DraftKings Reports Second Quarter Revenue Growth of 26% to $1,104 Million; Announces $1.0 Billion Inaugural Share Repurchase Authorization
DraftKings reported a 26% increase in Q2 2024 revenue, reaching $1,104 million, mainly due to customer engagement and the acquisition of Jackpocket. The company announced a $1.0 billion share repurchase authorization, reflecting confidence in its long-term outlook. For 2024, revenue guidance was raised to $5.15 billion, while adjusted EBITDA guidance was revised down to $380 million. Monthly Unique Payers (MUPs) rose by 50% to 3.1 million, though Average Revenue per MUP (ARPMUP) declined by 15% to $117 due to new customer promotions. DraftKings expects 2025 adjusted EBITDA to be between $900 million and $1.0 billion. CEO Jason Robins emphasized strong customer acquisition and retention, while CFO Alan Ellingson highlighted the company's healthy balance sheet.
DraftKings ha riportato un aumento del 26% nelle entrate del secondo trimestre del 2024, raggiungendo 1.104 milioni di dollari, principalmente grazie all'engagement dei clienti e all'acquisizione di Jackpocket. L'azienda ha annunciato un'autorizzazione per un riacquisto di azioni di 1,0 miliardi di dollari, a testimonianza della fiducia nelle proprie prospettive a lungo termine. Per il 2024, le previsioni di entrate sono state riviste a 5,15 miliardi di dollari, mentre le previsioni di EBITDA rettificato sono state abbassate a 380 milioni di dollari. I Pagatori Unici Mensili (MUP) sono aumentati del 50% raggiungendo 3,1 milioni, sebbene il Ricavo Medio per MUP (ARPMUP) sia diminuito del 15% a 117 dollari a causa delle nuove promozioni per i clienti. DraftKings prevede che l'EBITDA rettificato del 2025 sarà compreso tra 900 milioni di dollari e 1,0 miliardi di dollari. Il CEO Jason Robins ha sottolineato l'importanza dell'acquisizione e della retention dei clienti, mentre il CFO Alan Ellingson ha evidenziato il saldo sano dell'azienda.
DraftKings reportó un aumento del 26% en los ingresos del segundo trimestre de 2024, alcanzando 1.104 millones de dólares, principalmente debido al compromiso del cliente y a la adquisición de Jackpocket. La compañía anunció una autorización de compra de acciones de 1.0 mil millones de dólares, reflejando confianza en sus perspectivas a largo plazo. Para 2024, las proyecciones de ingresos se elevaron a 5.15 mil millones de dólares, mientras que la guía de EBITDA ajustado se revisó a la baja a 380 millones de dólares. Los Pagadores Únicos Mensuales (MUP) aumentaron un 50% hasta 3.1 millones, aunque el Ingreso Promedio por MUP (ARPMUP) disminuyó un 15% a 117 dólares debido a las nuevas promociones para clientes. DraftKings espera que el EBITDA ajustado para 2025 esté entre 900 millones de dólares y 1.0 mil millones de dólares. El CEO Jason Robins enfatizó la fuerte adquisición y retención de clientes, mientras que el CFO Alan Ellingson destacó el saludable balance de la empresa.
DraftKings는 2024년 2분기 매출이 26% 증가하여 11억 4백만 달러에 달했다고 보고했습니다. 이는 주로 고객 참여와 Jackpocket 인수 덕분입니다. 회사는 장기 전망에 대한 신뢰를 반영하여 10억 달러의 자사주 매입 승인을 발표했습니다. 2024년을 위해 매출 지침이 51억 5천만 달러로 상향 조정되었고, 조정 EBITDA 가이던스는 3억 8천만 달러로 하향 조정되었습니다. 월평균 유료 사용자(MUP)는 50% 증가하여 310만 명에 도달했지만, 평균 MUP당 수익(ARPMUP)은 새로운 고객 프로모션으로 인해 15% 감소하여 117달러가 되었습니다. DraftKings는 2025년 조정 EBITDA가 9억 달러에서 10억 달러 사이가 될 것으로 예상하고 있습니다. CEO Jason Robins은 강력한 고객 유치 및 유지에 대해 강조했으며, CFO Alan Ellingson은 회사의 건전한 재무 상태를 강조했습니다.
DraftKings a rapporté une augmentation de 26% de son chiffre d'affaires au 2ème trimestre 2024, atteignant 1,104 milliard de dollars, principalement en raison de l'engagement des clients et de l'acquisition de Jackpocket. L'entreprise a annoncé une autorisation de rachat d'actions de 1,0 milliard de dollars, reflétant la confiance dans ses perspectives à long terme. Pour 2024, les prévisions de chiffre d'affaires ont été relevées à 5,15 milliards de dollars, tandis que les prévisions d'EBITDA ajusté ont été abaissées à 380 millions de dollars. Le nombre d'utilisateurs uniques mensuels (MUP) a augmenté de 50% pour atteindre 3,1 millions, bien que le revenu moyen par MUP (ARPMUP) ait baissé de 15% à 117 dollars en raison des nouvelles promotions pour les clients. DraftKings s'attend à ce que l'EBITDA ajusté pour 2025 se situe entre 900 millions de dollars et 1,0 milliard de dollars. Le PDG Jason Robins a souligné l'acquisition et la fidélisation solides des clients, tandis que le directeur financier Alan Ellingson a mis en avant la santé financière de l'entreprise.
DraftKings berichtete von einem 26% Anstieg im Umsatz des 2. Quartals 2024, der 1.104 Millionen Dollar erreichte, hauptsächlich aufgrund des Kundenengagements und der Übernahme von Jackpocket. Das Unternehmen kündigte eine Aktienrückkaufautorisierung in Höhe von 1,0 Milliarden Dollar an, was das Vertrauen in seine langfristige Perspektive widerspiegelt. Für 2024 wurden die Umsatzprognosen auf 5,15 Milliarden Dollar angehoben, während die angepasste EBITDA-Prognose auf 380 Millionen Dollar gesenkt wurde. Die monatlichen einzigartigen Zahler (MUPs) stiegen um 50% auf 3,1 Millionen, während der durchschnittliche Umsatz pro MUP (ARPMUP) aufgrund neuer Kundenaktionen um 15% auf 117 Dollar sank. DraftKings erwartet, dass das angepasste EBITDA für 2025 zwischen 900 Millionen Dollar und 1,0 Milliarden Dollar liegen wird. CEO Jason Robins betonte die starke Kundenakquise und -bindung, während CFO Alan Ellingson die gesunde Bilanz des Unternehmens hervorhob.
- Q2 2024 revenue increased by 26% to $1,104 million.
- $1.0 billion share repurchase authorization indicating confidence in long-term outlook.
- Revenue guidance for 2024 raised to $5.15 billion.
- 2024 Adjusted EBITDA guidance lowered to $380 million from $500 million.
- ARPMUP decreased by 15% to $117.
Insights
DraftKings' Q2 2024 results show strong revenue growth and customer acquisition, but a revised outlook on profitability. Key points:
- Revenue grew
26% year-over-year to$1.104 billion , driven by customer engagement and expansion into new markets. - Monthly Unique Payers increased
50% to 3.1 million, reflecting strong user acquisition and retention. - The company raised its 2024 revenue guidance to
$5.05-$5.25 billion , up from$4.8-$5.0 billion previously. - However, 2024 Adjusted EBITDA guidance was lowered to
$340-$420 million from$460-$540 million , likely due to higher customer acquisition costs. - DraftKings announced a
$1 billion share repurchase program, signaling confidence in its long-term prospects.
While top-line growth remains robust, the reduced profitability outlook suggests DraftKings is prioritizing market share gains over near-term margins. The share repurchase program may help support the stock price amid this shift in focus. Investors should monitor customer acquisition costs and the path to profitability closely in coming quarters.
DraftKings' Q2 results reveal interesting trends in the online betting and gaming market:
- The
50% increase in Monthly Unique Payers indicates strong market demand and effective customer acquisition strategies. - However, the
15% decrease in Average Revenue per MUP to$117 suggests increased competition and promotional activity in the sector. - The acquisition of Jackpocket, a lottery app, demonstrates DraftKings' strategy to diversify its product offerings and expand its total addressable market.
- The company's presence in 25 states plus Washington D.C. for mobile sports betting, representing
49% of the U.S. population, highlights the ongoing state-by-state expansion of online gambling.
These trends point to a maturing but still-growing market, with operators focusing on user acquisition and product diversification. The planned implementation of a gaming tax surcharge in high-tax states in 2025 could be an industry-wide trend to watch, potentially impacting profitability across the sector. The online betting and gaming market appears to be entering a new phase where efficient operations and strategic positioning will become increasingly important.
From a legal and regulatory perspective, DraftKings' Q2 report highlights several key points:
- The company's expansion into new jurisdictions, including the recent launch in Washington D.C., underscores the ongoing state-by-state approach to legalizing online sports betting and gaming in the U.S.
- DraftKings notes that 10 jurisdictions representing
12% of the U.S. population have introduced legislation or potential referendums for mobile sports betting, indicating continued regulatory momentum. - Similarly, 6 jurisdictions representing
13% of the population have introduced measures related to iGaming, suggesting potential for further market expansion. - The planned implementation of a gaming tax surcharge in high-tax states with multiple operators in 2025 could have significant legal and financial implications for the industry.
These developments highlight the complex and evolving regulatory landscape for online betting and gaming in the U.S. Companies in this sector must navigate a patchwork of state laws and regulations, which can impact market access, operational costs, and profitability. The potential for new markets opening up presents opportunities, but also requires careful legal and compliance considerations. The proposed tax surcharge strategy will likely face scrutiny from regulators and could potentially lead to legal challenges or regulatory responses.
Raises 2024 Revenue Guidance Midpoint to
BOSTON, Aug. 01, 2024 (GLOBE NEWSWIRE) -- DraftKings Inc. (Nasdaq: DKNG) (“DraftKings” or the “Company”) today announced results for the second quarter of 2024 and that its Board of Directors authorized the repurchase of an aggregate of up to
Second Quarter 2024 Highlights
For the three months ended June 30, 2024, DraftKings reported revenue of
“We very efficiently acquired many more new customers than we expected and saw continued healthy existing customer engagement in the second quarter,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “We will continue to capitalize on the healthy customer acquisition environment for the rest of 2024 which positions us to achieve
“We are very excited about DraftKings’ Free Cash Flow trajectory,” said Alan Ellingson, DraftKings’ Chief Financial Officer. “In light of that, we are pleased to announce a
Continued Healthy Growth in Customer Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”) increased to 3.1 million average monthly unique paying customers in the second quarter of 2024, representing an increase of
50% compared to the second quarter of 2023. This increase reflects strong unique player acquisition and retention across DraftKings’ Sportsbook and iGaming products, the expansion of its Sportsbook product into new jurisdictions and the impact of the acquisition of Jackpocket. Excluding the impact of the acquisition of Jackpocket, MUPs would have increased by approximately34% compared to the second quarter of 2023. - Average Revenue per MUP (“ARPMUP”) was
$117 in the second quarter of 2024, representing a15% decrease compared to the same period in 2023. The decrease was primarily due to lower ARPMUP for Jackpocket customers when compared to customers of DraftKings’ existing product offerings prior to the acquisition, customer friendly sport outcomes, and an increase in new customer promotional investment for the Company’s Sportsbook and iGaming product offerings as a result of strong customer acquisition. - Detailed financial data and other information for the second quarter of 2024 is available in the financial statements set forth below under the caption “Financial Results.”
Fiscal Year 2024 and 2025 Guidance
- DraftKings is raising its fiscal year 2024 revenue guidance to a range of
$5.05 billion to$5.25 billion from the range of$4.80 billion to$5.00 billion , which the Company previously announced on May 2, 2024. The Company’s updated 2024 revenue guidance range equates to year-over-year growth of38% to43% . - DraftKings is revising its fiscal year 2024 Adjusted EBITDA guidance. The Company now expects fiscal year 2024 Adjusted EBITDA of between
$340 million and$420 million compared to its prior fiscal year 2024 Adjusted EBITDA guidance of between$460 million and$540 million , which the Company previously announced on May 2, 2024. - DraftKings continues to expect fiscal year 2025 Adjusted EBITDA to be in the range of
$900 million to$1.0 billion , consistent with the guidance range provided at the Company’s Investor Day on November 14, 2023. The Company’s fiscal year 2025 Adjusted EBITDA guidance excludes the impact of the planned gaming tax surcharge. - The Company’s guidance for fiscal years 2024 and 2025 includes all of its existing jurisdictions as well as mobile sports betting in Washington, D.C.
- DraftKings’ revenue and Adjusted EBITDA guidance for fiscal years 2024 and 2025 includes the impact of the Company’s acquisition of Jackpocket Inc.
- On July 30, 2024, DraftKings’ Board of Directors authorized the repurchase of an aggregate of up to
$1.0 billion of the Company’s Class A common stock. DraftKings may make repurchases of its Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws, subject to market conditions and other factors. The Company’s repurchase program does not require it to acquire any specific number or amount of Class A common stock and may be terminated at any time.
Mobile Sports Betting and iGaming Footprint
- Following the launch of its Sportsbook product in Washington, D.C. on July 25, 2024, DraftKings is live with mobile sports betting in 25 states and Washington, D.C. which collectively represent approximately
49% of the U.S. population. - DraftKings is also live with iGaming in 5 states, representing approximately
11% of the U.S. population. - DraftKings is live with its Sportsbook and iGaming products in Ontario, Canada, which represents approximately
40% of Canada’s population. - DraftKings expects to launch its Sportsbook product in Puerto Rico pending market access, licensure, regulatory approvals, and contractual approvals where applicable.
- To date in 2024, 10 jurisdictions that collectively represent approximately
12% of the U.S. population have either introduced legislation to legalize mobile sports betting or introduced a bill that may result in a mobile sports betting referendum during an upcoming election. In addition, 6 jurisdictions that collectively represent approximately13% of the U.S. population have either introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.
Webcast and Conference Call Details
As previously announced, DraftKings will host a conference call and audio webcast tomorrow, Friday, August 2, 2024, at 8:30 a.m. ET, during which management will discuss the Company’s results for the quarter and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.
To listen to the audio webcast and live question and answer session, please visit DraftKings’ investor relations website at investors.draftkings.com. A live audio webcast of the earnings conference call will be available on the Company’s website at investors.draftkings.com, along with a copy of this press release, the Company’s Quarterly Report on Form 10-Q, a slide presentation and a second quarter 2024 business update. The audio webcast will be available on the Company’s investor relations website until 11:59 p.m. ET on September 30, 2024.
Financial Results
DraftKings’ second quarter 2024 financial results, as well as the financial results for the respective comparative periods, are presented below:
| DRAFTKINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except par value) | |||||||
| | June 30, 2024 | ||||||
| | (Unaudited) | December 31, 2023 | |||||
| Assets | | ||||||
| Current assets: | | ||||||
| Cash and cash equivalents | $ | 815,880 | $ | 1,270,503 | |||
| Restricted cash | 12,844 | 11,700 | |||||
| Cash reserved for users | 244,760 | 341,290 | |||||
| Receivables reserved for users | 237,331 | 301,770 | |||||
| Accounts receivable | 65,011 | 47,539 | |||||
| Prepaid expenses and other current assets | 147,007 | 98,565 | |||||
| Total current assets | 1,522,833 | 2,071,367 | |||||
| Property and equipment, net | 57,425 | 60,695 | |||||
| Intangible assets, net | 949,381 | 690,620 | |||||
| Goodwill | 1,456,009 | 886,373 | |||||
| Operating lease right-of-use assets | 89,516 | 93,985 | |||||
| Equity method investments | 11,141 | 10,280 | |||||
| Deposits and other non-current assets | 131,877 | 131,546 | |||||
| Total assets | $ | 4,218,182 | $ | 3,944,866 | |||
| | | ||||||
| Liabilities and Stockholders’ equity | | ||||||
| Current liabilities: | | ||||||
| Accounts payable and accrued expenses | $ | 573,512 | $ | 639,599 | |||
| Liabilities to users | 720,668 | 851,898 | |||||
| Operating lease liabilities, current portion | 11,482 | 11,499 | |||||
| Other current liabilities | 68,078 | 46,624 | |||||
| Total current liabilities | 1,373,740 | 1,549,620 | |||||
| Convertible notes, net of issuance costs | 1,255,086 | 1,253,760 | |||||
| Non-current operating lease liabilities | 78,162 | 80,827 | |||||
| Warrant liabilities | 25,477 | 63,568 | |||||
| Long-term income tax liabilities | 71,639 | 72,810 | |||||
| Other long-term liabilities | 115,649 | 83,975 | |||||
| Total liabilities | $ | 2,919,753 | $ | 3,104,560 | |||
| Commitments and contingent liabilities | | ||||||
| | | ||||||
| Stockholders' equity: | | ||||||
| Class A common stock, | $ | 47 | $ | 46 | |||
| Class B common stock, | 39 | 39 | |||||
| Treasury stock, at cost; 13,314 and 11,901 shares as of June 30, 2024 and December 31, 2023, respectively | (470,094 | ) | (412,182 | ) | |||
| Additional paid-in capital | 7,744,638 | 7,149,858 | |||||
| Accumulated deficit | (6,012,689 | ) | (5,933,943 | ) | |||
| Accumulated other comprehensive income | 36,488 | 36,488 | |||||
| Total stockholders’ equity | $ | 1,298,429 | $ | 840,306 | |||
| Total liabilities and stockholders’ equity | $ | 4,218,182 | $ | 3,944,866 | |||
| DRAFTKINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share data) | |||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | $ | 1,104,441 | $ | 874,927 | $ | 2,279,437 | $ | 1,644,579 | |||||||
| Cost of revenue | 663,414 | 510,323 | 1,373,483 | 1,032,063 | |||||||||||
| Sales and marketing | 215,676 | 207,487 | 556,375 | 596,620 | |||||||||||
| Product and technology | 92,655 | 89,906 | 181,470 | 177,994 | |||||||||||
| General and administrative | 165,084 | 136,256 | 339,335 | 296,732 | |||||||||||
| Loss from operations | (32,388 | ) | (69,045 | ) | (171,226 | ) | (458,830 | ) | |||||||
| Other income (expense): | | ||||||||||||||
| Interest income | 14,212 | 13,411 | 29,279 | 25,206 | |||||||||||
| Interest expense | (678 | ) | (666 | ) | (1,327 | ) | (1,321 | ) | |||||||
| Gain (loss) on remeasurement of warrant liabilities | 9,791 | (20,041 | ) | (8,303 | ) | (37,076 | ) | ||||||||
| Other (loss) gain, net | (446 | ) | 45 | (1,181 | ) | 64 | |||||||||
| Loss before income tax (benefit) provision and loss (income) from equity method investment | (9,509 | ) | (76,296 | ) | (152,758 | ) | (471,957 | ) | |||||||
| Income tax (benefit) provision | (73,570 | ) | 651 | (73,921 | ) | 2,019 | |||||||||
| Loss (income) from equity method investment | 239 | 323 | (91 | ) | 442 | ||||||||||
| Net income (loss) attributable to common stockholders | $ | 63,822 | $ | (77,270 | ) | $ | (78,746 | ) | $ | (474,418 | ) | ||||
| Earnings (loss) per share attributable to common stockholders: | |||||||||||||||
| Basic | $ | 0.13 | $ | (0.17 | ) | $ | (0.17 | ) | $ | (1.03 | ) | ||||
| Diluted | $ | 0.12 | $ | (0.17 | ) | $ | (0.17 | ) | $ | (1.03 | ) | ||||
| DRAFTKINGS INC. NON-GAAP FINANCIAL MEASURES (Unaudited) (Amounts in thousands, except per share data) | ||||||||||||
| | Three months ended June 30, | Six months ended June 30, | ||||||||||
| | 2024 | 2023 | 2024 | 2023 | ||||||||
| Adjusted EBITDA | $ | 127,967 | $ | 72,972 | $ | 150,357 | $ | (148,639 | ) | |||
| Adjusted Earnings (Loss) Per Share | $ | 0.22 | $ | 0.14 | $ | 0.27 | $ | (0.36 | ) | |||
| DRAFTKINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) | |||||||
| Six months ended June 30, | |||||||
| 2024 | 2023 | ||||||
| Cash Flows from Operating Activities: | |||||||
| Net loss attributable to common shareholders | $ | (78,746 | ) | $ | (474,418 | ) | |
| Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||||
| Depreciation and amortization | 114,803 | 96,477 | |||||
| Non-cash interest income, net | (1,471 | ) | (378 | ) | |||
| Stock-based compensation expense | 183,755 | 206,593 | |||||
| Loss on remeasurement of warrant liabilities | 8,303 | 37,076 | |||||
| (Gain) loss from equity method investment | (91 | ) | 442 | ||||
| Loss on marketable equity securities and other financial assets, net | — | 75 | |||||
| Deferred income taxes | (79,762 | ) | 1,993 | ||||
| Other income (expenses), net | 1,920 | (3,349 | ) | ||||
| Change in operating assets and liabilities, net of effect of acquisitions: | |||||||
| Receivables reserved for users | 73,531 | 50,930 | |||||
| Accounts receivable | (14,494 | ) | 19,296 | ||||
| Prepaid expenses and other current assets | (22,698 | ) | 11,257 | ||||
| Deposits and other non-current assets | (179 | ) | (6,237 | ) | |||
| Operating leases, net | 168 | 1,457 | |||||
| Accounts payable and accrued expenses | (82,154 | ) | (79,933 | ) | |||
| Liabilities to users | (148,107 | ) | (86,027 | ) | |||
| Long-term income tax liability | (1,171 | ) | (575 | ) | |||
| Other long-term liabilities | 5,387 | 6,108 | |||||
| Net cash flows used in operating activities | $ | (41,006 | ) | $ | (219,213 | ) | |
| Cash Flows from Investing Activities: | |||||||
| Purchases of property and equipment | (5,446 | ) | (9,649 | ) | |||
| Cash paid for internally developed software costs | (44,072 | ) | (39,287 | ) | |||
| Acquisition of gaming licenses | (12,695 | ) | (1,959 | ) | |||
| Proceeds from marketable equity securities and other financial assets | — | 24,425 | |||||
| Cash paid for acquisition, net of cash acquired | (392,013 | ) | — | ||||
| Other investing activities, net | (2,308 | ) | (482 | ) | |||
| Net cash flows used in investing activities | $ | (456,534 | ) | $ | (26,952 | ) | |
| Cash Flow from Financing Activities: | |||||||
| Proceeds from exercise of warrants | — | — | |||||
| Purchase of treasury stock | (57,912 | ) | (41,184 | ) | |||
| Proceeds from exercise of stock options | 5,443 | 3,336 | |||||
| Net cash flows used in financing activities | $ | (52,469 | ) | $ | (37,848 | ) | |
| Net decrease in cash and cash equivalents, restricted cash, and cash reserved for users | (550,009 | ) | (284,013 | ) | |||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the beginning of period | 1,623,493 | 1,778,825 | |||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | 1,073,484 | $ | 1,494,812 | |||
| Disclosure of cash and cash equivalents, restricted cash, and cash reserved for users | |||||||
| Cash and cash equivalents | $ | 815,880 | $ | 1,113,715 | |||
| Restricted cash | 12,844 | — | |||||
| Cash reserved for users | 244,760 | 381,097 | |||||
| Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | 1,073,484 | $ | 1,494,812 | |||
| Supplemental Disclosure of Noncash Investing and Financing Activities: | |||||||
| Investing activities included in accounts payable and accrued expenses | $ | 1,709 | $ | 637 | |||
| Equity consideration issued in connection with acquisitions | $ | 331,557 | $ | — | |||
| Decrease of warrant liabilities from cashless exercise of warrants | $ | 46,398 | $ | 1,470 | |||
| Supplemental Disclosure of Cash Activities: | |||||||
| (Decrease) increase in cash reserved for users | $ | (96,530 | ) | $ | 88,556 | ||
Non-GAAP Financial Measures
This press release includes Adjusted EBITDA, Adjusted Earnings (Loss) Per Share and Free Cash Flow, which are non-GAAP financial measures that DraftKings uses to supplement its results presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes Adjusted EBITDA, Adjusted Earnings (Loss) Per Share and Free Cash Flow are useful in evaluating its operating performance, similar to measures reported by its publicly-listed U.S. competitors, and regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA, Adjusted Earnings (Loss) Per Share and Free Cash Flow are not intended to be substitutes for any GAAP financial measures, and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.
DraftKings defines and calculates Adjusted EBITDA as net income (loss) before the impact of interest income or expense (net), income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
DraftKings defines and calculates Adjusted Earnings (Loss) Per Share as basic and diluted earnings (loss) per share attributable to common stockholders before the impact of amortization of acquired intangible assets; stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
DraftKings defines and calculates Free Cash Flow as Adjusted EBITDA less investments into property and equipment and capitalized software, adjusted for sources or uses of cash from changes in net working capital and sources or uses of cash from net cash interest, and less corporate cash taxes paid.
DraftKings includes these non-GAAP financial measures because they are used by management to evaluate the Company’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA, Adjusted Earnings (Loss) Per Share and Free Cash Flow exclude certain expenses that are required in accordance with GAAP because they are non-recurring items (for example, in the case of transaction-related costs and advocacy and other related legal expenses), non-cash expenditures (for example, in the case of amortization of acquired intangible assets, depreciation and amortization, remeasurement of warrant liabilities and stock-based compensation), or non-operating items which are not related to the Company’s underlying business performance (for example, in the case of interest income and expense and litigation, settlement and related costs).
The unaudited table below presents the Company’s Adjusted EBITDA reconciled to its net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:
| | Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (amounts in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net income (loss) | $ | 63,822 | $ | (77,270 | ) | $ | (78,746 | ) | $ | (474,418 | ) | ||||
| Adjusted for: | |||||||||||||||
| Depreciation and amortization (1) | 61,623 | 48,264 | 114,803 | 96,477 | |||||||||||
| Interest (income) expense, net | (13,534 | ) | (12,745 | ) | (27,952 | ) | (23,885 | ) | |||||||
| Income tax (benefit) provision (2) | (73,570 | ) | 651 | (73,921 | ) | 2,019 | |||||||||
| Stock-based compensation (3) | 90,220 | 89,193 | 183,755 | 206,593 | |||||||||||
| Transaction-related costs (4) | 18,585 | 425 | 23,493 | 425 | |||||||||||
| Litigation, settlement, and related costs (5) | 10,804 | 4,136 | 20,124 | 6,699 | |||||||||||
| Advocacy and other related legal expenses (6) | — | — | 285 | — | |||||||||||
| (Gain) loss on remeasurement of warrant liabilities | (9,791 | ) | 20,041 | 8,303 | 37,076 | ||||||||||
| Other non-recurring costs and non-operating (income) costs (7) | (20,192 | ) | 277 | (19,787 | ) | 375 | |||||||||
| Adjusted EBITDA | $ | 127,967 | $ | 72,972 | $ | 150,357 | $ | (148,639 | ) | ||||||
(1) The amounts include the amortization of acquired intangible assets of
(2) The Company recorded a discrete income tax benefit of
(3) Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
(4) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration and pending or completed transactions and offerings, including costs relating to our acquisitions of Jackpocket and Sports IQ Analytics Inc. in 2024.
(5) Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.
(6) Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.
(7) Primarily includes the change in fair value of certain financial assets, as well as our equity method share of investee’s losses and other costs relating to non-recurring and non-operating items. In 2024, this amount includes
The unaudited table below presents the Company’s Adjusted Earnings (Loss) Per Share reconciled to diluted earnings (loss) per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:
| | Three months ended June 30, | Six months ended June 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Diluted earnings (loss) per share attributable to common stockholders: | $ | 0.12 | $ | (0.17 | ) | $ | (0.17 | ) | $ | (1.03 | ) | ||||
| Adjusted for: | |||||||||||||||
| Amortization of acquired intangible assets | 0.07 | 0.06 | 0.14 | 0.13 | |||||||||||
| Discrete tax benefit attributed to the Jackpocket acquisition (1) | (0.15 | ) | — | (0.16 | ) | — | |||||||||
| Stock-based compensation (2) | 0.17 | 0.19 | 0.39 | 0.45 | |||||||||||
| Transaction-related costs (3) | 0.04 | — | 0.05 | — | |||||||||||
| Litigation, settlement, and related costs (4) | 0.02 | 0.01 | 0.04 | 0.01 | |||||||||||
| Advocacy and other related legal expenses (5) | — | — | — | — | |||||||||||
| (Gain) loss on remeasurement of warrant liabilities | (0.02 | ) | 0.04 | 0.02 | 0.08 | ||||||||||
| Other non-recurring costs and non-operating (income) costs (6) | (0.04 | ) | — | (0.04 | ) | — | |||||||||
| Adjusted Earnings (Loss) Per Share* | $ | 0.22 | $ | 0.14 | $ | 0.27 | $ | (0.36 | ) | ||||||
_____________
* Weighted average diluted number of shares used to calculate Adjusted Earnings (Loss) Per Share for the three months ended June 30, 2024 was 518.3 million. For the six months ended June 30, 2023, the basic weighted average number of shares used was 476.8 million. For the three and six months ended June 30, 2023 the basic weighted average number of shares used was 462.4 million and 458.9 million, respectively. Totals may not sum due to rounding.
(1) The Company recorded a discrete income tax benefit of
(2) Reflects stock-based compensation expenses per share resulting from the issuance of awards under incentive plans.
(3) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration and pending or completed transactions and offerings, including costs relating to our acquisitions of Jackpocket and Sports IQ Analytics Inc. in 2024.
(4) Primarily reflects external legal costs related to litigation and litigation settlement costs, in each case per share, deemed unrelated to DraftKings’ core business.
(5) Reflects non-recurring and non-ordinary course costs per share relating to advocacy efforts and other legal expenses in jurisdictions where DraftKings does not operate certain product offerings and is actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where DraftKings does not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and DraftKings currently operates.
(6) Primarily includes the change in fair value of certain financial assets, as well as the Company’s equity method share of the investee’s losses and other costs relating to non-recurring and non-operating items, in each case per share. In 2024, this amount includes
Information reconciling forward-looking fiscal year 2024 and fiscal year 2025 Adjusted EBITDA guidance to its most directly comparable GAAP financial measure is unavailable to DraftKings without unreasonable effort due to, among other things, certain items required for such reconciliations being outside of DraftKings’ control and/or not being able to be reasonably predicted. Preparation of such reconciliations would require a forward-looking balance sheet, statement of income and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the Company without unreasonable effort. DraftKings provides a range for its Adjusted EBITDA forecast that it believes will be achieved; however, the Company cannot provide any assurance that it can predict all of the components of the Adjusted EBITDA calculation. DraftKings provides a forecast for Adjusted EBITDA because it believes that Adjusted EBITDA, when viewed with DraftKings’ results calculated in accordance with GAAP, provide useful information for the reasons noted above. However, Adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss) or cash flow from operating activities or as indicators of operating performance or liquidity.
About DraftKings
DraftKings Inc. is a digital sports entertainment and gaming company created to be the Ultimate Host and fuel the competitive spirit of sports fans with products that range across daily fantasy, regulated gaming, and digital media. Headquartered in Boston and launched in 2012 by Jason Robins, Matt Kalish and Paul Liberman, DraftKings is the only U.S.-based vertically integrated sports betting operator. DraftKings’ mission is to make life more exciting by responsibly creating the world’s favorite real-money games and betting experiences. DraftKings Sportsbook is live with mobile and/or retail sports betting operations pursuant to regulations in 27 states, Washington, D.C., and in Ontario, Canada. The Company operates iGaming pursuant to regulations in five states and in Ontario, Canada under its DraftKings brand and pursuant to regulations in three states under its Golden Nugget Online Gaming brand. DraftKings owns Jackpocket, the leading digital lottery app in the United States. DraftKings’ daily fantasy sports product is available in 44 states, certain Canadian provinces, and the United Kingdom. DraftKings is both an official daily fantasy and sports betting partner of the NFL, NHL, PGA TOUR, WNBA and UFC, as well as an official daily fantasy partner of NASCAR, an official sports betting partner of the NBA and an authorized gaming operator of MLB. In addition, DraftKings owns and operates DraftKings Network a multi-platform content ecosystem with original programming. DraftKings is committed to being a responsible steward of this new era in real-money gaming with a Company-wide focus on responsible gaming and corporate social responsibility.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements about the Company and its industry that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release, including statements regarding guidance, DraftKings’ future results of operations or financial condition, strategic plans and focus, user growth and engagement, product initiatives, and the objectives and expectations of management for future operations (including launches in new jurisdictions and the expected timing thereof), are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “confident,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “going to,” “intend,” “may,” “plan,” “poised,” “potential,” “predict,” “project,” “propose,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. DraftKings cautions you that the foregoing may not include all of the forward-looking statements made in this press release.
You should not rely on forward-looking statements as predictions of future events. DraftKings has based the forward-looking statements contained in this press release primarily on its current expectations and projections about future events and trends, including the current macroeconomic environment, that it believes may affect its business, financial condition, results of operations, and prospects. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside DraftKings’ control and that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include, but are not limited to, DraftKings’ ability to manage growth; DraftKings’ ability to execute its business plan and meet its projections; potential litigation involving DraftKings; changes in applicable laws or regulations, particularly with respect to gaming; general economic and market conditions impacting demand for DraftKings’ products and services; economic and market conditions in the media, entertainment, gaming, and software industries in the markets in which DraftKings operates; market and global conditions and economic factors, as well as the potential impact of general economic conditions, including inflation, rising interest rates and instability in the banking system, on DraftKings’ liquidity, operations and personnel, as well as the risks, uncertainties, and other factors described in “Risk Factors” in DraftKings’ filings with the Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov. Additional information will be made available in other filings that DraftKings makes from time to time with the SEC. The forward-looking statements contained herein are based on management’s current expectations and beliefs and speak only as of the date hereof, and DraftKings makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations, except as required by law.
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FAQ
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