DraftKings (DKNG) 4 Nov 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the DraftKings Q3 2022 Earnings Call. [Operator Instructions] I would now like to turn the call over to your host, Stanton Dodge, Chief Legal Officer.

You may begin.

Good morning, everyone, and thanks for joining us today. Certain statements we make during this call may constitute forward-looking statements that are subject to risks, uncertainties and other factors as discussed further in our SEC filings that could cause our actual results to differ materially from our historical results or from our forecast. to statements responsibility required than no law. by assume update other forward-looking as We

remarks available can management GAAP discuss who financial financials. these evaluating quarterly Co-Founder, the will be measures business; call, our a call Reconciliation be filed this During will our also SEC. in of and or share isolation in DraftKings, measures believe These found on should presentation, Park, directly and which in Jason as Robins, Officer be our of most and accordance opening of considered DraftKings, the Executive performance. Chief GAAP. in that website provide with an Financial for report and our certain to may our of useful prepared update today, earnings operating non-GAAP in DraftKings Hosting review Jason are will Chairman XX-Q on on have measures DraftKings' substitute a measures comparable Chief Officer not we Form who results the we financial non-GAAP with some

the open then Jason will questions. to call over will We to now turn Robins. I the line

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parlay as new and customer payout X attractive with any on more year-over-year engaged points. increased Our CAC. had bet mix We X And known customers. mix rapid September other resulting in basis in acquisition an launch handle our in or capability, on points than X,XXX otherwise basis we XX up early with basis innovative our population-adjusted increased existing parlay up, XXX QX. And launch, a very have excellent state Kansas both

that environment. is Thursday For based customers to continues we unique the through pregame number a digital handle opportunity announced in limited reported is capturing the GGR as month selected Video. a the above sponsor a as at target Amazon This towards coalesce we GGR second data engage long-term the activity industry true with operator. provider September state and handle and in on a share operator-level of September, of that operators. odds led We DraftKings twice for that to states share Prime Football with very exclusive and Night than And largest of that and are September, or our more

deliver pregame NFL will with collaboration content offers betting and multiyear Our fans Amazon season. on the Thursday unique engaging throughout

available including show, in and including live insights. additional on Amazon also offerings, on Night Sportsbook features pregame Football the our its parlays, integrations As DraftKings DraftKings collaborate agreement will are which sports TNF-themed part Thursday of and with app. odds Amazon, DraftKings betting same-game

will Video Prime season. during in content XXXX the featured Thursday Our NFL on XX games all Football Night be

third was financials, much $XXX excellent terms and EBITDA technology, for due of well expectations trading, higher our Adjusted revenue early quarter flow-through than that also August. been execution and higher revenue in as million, our the launch $XXX marketing provided that across of we DraftKings. customer anticipated had better investments favorable in Kansas to expected, million, product as XXXX service into aforementioned In than sport was marketing. supported been outcomes expenses negative much transformative from has despite the not a QX out shifting QX into year included by

We am slowed cost year-over-year of profitability. by identified do controls path and of over we've top growth fixed in been have savings engagement our retaining is heavily line to this competitively, all of and able continuing more and while What most proud towards customers. winning I that our most our on million cost results. growing though focus as on to importantly, with cost growth, QX We $XXX to annual attention shifted significantly have evidenced

as XXXX. a on shifting to decline we CAC significantly seeing marketing this efficiency XX% we simultaneously year past population. made we that expand. have to and operations towards growth also are states mobile margins new In third This and customers gross And at more to work are the state And betting relative we believe these is the average between of exceeding now considering adjusted QX adjusted long-term balance aggressive great to both of profitability maintaining national and path have growth of benefit articulated. we sports our XX local is paying revenue our expenses. continues manage looking and in collectively a internal It U.S. our consistently live the year that consistent tremendous. that plan, management the with a acquired while from from expect a third and quarter, an away and customer-focused XX% of combination expectations. with CAC the We customer of advertising striking expense we're ahead, our all our of spending, over creates working progress footprint has clear margins represent been lower evident the The EBITDA to products, quarter team results we'd hard our demonstrate that points is off. And EBITDA with revenue service

to I'd our Now move on like outlook. to financial

raising midpoint For to are by revenue of our we $XX excited the be guidance XXXX, million.

We are also increasing adjusted million. XXXX EBITDA midpoint the $XX of by guidance our

addition to Our marketing our and guidance January regulatory both marketing investments. we now our we despite as Kansas Therefore, on Maryland Ohio XXXX, in Ohio these and in approval. and These adjusted with licensure Maryland launch are that of EBITDA additional includes investment states prior as well guidance. our not guidance launch QX our the launching expected expect included pre-launch pending X, were three in for improving

our excited as cost also engagement that core XXXX of supports growth as are having outlook goals. and customer structure our which principles path today, initial our also We reflects maintaining a long-term while profitability continuing margin well on strong to share to our

we licensure well to of EBITDA guidance, million. footprint, Maryland, For outlook subject our introducing as well Massachusetts adjusted Ohio $XXX $XXX $X.X launches approvals state Unlike regulatory expected guidance existing billion negative as our in reflects guidance XXXX, are Rico. including $X as prior million revenue of billion as Puerto to Kansas, to and our and now

away the EBITDA. of one positive previously, only will As adjusted fourth we've XXXX, expect with that year we quarter now, first be from stated quarter our

a legalization under are Additionally, balance sheet we additional as well reasonable any most reach without raise needing from standpoint positioned previously capital. to profitability scenarios stated, to

on breakeven assuming it's And We cash full consistent be year EBITDA while with full EBITDA legalization current of adjusted in that multiyear loss prior expect years. trends XXXX, plan roughly our approximately guide basis that launch a to a end XXXX. remain adjusted suggests year is and XXXX we'll the our to in our XXXX, with to end too for balance high double guidance early

the the to and launching in launches positive. on Looking in continues to X. will to for Massachusetts Ohio, OSB outlook of XX%. whether our Rico U.S. Puerto We legalize XXXX; be XXXX, penetration on fourth which ahead, and vote bring in quarter population Californians state Maryland would OSB the November anticipate of

And our that likely unfavorable The approximately legislation several states additional has states in outcome XXXX may but million. will in iGaming OSB in for that Please expect polling lastly, consider actively to We we still DraftKings' California and the too recent most deploying XXXX, cash grassroots DraftKings suggests know campaign. are efforts, coalition. still note pass the it's cash a which was investment early while discontinued investment $XX legislation.

U.S. So legalized population population outlook regulatory will XX% there's our a the permit the front. comprising of about legalized iGaming. lot on We to U.S. in excited ultimately be states of ultimately that the will XX% permit comprising and OSB, states confident remain long-term

recent few more minutes providing like detail to enhancements. a I'd product on Now spend our additional

new acquisition and and our season of from and also as full-time wagering customers per extended matchups dozens features for season. launched parlay as as included XXXX the parlays. the markets moneyline new to ability costs same-game is our retention. moneyline props player-specific expand such all parlay same-game from parlays team well. a We parlay in which depth to parlays time NFL interface product, SGPx player more and performance Sportsbook which of to enabled multiplayer engagement as increase product, increases And drives our game payout with props payoffs customers to certain our leg moneylines by head-to-head wagers, the derivative bets same technology to of cross-port been the customer and parlays. anytime and with play Player of parlay has quick next-play games, as settle the bets allows sports. game content full model-driven of size offering. our singles squares the is come. content every and same-game highest to a list several have exciting parlays anytime matchups, months options functionality for a functionality parlay improve of multiple DraftKings flash total point squares. more offering. types. on subcategories prepackaged as lead. other efficient and player all to mechanic reaches our next-drive It And early now newly which totals for to same-game well depth count and Head-to-head player Early and include The we've Quick with long-term and is Quick squares larger we quick new for of the same-game product game an users added different parlay to once and flash variety for spreads, build market continued game introduced increase much Multiplayer player the SGP combine include integration vertical bet include player-propped average XX a innovation the well

modest contributed U.S. Players to wager for who only operator in-house We the to the outlook. introduced are engagement demand iGaming, player the of CFO, increase product can this in our For from additional recently capability. competition. for jackpots will believe opt discuss third and of call thousands continued I'll in DraftKings' dollars. results in Jason hundreds and its to And over Park, functionality chance customer potentially a we an will differentiation win refreshed response customer and turn now our quarter with demonstrates

Thanks, new around Please revenue, non-GAAP statement in NFL rolled note the We that supported granularity I'll EBITDA activity out well to to we of Jason, and and by everyone. shift by QX. functionality QX except off the executed outlook on are that all start product was for basis. a very season. providing adjusted I'll income robust, pertaining discussed, more the XXXX. start Customer then measures for hello, QX, and

to seeing negative environment both significantly is of EBITDA, look $XXX overall our the indication and and detailed the QX, August. call in $XXX million engagement. on continued customer macroeconomic that outperformed have In provided million our revenue cohort We adjusted of generated expectations discernible impacting we not at are QX that any we data

rate QX outcomes compared last Sport revenue Our to were our operators to year. certainly BXC growth XXXX's of year-over-year this quarter, favorable lapping XXX% segment XXXX increased of versus outcomes QX unfavorable XX%. as

call provided and across driver understand favorable offerings million a in execution revenue for of of approximately strong August, our retention volatility thumb also of Our initiatives QX, to for outcomes outperformance. In you monetization our product contributed we On was a revenue. acquisition, in sport QX. potential our core rule $XX

did As well of generally are underdogs aware, September. it you well was operator-friendly most an in quarter. NFL

three Bears. example, including week underdogs and biggest the won the Steelers For in of Seahawks, one,

to Kansas And and tend football other higher night, isolating games These In relative addition, and games games. X, in Thursday than the primetime quarter, was Sunday night note in in due to our our guidance handle fell these negative night launched game playbook. third Kansas quarter, from benefited September prior $X Net consistent QX XX our XXXX. favor. in to games per than to XX%. we attract launch Monday revenue on standard our rate a It's new date. hold of is Kansas environment uncertainty promotional to that a significant just the important NFL included about greater also several not had start. we state with of launch revenue generated million that fantastic growth in net off less

of significantly solid revenue the unique per For MUPs on the QX basis million, remember profit per alone, XXXX. cohorts strongest promotions with flow-through. kickoff the a in $XXX balance mature. margin call It's of our whole, prior states XX% due DraftKings for the period $XX the QX, unique X.X Adjusted QX revenue very year more growth conclusion the more provided month NBA million we monthly naturally a is as prior within X.X than is based higher-than-anticipated EBITDA due EBITDA negative is XX% adjusted expect gross increased our that payers the in playoffs on profile year This monthly expectations and that behavior, on the August negative while completed in we And XXXX which NBA industry promotional before Average player-specific deployed rational season. or the more which QX of typically less as of have $XXX reiterated for consistently important playoffs, player year-over-year which persist. surgical period. as $XXX million, to in to as the of ARPMUP revenue. we year million to doubled primarily payer reinvesting had declines the saw than better MUPs NFL to to Notably, gross growth QX the player was intensity in business, we healthy higher September we included is than and million outperformed as are year-over-year mature. to and We the were seasonally which

given impressive, Our investment QX our previous in in was performance included Kansas was our included especially which launch, that it not guidance.

marketing G&A shifted and Additionally, line out certain our into principally and within QX items, expenses, QX. of

revenue quarter As and the certain and basis gross mix to DFS was Gross inclusion compared rather XX% for flows or QX points unfavorable product typically favorable given a XXX to into year. and rate outcomes our our net last improvement. products a of revenue gross incremental and cost margin On at increased adjusted driven York upside Sportsbook of growing basis, a within reminder, third by shift to New revenues expenses through EBITDA outcomes significantly driven revenue. than limited margin year-over-year the of downside iGaming our our rate deposits continued out high are our by tied our of handle margin, in

promotional primarily gross prior However, intensity. where I million to due saw was in well the that as $XXX states growth in pleased reduction a live XXXX iGaming were increase revenue we to an in OSB meaningful of QX as over profit

expect be XXXX the and to promotional XX% declines range X% to full into our XXXX. to for and our Sales to of up of naturally improve versus continue We portfolio states. our in QX as expense approximately marketing mid-XX% gross year XXXX low across rate was intensity margin

QX XXXX, we XXXX our states year-over-year external a And compared these which down live in been have largely a outcomes. XX% basis. was profit states deep a more driven For by spend contribution that from loss significant in for year, generated than marketing unfavorable to QX on was

pleased three-year payback. for and We to a continue on gross profit continue to LTV-to-CAC our be with be ratios track

with build expenses the is the added year science XX% moderate in XX%, our call, result in engineering and As to growth we've the additional administrative product The in our products P&T of the expense primarily respectively, continuously help and best industry past the the to QX general period. growth third technology, year and to data prior up and product on and we fixed expenses and compared over mentioned resources quarter our meaningfully strengthen the began capabilities. management to

largely new investment XXXX. made at lap quarters XXXX add will we in capabilities, the in late expense, to expect investments than the the scale we significant of but early continue is as customers in of half reflection as customer growth we second slower G&A reach pace we a a and experience increased previous grow and For our which the

Moving have is we that unlike reasonably guidance. guidance guided into during we legalized the that provided states that the it are Please launch note and will the past, which XXXX we and in inclusive guiding in have XXXX of period. foreseeable now that

Specifically, our in spend Ohio, to expect regulatory XXXX, September which and we marketing on pending quarter January expect fourth related as X, which includes both well launch launch XXXX guidance launched Kansas, we prelaunch and approvals. in to Maryland, now the as to which licensure

XXXX, of midpoint year to Looking $X.XX a from year our XXXX. $X.XX to we the $X.XX our billion of $X.XX guidance to from increased billion. our compared outlook the billion, range to revenue of The of $X.XX XX% revenue to full to raising at are billion pleased $X.XXX increases which be full billion implies midpoint range guidance a billion growth

our We due the guidance gaming we revenue are to verticals saw increasing QX. our in strength in online

revenue in in customers early unlucky revenue guidance, million planned we contribute state about the who to which we based in as and $XXX included we on For of In generate revenue QX, the newly year-over-year football in invest outcomes weeks significant midpoint have growth its represents expect the following the XXXX to our states, launch. substantial in expect negative early Maryland season. reinvestment

QX NFT impacted expectations new the which softness Our our market, Reignmakers has vertical. in also reflect broader continued

year. Looking growth ARPMUP, to the higher growth be expect we MUPs ARPMUP and full for at MUP than

guidance. EBITDA adjusted our to on Moving

as expense particularly despite guidance million been which we significant $XXX Maryland drive and for revenue including has year our and EBITDA cost $XXX in resulted cost improving on million in and where now I'm thought Kansas, launched savings well launches marketing of by new higher XXXX lines. midpoint than the than year beginning The the There at efficiencies, basis million in proud year ongoing of primarily in $XX expected land improvement in Ohio. to in combined throughout by G&A that capture more to XXXX with negative was September a the launching state in-year better as despite comparable guidance expect the states. an effort adjusted materially investments are We of driven has full to we XXXX. the discipline, in our which

continue will and business area on focus to this this We remainder year the diligently the of of for beyond.

Finally, continue I that full want states are adjusted XX for at year also to and to expect we for least we be XXXX. reiterate contribution Today, guidance profit introducing XXXX to EBITDA. revenue positive

revenue be XXXX full million. between to and for full expect billion adjusted $XXX EBITDA for be $X.X XXXX year negative to to and billion negative year million We $XXX $X.X

Maryland that For and XXXX, our XXXX. guidance, QX full assuming launches launch we XXXX Puerto and year in QX in launches XXXX Rico Ohio are QX Massachusetts in

shift We improve to year partially by In we full XXXX, promotional revenue less reduced approximately new margin expect XX% mature and generate for basis to expect launches year out mix negative our offset of states, X% launches combined XXXX EBITDA. than XXXX new XXXX jurisdictions of state we more to in account relative to and gross a full as of DFS. in on continued slightly intensity adjusted

rate will And X.X to that XXXX. state years XXXX improve gross the X.X versus years is average age appreciates, exiting exiting if expected margin dramatically. weighted population Our be number

year XX outflows liquidity Last, to on With expect to the usages, cost we the guided million year, $X.X of range other on recur important position. not end $X.X fixed upon cash GNOG XXXX our to the note with for billion more we acquire. Based billion poised sheet. on many variable new and in close other touch cash $XX $X.X between users as depend combined paid and a and as EBITDA next to while slow such fourth will guidance growth to adjusted We with in It's than of net balance our EBITDA cash. XXXX cash XXXX quarter how expect cash largely meaningfully, cash to significant XXXX. in I'll usages expected of amount billion exit are are $XXX that with our in September expected adjusted expected we marketing million our for

legalization EBITDA Looking full out most year and XXXX, we be scenarios. a on launch adjusted basis roughly to expect to would breakeven under reasonable

long-term well now questions. resources. flow free and gross summary, cash to That existing EBITDA on line and remarks, will And targets. concludes the we our clear business in the open we are capitalized positive a believe to path So, we is our become margin for margin with achieve

question comes from first Our Dave Jefferies. Instructions] Katz [Operator with

to the discussed I isn't discussion. doing et minute. And touch more, with wanted at more its not How us? on why that, doing what you it middle just how realize But it's core a its can iGaming Nugget down of cetera. profit probably right that? are I potential, Golden please? for and becomes and share you What And look necessarily long-term growth, its are with prospects, with you should we the

question. Thank Great you.

really well the synergies, particularly Nugget operation going Really, the integration. some synergies we year marketing So We to side. biggest the platform. will the on when onto migrate next come started realize Golden our entire everything is with

that should of migration. So back about That complete that. the the year, in we'll be very half excited hopefully

deeper the really is as nicely market. iGaming and everything gelling about a teams way to on Golden So Nugget are penetrate excited future track, of the into

it I up, is some you're Is are large enough do on side? it in on OSB it Is profitable And that of of and is the that? that? offsetting Can it follow tell, today? to itself? investments please, the And able to making we

minimis. Golden broken we I separately, Nugget that believe impact to haven't said expect to we be but bottom out any the line We de

Understood.

XXXX. For

with Shaun America. from comes question Kelley Bank next of Our

a just your to product changes Robins, a you more mix. higher to materially bunch being and lot or here I stay. of initiatives Jason, the product versus of a about Jason are mix little bit hold in new of kind outlined imagine ask parlay wanted quarter. those Jason Obviously,

initiatives our as push wrap rates the new in of to around what's sort and the product minds is ability to some relative a trying saw hold take luck-based that of higher obviously lot go-forward what of So of which as to outcomes well. percentage these we're we hold sort quarter,

if could into talk of XXXX. what's just and trade-offs it you thought you or those So about how some baked about

Great Yes. question.

on I driven our whole merchandising in been marketing. that made That's of primarily lot front been by the mix improvement product think a as bet progress and well has year-over-year. largely as

as launched So parlay we has of parlay, marketing well host prepacks, as those parlays, And launched with multiple two, great mentioned, whole a our same-game other Night same-game features. combinations and many of done merchandising team as Football including a I NFL through job Amazon. think Thursday the relationship

hold So And a of feel mix, there's drive We lots executing we to like the to should of, it's I improved lot tailwind of think, that continue think company definitely see and I there. parts rate. improvement.

baked As improvement. cautious been far in, what's baking as in we've about pretty

I think we sight we that as to. usually have is the line case typically with clear our include guidance, of things only

of example great to In February, a $XXX million EBITDA. been guided we minus has XXXX that. in think I

and minus Ohio to $XXX the inclusion which the not and were that's million. Now $XXX with guiding we're in Maryland, million, Kansas, Ontario, of

in year savings. cost four with almost a the better province So we different million initiatives of flash of to on we throughout And around the the able bottom that's line rallied year. team over what that We're had the sight at time, absorption was launches. number to. But over million $XXX -- $XXX the save because of line state

where how But to view we we signing we throughout what better, a can we're that, I to do don't think commitment I thing the never like go year, to great a we're to of thing, each of new achieve. too. of make guidance and credibility So we we guiding currently is it's I the states able approach and to. a want up make despite And continually always feel example launch we guidance. here out that the to that's very improve number as think sight the every we're same can have where typically we and important our most quarter. sure and try to there And XXXX much We think line

and 'XX. And so going do that's our that's in again year, goal to we're try every to what

how and follow-up, Obviously, is deals could relative little or could as relative outlined thinking then to fixed Amazon you about about ESPN of one some sponsorship but these maybe there And the potentially bit partnership investments variable be where big my more. for another relationship, a you're talk a have sort Night marketing -- Thursday just of going you Football, you forward?

So outcomes. just investing to maybe be top types where deals strategically, are more tied how and in could to about there's you maybe more relative directly more that thinking spend variable of committed things these line

marketing The majority we of our deal. committed. good spend controllable. Amazon really about but not selective with feel is deals, It's completely We're pretty the

one. of in our weeks I keep to like and committed. is of Football out things. flexibility years better had deals several the of most But marketing the first optimize that think of that not can excited Thursday Night we've and we We that it's with one results no, recent very about the spend so in we've seen through

Morgan with Our next question Young comes Stanley. from Ed

clarification My first question is really. just a

Maryland into could quantify your of making the useful the the QX investments EBITDA a then assumptions year. and be on touched sense Jason next if comments, And underlying any leverage wonder again, guidance? this Ohio Park, you're in you in to Kansas from operating impact and us about you my give I of it, about but You sort how in question, would think quantification year's just broader

promotions your sort year? GGR, conversion particularly and give growth on parts, ratio for of So the around the NGR marketing of kind around your moving next some you color versus could OpEx of cost out

Yes, Yes. absolutely.

launch as guide provided also launched as that already And we've well Massachusetts we the XXXX includes and Kansas, has year today Our obviously Puerto Rico. Maryland, full expected and in XXXX Ohio. which included the imminent

the slightly revenue what hold players QX of lower seeing Reignmakers lower unlucky well that And little is planned terms a NFT in outlook from flow-through revenue in revenue is In as slightly a -- way who QX, of very to due there some for outlook from had as the surgical product. you're in headwinds bit the QX. reinvestment

Ohio, in in states loss we the from But are inclusion So guide guide. call, the then now which those is we as of And states. Massachusetts, Maryland, of QX And are EBITDA Puerto Rico. Ohio, including change EBITDA. revenue XXXX, the the including again, about comes that's major from those and Maryland of and impacting of EBITDA new I EBITDA terms on X% in QX the the mentioned the new XX% comes QX

incremental on of in XXXX you and think implied the north a basis. I flow-through with no-new if the state states, new So a well about you're revenue think XX% without on flow-through implied

Yes.

an that's takeaway. important think I

response of that quarter, realize is year it's One done in. say, and I narrow a we in have to sight very shift. I that's and to And in listen, this the think, you We've launch a states we that guided things, certainty, certainty line never a a saying, before. do It's Maryland. different is window. relative license state not dates, received new that We that with of investors with if pretty but it's should we this our

Gaming launch Ohio. course, launch we Same as to in March. launch there. pending, -- We require. a Same to approvals Pending they've In approvals, Massachusetts, that set date. the voted in Commission X additional of expect thing Jan

of quarter those did like of and timing. the million guiding little states, I have certainty come if we're think But as felt we'll not a something if update. the is those include noted, out those may around comparisons back were sufficient enough that on at Jason So you take to loss that states. range narrow bit around waters $XXX least and sufficiently a a had the change, and Park some in XXXX. Obviously, close under And changes, muddied

that which numbers might first the that out provided, be So the analyst of states. some time, several least I there apples-to-apples versus new a was guide just including we for at comparison the more think

on cost think implied about operating into the at And then, next into on last rate total margin slower as to guide, meaningfully you're single-digit looking on year. a look you your commentary if talked the growth We've think Ed, just XXXX. going fixed on the growth broadly the growth, at question the rate, few look quarters I cost the right -- way think XXXX it about going at gross XXXX, you I expense

we're more to look OpEx, versus on marketing, looking more certainly front. I've much continuing a And slowdown you're we're that single and opportunities is cost. that that meaningful in out on how And but total marketing at also variable breaking of for mentioned digits. So not a fixed

I give just are for the to appreciate us new And detail the able cost the there. is to Ohio, you to shift Reignmakers give comparison. Maryland able QX, the all idea. for I investment the think and to us And useful particularly [XXX] launches next the the just quantification split a you -- an on But are get year of not like-for-like

guide You've decent QX terms been obviously beaten quite EBITDA. in to not has of much year the in full passed on and

trying there? like just So dynamic looks about underlying to think what the

to due say is revenue think do you what slightly revenue through I QX lower can rest to and mean, in And QX the flow I you decline I EBITDA. can new the the that outlook sort the a basically revenue the states. of

from comes next with Jason question Citi. Our Bazinet

quick of enhancements just wondering I sort if had that's just the And would the that lower true. on had number B, states. that you've are is going activity promotional a then that's of tethered you've on, I I that made? significant to was you that Or of on? can share think, across that, confirm you pretty gains a pin question And some

NFL share sports. do a Yes, did Thank we you. increase see other typically to to We start relative very well NFL. nice in

gaps. differentiation year really. I some But we're little which as as rational think I subset of then real And It's seeing created So day. material I the that before competitive lower And two touched We points bit closed versus all of promotion, competitive well and things it, of interesting have stuff of NFL. more seasonality story, the lot larger last been product to drivers, which night the the to there. right substantial. biggest point enhancements, are you a shipped had if is would this was of there's a a is year environment sort on the secondly a truly say in

But gain for we the external be environment our the if would three some I behind it, think that promotion of point number well. the competitive say of and in be that a I then nothing that probably like as us there of as year typically was, one. helped still given to, to is I'd certainly, some seasonally it's as strength time better made, our some by had far ordinary. aggressive NFL. the in the I environment. the And think, us, enhancements competitors, said, As was environment I of change share anything, And would out competitors that product marketing some two Number rationalizing number this the well as the in more competitive but rationality investments of spend certainly

Our Jed next with Oppenheimer. question from Kelly comes

Great.

Just on circling MUPs. back

I and the And Jason, a higher elevated the you churn mentioned grew question. September see Given I And October MUPs hold, guess, Can then September. think, you your, rate? October? in growth give XX% did us you follow-up just in

the deal? seeing you Night strong mentioned Can of around Just on some engagement. speak Amazon, the customer you're Amazon you metrics sort of Football Jason, Thursday to with engagement

one. I'll start second on the Sure.

perfect have there's One of it's is parlay of Night pushing really, a acquired; two relationship. really setup So kind the by which benefits customers I on. things for that new that same-game the just is primary Football, the that and Thursday one on it, we've two, game are been, think,

So real seen bet it's to do time mix. a We've movement that. material in great

with why at I is has because it comparison. those XXXX, games look I But think broke looking that at thing as September stories So if of -- out cleaner real partnership. the a had far you're have it July of you that we key been MUPs was if little MUPs, -- the -- year, a of And two from is last NBA. a think positive been neater few bit a this as

quite So MUPs number that up NBA substantially, that drove July whereas in QX. year, ended this

July, So way QX MUPs doing calculation given calculation. done didn't the is the we is X/X obviously, the get is any of NBA.

in of September significant less was the included really players participated that were was some ARPMUP, a the the QX a than the So MUPs biggest September. year in growth of NBA -- growth come handful July. last flip back part was that on players days in the primarily kind that why story I think the didn't in thing side of of same the only definitely for because They denominator MUPs growth. that, only then And that until

per year, NFL, better player For revenue it's that look, a number a this think. little I numerator, denominator bit thing looked

So the always given hard sport that to calendar changes year-over-year. tell,

So MUPs which some of add playoffs It's guide of tell, It's the thinking ARPMUP. and is measure we predicting health going don't always it's and nice into thing. go kind you guiding to to things a about good of to of MUPs KPI the is like a ARPMUP. business. a But hard or NBA a you into the bit start why when complex July

So calendar volatile, we've it's a from stayed changes. away of because sort the it just little given sport

of it. sort above-average we has in churn it holds? thought Got be, line would given what But the been with

Yes. I basis. when on a look mean, we churn, at that we I think it look at player-by-player

are to there that, the and cohorts, churn. thing same So of think, micro no we've environment back from of pare that I like seeing either. previous optimizations made far impact terms the and the anything to year-to-year good sorts some underlying things been we've of we nor any macroeconomic continue But is as seen real have the seeing nor in other hold, higher quarters health from see certainly we're churn, bonus in impact as hunters

very healthy on that. cohorts to That's keep very closely, something to but continue us. from all we respects, So eye we the an monitor look

from comes Santarelli question next with Bank. Carlo Deutsche Our

whose the Jason most that back you of was or with zero, through date that once like on mentioned programming gone for point, retention look led the on to XQ you you're reinvestment XQ in some the of basically that have about think customer that I'm XQ. unfavorable as But that the their October. earlier Just to loss already does funding? in Park, accounts what kind kind your tactical of experience players gone assuming they've to

Yes. good I it's a we question. -- mean

trigger to result That's them that I outcomes, value. active there promotions that's QX a -- probably an every amount time. reinvestment, go -- an to also into are I trying way ultimate what excuse should say And that we giving think earnings players you're question. I or call. to sort them But staying what have given for us players the our campaigns up we're that outcomes player to to sport of But get But make smarter the reactivate. quite what to why actually zero. then their to and part before sure maximize reach long-term QX you We came noted did in, of last the we're we little I that quarter flipped set to it this of still a QX negative look And like is like little the around. that there's revenue think will mean to are good in model-based shift. get a the day, it me, overall lifetime we'd that that try that's granular of balances down it's other when to QX few on cover return understanding we seeing

different some to return it total uncontrollable are some probably of optimal probably trying promotional equation. between there's we how there's like a at it's is that intensity. So be to really that reached. levers are that of segments we're look different And outcomes, and controllable players, to that's needs optimize like that an And for number constantly player sport different

sheet. then as think, could, I follow-up million. in And period used about to pertains $XXX if one about Great. balance just -- The the the cash was it I

period had the et think, the I costs, in million $XXX software or so spent, guys You $XX and kind EBITDA cetera, million somewhere of in loss.

cash, like bridge gap, looks something that missing of a could million of you $XXX that in there that So there? source Is for me? kind it I'm

Carlo. Yes,

in So cash source basically, working the capital use the -- QX. of major part is of the bridge

uses full had anticipate slight the type. So cash, and I comment just -- capital QX if I of you of QX, source we cash would consistent recall cash. basis, QX, as our back year And or don't a we with on businesses in that meaningful use of don't working being a of source

Canaccord Graham question from with Genuity. Our next comes Michael

that just go ask that And a I thinking wanted will And the U.S. could Jason mix mix. it expect on expect I And an into business? of mix? between us national the question the recession is advertising how you planning? just first about you terminal to how you I then update arc And of affecting you wonder year? economy probability, you're How is the if are be? kind guess, would to just give that your your and in next the mentioned do The impact what local you national transforming where to about

Yes. Good question.

the XX% point population on many get sports start We're having to online as cases, legal years, turning national that would few advertising. the first to threshold now. just said So the that that where would north a be betting, around last of we advertising crossing of one, efficient over we've, in local more than become,

population. states We are that XX% represent of about in

just starting see and impacts that. from to So favorability small some

customers new actually we XX% our think I better As we CACs that on we were beat we noted total the call, expected, and forecast had than for acquired.

advertising efficiency. continue national scale to I get of able So That increase. from to get is we should only part think benefit were to starting bit this And shift. and a little that of

regulatory to right because course. already X% add approvals, are really you're comes state the represent next that tailwind. so additional the reaching of the and projected And ones those we as on, licensure from it of We now in to five will months that are go that Massachusetts launch, national new continues states Maryland, really then and That each or start just mentioned, to population have that customers Ohio there seeing ads. pending

You locally advertise don't much anymore. have as to

big a I'm think, and some to sorry, was in second our starting the back see that you're question? the And QX then I really, behind So of results. what now, tailwind

a recession a thinking -- recession. Just how about you're possible

Yes.

we next sign of right would not that customers could that where of look scenarios at manage if that. like? prepared different of that recession now, and what to any And that. mean we've seeing So looked definitely to consumer of mean revenue if for how impactful some we're our well for there were What segment that year? were we're kind So for would What have it behavior costs?

fortunately, see that the So us. we're we but pretty shift are do be prepared. that, to good if quickly that to now, managing environment seeing. start prepared always to right anything seeing concerns to not we're But we are And we

Our next Needham. Bernie question McTernan comes from with

with short betting last a the it's changed ESPN, even sports landscape struck deal the time a just partnership has lot. U.S. though Since you ago, of

a versus So for major key of key look sit now priorities now any thinking couple as ago? about would of with ago, that years weren't you a are priority maybe media that here we years partnership there a any changes couple

I our the that's of the is we're the evaluate think we we partnership? it over relevant partnership what really, on establish with is everything. course if and So expense that financials beyond. same which view looking partnership as of the anything doing, And we what against at how impact the way, might the we're of check does any out

past, down acquisition. play gross to kind always And three companies specific into of new customer look think of customers. less If or it at partnerships mostly as years some the at of profit comes that's payback are with for something because we you the in about that noted look media I KPIs, many more

on. looked always that that the we of at changed has think that and there. pass much we've Nothing's time, I year, at how will say too it. really I that really the had some that's year-over-year deals So environment dramatically improved last to

rationally environment, priced. today's in think I would more be

our noted we're And of earlier, and marketing keep an like optimize eye out than I actually for opportunities. able So -- excuse have But being flexibility keeping our of more to we as spend to in as than variable. half also, around marketing me, and things. spend of X/X substantial always more we out

of careful any we're making historical feel partnership the that always from doing channels, those So receive. to light and on commitments good before we expect that we the data have testing about very very benefits in

a as follow-up, 'XX profitability framework the for of spoke same Great. about then That's XQ irrespective really passing. helpful. California you And

going anywhere maybe spending a not to that is going acquisition those going there's that you have you that didn't like quarter, are costs you prior? chance California be to on in you're Now seem have -- else doesn't have to that those and customer now luxury you're the the pass it redeployed into wouldn't

great The answer is yes. question. That's a

out that were definitely that as we needed non-California and the same I we'll we to Wednesday, California as Tuesday a and a trade-offs There we be plan. anything if wake tack would California had made have plan, make to plan. to passed, California find to it Obviously, the it guided If just now. what to and plan So but It and wasn't were simple and to happen. saying up we we prepared California launch. on are give back wasn't on all guess, can it

to is what cash controlling own So great cushion have committed on have was that are profitability irrespective question. we our whether to And we we've And not. I think we continuously the of that a today. that path said with absolutely clear or really, that balance California destiny launched

two planning had it's we different where that's since if we to although without on a and one it ready looks surprise, get like so next with but And executing one dime week. what plans, expecting I'm going, now, pivot without Right not pleasant California. certainly that we're a on we're

Ryan from Craig-Hallum. comes question Sigdahl next Our with

us. for questions Two

few guys. expectations in-game about the First betting? trended and one, obviously, is going that big last a quarters that everybody then forward? what parlay But sales percent has How a curious you as and for focus, of

continued we've improvement area mix seen betting. betting launched of is in-game We've in also So live since an definitely of focus.

really is more we've that the in payouts part use ran of impact things early betting. when interesting from on betting. that drive to good, and really then game win about driving we merchandise one I early think, live of design paying And this that think live was and you're can I it we out the those we've the seen year behind had up promo

continues we know a bet that's definitely but a focus. holding that just the was on why gap biggest talked below we've was are it lot, FanDuel. competitively where I mix least to because we and about parlay be So at the like felt side

and that to customer I be. it it hasn't It's focus but about engaged throughout game. betting So think been the really continues doesn't a live a mean we've of that, that's internally the way great talked big that, keeping why lot a

in about temporary players, think I as just aggressive then and like speaking DraftKings FanDuel, bit national and think little retention advertising. balancing a you marketing? or win early player of do loyalty cetera, kind bit How it the et about seems player other mentioned on reinvestment versus of versus brand creative bonuses but some you and guys short-term a existing And unlucky some to those less relative are building promotions you outcomes, more on national new

I how of very a that's question, of important improve against as year. versus It's for question. it marketing, to for And optimized the of such of earlier think broad this the optimize Yes, think to sort of promotional right of really that one that we've what's we're us rate our advertising continue spend. smarter we this balance day. category able mentioned what's right balance along were you if every of this gets your the think figuring -- spend I And but us along important to return of of and I those both journey with still the lower out, promotion to all definitely that kind of year, was overall

still basis, CAC, that targets. mentioned to on this than spend should year. exceeding hitting And our advertising improved. customer we've been QX better We while a our in or new customer able Our per all has I do say, expected XX%

investments done made be out So the to progress lot great of work but where still to a right of I feel there, are like figure made. balance we've those there's

question Our from comes next Joe Stauff Susquehanna. with

follow of to users. just on kind I maybe wanted question, First up

monetization. I MUP in relationship or the MUPs Park, mean, third I think you year, degree? the I had that monetization. you the full be said Jason for -- what and quarter, was and wondering to XX% growth more will monetization between obviously, But significant

the up if in you in And say, really, XXXX about based how relationship you it of quarter. of sort on terms wondering guide. think Just tighten fourth your can, expectations that

Yes.

So great question.

Most it some is not. of think of it's controllable. I

quarter why the or in July substantially into year ARPMUP bleed I year, reason didn't. you last say, more NBA and was saw this should this in than you QX, big growth a MUP So

drove turn, then obviously year, the also last it that in year, So drove denominator but down this the ARPMUP. increased up

sport So think some sort just of I calendar-dependent. that of is

of regardless For form in. us, to LTV how maximize trying long-term of player we're comes that total -- what

that more the So from we at we're than one other. we we generating acquire. the do maximize how really It's the LTV it look don't as is better players that

guides that's the future the maximizing revenue doing making we in we're not also us. either. revenue So at that really term, short sure look what And think that expense at I but of

just look it holistically. So business. those going more us at underlying And on more a I understand for really, we in are measure what's to think KPIs the

And Makes World for a was sense. then XQ your as follow-up, your wondering expectations were what relative Cup I to guide?

Cup interesting. World will Yes. be

as much We sports. We're haven't it. really talked too any not about with we don't it other out separately breaking

World our quarter. kind a of think But the engagement could ton on significantly have be we probably examples data something the for outperforms if So will of interesting don't I it see to positive what catalyst be that of one And that's it expectations of we get. Cup. a

what to to really say it's expect tough it. So from

World And lot in certainly, QX. Joe, Cup of a not data of

a Yes. Yes, difference. Makes exactly. big

it in DFS, terms a last how in grower? type of perform Is just did Is And I could in of DFS. -- one quarter? low kind single-digit third the your like still squeeze just guess, I

about a customers providing important state huge addition flows iGaming. a DFS is new we through in OSB source also that's or a very high it a time for but slow one new grower because us to continues be for for at very us, to of revenue every that right. really Yes, enter margin, that's

Jordan Bender from comes question with last Securities. JMP Our

coming new then maybe pace on On about end? the the content iGaming on side, improvements made platform? any your to of you've can that you And talk

other was thing was totally Yes. launched a functionality. to product very it pool, in usually that the of of It's players once high jackpot we -- The out, big was sums. one team No lot proud else biggest that then operators a the this jackpot our have the and paid work very separate opt hits it. just in making, to no a allowed unique gets It to market. -- which one

I players a a lot So which put gets big really looking a to what amount for, opportunity of think get are potentially work of that the payday. product appealing, to at money small interesting, and is attractive

about we've That's very most significant So the launched. excited thing that.

lots looking of popular some the third-party differentiated functionality to have and we out build which this For been are unique and new homegrown like the the and but make launching our also most content, best but rocket content always of and tons that of some that titles we sure which year both though, game out we've unique, games, offerings integrations, launched. are of like there just or recently through jackpot

closing back over to Jason to the I'd CEO, like turn call Robins, remarks. any for

very positive full expect EBITDA. expect us for to year really there. feel quarter, about excited we on course, And adjusted strong finish our really first quarter XXXX, you which XXXX XXXX, set profitable and joining for Thank for all up performance first going which of the excellent and we're then, had to QX into we of well really XXXX to we be an breakeven, We of be today call. roughly our potentially well a third positioned

first you. So all and sports with year. speaking we think, you Thank excited the one weeks. the next very year calendar I forward hope over and our quarter. a from the away, the stays on enjoys remainder exciting adjusted very EBITDA of positive about look everybody through future, only And safe to few time well the

this today's presentation. gentlemen, and Ladies does conclude

now wonderful a may have and disconnect, You day.