What factors drove RSI's EPS surprises in 2024?

Rush Street Interactive (RSI) experienced significant earnings per share (EPS) surprises in 2024, driven by several key factors: 1. **Strong Revenue Growth**: RSI's revenue surged by 37% year-over-year to $232.1 million in Q3 2024, surpassing analyst estimates by 12%. This growth was fueled by a 35% increase in monthly active users (MAUs) in North America and significant expansions into new markets such as Delaware. The company's year-to-date revenue increased by 35%, outpacing competitors like Caesars Interactive Division and BetMGM. 2. **Gross Margin Improvement**: RSI's gross margins for Q3 2024 stood at 35%, exceeding consensus expectations by 158 basis points. This improvement reflects enhanced operational efficiency and cost management, contributing to higher profitability. 3. **EBITDA Strength**: The company reported an adjusted EBITDA of $23.4 million in Q3 2024, a substantial increase from $4.1 million in the same period last year. This indicates robust cash flow generation and profitability, which directly impacts EPS. 4. **Strategic Focus on User Experience**: RSI's focus on innovation and differentiated user experiences has attracted high-value players and maintained strong player retention rates. This strategy has not only driven revenue growth but also improved profitability margins. 5. **Market Expansion and Geographic Diversification**: RSI's expansion into new territories, such as the launch in Delaware, has contributed significantly to revenue growth. The company's presence in fifteen U.S. states and several regulated international markets provides a solid foundation for future growth. 6. **Financial Management**: RSI's financial management, including the authorization of a $50 million share repurchase program, demonstrates confidence in future growth and commitment to shareholder value. This positive signal can enhance investor confidence and potentially increase EPS through reduced share count. In summary, RSI's EPS surprises in 2024 can be attributed to strong revenue growth, improved gross margins, enhanced EBITDA strength, strategic focus on user experience, market expansion, geographic diversification, and effective financial management. These factors combined have contributed to the company's robust financial performance and positive earnings outcomes.