RSI - NYSE

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Rush Street Interactive First Quarter 2025 Earnings Conference Call. All participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note that this conference call is being recorded today, April 30th, 2025. I would now turn the call over to Kyle Sauers, Chief Financial Officer.

Thank you, operator and good afternoon. By now, everyone should have access to our first quarter 2025 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 one-time or non-recurring items, and other adjustments that are either non-cash or are 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 2025 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 to questions. And with that, I’ll turn the call over to Richard.

Thanks Kyle. Good afternoon and thank you for joining us today for our first quarter 2025 earnings call. We have started the year with strong momentum, continuing to build on our success from last year. Our first quarter revenue was $262 million, up 21% year-over-year, and adjusted EBITDA was $33 million, almost double compared to the same period last year. We continue to achieve strong results by prioritizing innovation and the quality of our player experience, while at the same time, excelling in the efficient acquisition and retention of high-value players. In essence, we are consistently adding more players to our platform, these players are of higher value, and we are acquiring them as efficiently as ever. This growth is driving significant profitability and reinforcing our strong momentum. During the first quarter, we continued to experience solid growth in both our online casino and online sports verticals. Online casino grew by 25%, while sports betting grew by 11%. The growth in sports betting occurred despite player-friendly outcomes throughout March Madness as well as the Philadelphia Eagles' Super Bowl win, which impacted us because of our large sports betting player base in the Delaware, South Jersey, and Pennsylvania areas. The balanced expansion across product verticals is a proof point to our persistent efforts to enhance the user experience across all product verticals and customer touch points as we attract and retain high-value players. Our strategy of differentiating our offerings continues to pay off, driving engagement and retention on our platform. In North America, MAU growth for the quarter was 17% year-over-year and in Latin America, our MAUs continued to expand at a high rate, growing 61% year-over-year compared to last year's quarter. In fact, March was the second highest level of MAUs in LatAm despite the tax situation in Colombia, trailing only last July when Colombia played in the finals of the Copa America. I will touch more on the tax situation in Colombia in a few minutes to provide an update from our last call. First, a few takeaways worth noting that underlie the strong results. Domestically, we saw very solid growth across the board with year-over-year revenue growth in 15 out of our 16 North American online markets. This despite the challenging sports hold in Q1 of this year that I referenced earlier. Our markets with both online casino and online sports betting, such as Michigan, Delaware, and New Jersey continue to perform exceptionally well. For example, in Michigan, we demonstrated impressive growth with revenue up 40% during the quarter. In Delaware, this was our first quarter with year-over-year comparisons and the revenue growth exceeded 80%. While we anticipate facing tougher comparisons as the year progresses, these Q1 results underscore our continued enthusiasm for this market. New Jersey also remained a strong contributor, growing 27% during the quarter. As the industry approaches the 12th year of legalized online casinos in the State of New Jersey, the market has shown consistent year-over-year revenue growth, and we believe it serves as a prime example of the long-term prospects and durability of the online casino industry. Internationally, we continue to generate strong results. In Mexico, growth accelerated from Q4, and we are seeing year-over-year growth near 50% as we begin our third full year. In Colombia, our GGR was up 55% in local currency, while we've been navigating the temporarily imposed 19% value-added tax on player deposits. On our last earnings call, we were only a few days into the new Colombian VAT tax, and we're uncertain about how we'd approach the change and the impact on us and the broader market. In response, at least up to this point, similar to others in the market, we have been absorbing the tax through higher bonusing rather than passing the cost on to our players. This approach has allowed us to retain our market share, maintain strong player activity and keep GGR levels near all-time highs, albeit with lower NGR. To provide clarity on the upcoming timeline, recall that the Colombian President issued two emergency decrees, one declaring a state of emergency in the Catatumbo region due to increased Gorilla activity, which would be the basis to institute emergency tax increases and another imposing the actual 19% VAT tax to fund efforts against the Gorilla threat. Just recently, the President chose not to renew the state of emergency decree as of April 24th. Both decrees are under automatic review by the Colombian Constitutional Court. A summary of the court's ruling on the first decree was released yesterday, providing that the first decree was declared constitutional in limited part. We will review the court's full opinion on this decree once available. Regardless, the court must separately and independently rule on the second decree's constitutionality, which is likely by late May or June. Depending on these court rulings, we and our competitors may adjust the bonusing strategies to better suit operators. Regarding legislative activity, there has been exciting progress in online gaming legislation in Alberta. The iGaming Alberta Act, known as Bill 48 has advanced to the third step of a five-step legalization process, moving to the committee stage. This bill aims to establish an open market for online sports betting and online casinos in the province of Alberta, transitioning from the current monopoly model operated by state-owned Play Alberta. The bill proposes creating the Alberta iGaming Corporation to manage contracts with operators, while regulation will be handled by the Alberta Gaming, Liquor and Cannabis Commission. These changes are designed to bring unregulated operators under a regulated market, similar to Ontario's model. We are excited about the progress made and expect to be operating online casino and sports betting in this market next year, leveraging our success in online casino markets in North America. We continue to monitor sessions in various U.S. states. The increasingly challenging economic realities faced by states, combined with the proven financial and consumer protection benefits of our regulation and the fact that unregulated online casinos in the form of online casino sweep stakes and offshore casino sites already exist in the states, creates a compelling case for the legalization, regulation, and taxation of online casinos. The reality is that legalizing online casino remains one of the best options for state governments to make up any near or long-term budget deficits. It's reliable, proven, and straightforward for states to implement. In short, legalizing online casinos would be an additive contributor to state budgets, generate large and meaningful tax amounts for states, and in states where land-based casinos already exist, grow the overall pie of gaming revenues for those states. As more states recognize the dual benefits of protecting their citizens and generating substantial tax revenues, we believe the iGaming legalization will gain momentum in the coming years. Reflecting on the current economic macro situation, we are a well-positioned pure play in the online casino and OSB space. Our digital platform offers a very high-quality entertainment, along with affordability and convenience. This makes it an attractive option for consumers, especially during challenging economic times. The accessible nature of our content makes it an appealing source of entertainment, positioning us as a resilient and well-positioned among other consumer-facing industries. We believe that our focus on delivering consistent performance and driving value for our shareholders will continue to make us a strong performer. Our platform's ease of use, affordability, and innovation, combined with our award-winning customer service, are key factors that are helping us to excel during these challenging times and will contribute to us continuing to be an outperformer. I want to emphasize our unwavering commitment to delivering value to our shareholders and providing an unparalleled gaming experience to our users. Our success over recent years has set a strong foundation, and we are optimistic about building on this foundation going forward. Thank you for your continued support and confidence in Rush Tree Interactive. With that, I'll turn the call over to Kyle.

Thanks Richard. First quarter revenue was $262.4 million, up 21% year-over-year, driven by strong growth of approximately 25% year-over-year in online casino and approximately 11% in online sports. It was very encouraging to see that our first quarter results were also strong across market vintages and geographies. In the first quarter, North American MAUs were 203,000, up 17% year-over-year, while ARPMAU in North America increased to $368, up 3% year-over-year. The fast growth in players, while maintaining and even increasing our leading ARPMAU level is a testament to our underlying strategic focus on user engagement and retention. As you would expect, our player growth is faster in the higher-value markets that include iCasino since that's where we invest more of our resources. In Latin America, as Richard mentioned, we continue to experience high levels of player growth with our MAUs increasing year-over-year by 61% to 354,000. This player base is a new quarterly record for LatAm in total, but also a new quarterly record for Colombia, even in the face of the temporary VAT tax implementation. Our ARPMAU in this region was $36. As you would expect, ARPMAU in LatAm was impacted by the higher bonus in Colombia that Richard explained earlier. For those that track our MAU and ARPMAU trends closely, we've added a table in the back of our investor deck that shows historical trends. I'll point out that we've made some immaterial changes to the historical numbers to be consistent in all markets by only including players who have placed real money wagers in that data, essentially excluding players who have only placed wagers with bonus money. Moving to gross profit margins. In the first quarter, they increased by 125 basis points compared to last year to 34.9%. This improvement was driven by ongoing trends in revenue diversification and higher revenue growth in our more profitable markets. On the marketing front, we remain disciplined and deliberate with our spend. We are allocating more resources to markets with better return opportunities while maintaining flexibility in our investments. In the first quarter, we increased marketing spend by 3% compared to last year, yet achieved leverage over our marketing spend and delivered another record EBITDA quarter. First quarter marketing spend was $38.8 million or 15% of revenue compared to 17% of revenue during the first quarter last year. Our cost to acquire players in North America continue to be near the lowest they've been since going public and just as important, our first-time depositors in North American iCasino markets, even when we exclude our newest market, Delaware, continue to grow nicely year-over-year, even while the markets become more mature. A testament to the expanding size of these markets, our ability to refine our marketing approach and success continuing to find new valuable players. For the full year, we plan to continue our disciplined approach, making investments where we see opportunities and expecting incremental leverage over our marketing spend again in 2025, with marketing spend continuing to grow at a lower rate than revenue. G&A expenses for the first quarter were $19.5 million or 7.4% of revenue compared to 8.4% last year. For the full year, we continue to expect to achieve modest leverage over our G&A expense. Adjusted EBITDA for the first quarter was $33.2 million, reflecting the revenue growth and the increased leverage over expenses, partially offset by the increased bonusing costs in Colombia. We ended the quarter with $228 million in unrestricted cash and no debt. We generated approximately $25 million in cash during the quarter, excluding stock repurchases and stock withheld for employee tax obligations on vesting. During the quarter, we repurchased approximately 500,000 shares at an average price of $10.35 under our previously announced $50 million share repurchase program. Subsequent to quarter end, we purchased an additional 234,000 shares at an average price of $10.55, leaving approximately $42 million remaining on our repurchase program. We are reiterating our full year revenue and adjusted EBITDA guidance for 2025. We continue to expect 2025 revenue to be between $1.010 billion and $1.80 billion with a midpoint of $1.45 billion, representing a 13% year-over-year increase. For the full year, we anticipate adjusted EBITDA to be between $115 million and $135 million, which represents $125 million at the midpoint, up 35% year-over-year. With regard to how we performed relative to guidance since our last call, while Colombia is actually performing above our base expectations for player counts, handle and GGR, it's below our base expectations for net revenue due to the higher bonuses. This has been offset by the continued outperformance in North American iCasino markets and the positive trends in players and revenue in those jurisdictions. Our guidance ranges for revenue and EBITDA continue to include a range of potential outcomes from the recent tax changes in Colombia with the assumption that the tax lasts through the end of the year. Given how strong the volumes have been in Colombia, should the temporary tax go away prior to year-end, we could see meaningful upside to both revenue and EBITDA. And one last reminder, our guidance includes only those markets that are live as of today. And with that, operator, we can open the line for questions.

Absolutely. We will now open the line for questions. [Operator Instructions] The first question is from the line of Bernie McTernan with Needham & Company. Your line is now open.

Great. Thanks for taking the questions. Maybe just to start, I would love to touch on Colombia a little bit more and understand the investments that you guys are -- that the company is making. What are you seeing from a competitive standpoint? Are other operators also offsetting that tax for consumers? And importantly, do you think you're taking share of MAUs and handle in the region? And then I have a follow-up.

Sure. Hey Bernie, I'll take it and see if Kyle wants to add anything. But yes, it's -- we are bonusing at higher rates, as we mentioned, and passing the cost on to other players, which is consistent with what all the other players in that market are doing as well. We are, as we also mentioned, having all kinds of record performance on GGR, volume handle. So, we feel very confident that our decision to do that has been a good one because it's continuing to ensure that we retain or possibly grow share. As you know, the market share information isn't disclosed in that market. So, it's not something we can speak to directly, but we are feeling like we're doing everything within our control to make sure we're managing it smartly. I think that at the end of the day, as I tell our team often, we can focus on execution and what we can control. And I think we're doing a really nice job there of managing that business through this challenging period.

Understood. And then I wanted to touch on Delaware, which I think has been a major success story for Rush Tree. Lots of growth last year. How should we think about growth in 2025 and frankly, beyond too, in terms of -- I think it was a large contributor to consolidated growth last year. Should it slow down? Is it a tough comparison? Like how should investors think about Delaware in 2025?

Yes, I'll take that. Appreciate the question. And you're right, Delaware has been a great win for us and it continues to be performing really well. Our expectation is that we'll continue to see really nice growth out of Delaware. As you point out, we've lapped now the launch of Delaware for us, which was right at the end of 2023, so call it the beginning of 2024. So, as the year goes on, it's logical that the growth rate will slow down in that market specifically. But we feel like there's a long road ahead for Delaware. We probably mentioned it before, but if you just triangulate around how other markets have performed that have iCasino, you look at adult population and income levels, this could be approaching a $300 million GGR market in a few years. And maybe there's a little discount off of that because there's not as much competition there. But that's a long ways from where we're running today. So, there's a lot of upside in Delaware still.

Understood. Thank you, both.

Thank you.

Thanks.

Thank you. The next question is from Jordan Bender with Citizens. Your line is now open.

Hey everyone. I want to stick with Columbia here for a second. So, net revenue coming in below your expectations, but are there any early learnings that you can use to adjust the business model as the year goes on to better tailor what you're doing in the market to improve those NGR results to be more in line with the range that you gave when you gave guidance last quarter? Thank you.

Yes. Thanks, Jordan. So, we're continuing to adjust. And obviously, the competitive landscape and how our competitors are treating customers is an important part of that and making sure that we're keeping players excited beyond the great platform that we provide to them. As I think you understand, the tax itself that players are responsible for, but that we're making up for with a cashback bonus is a tax on deposits. So there is a bit of a multiplying effect there if there are multiple deposits and there's withdrawals. So, we've -- one of the things we've done that we've been proud of is adjust to that and make sure that we're reducing that deposit turnover as much as possible. We have reduced our marketing spend a little bit down there in response to this. But we'll continue to monitor what the competitors are doing. And if this tax does appear like it's going to last through the end of the year, then we'll see how the competitors respond and think about what our response might be. But we're doing everything we can to maximize that net revenue off of what is a growing GGR base. I mean one of the previous question was about market share, and Richard pointed out that we don't know for sure if we're taking market share. but GGR up 55% in Q1, and it's actually up even more than that in April. Unless you assume the market is growing at that rate, you have to assume that our strategy and our product is taking share for sure.

Great. Switching gears here. Pennsylvania just joined the multistate Internet gaming agreement, which should help liquidity across your platform. I don't think poker is a huge driver of revenue, but curious to get your thoughts around another large state added to the agreement and how that could help cater to the segment of your database that participates in poker? Thank you.

Sure. Thanks. And we're excited for the launch that we achieved in Pennsylvania. It was a successful debut of a poker platform, which is hard to achieve, and it's one of the -- it is the newest platform in the industry, and we're very proud of what we've been able to do there. But the goal for us though was to be ready and to make sure that platform was capable of handling all the multiple state player liquidity that now fortunately is available to us. So, we will be expanding in the future states. We made a statement earlier this week to those to that effect. And as you probably know, our strategy for the poker has really been more of an amenity ultimately, and we're using it as a cross-sell to casino and sports. So, it's easy to say that, but it's hard to deliver that on the actual way the product works. We've done all kinds of really nice features and functions we've added to the platform to make it really easy for a user to play the other products and achieve that result that we've set up for ourselves as a purpose of that is to be able to attract customers that want to play poker. Once they're playing poker with us, have the other great offerings available to them in the other product verticals and also, of course, to ensure that players that enjoy our casino and sportsbook stay with us when they want to play poker. And so between the two Phils that we've -- who are our brand ambassadors of poker, Phil Galfond and Phil Hellmuth, we've been really able to really reach a nice audience, and there's a lot of enthusiasm and excitement around this poker vertical for us, and we will be and are excited to be able to expand that into other states in the near future.

Thank you very much.

Thank you. The next question is from the line of Ryan Sigdahl with Craig-Hallum. Your line is now open.

Good afternoon. This is Will on for Ryan. Thanks for taking our questions. Just a quick one on Colombia, and then I'll have a follow-up. Could you quantify how much the increased promotions to VAT tax impacted revenue and ARPDAU in the quarter?

Sure. So, I give a couple of stats that I'll expand upon or a couple of stats a minute ago. So, Q1 GGR was up 55% and I mentioned that April, that GGR growth rate is even higher than that. And this -- if you look at that growth rate, that's fairly consistent with what we've been seeing in Colombia for the last couple of years. And during that time, our GGR and our net revenue have grown at a fairly similar pace, which tells you that the bonusing -- in total, the bonusing hadn't changed a whole lot over the last couple of years. But to your question, in each of March and April, our net revenue growth was significantly impacted. So, in March, our net revenue in U.S. dollars was actually down slightly year-over-year. And in April, it's been about flat year-over-year. So, we've got a market that may have otherwise been growing at 50% plus that's now relatively flat year-over-year because of this temporary VAT tax. So, I think there's a couple of takeaways from that. The first is the removal of the VAT tax should be a very meaningful driver of growth for us when that happens and when we have those as comparables with when the tax was in place. And I think the other piece is, and we said this in the prepared remarks, that the rest of the business is performing very, very well, such that we outperformed in Q1 and reiterated the guidance for the year even in the face of the additional bonusing in Colombia.

Got it. Thanks for the color there. Maybe a quick one on the constitutional decree. So, you said the first one was found partially constitutional and the second one, obviously, related to the tax is kind of up for debate right now. If we do see that continue out until the end of the year, could it be renewed? Or is it pretty much transitory until that point? Thanks.

Sure. Yes. It's -- the limitations of the emergency decree are that you can only extend it to a certain period of time. And that's one of the decisions the court will make, whether it's a six-month period or throughout the rest of the calendar year. In terms of being able to exceed beyond that, you wouldn't be able to proceed without that per the guidance unless you have a congressional support for that, which in the past has been absent. So, it does feel fairly likely that it would end either after six months, so still a few months before the end of the year or at the end of the year -- end of the calendar year.

Great. Thanks guys.

Thank you. The next question is from Jed Kelly with Oppenheimer. Your line is now open.

Hey, great. Thanks for taking my questions. Seeing really nice marketing leverage. We have seen kind of some of the larger land-based casino players start to grow their product too for iGaming. Can you just kind of expound more on what's sort of driving the marketing leverage even though the market remains pretty competitive because it continues to be pretty impressive.

Yes, sure. Hey Jed. At the end of the day, it comes down to a real simple business here of can we have a reasonable rate of investment to acquire customers and then we let our experience take over. And I think the quality of our experience continues to be the reason why we're able to achieve that the results that we are despite not having the strongest brand in the market and not having the largest budget and not having a land-based property driving traffic to us consistently at the levels that you see in some of the larger land-based casino groups that reported earlier this week. So, at the end of the day, we focus on experiences and how can we differentiate those experiences to the point where a player who sign up for multiple accounts, most players have multiple accounts, what's going to motivate them to spend a higher percentage of their entertainment budget with us. And what it comes down to is can we offer them an experience that is unique and compelling and fun in a way that's not available elsewhere. And the answer has been -- it continues to be, yes, we do offer something unique and something that's entertaining and engaging for customers in a more sophisticated fashion than most other products in the industry, which are mostly just offering a game library from a game lobby where we have all kinds of fun experiences, whether it's community, chat engagement, or whether it's all of our promotional engines that lead players to engage with each other in fun promotional games. I think at the end of the day, the players who are playing often and frequently notice these features, and they stay active with us because of that.

Got it. That's helpful. And then just real quickly on the guidance. I see you're maintaining your revenue guidance. However, I think 1Q was 21% revenue growth kind of implies a deceleration even though you have similar comps throughout the year versus 1Q. So, can you talk about anything we should be watching for, for the balance of the year? Thanks.

Yes. Thanks Jed. So, maybe just to frame that, I think given the guidance that we've offered, if you're looking at the midpoint, it is likely that revenue would be lower in Q2 and Q3 than it was in Q1 and that then Q4 would be the largest revenue quarter of the year. I think the things to think about, one is that I mentioned on a previous question is just lapping Delaware. And while we still expect really nice growth out of Delaware, the growth rate in Delaware is likely to be slower as the year goes on. And then another piece just really, I'll say, kind of Q1 specific is that the VAT tax in Colombia went into effect about almost two-thirds of the way through the first quarter. So, we didn't have the headwind of that tax and that bonusing for most of Q1. And under the guidance that we've offered, assuming that the tax lasts through the end of the year, that tax burden will be there or the bonusing burden will be there throughout all of Q2 and the other quarters. So, that would be a headwind relative to Q1. And then maybe the last thing, just building in some potential changes in consumer behavior. I think Richard pointed out, we haven't seen anything in our data or our experience that's suggesting any consumer changes. But certainly, there's a lot of rhetoric and discussion around that topic. So, we just want to be mindful to keep that in mind and the thoughts and the guidance.

Got it. And then just real quick, what's the tax rate we should assume for your adjusted EPS?

Let me get back to you on that, Jed, because there's some moving parts there. Part of it being that Colombia is changing pretty quickly. And at the moment, Colombia is the only market where we're paying any meaningful income tax. So I'll come back to you on that.

All right. Thank you.

Thank you. The next question is from David Katz with Jefferies. Your line is now open.

Hi, good evening. Thanks for taking my question. One of the areas that, I guess, we were obligated to discuss is the prediction markets. And on the one hand, is that something that you would contemplate engaging in, in some fashion? And second, if you have kind of any perspective on how you think that evolves in the U.S.? And whether it has any kind of meaningful impact on what you're doing on the sports betting side, that would be helpful? Thank you.

Sure. Hey David, I'll take that one. We've been very focused on wrapping up our education on that market opportunity, making sure we are aware of all possibilities should that market persists and grow into a legal market that us and others are able to participate in. Clearly, as others have noted, right currently today, there's a limited amount of liquidity and a limited number of markets that have enough liquidity to offer bets, but you would expect over time that, that could and would grow to a greater variety of options. So, it is something that we are, like I said, very aware of and very focused on understanding all the aspects of it. And should there be an opportunity where licensed operators like us on a state-by-state level are able to participate in that market, that's certainly something we would consider at that time.

Understood. Thanks very much.

Thank you. The next question is from the line of Chad Beynon with Macquarie. Your line is now open.

Hi, good afternoon. Thanks for taking my questions. Richard, Kyle, I wanted to ask about some of the other international markets, I guess, Mexico and Peru, specifically. Are the TAMs that we have been thinking about before, do you still believe those to be true? How are those markets ramping? And then also adjacent to that, are there other international markets that you have your eye on at this time? Thanks.

Yes, sure. Yes, I'll start and maybe Kyle can feel free to add some extra context. But in terms of Mexico, as you heard, we're really seeing a lot of great growth out of that market. It's continued to be one that really excites us and things are moving in a really great direction for us there. And as we noted before, we expect over time, it will be one of the largest markets in LatAm, larger than Colombia ultimately. And for us, specifically, as we've mentioned before, post-launch, Mexico is still tracking ahead of where Colombia was in revenues after the same period of time after launch. So, we feel really optimistic about Mexico. Peru has been a story where we haven't invested much in marketing yet because we're continuing to optimize the experience and localize it. It's something that we continue to be -- feel positive about, but it has been a market that we haven't ramped up yet. And so it's still something that we're excited to be able to do in the future given the relatively large population that country has. There are other LatAm markets as well that we have our -- we've been focused on our attention on and have been evaluating ways to enter those markets. We haven't announced anything, and so I won't be able to share anything with you today. But certainly, as you can imagine, once you have a great brand, a great platform, a great team, great marketing team, operations, local knowledge of experiences in those regions, it becomes a lot easier for us to be able to add and be successful in future markets. So, there is great opportunities ahead in that region, but we're being very selective and making sure that we don't move faster than we need to because there's still a lot of growth in existing markets that we're operating in.

Okay, great. And then on OSB product growth, you mentioned the Eagles, March Madness, some of the pressure that you saw in the quarter there that put a ceiling on the OSB growth for the quarter. But just thinking about single-game parlays, hold rates, et cetera, were those up meaningfully for the quarter? And should we expect for those to be up as we look through the rest of the year? Thank you.

Yes. So, I can start and if there's anything you want to add, Richard, feel free. But our hold rates, Chad, as you mentioned, they've continued to improve, and it's because of the improvements in the product and merchandising and improvement in the bet mix towards parlays, same-game parlays our Prop Central Prop packs, all that drive the higher-margin betting. So, we have continued to improve our overall sports hold, and that can apply to both the U.S. and to Latin America. But as you point out, we had a little bit of a headwind here in the U.S. from the Super Bowl and March Madness.

Great. Thanks Kyle. Nice quarter guys.

Thank you.

Thank you. The next question is from the line of Joe Stauff with Susquehanna. Your line is now open.

Thanks a lot. Hello Richard and Kyle. I wanted to ask on the user growth in the quarter in North America, 17%. That's a strong number. I guess it's fair to assume a heavy portion of that is Delaware, but I was wondering if you can give us some idea of the concentration in terms of Delaware and maybe non-Delaware? And then the second question I wanted to understand, if I could, is, Richard, you had given the growth in Michigan, Delaware, New Jersey. And I was curious about Pennsylvania. That's a pretty big state for you guys. I was just wondering how that is growing in terms of, again, your 16 states?

Yes. Thanks, Joe. So, on the first piece on the MAU growth during the quarter. So, Delaware made up kind of mid-single-digits of that 17%. So, I think it was somewhere around 6% and then the remainder would have been from all the other North American markets. Most -- I think actually, almost all of the rest of the growth came from markets that have iCasino, probably not a surprise since that's where we have put most of our most of our marketing efforts that that's where a lot of that growth is coming from. And not coincidentally, those are higher-value players and helping to drive the revenue growth for sure. On the second question, Pennsylvania, it was a grower for us year-over-year, but low single-digits. I think something like 2% or 3%. No surprise. Again, I think that, that's a market that has much lower margins for us. So, there's not as much investment going in there. So, that's certainly a drag on the overall revenue growth rate, but the revenue growth that we are achieving is coming from our higher-margin markets.

Got it. Thanks a lot. Very helpful.

Thank you. The next question is from the line of Mike Hickey with Benchmark Company. Your line is now open.

Hey Richard, Kyle, thanks for taking our questions and congrats on a strong Q1. The first question, Kyle, can you quantify -- I can't remember if you did last quarter or not, but can you quantify the tax impact from Colombia that's baked into your 2025 guide, thinking about the impact on EBITDA?

Yes. We didn't quantify it in terms of EBITDA. I think the way I framed it earlier is probably the best way to think about it is that our GGR is growing in Q1, at least in local currency, it grew 55%. That's a little bit lower than that in USD. In April, it's growing a little faster than that actually. So, we've seen acceleration in GGR growth. But the net revenue was down a little bit in March. It was up for Q1. In April, it's kind of flat net revenue compared to higher than 50% GGR. So, that gap is really the impact for us on revenue. And we've got obviously some different scenarios higher and lower than that, that are built into the guidance for the year. So, hopefully, that's helpful to -- for you to think about how to frame the impact. I think the -- I said it before, but when this tax goes away, it's obviously a very meaningful driver of growth in revenue and profitability and certainly when we compare to these -- the months that had the tax in 2026.

And just to clarify, Kyle, from what I heard, it sounds like it would be -- we don't know when it's going to end this year, maybe worst case end of year, but it seems like it would be very unlikely to see a similar tax scheme carry through into 2026. It would require another emergency decree, I think, at that point. Is that a fair assessment of what you're thinking?

Yes, Mike, this is Richard. That is an accurate assessment.

Okay. Last question from us. You've highlighted before the strength of casino plus OSB. And I think in the most recent data, you're saying that the combo in terms of the player combo participating across both verticals, you get 16 times the GGR from OSB player alone. Curious what percentage, Richard, of your player base does participate in both verticals. Obviously, that necessitates a strong sports betting product as well as iGaming. But curious where you are in terms of mix, where it's trending and what strategies you have in place to sort of get that dual player just given how better the economics are? Thanks guys.

Hey Mike, first, if you noticed from that slide in our investor deck, it has improved -- increased over time that multiple of what you get from a value of a player that plays both casino and sports versus a player that only bets on sportsbook. So, you're hitting on a topic that we're aware of and obviously by strategy or designing products around ensuring we get that cross-sell. So, to answer your question on what we've done, we've created a mini game lobby. Not only do we create -- let me start again. We actually created launching games initially to allow that cross-sell to become very easy for a player who's betting on sports to be able to play casino games by having a little icon on the -- on the sportsbook that lets them open up a game. And then what we've done more recently is created a game lobby where you have a variety of games there that are easy to navigate between ensuring that you offer optimal number and variety of game -- casino game types available for players. They may not just want to play a Blackjack, they may want to play a roulette game or a slot game. And what we're finding is having a greater variety of that has been helpful for us. So, I think that at end of the day, we haven't really -- we've never shared our breakout between a number -- the percentage of players that you asked for. But I will tell you that we obviously recognize the cross-sell opportunity and built our product and platform to reduce friction for users to optimize the number of players who will cross-sell and play, knowing that's something that's a differentiator between us and most of our peers and something that we think we can continue to take advantage of given our focus on the technology to enable this kind of unique player multiple products at the same time from a single experience.

And Richard, is the cross-sell, is that starting primarily with iGaming, which is your core product to sports betting? Or are you actually reversing that and bringing in the sports betting and then crossing them into iGaming?

It's a little bit of both. But obviously, we also have poker that's driving a lot of the cross-sell in Pennsylvania. We're trying to ramp it up. And as we said earlier, we're going to launch multistate poker share liquidity across multiple states in the future. But I would say that it goes both ways, but there is a lot of sports book to casino action and there's a lot of from poker. You get a lot of players going over to casino from poker. So, it really is a -- works in multiple ways through multiple journeys for players.

Nice. Thanks guys.

Thanks Mike.

Thank you. There are no further questions in queue. [Operator Instructions] There are no further questions. I'll hand the call back over to Richard Schwartz for concluding remarks.

Thank you again for joining us today. We look forward to updating you on our progress when we share our second quarter results in the summer.