Rush Street Interactive (RSI)

Online casino and sports betting company Rush Street Interactive (NYSE:RSI) announced better-than-expected revenue in Q3 CY2025, with sales up 19.7% year on year to $277.9 million. The company’s full-year revenue guidance of $1.11 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.09 per share was 24.5% above analysts’ consensus estimates.

Company Overview

Specializing in online casino gaming and sports betting, Rush Street Interactive (NYSE:RSI) is an operator of digital gaming platforms.

Gaming 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.

Rush Street Interactive competes with established online-first companies like Flutter Entertainment (FanDuel, PokerStars), DraftKings, BetMGM, Bet365, and Fanatics (PointsBet), as well as traditional casino operators that have moved online, including Penn Entertainment (ESPN Bet), Hard Rock Digital, Caesars Entertainment, and Wynn Resorts (WynnBET).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Rush Street Interactive’s 38.8% annualized revenue growth over the last five years was incredible. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.

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 trend. Rush Street Interactive’s annualized revenue growth of 26.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Rush Street Interactive reported year-on-year revenue growth of 19.7%, and its $277.9 million of revenue exceeded Wall Street’s estimates by 4.3%.

Looking ahead, sell-side analysts expect revenue to grow 13.9% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and implies the market is baking in some success for its newer products and services.

Rush Street Interactive’s operating margin has been trending up over the last 12 months and averaged 4.1% over the last two years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports lousy profitability for a consumer discretionary business.

This quarter, Rush Street Interactive generated an operating margin profit margin of 7%, up 4.2 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Rush Street Interactive’s full-year EPS flipped from negative to positive over the last four years. This is encouraging and shows it’s at a critical moment in its life.

In Q3, Rush Street Interactive reported adjusted EPS of $0.09, up from $0.05 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Rush Street Interactive’s full-year EPS of $0.36 to grow 29.2%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Rush Street Interactive has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 9.7%, subpar for a consumer discretionary business.

Businesses that maintain a cash surplus face reduced bankruptcy risk.

Rush Street Interactive is a profitable, well-capitalized company with $273.5 million of cash and no debt. This position is 16.9% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Rush Street Interactive beat analysts’ revenue and EPS expectations this quarter. We were also glad its full-year revenue guidance was raised. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $18.18 immediately after reporting.

Updated: December 4, 2025 at 9:58 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Rush Street Interactive, you should also grasp the company’s longer-term business quality and valuation.

We see the value of companies helping consumers, but in the case of Rush Street Interactive, we’re out. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its remarkable EPS growth over the last four years shows its profits are trickling down to shareholders, the downside is its low free cash flow margins give it little breathing room. On top of that, its operating margins reveal poor profitability compared to other consumer discretionary companies.

Rush Street Interactive’s P/E ratio based on the next 12 months is 39.4x. At this valuation, there’s a lot of good news priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $22.86 on the company (compared to the current share price of $18.77).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.