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Online casino and sports betting company Rush Street Interactive (NYSE:RSI) reported results ahead of analysts' expectations in Q2 CY2024, with revenue up 33.5% year on year to $220.4 million. The company's full-year revenue guidance of $880 million at the midpoint also came in 4.1% above analysts' estimates. It made a non-GAAP profit of $0.04 per share, improving from its loss of $0.04 per share in the same quarter last year.
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Rush Street Interactive (RSI) Q2 CY2024 Highlights:
- Revenue: $220.4 million vs analyst estimates of $201.4 million (9.4% beat)
- EPS (non-GAAP): $0.04 vs analyst estimates of $0 ($0.04 beat)
- The company lifted its revenue guidance for the full year from $835 million to $880 million at the midpoint, a 5.4% increase
- Gross Margin (GAAP): 34.4%, up from 33.4% in the same quarter last year
- Monthly Active Users: 164,000 at quarter end
- Market Capitalization: $795.2 million
Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE:RSI) is an operator of digital gaming platforms.
Gaming SolutionsGaming solution companies operate in a dynamic and evolving market, and the digital transformation of the gaming industry presents significant opportunities for innovation and growth, whether it be immersive slot machine terminals or mobile sports betting. However, the gaming solution industry is not without its challenges. Regulatory compliance is a crucial consideration as companies must navigate a complex and often fragmented regulatory landscape across different jurisdictions. Changes in regulations can impact product offerings, operational practices, and market access, requiring companies to maintain flexibility and adaptability in their business strategies. Additionally, the competitive nature of the industry necessitates continuous investment in research and development to stay ahead of competitors and meet evolving consumer demands.
Sales GrowthA company's long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last five years, Rush Street Interactive grew its sales at an incredible 86.9% compounded annual growth rate. This shows it expanded quickly, a useful starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Rush Street Interactive's annualized revenue growth of 22.7% over the last two years is below its five-year trend, but we still think the results were good and suggest demand was strong.
This quarter, Rush Street Interactive reported wonderful year-on-year revenue growth of 33.5%, and its $220.4 million of revenue exceeded Wall Street's estimates by 9.4%. Looking ahead, Wall Street expects sales to grow 8.3% over the next 12 months, a deceleration from this quarter.
Operating MarginRush Street Interactive's operating margin has been trending up over the last year, but it still averaged negative 6.6%. Its large expense base and inefficient cost structure mean it still sports inadequate profitability for a consumer discretionary business.
This quarter, Rush Street Interactive generated an operating profit margin of 1.9%, up 10.6 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.
Key Takeaways from Rush Street Interactive's Q2 ResultsWe were impressed by how significantly Rush Street Interactive blew past analysts' EPS expectations this quarter. We were also excited its revenue outperformed Wall Street's estimates. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock traded up 12.6% to $11.24 immediately following the results.
