Great. Thanks, everyone, for joining us. Our last Fireside session of the day. My name is Bernie McTernan. Happy to introduce the team at Rush Street. We have Richard Schwartz, CEO, and Kyle Sauers, CFO. Thank you both for joining us.
Hi, Bernie. Great to be here.
Thanks for having us.
You know, we just got done with Q3 earnings. We're about to turn the calendar over to next year. Richard, what are some of the top priorities for the team as we're entering 2025?
We're growing profits, right? That's the name of the game here.
That sounds fun.
So we're working very hard on improving the user experience, focusing on those casino growth opportunities in North America. The current markets we're in are continuing to perform really well for us, continuing to invest in Latin America, another region that we're, as you know, we've been very successful at, and really trying to ensure that we grow both sports and casino across the markets, and we do that by investing in improving the user experience at all times and making sure we put our customers first.
Great. So I just wanted to make sure we touched on some recent trends here. So, you know, what happened in October, obviously well known. But Kyle, can you just remind us how that's factored into your guidance, maybe what you're assuming for hold for the rest of the year, just from a high-level perspective? And importantly, maybe how you think about U.S. versus Latin America as well in that distinction.
Sure. So, yeah, as you point out, October was pretty friendly for the customers in terms of sports outcomes. That actually was true for football in the U.S., but also some of the soccer that affects our Latin American markets a little bit more. So we built those outcomes from October, negative for the operator outcomes, into our guidance for the remainder of the year for Q4. But still raised guidance. We're pretty pleased with that. And as you know, we have a revenue mix that tends more towards iCasino, which is far more predictable in terms of hold.
But in terms of what we are expecting for the remainder of the year, what was included in guidance for November and December, it was really a range of normal sports outcomes, not an expectation that we'd be getting back maybe what we didn't get in October, but more just normalized for the remainder of the year. I think the good news is, you know, November results in football, both college and pro, and then soccer results have all been a little more favorable than October. So I think that's probably good news for all operators.
All right. You think above structural or back to where you would think, you know, it would be?
I think we've been pleased with the results. I wouldn't say it's offsetting October, but probably a little better than normal would be my take on that. You know, obviously, our outcomes might be different than others, and the impact from the mix of Latin America probably helps us more than anybody else that you cover. But I'd say probably a little better than normal, let's say.
Okay. And then wanted to also touch on Illinois. So the tax increase, obviously, it's a progressive tax rate so it impacts you guys less than others. But how are you working on mitigating those higher costs? And are you seeing any changes in the competitive intensity of the state? Obviously, you guys punch, even though, you know, maybe a lower market share than the DraftKings or FanDuel, but you guys still punch above your weight in the state.
Yeah, sure. I'll take that one. Yeah, we've been, you know, to mitigate the higher costs, ultimately, we're investing less in Illinois, and we believe others are doing the same thing. This goes hand in hand with our overall approach to all of our markets where we invest where the profits are most opportunistic for us, and we determine how much we're going to invest in each market based on the return on invested capital, and then we look to how we acquire customers and markets, what is the long-term value of those customers, and we factor in things like the tax rates into our prioritization strategy, so it's worked well for us for years now. We're continuing to do that, so in Illinois, I do think, obviously, with a higher tax rate, it does have an impact.
I think, I believe the intensity has diminished a little bit in Illinois as a result.
Yep. Makes sense, what you'd expect. Maybe you want to focus on the U.S. So, accelerating user growth every quarter so far this year. You know, I don't know, just really strong trends. Like, if you're able to take a big step back, like, you know, what's driving this? I mean, I'm sure it's mostly product-driven, but so, you know, maybe within that, where are the greatest product improvements that you've seen this year?
Sure. I mean, I think the mindset we had from the very beginning is it's always with players first. And it's easy to say that, but it's hard to execute on that. And that's something we've lived by for years. And I think what that means, though, is ultimately combining the user experience is really two elements. There's the customer service operations interface with the customers, and there's the product. And both have to work at a world-class level to deliver that user experience that we want. So we've proven that we are able to offer that unique and differentiated user experience, which does drive high-value players and, more importantly, keeps high-player values playing with us. In terms of the flow of our business, you know, it's about getting efficient acquisition of new players. We have new customers coming at a very high level for us right now.
In fact, we are not only having as many customers as ever new to our business in the history of our company, but we're spending less to acquire new customers any time in our history. So obviously, the combination of new users, if you have more users, if you keep your players and get a lot of new players, you're going to end up with more overall user base. Our user base is growing very nicely because of that. In fact, we've accelerated our user base for seven quarters in a row, which, I guess, is an active user base, which is an indication that as the new players are coming in, we're keeping them, we're converting a large number of them, and we're also retaining a large number of our existing ones.
And you ask what is driving some of this. There's really a wide range of things that we have built. Remember, we've been doing this for over 10 years, and we haven't had to worry about a change of strategy or philosophy. From the very beginning, it was about how do we retain our customers? And you can't just offer the same thing everybody else offers your customer because they're going to say, well, I'm going to shop around for whoever offers the most bonusing. So we've really made sure that we develop an experience for the customers that they realize there's things that we are offering that are unique and they enjoy, and you can't get it if you bet somewhere else. So, for example, in the casino category, we recently launched a Jackpot system that covers all games on the site. It doesn't matter which vendor creates it.
And what's nice about it is that we're not asking players to spend more in order to get access to play this game. They make a wager on any game on the site, and randomly, they're invited to play this jackpot game that we built in-house with our own proprietary technology. And what this does is lets players play for a chance of a life-changing jackpot for no extra cost to the player. And so when you're giving the same sort of bet that you're available on any other site, but with us, we're giving players more chances to win in fun and unexpected ways with life-changing outcomes, it creates a reason for a player to stay with us. So that's one example. We have dozens.
When you create a large enough variety of tools like that, you just create a compelling user experience that is unique and gets those players staying loyal to us, which, as I mentioned earlier, is our primary goal from day one as a business.
Right. Yeah. I mean, one of the things that I thought was really interesting, we recently did a deep dive on the U.S. parlay markets. And one of the things that we looked at, you know, we looked at all the different markets that all the different operators offered. And Rush Street actually offered overs and unders in terms of player props or player milestones. And you guys were the only company that was doing that. So, I mean, I guess if you can maybe speak to what you're doing on the sports side as well in terms of technology and what you're able to do in terms of driving player props and driving parlay penetration.
Sure. I mean, I think it starts with really recognizing that in order to be successful as a company that has invested less than $50 million in our business from day one to get the growth that we've experienced, you have to not just copy other companies and offer the same experience. Otherwise, you're going to be losing that war because you're ultimately not spending the same. You don't have the same brand awareness others have. So you have to find a way to create a differentiated experience. So the example you referenced is a great example because player props, we know, are very popular for players, probably more so in the U.S., only because its history started with prop fantasy. And fantasy sports started with players. A lot of fans follow players more than teams even today.
So it was really important for us to make sure we had a nice wide selection of prop bets and that we're able to take advantage of that. So last year, we introduced a Prop Central feature, which created a more user-friendly way for players to be able to find the props they want to bet on instead of having to go to each game and click on it to open up each game and look at all the bets on the game between the teams and then continue to go down to the bottom to see where the player prop options were for that game. We actually unified and combined all the player props from all the games for a sport in one central location, which makes it easier for players to swipe up, down on their phone and discover the prop bets that are available to them.
Another example very recently that we just launched, and we think is the future, is this Prop Packs experience. What this is doing is playing to the strength of collecting cards, sports cards. We know they're very popular right now. They always have been, but there's a lot of interest in them now. So what we've done is when a player makes a bet on a Single Game Parlay with us, we're randomly awarding them a bunch of cards for basketball players that are going to play in the game they just bet on. So now you're watching those players perform in the game. And if they score over 20, 30, 40, 50 points in that next game they play, we give extra value and extra prizes to players.
In fact, if a player is awarded a card, a bettor, and that player, Curry, let's say, scores over 50 points, they're going to win up to $10,000, even guaranteed if that player does score over a certain number of points in the next game. So it's incredibly innovative because you're giving players value for playing with us. They're getting extra chances to win for no extra cost. And it's fun and engaging to watch. And they open up their app, they can see which cards have been awarded by us, and they're following along. Even the cards update with how many points that player scored up until that moment in the game. So you can start cheering things on.
From a marketing standpoint, it's a great mechanic for us because instead of just repeating over and over again on social media, here's the same offer for everyone to sign up. You're able to say, "Hey, this player has Curry, and he's at 45 points right now. Come cheer along. If he gets a 50, that's a big prize, a $10,000 prize for a $20 bet." So I think this kind of excitement and engagement with players is something that's very complex to build. We spent a lot of time building it, and that is a huge differentiation for us because it lets our players feel like it's seamless to betting on the primary bet, but we give them extra chances to win, like I said.
Yeah. And it flows to what you're talking about earlier with the iGaming in terms of the jackpot, you know, the bonus being some sort of jackpot that, you know, I think inherently gets people a little bit more excited than maybe, you know, a $20 free bet. Okay. And then we'd love, you know, so maybe just moving over to, you know, you mentioned customer acquisition costs falling. So, you know, you're acquiring more customers at a lower rate. What's the driver here? And this is similar to what we're hearing across the industry. So is the industry getting smarter? Are CPMs just falling? Like, we'd love to just know. And I know you also hired a new CMO, but like maybe if you can just discuss some of the drivers of that.
Sure. I mean, we're just getting better at marketing as you mature as an organization and you're able to just improve everything you do. We bring a new approach to how we look at acquisition in terms of we've always been a data-driven organization, but some of the tools that are available to us now are even better than they were previously. As you referenced earlier this year in the spring, we hired a new Chief Marketing Officer. It's been a terrific addition for us because it's allowed us to focus very much more detailed on some of the things that are very important for us to continue to kind of scale the business. In fact, our CMO, Brian Sapp, came from 20 years plus of mobile marketing in the U.S. and the gaming sector, a lot of social gaming and other things.
He really understands the data-driven approach and the testing and learning necessary to optimize results. We also have a marketing technology development team that's focusing constantly on integrating new methods and new tools that allow us to track and be able to perform better in our marketing. And then I think another big picture for the whole industry is that as you get more mature, you learn what works and what doesn't work. And you've seen some of our competitors who've maybe invested even more than we have historically in some of these large sponsorship deals. And as those deals fall out, other marketing commitments, you know, they're able to reduce their overall spend on marketing, which then helps increase some of the benefits, such as lower costs to acquire new customers.
I think that we're using data that we are finding to be more economical in how we find customers. As we mentioned, we're significantly dropping the cost of acquiring new customers. I think one thing I also want to reference is that since we own our own technology, we have entire teams that are dedicated to the touch points of when a player first gets to our site and the first steps they take to register and to ask KYC for identity verification, to then getting landed on a payment cashier system to make sure the payment method that we know has the highest likelihood of working is the one chosen first. Those are things that we spend time on. How do we optimize every single phase? How long do we wait if someone doesn't get through the automatic system before we reach out to them?
How do we automate parts of that journey? How do we create real-time experiences to reach out to customers who struggle with a part of that experience? Sometimes it has nothing to do with us, but just the tools that are available to our industry. You have to work how to optimize them. So I think we're very, very focused on finding touch points and investing in our technology and our platform to automate things. And I'll give a very basic example, which, you know, it's an example of KYC. If someone signs up for us and they don't pass the identity verification initially, maybe it's someone that's in a second marriage and their name from the prior marriage is the one coming up, they're not going to pass.
We want to have a waterfall cascading effect where they're having multiple vendors' systems running through because while the first one might not work, the third one might work, and so making sure that we don't miss an opportunity to pass the maximum number of players is an example of something that we've invested in over years to ensure that we do that very seamlessly, so I think when you combine all that with maturity, a higher dedicated focus on the leadership, on that CMO function and the marketing team, we've had a lot of success with our BetRivers network recently where we create our own content ourselves, and we're able to sort of attract customers with very trusted, known local personalities in the community and to be able to offer unique promotions via our content.
So, if you're creating content that people want to listen to, not because you're forcing it down their throat, but because it's actually compelling and interesting and relevant and helpful, and then, by the way, we're the exclusive owner of that asset. So when it comes to promoting our brand, we're the only brand that gets promoted. You don't have to worry about there being three brands promoted in a radio spot on the radio program and not knowing who actually, on the consumer being, can get confused over whose asset that is and who's branding in that show and not knowing who you are versus other brands being marketed. So I think a lot of those types of programs have really helped us as well to kind of reach an audience more locally than we would have done in the past.
Right. Makes sense. So, Kyle, as we're thinking, you know, I know you're not going to provide 2025 or 2026 guidance right now, but I mean, certainly, we'll certainly let you if you want to. But as you look out, I mean, do you think are we going to be at a point soon where we should start seeing maybe ARPU or ARPMUP as the greater driver of growth here and less on players? Because at some point, you would think it would flip. But I guess, you know, A, how do you think about that? And B, if that were to play out, what are the financial ramifications of that?
Yeah, so it's a great question. I think there's still a long tail of opportunity to continue to grow users. I mean, if you look at the, you know, we launched Delaware right at the end of last year, really more so the beginning of this year, and while that's been helpful for our player growth this year, so much of our growth in North America has come from markets that launched years ago, so I think there's still a lot of opportunity for us to continue to grow users in all of these markets. I mean, I think it's actually, it's pretty notable that if you look at what we've done the last several quarters, where we've been accelerating our active user counts and had record numbers of first-time depositors, at the same time, we've been growing ARPMUP.
So I think to your point, when you have markets start to slow down or become more mature and you're not adding as many players and you're not diluting that base of players with new players who aren't as profitable for the operators or you have more bonusing, that has the opportunity to drive that ARPMUP up. So I don't think I'd put us at a point where that flips yet. I think there's still an opportunity for both to grow pretty significantly. So I think that's a good position for us to be in.
Right. Okay. And so we estimate North America, your North America revenues can grow about 30% this year. But that includes a tailwind from Delaware too. So kind of the underlying ex-Delaware is closer to 15%-20% growth. I mean, do you think that kind of underlying growth is achievable? You know, I guess depending on what the market does in the U.S., but if the market stays strong like it is now, I mean, would that be a double-digit grower? You know, why not?
I think I just heard you say a minute ago you were going to ask for guidance for next year, but I appreciate the question. So I think you're on the right track on North American growth this year. Ex-Delaware, you're right. It's pretty close to 20% for the year when you strip out Delaware. So still super solid growth. And, you know, unlike some of our competitors, we didn't launch in some of these recent sportsbook-only markets, so we don't have that impact in our growth either. So we've held really well close to the market growth in all these other markets. And I think we're very, very, very proud of that. I think maybe part of your point is those markets all seem to still be growing very nicely, don't seem to be slowing down much, even the ones that have been around for quite a while.
So I think without putting a number on it, we'd expect to get our fair share of those markets in 2025. A lot of optimism about our ability to continue to execute really well and drive growth in those markets. And then, you know, obviously, Latin America is a whole nother story, a lot of opportunity there. And, you know, we'll have Alberta. Hopefully, it'll be launching the back half of next year. So we'll have some other things to help out that growth rate as well.
Yep. You know, Kyle, you mentioned Alberta. So maybe that we can talk about U.S. regulation next. Richard, do you think the recent presidential election with Trump winning, does that have any impact on the trajectory of OSB or iGaming legislation in your view?
I think it's always helpful to have a president who is not opposed to gaming expansion, which is the case with President-elect Trump. I do, though, as you know, gaming in the country, in the United States, has always been regulated on a state-by-state basis. It really comes down much more to localization, local state governments. There are now and then efforts made on a national level. I know the Safe Bet Act was sort of an act that a couple of Democratic sponsors last year were working on. And I don't think there's going to be much support to advance that given the change in the recent federal U.S. election. I would say that I think what's pushing iGaming actually are a few factors, right?
The alignment between the major online operators and land-based consumer groups all supporting sort of the legalization of iGaming as a chance to expand omnichannel generates greater tax rates. But something that's happened recently that we really haven't talked a lot about publicly, but I think it's getting a lot more attention since the G2E trade show in Vegas a couple of months ago was that these online sweepstakes companies, sweepstakes casinos have proliferated. And you see one or two, but now there's probably hundreds. And these sites are essentially acting like online casinos across all these states. And so when you're a governor or legislator, they're looking at saying, "We're already having a situation where online casino is available in our state. We're not paying taxes. We're not generating any taxes from it.
We're not protecting the consumers." I think that's a great reason to kind of jumpstart even more efforts on iCasino. Plus the fact that we do know that when a casino is added to a state with sports betting, you know, about three quarters of the taxes come from casino versus sports. So it's a very profitable way to raise taxes. It protects consumers, which is critical. And it kind of gets away from the black market that currently has been building pretty strong.
Interesting. I mean, some of the folks that we've been speaking to recently have gotten incrementally more bullish on New York potentially passing iGaming legislation. I think maybe coinciding with some of the timing of the land-based stuff that's coming to the state. Any kind of incremental thoughts there from you, Richard?
I mean, obviously, we would benefit probably as much as any company in the industry from that happening. But I would very much like that to happen. And I think there is a real path for that to happen. There's been the leaders of the effort on the legislative side are very knowledgeable and experienced in this category, understand it well. And it's taken a lot of effort and time to go meet with different stakeholders to try to understand what are the blockers to achieving the ability to move that kind of legislation forward. So, you know, we're optimistic, but I think it's something that we have to kind of continue to be focused on and aligned with our partners and who also want the same result we do.
Okay. Got it. Were you surprised that Missouri passed by such a narrow margin?
I'm glad it passed.
I think it's one of the tighter referendums.
Yeah, it was tight. I think I would have. I'm glad it passed. I thought perhaps it would have been a little bit of a wider margin, but it's good for the industry that it did pass. You know, we really like that state in particular because I think it's a really good one to adapt to iCasino in the future. It's a good candidate. A lot of the larger, more impactful casino groups that lobby are actually for iGaming legalization have, you know, significant presence in land-based casinos in that state. I think that's the one that, you know, it's a large population and one that we think is an attractive market as well for other reasons. We were glad it passed.
Got it. Okay. Maybe moving down to LatAm. Any kind of, I think there's been a change in your outlook from Brazil. I think it's more of a wait-and-see approach now. But would love to just get your updated thoughts in terms of, you know, the market that, you know, you guys have done such a great job in Colombia. Mexico is becoming a better growth story as well too. So maybe, you know, how you're thinking about Brazil.
I mean, sure. I spent time down there as well as a lot of my colleagues spent a lot more time than I have down there. So we're very monitoring the market very closely. It's obviously a very large market, very attractive for the attributes of the size of the market. But we are being very thoughtful on this because I do think some of the regulations are still being developed. Some are changing. Even recently was validated that you're not going to have sign-up offers for new customer offers, for example. It's not just a tax rate. There's other financial fees you have to be concerned about as well in that market. And ultimately, we made a decision not to launch in January. Why? Frankly, because if you launch in January, you're still not the first of the market.
You've been having this very aggressive market for years down there. So we will continue to kind of evaluate all kinds of opportunities down there and make sure we find the right long-term approach. But we don't want to rush in there initially in a, quote, opening of the market because it really isn't that. And in fact, this makes more sense for us to watch the market evolve a little bit and find those opportunities that make sense for us at that point.
Okay.
There's a lot of other countries in LatAm that are ripe and legal and ready for us. So we have plenty on our plate to be able to prioritize instead if we want to.
Well, even the countries that you're in now. I mean, 3Q, LatAm grew nearly 100% year-over-year. I mean, we'd love to get your thoughts in terms of, you know, how sustainable that growth is. Like, are we seeing Colombia starting to, like, level off and Mexico starting to drive more of the growth? Or, like, how are the shape of those curves looking right now?
Yeah. So Colombia is still growing really, really strong. In Q3, it was a big part of that growth. But Mexico was doing well also. You know, so just to give you some perspective for Latin America, so set aside Peru, which is relatively brand new for us and isn't impacting revenue. You know, Mexico makes up a little more than 10% of the Latin American revenue. So you had to see a pretty big increase in Colombia to get to that 100%. So very, very proud of that. The team down there is executing really, really well. And all the, you know, you think about all of the product initiatives and advancements that Richard was talking about earlier that are made for prime time in the U.S. markets. And we take that to the Latin American markets, and it just competes really, really well.
So we've been very happy with that. Obviously, really strong user growth in particular in June and July, but in Q2 and Q3 from the COPA. That was a big user acquisition opportunity for us. And we've kept a lot of those players around. So we've continued to see really good year-over-year player growth here in October and November in Latin America. I think it'd be a stretch for me to say we can expect to continue 100% growth down there. It keeps getting to be a bigger and bigger base. But, you know, there's so much opportunity in Colombia still. We're executing really well. And Mexico is, as I mentioned, is still relatively small. So there's a lot of opportunity. If it ends up looking anything like Colombia someday, that'll be a big win for us. And it's obviously a much larger market than Colombia's.
I just want to add briefly about our market variety, which is that, unlike others in LatAm, we don't have a different platform for every market. It's the same universal platform for all of our markets. So we make an advancement, like I described earlier, the Prop Packs. It's going to end up in South America as well, Latin America. So I think the ability to kind of know that we're always putting our best foot forth and we're having a really high-quality platform technology to be able to deploy once. Whereas in the past, a lot of our competitors maybe bought single companies in a single market and continue to let those or enable those companies to use their localized technology. So you're not really on a global scale.
We think our approach really does create an elegance to the experience and a consistency that's going to be valuable as we enter more markets in the rest of the world.
Interesting. Okay. Thank you for that, Richard. And I remember, you know, we were talking about Mexico would really accelerate here in the second half. I mean, have you seen that as expected, second-half acceleration? And then maybe B, you said Peru is basically no revenue right now. I mean, what's the timeline for Peru to be a more significant contributor?
We've been really pleased with Mexico. It's continuing to build nicely for us. It's a very exciting market. The size of the market's obviously very significant and multiple is larger than Colombia. So if it continues to mirror the growth in Colombia that we saw in the early days, which it has, and we've continuously reported on that, it's going to be a big business in the future in Mexico for us because it's a lot, like I said, 130 million people in Mexico versus, you know, a little under 50 million in Colombia. So a big, big difference there. Peru, it takes a while when you enter a new market to make sure you optimize everything you need to. You don't want to start investing in a brand, especially one that has such a strong reputation in the region, before you're ready with it.
An example I'll give you is that there was something that we had to do in Peru where if you were coming from a gray market to a legal market as an operator, you already had large libraries of games available on the site. As a new entrant in the market, because we wait for legalization in that market and regulation, we had to sort of get everything approved separately on the content side. So we didn't want to start marketing a site in Peru if we had a subset of the game library that we know is necessary because someone might have known about us already and our reputation in the region, especially because it's adjacent to Colombia. And as we shared before, a lot of the soccer streaming matches that you see from Colombia are also viewed in Peru. So there's a benefit there.
When people think of us as a great brand, when you launch and you have too small of a library of games, it's going to be confusing to the customers. Like, why is this brand such a wonderful company if you're not delivering the kind of experience they're expecting yet? So we need to take our time to get things built up, which we've done now. And so next year will be a year we'll start to invest, you know, more in that growth in Peru.
Okay. Understood. Maybe turning over to margins here. Gross margins trending up about 100-150 basis points year-over-year for the first three quarters of the year. What are the primary drivers that you're seeing of that gross margin improvement?
Yeah. So there's really two main areas. One is the mix of business by market, and the other is structural margins. So I'll start with the second. You know, we've pretty quickly grown to close to a $1 billion revenue business. This market has changed. There's a lot of new entrants when it comes to suppliers. So our size and scale and the industry changes is allowing us to, you know, take advantage of better pricing. Some of that's around kind of operational execution. Some of it's around us being more valuable to some of our vendors and being able to improve pricing. So I think structurally, our gross margins are improving. Some of that has impacted 2024. I'd expect a bigger impact from that piece in going into 2025 and 2026. And then the other piece is just the mix of business.
So as we've talked about in some of our earnings calls, you know, not too long ago, the early markets of Pennsylvania and Illinois made up close to 70% of our revenue. Now that's less than 40%. Those are our, in aggregate, lower margin, gross margin businesses, or markets, I should say. In aggregate, those are sub 20%. If you look at the rest of our markets, it's 45%-50% gross margin. And those other markets are where we're driving more of the revenue growth this year. And we'd expect that to continue in 2025 as well. So the combination of structural changes and revenue mix should be good for us going forward in addition to what you've already seen in 2024.
On Illinois and Pennsylvania being 20% gross margins, is that just the tax rate, or are there other things in terms of, like, revenue share that makes it structurally lower?
So there's two things. Certainly, the tax rate in Illinois, that's changed. And then in Pennsylvania, taxes are much higher, particularly on slots, right? So those impact it for sure. And then just the economic nature of those two relationships have a higher piece of the revenue going to the properties that we get our licenses from in those two states.
Understood. Okay. We already touched on it a little bit, but just on customer acquisition, I mean, we're seeing sales and marketing, you know, down slightly in terms of dollars a share, at least we're estimating. So certainly showing leverage as a percentage of revenue. Just, you know, any learnings from this reduced level of spend? Like, is this the right level of marketing, either, like, on an absolute dollar base for the company or as a percentage of revenue now that, you know, it seems like there's, you know, a lot of learnings that you mentioned earlier, efficiencies gained?
Oh, yeah, go ahead, Richard. No, have at it.
Why don't you, Larry?
Larry, I'll give a couple of comments, and maybe you can layer in a little bit more of what you had in mind. But I was just going to say, Bernie, that, well, our learnings have been, like, investing more in the channels that work and pulling back in channels that don't work. Real simple, but real effective if you do it well and understand how to assess, to my points earlier about the data and understanding what's working, what's not working. The exciting thing for our company is that we have a lot of improvements that we've been making, but there's a lot more things that we're aware of that we're in the process of getting even better at. So obviously, we have some low-hanging fruit that we are continuing to focus on to make sure that we can achieve the results we want on the marketing side.
I would just say that, you know, to get a larger volume of players in the door like we've been seeing and at a lower cost than we've been paying for years and still keep the user base high and growing the ARPU, the average revenue per user at the same time is really tough to do. And we've been able to do that, which I think shows the quality of our experience and being very disciplined in our investment and how we acquire customers and making sure that the right channels are working for us. For example, you know, we stopped doing some affiliate marketing in some markets earlier this year and focused on other markets where we thought it was more attractive.
I think that decision has been helpful for us because it's allowing us to focus on the markets that matter most to us and invest our budgets in the markets that deliver the best results.
Yeah. So then, yeah, I'll just walk away in a little bit. Not surprising as we've had less new markets launching. You don't have the big expenses for initial launch in markets. So that impacts what we invest in marketing for sure. So maybe the comments I'll make next will be setting aside other new launches that might come around. You know, Alberta launches or we have, if we're fortunate to have New York, as you mentioned, those would be investments for us for sure. But I think when you look at 2024-2025, the right amount to spend is going to be dictated in large part by what the environment is for us for acquiring customers, assuming we can continue to buy players or attract players at the rates we are now or potentially better.
We don't want to, you know, choke that off just because we've got a number in mind. At the same time, we've got a balance. We've got a balance being a profitable company and driving growth and getting leverage with that player acquisition. So we're going to, we'll stay nimble like we always have. I think I'm certainly not going to commit to a lower absolute dollar in 2025. But I think we feel very confident that we'll get leverage over the marketing line, you know, as a percentage of revenue. So I do feel good about that.
Yep. Well, it's maybe a good question to leave it on, just be capital allocation. You guys have cash building up on the balance sheet, no debt. And what's holding you back from being more aggressive on capital allocation, whether it's turning to shareholders, more aggressive in M&A, just, you know, how should we be thinking about how you view the opportunity?
Richard, you're on mute.
Richard, you're on mute.
Yeah, I would say that first, we authorized recently in our last earnings call our first buyback authorization. So we're excited to have that in place for $50 million and gives us the flexibility to return capital to shareholders. We're confident, obviously, in our position, in our cash position, but it does allow us to have some ability to continue to kind of grow the business in ways that we want to. For example, you know, we have an increased cash flow, which does allow us to execute the buyback, but also to do, you know, tuck in M&A acquisitions and to be prepared to enter new market entries.
It's also something we, you know, have to always save the cash and ability to invest in because if there's multiple markets opening up in New York and Illinois and other states open at one time, we want to make sure we're sufficiently capitalized to be able to maximize those opportunities at the onset of those new markets.
Okay. Fair enough. Makes sense. All right. Well, Richard and Kyle, let's leave it there. Thank you so much for the time. Thanks for everyone who joined on the webcast. Really appreciate it and have a great Thanksgiving. Looking forward to catching up again soon.
All right. Thanks, Bernie.
Thanks.