For most online gambling companies operating in the United States, straws are too tangible to accurately describe how immaterial turning a profit over a three-month period has been. A more accurate analogy would be trying to hold vapor in your hands.
Rush Street Interactive (RSI), which offers online casino play and online sportsbooks in several US states, came closer than ever to pulling off that feat during the third quarter of this year. Three factors are behind the improvement according to the company’s financials.
Rush Street Interactive gives shareholders good news
The bottom line for RSI shareholders is that they are still not receiving a quarterly dividend from the company. The reason behind that is quite clear. As it stands through the third quarter of 2023, RSI is not profitable.
At the same time, there are reasons those who hold stock are probably holding on right now. RSI has never been closer to reporting an actual profitable quarter. Put another way, the key metrics continued to improve during Q3 2023.
Getting into the actual numbers, RSI stock showed a $0.06 per share loss during the quarter. Gross revenue for the quarter came to $169.9 million, translating into a net loss of $13.4 million. All of those numbers represent significant improvements in the same categories of the third quarter of 2022.
- Loss per share down 40% from Q3 2022 (-$0.10 per share)
- Net loss down down 41% from Q3 2022 (-$22.7 million)
- Revenue up 15% from Q3 2022 ($148 million)
Three facets of RSI’s report stuck out as being most responsible for these marked improvements.
RSI’s progress is simple to comprehend
Grasping why RSI moved closer to showing profit over the course of July, August and September of this year is quite simple. Diminished expenses and greater revenue mean a stronger bottom line. There were three factors behind that more attractive math.
According to RSI’s Investor Presentation for Q3 2023, the expansion of revenue opportunities was a factor. During the third quarter of 2022, RSI was offering online casino games, online sports betting or both in 13 states. Since then, RSI has added two more states — Ohio and Tennessee.
Furthermore, RSI cut its marketing expenses for its BetRivers and PlaySugarHouse products in their markets. On a global basis, that line item shrank to $34.1 million for Q3 2023. That’s a 23.7% decline from the same expense in Q3 2022.
Lastly, RSI cut its expenses in terms of retaining players while also improving upon the revenue it gleaned from those players. In fact, RSI’s average revenue per monthly active user hit a company record of $374 during Q3 2023.
Getting close to being profitable in one quarter does not guarantee that progress will continue. However, there are reasons to believe that could be the case for RSI.
RSI’s positioning could lead to continued improvement
Immediately apparent expansion opportunities when it comes to the US are slim. RSI has no presence in three states soon to launch online sportsbooks — Maine, North Carolina and Vermont. That could change in the latter two, however.
While RSI plans to discontinue operations in Connecticut during the final quarter of this year, that could translate to a push for the business. RSI has become the operational partner for the Delaware Lottery when it comes to online casino games.
Additionally, the company has touted further expansion opportunities in Central and South America. It’s also possible that some of the US states in which RSI currently offers online sports betting will legalize online casino play soon, too.
Failing those avenues, RSI will have to count upon further streamlining of operations and gaining market share to get it over the hump of profitability. While that has been an emphasis for several quarters now, those measures have their limits.
It’s the combination of those three factors, rather than any individual, that could produce a profitable quarter for RSI in the near future. To date, the numbers seem headed in the right direction.