Rush Street Interactive's Strong Q2 Earnings Signal Growth Potential, Says Analyst

Needham analyst Bernie McTernan reiterated a Buy rating on the shares of Rush Street Interactive Inc RSI with a price target of $6.

Rush Street reported a Q2 revenue growth of 15% to $165.1 million and adjusted net loss per share of $(0.04), both above Street view.

RSI posted their first positive adj. EBITDA quarter benefiting from revenue growth, gross margin expansion and lower sales and marketing, which should also support positive adj. EBITDA in 2H23E, said the analyst.

Management continues to be positive on the potential for iGaming legislation to move forward in the U.S., specifically noting developments in Ohio and Maryland, added the analyst.

Given RSI's focus on a different customer base relative to DFS/OSB-first operators, the analyst believes iGaming legislation would have an outsized benefit for RSI. 

Revenue in Colombia grew 30% Y/Y and 50% constant currency, and the company is seeing a rapid ramp-up in Mexico going into the 2H, noted the analyst.

With Brazil and Peru recently issuing regulations, the analyst believes there are additional potential growth opportunities for the company in Latam.

Price Action: RSI shares are trading higher by 19.8% at $4.44 on the last check Thursday.