynamic we will continue to monitor developments in the space. And this filing ensures we have the flexibility to navigate all possible outcomes. As we look to the second half of 2026, we remain confident in the strength and continued durability of our business. We are executing well and taking market share across our core markets. We are off to a strong start in Alberta, a market with meaningful long term opportunity. And we see continued significant growth ahead in the other markets where we operate.

With that, I will turn it back to Kyle to discuss the financial details.

Kyle L. Sauers: Thanks, Richard. Let me walk you through the details of our second quarter performance. Record second quarter revenues of $394 million represents 46% year over year growth. A continuation of our accelerating growth and a new watermark for our fastest growth rate in over 4 years. This performance was driven by strong execution across all of our business, particularly in our 2 areas of primary focus, online casino, and Latin America. Gross margins for the quarter came in at 35.5%, a continuing improvement reflecting our faster growth in higher margin markets. But still negatively impacted by the temporary tax in place in Colombia.

Marketing efficiency continues to be a key component of our success, with marketing expenses of $48.6 million in the quarter, an increase of 34% year over year and representing 12.3% of total revenue compared to 13.4% in the prior year period. As Richard mentioned, we continue to see attractive player acquisition costs alongside strong player growth. Therefore, we expect to continue investing marketing dollars throughout the second half of the year particularly as we ramp in Alberta. In fact, because our efficiency continues to improve, even as we have been scaling up, we now expect to spend more on marketing than previously planned in the second half.

So we have always said when we find strong ROI opportunities, we will increase our marketing spend. G&A for the second quarter was $26.5 million or 6.7% of revenue compared to 7% in the prior year period. As previously discussed, while we are achieving leverage over this line item, have been increasing our investments in people and technology in 2026 to support our growth. Turning to profitability. Adjusted EBITDA reached a record $64.6 million representing 61% year over year growth and 16.4% margins. We continue to demonstrate scalable profitability expansion through the operating leverage built into our business model.

Additionally, while our year over year adjusted EBITDA growth remains strong, it is worth noting that on a sequential basis, Q1 had the benefit of no extra tax in Colombia for about 2.5 months during the constitutional court's reversal of the prior emergency decree whereas Q2 and the remainder of 2026 assumes a 16% VAT in Colombia. And for context, that benefit in the first quarter was around $7 million. Net income for the period was $29.3 million compared to $28.8 million in the prior year period. Representing a 2% year-over-year increase. User acquisition and retention continue to be key pillars of our success.

As Richard mentioned, our user growth this quarter hit record levels once again, while also setting another record for first time depositors. In North America, monthly active users grew 51% year over year to over 296 thousand with miles in online casino markets growing 64% year over year. In Latin America, MAUs grew 62% year over year to over 652 thousand North American ARTMO was $320 in the second quarter, down 18% year-over-year over year, but up modestly from the first quarter.

As we discussed last quarter, this reflects the impact of our player acquisition levels, Newer player cohorts start at lower value than our established base, but we continue to see this as both healthy and consistent with our historical experience as these cohorts mature over time. In Latin America, ARTMAU was $55, up 82% year over year. Reflecting continued strength across the region, the elimination of bonusing in Columbia to offset last year's VAT on deposits, and favorable movements in the Colombian currency. Breaking down our performance by geography and product, we saw continued strength across all areas. In the second quarter, online casino revenues grew 40% and sports betting revenue grew 64%.

Regionally, revenue in North America grew 23% in the second quarter, and revenue in Latin America grew 195%. Growth remained broad based across regions and products, and we continue to see the benefits of the brand awareness and player loyalty that we continue to build Our balance sheet remains strong with $340 million in cash on hand as of June 30th, and we still have 0 debt on our books. In May, we completed a secondary offering of which we repurchased approximately $29 million worth of shares under our $50 million share repurchase program And then in addition, our board authorized a new $100 million share repurchase program, which allows us to continue to be opportunistic with share repurchases.

Now turning to guidance. We now expect revenue in the range of $1.56 billion to $1.6 billion representing year over year growth of 38-41%. At the midpoint of $1.58 billion, this represents a $65 million increase from our previous guidance and 39% year-over-year growth. This increase reflects continued share gains in North American iCasino, sustained outperformance across Latin America, and a well managed World Cup period. For adjusted EBITDA guidance, we now expect it to be in the range $245 million to $265 million representing year over year growth of 59-72% At the midpoint of $255 million, this represents a $15 million increase from our previous guidance, and 66% year-over-year growth.

This is inclusive of our plans to further lean in that efficiency by increasing our marketing investments in the second half of the year. We are pleased by the continued strength of our business, We are growing both rapidly and profitably, and we remain confident in our ability to deliver on our full year guidance. And with that, operator, we are ready to take questions.

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality If you are muted locally, remember to unmute your device. Please stand by while we compile the Q&A roster. Your first call is from Bernard McTernan from Needham. Your line is open. Please go ahead.

Bernard McTernan: Great. Thanks for taking the questions. Just had a question on the World Cup customers that you were acquiring. Any thought I know it is early days, but any thoughts on the LTV of those customers maybe versus, you know, customers you are acquiring previously? And then I have a follow-up.

Kyle L. Sauers: Yeah. it is a good question, Bernie. I think I think you are right. It is to probably too early to tell for sure. You know, it certainly, you are going to have some players who are joining just for the, you know, the cultural moment and the excitement around their country and their team. But I think we have proven in the past that in events like this, we can bring people in get them excited about the platform, and keep them around. We mentioned on the on the prepared remarks that we had really good success early on with cross sell in Latin America over to the casino side.

Quite a bit, more so than we did Copa America a couple of years ago. So we are we are really excited about that. But, you are right. it is it is it is pretty early on that.

Bernard McTernan: Okay. Understood. And then wanted to double click on the marketing commentary in the second half of the year. Now investing more than previously planned. Can you just dive into that a little bit more? Is that all Alberta or anywhere else, that you are spending? Thank you.

Kyle L. Sauers: Yeah. No. Good question. I think as you already know, we have we have increased marketing pretty significantly. This year. I think we are up for the whole first half. Maybe it is around 25-26% so far. But I think as the data we have continued to share, the results are really, really strong out of our marketing teams and the strategies they are using. So we just feel like it makes sense to push harder. The player values are still really good. We have continued to push our cost to acquire players lower. So the, certainly, there is more spend because of Alberta and because of that launch a couple of weeks ago.

But really what we were referencing in the call is that we are going to push harder on spend in other markets where we see opportunities. We are gonna like we always have, we are gonna move quickly and be dynamic. So if thing something is not working, we will probably pull back. And at the same time, if other things are working really well, we are gonna lean in further. So maybe just to put a number around it, which I will I will go back to the fact that we are going to remain flexible.

But maybe sequentially from Q2 to Q3, we might spend something like $7 million to $10 million more On marketing in Q3 compared to Q2. And that is that is inclusive of the Alberta launch.

Bernard McTernan: Understood. Thanks, Kyle.

Operator: Your next question is from the line of David Katz at Jefferies. Your line is open. Please go ahead.

Richard Todd Schwartz: As a reminder, please remember to unmute your handset. And if we go to the next person operator, and we will can circle back to David.

Operator: Your next call is from Zachary Silverberg at Wells Fargo. Your line is now open. Please go ahead.

Zachary Silverberg: Hey. Good afternoon, and thank you for taking my In the press release and some of the management commentary, you mentioned that you continue to see meaningful long term opportunities ahead of you guys. To drive shareholder value. Can you maybe quantify or qualify some of that, and, provide some color on what those opportunities might be.

Richard Todd Schwartz: Yeah. Hey, Zach. it is Richard. I think the 2 areas that I would just focus on clearly is that we have a large percentage of the population in America, North America, are not yet legal for online casino and it is Alberta just launching on July 13th and represents a really meaningful new opportunity for us.

What I would also indicate is that within existing markets where we are operating, today, I think because historically our brand does not have the same high awareness as some the other brands we compete with, there is a large percentage of the population in these jurisdictions that have not really had their first experience with us And when they do have it, it is a it is a positive experience for the most part which is why we have been able to deliver the type of results where we are growing share and getting exposure from new players to our platform the first time in many cases.

So I think we are really excited for the ability for us to continue to grow share in our existing markets And also, naturally, we have these other 88% of The US population, which today is not yet able to play online casinos. So I think between those things and then you bring it to Latin America, all the jurisdictions down there that are legal and regulated that we have not entered yet. Certainly are really excited by all the opportunities ahead of us.

Kyle L. Sauers: Yeah. And the only thing I would add to that is that is going to drive that the top line, which is obviously key to the success. But as we have been doing, for several years now, pretty consistently, we would expect to be able to get leverage over all of our different P and L line items, as we continue to grow.

Zachary Silverberg: Got you. Appreciate that. And just for my follow-up, maybe if you guys have any updated view or outlook on the potential legalization landscape. You know, we have heard from 1 of your peers that they are kind of expecting Virginia, DC, Obviously, we know about Maine's, Maryland, maybe just any commentary on that would be great. Thank you.

Richard Todd Schwartz: Sure. Yeah. I mean, for us, each new online casino market is meaningful to us. So we are working hard as you we have said in the past to try to educate legislators to try to improve the pace of legalization. We remain optimistic with a long term outlook for iGaming and believe that jurisdictions will legalize over time.

I think 1 of the key drivers is going to certainly be that reduction in federal support and some increased fiscal responsibilities for states over the next 2 fiscal years. it is going to create even more pressure on funding gaps that we think the reductions in major social programs in many states including some of the very large population states like Illinois and New York, are going to create opportunities for a greater emphasis on new and sustainable sources of recurring revenue. So we believe that is going to drive the discussion around proven revenue generating policy proposals like online casino legalization.

I think between that protecting consumers and for the first time, starting in October of this year, you are going to start to see some impacts from of these major social programs reductions. And so I think that is going to become real and that is going to be a in terms of deficits and gaps that the states are gonna have. And so we feel like it is a good time to kind of have a momentum being built. So we feel in terms of specific states, I know that MGM referenced a couple of states yesterday.

I think Virginia clearly is 1 that progressed furthest during the 2026 legislative sessions and each chamber passed its own authorization bill before they failed to reconcile it before they adjourned but there is certainly going to be another effort this next year. You know DC you referenced certainly that is an active opportunity. Indiana, Ohio, our other markets that we have an eye on and we are monitoring and being active when possible to try to accelerate some adoption opportunities there.

Zachary Silverberg: Thanks for all the call.

Operator: Your next question is from the line of Jed Kelly at Oppenheimer. Your line is now open. Please go ahead.

Jed Kelly: Hey, great. Thanks for taking my questions. Just circling back on MAUs. Are you seeing any change in the CAC or what is going on with the spending? And can you just talk about more where you are north American MAUs is coming from? Is it more slots first, or are or are you adding more success with some of your sports first customers that might be a little more table game centric? Thanks.

Kyle L. Sauers: No, good question, Jed. I think the reality is that the our cost to acquire players has continued to go down. Most of our spend in North America has been in the markets that include iCasino. And a lot of that is, you know, slots first type creative. Obviously, we welcome all kinds of players and we are catering to table players as well. And we clearly, we are still doing quite well in sports. But most of it is casino first and the cost to acquire players has continued to go down. it is it is the and the player values continue to hold up. As well.

So it is it is the primary reason that we are going to be spending more in the in the back half because it is there is a there is a lot of opportunity there.

Jed Kelly: Got it. And then just as a follow-up, you kind of look at the sports that are getting most of the prediction market share, You know, tennis, I think, is doing about 2x the amount of baseball Do you have any insight on what is going on there, and are you seeing certain pockets of your sports handle maybe you know, I mean, down sort of because it is going more to a sharper player or anything you are seeing in some of kind of tennis in particular, if there is anything to call out. Thanks.

Richard Todd Schwartz: Yeah. I do not think we have anything to call out there. That we have seen as a big a big change. But it is an interesting an interesting call out.

Jed Kelly: Thank you, and good job. Thanks, Jed.

Operator: Your next call is from the line of David Katz from Jefferies. Your line is now open. Please go ahead.

David Katz: Hi. Thanks. Hi. Good evening. Appreciate coming back around. It was a misunderstanding with the mute button. I wanted to just go back good evening. I just wanted to go back to the retention of you know, these high volumes of players that you are capturing, you know, during the World Cup I think, Richard, in your prepared remarks, you talked about the ability to cross-sell them over to casino, being 50% higher than from Copa. But if we look out into the future, your ability to retain those people in your system over time, is there any perspective or any data you can give us to that end?

Kyle L. Sauers: Yeah. So I think it is challenging to have a great comparable to this event. You know, the World Cup, as we all know, was in the right time zone this time around for people in The Americas to watch it and engage a lot more meaningful way. Our business has changed dramatically. Since the last World Cups, even since the COPA, which was more of a LATAM event for us. In the North in North America, we had really, really good engagement It was more about a reactivation and using the World Cup as a, you know, a pop culture event to engage people across the platform.

And in Latin America, it was a really big player acquisition opportunity for us, and we are really pleased with how that turned out. 1 thing I will I will point out is that after COPA, even though I just mentioned, it is not the greatest comparable because we are so much larger at this point. The product's better. We saw a nice inflection after COPA, in our casino volumes down in Columbia And so we are we are certainly hoping to be able to capitalize on a similar situation this time around. So I think good early signals, but too early to give too much detail.

David Katz: Understood. And if I can ask 1 follow-up from a longer term nature, You know, I noticed some of the other Latin American countries that you have listed as potential future opportunities So at least the last couple of quarters in your deck, You know, how far away or what are the gating factors for those to become a reality?

Richard Todd Schwartz: Yeah. Thanks for that question. So as you can imagine, we are very thorough here, and we are very focused on making sure that we pick the right markets to enter and we do so in the proper way where prepared for success. And so there are markets down there that, as you know, are legal and regulated that are exciting, but we are having to sort of have a lot of growth as you see in our existing markets and we have to be very thoughtful about how we invest in additional markets. But there are, you know, thoughts and efforts going into additional expansion in other markets down there.

Certainly it is not something we are prepared to share at this time.

David Katz: Okay. Thank you very much. Thanks, David.

Operator: Your next call is from the line of Daniel Politzer from JPMorgan. Your line is now open. Please go ahead.

Daniel Politzer: Hey, good afternoon, everyone, thanks for the questions. First, I want to touch on the prediction-- the application you filed with CFTC. Can I know you mentioned that you do not intend to lean into the crowded sports area here? But I guess, you talk about maybe what this allow you to do specifically? Do you envision yourself as you know, a taker or a maker? Is this kind of, you know, just kind of a way to kinda give optionality? How are you thinking about this kind of in the medium or longer term?

Richard Todd Schwartz: Yeah. We do view the applications as a way to preserve our strategic flexibility to maintain our optionality as you just mentioned. Ensure that we are not caught flat footed should the market or regulatory environment evolve in a way that becomes relevant for our business. So it is really just being prepared and preserving optionality.

Daniel Politzer: Okay. Great. And then can you talk about maybe what you are seeing in terms of the competitive environment within iGaming? Obviously, you have been acquiring a lot of users. I know that you are seeing it sounds like strong LTVs and CACs. But in Michigan or any other states, have you seen any incremental competition or even wallet impact from prediction markets?

Kyle L. Sauers: So I think on your last piece on the prediction markets, I think the answer is we do not believe so. Obviously, it is hard to know for sure. Think on the on the competitive intensity, listen. there is-- it depends on the numb the number of operators in a given state or market, in North America, of course. But there is really good competition, and we have had to deal with that for a long time. There are some new competitors that have entered in a couple of our markets. Which certainly increases the competition.

And we have had some of our competitors who have I think, recognized that iCasino is a is a great place to focus on and have talked about putting more efforts there. But all the while that is been happening, we have been consistently growing market share for I think, 4 straight quarters here. So we are very proud of that.

Daniel Politzer: Understood. Thanks so much. Thanks, Daniel.

Operator: Your next question is from the line of Ryan Sigdahl from Craig Hallum Capital Group. Your line is now open. Please go ahead.

Ryan Sigdahl: Hey, good afternoon, Richard, Kyle. I wanna double click on the World Cup. The activations Well, let's start reactivations in North America. Just given that strong 25% cross-sell to iCasino. Was there a specific focus on players that maybe had a higher potential to play at casino, or is it just product, everything, you know, is kind of guerilla across the board? And then maybe secondly on that, just the Latin America activations. Was there also you know, specific player targeting for players that may be had a higher likelihood of playing iCasino or that you thought would?

Kyle L. Sauers: Yeah. So just for clarification on that data point that Richard had given, that was related to Latin America. So I just wanna make sure that was that was clear. And I think you are right. There was a lot of different efforts And different styles of marketing and trying to attract different types of players. We definitely leaned into sports first and World Cup first in the Latin American markets and obviously had a lot of success with that. I do not know, maybe clarify if I missed a piece of your question there.

Ryan Sigdahl: Yeah. Just on the reactivations in North America. If there was a specific focus on maybe players that had gone-- you know, were not active anymore, gone inactive, but had I guess, you know, in the past if they were a greater focus. Just curious how you kind of focused from an activation or reactivation on iCasino players.

Richard Todd Schwartz: Yeah. It was across the board. Right? I mean, when you think about reactivations, you know who the people are and you know information about them so you can tailor the message and the creative to them based on what you know about their past experiences and their interests. So it was I think it was kind of all of the above there.

Ryan Sigdahl: Very good. Just for a quick follow-up, Kyle. The increased marketing spend, that is pure kind of marketing spend through OpEx, right? Curious how you think about promotions in conjunction with that.

Kyle L. Sauers: Yeah. So, yes, that increase is that is intended to show up in the in the marketing line on the p and l. Correct? From a bonusing perspective, you know, obviously, the more new players we are bringing in, that can have an impact on bonusing. I think we have continued to refine our bonusing strategies. Adjust those as we go, and it is different depending on the market. The rules, the how taxes are affected by bonusing. How players engage with bonusing. I will point out that our bonusing sequentially this is this is a North American comment, but bonusing sequentially is down In Q2. Up a little bit year over year.

But it is an area we spend a lot of money on bonusing. Right? We pay a lot of attention to it, and we wanna make sure the right bonuses are going to the right people. Other than hopefully, extra new players coming in because of extra marketing spend, and some associated bonusing with them. I would not I would not, think about a big change in bonusing strategy otherwise. You know, outside of typical seasonality heading into the football season.

Ryan Sigdahl: Great. Guys. Nice job. Thanks, Ryan.

Operator: Your next question is from the line of Mike Hickey at Stonex. Your line is now open. Please go ahead.

Michael Hickey: Hey, Richard, Kyle. Congrats, guys. Awesome quarter. I guess the first topic, Kyle, the second half revenue and EBITDA cadence post 2Q here, how should we think about I guess, post February and your raised numbers for the year, how should we think about the relative cadence of revenue and EBITDA between 3Q and 4Q?

Kyle L. Sauers: Yeah. Good question, Mike. I think first thing I will point out, we mentioned that we had really strong hold in Q2 from on the sports side. So Q2 was aided by that and probably benefited revenue. by around $10 million. So after you net that out of Q2 results, to think about the sequential look going forward. At the midpoint of our guidance, I would probably expect Q3 revenue to be relatively flat with Q2. So ex-that $10 million, Q3 being up by around $10 million over Q2. Obviously, there is a there is a range of around that, but that is the way I think about it.

And then like we typically do, we would we would expect a real nice uptick in revenue from Q3 into the fourth quarter. And if I move to EBITDA cadence, if you think about a revenue that is kind of flat from Q2 to Q3, We are talking about additional marketing spend in Q3, particularly with the Alberta launch. And then spending even more in marketing than we previously planned. I think it is likely that Q3 EBITDA will be the low quarter of the year for us.

And then with Q4 being a sizable step up in EBITDA due to, you know, much larger revenue, And then moving away from the Alberta launch costs, So I think that is largely in line with what analysts are already modeling. Given our previous, commentary and kinda historical results. I guess maybe you did not ask this 1, but while I am at it, I will I will talk about adjusted EPS real quick because as we become kinda consistently growing and profitable it is a metric that some investors are looking at in addition to EBITDA. So just a few components for people to be able to, have some help with modeling.

And I will give I am gonna give you exact amounts. But keep in mind, there is a range of outcomes associated with each of these. But depreciation and amortization is probably around $47 million for the full year. Stock comp expense is around $30 million for the year. Interest income around $12 million. Tax expense of around $74 million. And then a fully diluted share count, of around 237 million. So at the midpoint of guidance, if you if it is just all those numbers, midpoint of the guidance, that gets you to about $0.62 in adjusted EPS for the year. So as people are modeling, hopefully, that gives a little more, color that everyone can look back at.

Michael Hickey: Nice. Thanks, Kyle. Keep you talking here. Maybe Richard too. Just on your 2028 growth opportunity, sort of as you are today, what you think are sort of the most important drivers that could help you sustain that double digit revenue growth from your current base and you know, at least on 2028, how much further can you take EBITDA margins or maybe how we should think about those will take shape for you. And I guess just overall, Kyle, how we think about the World Cup as a comp and in 2028. I mean, is it sort of the unlock for growth if you retain and cross sell like you expect?

Or is that elevated volume and the success that you had sort of more of a challenge for you as you look at 2028 Thanks, guys.

Kyle L. Sauers: Yeah. So I will take that last piece first maybe. I would certainly a comp element there. I think we are we are because it added significant number of games to the meaningful soccer schedule for the world, in 2026. Right? So there is a it does impact comps next year, and we and we had nice hold. So that is an element I feel very good that with the rest of our growth profile, and the number of players we have added and reactivated, through that big event that will help us push through those, those tougher comps, next year. You said 2028, and we are assuming you are talking about 2027. Did mean 20 July. Sorry about that.

So we do not skip the year here. Go ahead. So, you know, we will we will it is a little early for that. We will we will give 2027 guidance in a couple quarters, but I think here's here's a few things to think about. You know, we are obviously in a growth industry, a really nice growth industry. And we have been able to consistently take share the North American iCasino market where we where we are focused in North America. So I think in 2027, think we feel good about taking our fair share of the industry growth. In North American sports, I would not expect, as much growth from us.

That part of the industry has slower growth, and we are not investing as much or that much in player acquisition in the sports only markets. And then if you go south to Latin America, again, the markets that we are live in are growing really nicely. We believe we are taking share in all of those markets. And we would expect those to be significant growth drivers for us. And then you know, if you move down the p and l, I would I would expect that we will continue to see operating leverage again next year, just like we have seen over the last 4 years. We are growing more quickly in our higher margin markets.

So with all else being similar, the revenue mix alone should improve our gross margins. And even when adding in the investment market of Alberta, we would expect to get leverage over marketing spend next year. I suspect the same would be the case with GNA as well. And the only wild card I would throw in is if back to a question Richard was responding to earlier, If we have an a new, state or 2 in The United States legalized, and launch iGaming next year that would change the profile a little bit. But I am sure that is something we would all welcome.

Michael Hickey: Nice. Thanks, guys. Good luck. Mike.

Operator: Your next question is from the line of Joseph Stauff at Susquehanna. Your line is now open. Please go ahead.

Joseph Stauff: Good after or good evening. Richard, Kyle. You know, your North American active growth is impressive. But I was wondering if you could talk just structurally about you know, how this pays off and when it pays off in terms of, you know, say, ARPMAU. If and I do not know how you wanna discuss that, but certainly, you know, it is been fertile. You know, you are active growth has accelerated it is even higher this quarter. Seems likely to continue given the investment and it is paid off. Just wondering how to think about if you were to normalize your level of marketing, you know, the how we see that sorta in the ARPMAU?

Is it you know, does a new customer that you acquired, call it, you know, the third quarter, do they contribute maybe a corporate level of ARPMAU a year later, just talking about details of how an iCasino new customer ramps in that spending. I do not know what you could share with us.

Kyle L. Sauers: Yeah. I so without getting into exact numbers, it is a it is a good question, Joe. First of all, I would say I think it is already paying off. When you look at our growth across the business. Our player counts are driving our added players are driving a lot of growth. Right? In terms of the progression of the value of players or maybe a player cohort there is there is 2 things that happen. The longer players stay with us, the more valuable they become. And also, the retention improves dramatically.

So there is a there is a natural falloff for us and for this industry of players that get acquired and early on, you are going to lose a decent amount of those players at least for a while. And then their value builds over time. In iCasino, that payback is faster than in sports. At least that is that is been our experience. In terms of what you know, I do not want to get in the habit of forecasting ARPMAU. You know, future quarters, future years.

If and when our player growth slows, which we are at a pretty high clip right now, so that is that is probably natural that it is going to happen at some point. that is when it is more likely to see that ARPU might increase. You know, it was I think we pointed out that it was it improved a little bit sequentially. Which I think is great. This is actually this is more on the mouse side, but you know, on the denominator. But this is the first quarter in 6 years where or first, second quarter in 6 years where we had a higher player count In North America in the second quarter than the first quarter.

So it just tells you how much we are driving growth there, and how much of it is casino led and not as dependent on the sports season. So, hopefully, that gives you a little bit to think about there, without going into a lot of quantification.

Joseph Stauff: Yeah. No. I appreciate that. And just to clarify, you and Columbia, Richard, you had mentioned sort of the pathway. See next week, you know, where the, I guess, the executive branch of the Colombian government and how they-- you know, if they are going to remove that text or not. But it just remind me, is there a constitutional court pathway as well that is active similar to the last 1?

Richard Todd Schwartz: Yeah. There is. And there is a opportunity to be heard again. The current temporary tax that exists will be heard by the constitutional court, and there is always a possibility that they rule against it, which would mean, you know, there could be a change in that tax impact for us.

Joseph Stauff: Okay. Thanks very much, guys. Thanks, Joe.

Operator: Your next question is from the line of Jordan Bender at Citizens. Your line is now open. Please go ahead.

Jordan Bender: Hey, everyone. Thanks for the question. Maybe to start more broadly, you have obviously had a ton of success down in Latin America under the RushBet brand. Would you guys ever look to bring that to the US just to kind of cater to some of the Spanish speaking population here?

Richard Todd Schwartz: Yeah. Jordan, it is a conversation we do have internally. At times. And certainly, it is something we have considered and thought about. I think certainly a multi brand strategy is something that every operator should consider at some point. Some have already pulled the trigger on that. Certainly, I think that for us, comes down to the right timing to try to address multiple brands in the similar market. Some jurisdictions are easier to have multiple brands, some are more challenging.

But ultimately, I do think that we have an, you know, opportunity to really cater to some of the Spanish speaking Americans certainly would probably prefer at times to play a site that is very native for their preferred language.

Jordan Bender: Great. Thank you. And just to follow-up, just to kinda take another swing at some of the incremental marketing costs. 3Q, that comes at a time when you are normally ahead of the NFL season, you get a ton of spend from the sports betting industry this year. We all kind of can imagine how much is going to be spent on the prediction market side. Is the increase in marketing going into March, is there anything with that to say, you know, maybe that is a little reactionary to what is to come, or is it truly the customer economics of what you are seeing or just very attractive and you are just stepping in ahead of that.

Kyle L. Sauers: I would say zero of it is in reaction to what others are doing and where they are spending and that we feel like we have to match something. It is all about the player economics the player values, and the economics around acquiring those players and how successful we have been and actually improvements we have continued to make within our marketing programs and technology where we think we can, we can spend more and do it at the same rates.

Jordan Bender: Understood. Thank you. Thanks, Jordan.

Operator: As a reminder, if you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Your next question is from the line of Chad Beynon from Macquarie. Your line is now open. Please go ahead.

Chad Beynon: Hi, afternoon. Thanks for taking my question. Just 1 from us. Tonight, just around the prediction markets again. More related to guess, what you saw at the end of the second quarter during the World Cup and maybe into the third quarter, we have seen you know, lots of data in terms of prediction market volumes that are out there. I think most of it is probably in The States where you do not participate.

But just wondering if you could add any additional commentary if you believe that in The States where you have sports betting, so ~28% of your business, if you have seen, you know, decelerating volume trends or anything else that you can kinda talk to help us think about the trajectory of OSB into the back half? Thanks.

Kyle L. Sauers: Yeah. I can-- I will start I think the answer is no. We have not seen that impact. But it is also true that we probably do not have perfect visibility into it. I think the fact that we are not focusing on new player acquisition in sports only markets, and we are doing as well as we are. In sports relative to our peers. Probably tells you that we are not being impacted by it. By it a whole lot.

Richard Todd Schwartz: I would just add as well that we are not catering to the Sharp customers either, you know, potentially the way they may find the prediction markets more appealing and maybe conventional sports book.

Kyle L. Sauers: Yeah. The 1 other thing I was just gonna clarify for you because you did say, you know, you mentioned 28%. Of our revenue. But you gotta keep in mind that about half of that, maybe more than half of it, if I went back and checked, is coming from Latin America. So that is that is not at risk in the areas that you are referring to?

Chad Beynon: Thank you both. Appreciate it. Thanks a lot.

Operator: There are no further questions at this time. We have reached the end of the Q&A session. I will now turn the call back to Richard Todd Schwartz for closing remarks.

Richard Todd Schwartz: Thank you again for joining us today. We look forward to updating you on our progress when we share our third quarter results in the fall.

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

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