DraftKings (DKNG) 3 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the DraftKings Q3 2023 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stanton Dodge, Chief Legal Officer. Please go ahead.

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

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

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

Good morning, and thank joining. you all for

DraftKings. outstanding The first X for quarters been have XXXX of

season. team winning of tremendously thoughtful start our made around our We have football our and and throughout investments in executed college NFL with year product customers, and the are the

entering of our and and jurisdictions focus monetizing start drivers, momentum and quarter our pleased acquiring seasons. expectations, into exceeded and excellent share execution scaled EBITDA with our that and the Revenue basketball the resulted core building the and fourth continued strong adjusted hockey quarter. another remain we existing efficiently, customers value efficient Importantly, retaining on organization. I'm this to an our and new customers, focused in

We guidance of raising EBITDA and XXXX. In our introducing initial billion expect are year billion to $XXX of revenue and million. adjusted fiscal $XXX $X.X $X.X year XXXX fiscal we for to expectations million for XXXX, positive

expect free flow XXXX. cash meaningfully year to also We in generate positive fiscal

quarter we are the here third back on key takeaways. XXXX, our in As look

winning. are we First,

Our of increased we iGaming basis X,XXX of OSB in proud of. gross XX% quarter OSB revenue since over in #X added XXXX, the combined the are we combined and revenue We've achieved shares very which year-over-year, second and gaming quarter efficiently and the iGaming U.S. share points

in investments our Second, product technology paying off. are and

is our industry believe product overall and structural engagement the continue hold seeing to we what strongest the created increase. in have are on We app and percentage

have map our we a clear the product coming advantage years. extend to Importantly, road over

and incremental Third, we is on largely adjusted at previous profit, our scale improvement. attractive generating and states faster are states we older our expect are newer profit states. Fourth, contribution has as runway margin revenue than of contribution a positive long percentage flow-through EBITDA believe generating significant therefore, organization

Finally, the to yet come. best is

business drivers, turn will latest opportunity, on core XX. With additional it on over and on Day of We forward including are the our future November multiyear presenting to look Park. that, excited views competitive at and economics the our financial to details Jason I unit U.S. sources outlook our Investor differentiation, for

measures Please adjusted and are non-GAAP a revenue, income hit quarter I'll guidance the Thank expectations statement XXXX you, initial increased all our basis. discussed our note Jason. highlights, for that except third strong XXXX. including performance, very EBITDA for on

revenue, parlay negative our game our million we successfully exceeded by far third prop those showing EBITDA acquisition and year-over-year throughout same As as quarter is achieved up and our quarter, million exceeded as football the markets. third a offering $XXX and improved MLB our of XX% well, $XXX in was into season. Customer transitioned results. retention our in that adjusted customers live our of higher mentioned, is organization and basis. Customer spot very a and revenue of is which expectations. engagement Jason the on the was XXXX We $XXX also healthy executing and quarter, bright million well expectations many live player as customers enjoyed the than

we expectations continue in than during and XX. optimize example, improve have For Sportsbook our the above our in to X.X% hold ahead parlay on more capabilities. our of already the September the population and of acquired well adult Structural as X% state following we was launch of product mix trading Kentucky quarter that

mix college outperformed of our in of percentage Our football actual to existing customer-friendly resulted OSB a expectations and higher inclusive Sportsbook on Promotions X%, slightly of in Promotional as which year-over-year approximately outcomes, improve customers customers. NFL. as new basis continue a sport percentage stronger-than-anticipated to our existing and states. of versus due percentage a the primarily GGR iGaming a reinvestment GGR hold for was of retention customers,

year-over-year. XXXX, rate, states mature with costs. We're to contributed and were adjusted in XXXX marketing and that external in in almost points improving rate. combined state. adjusted In year-over-year discipline results corresponding gross better OSB handle was with handle our OSB with executed margin at fixed margin strong continue from and drive vendor-related very compensation higher our iGaming our basis the against sportsbook a our and football more kickoff our gross to as through decreased External very and we rate growth launched a revenue costs increased while to improvement expenses expectations and with Our pleased double-digit iGaming with consistent exert we line our margin. reinvestment plans for XXX season & Strong hold growth structural and adjusted expenses promotional continue gross marketing

significantly visibility continued raise enabled adjusted Our improvement into and quarter our strong have third to and us results for expectations revenue XXXX our EBITDA.

year the by improving billion $X.XX at our We million $X.XX billion to are or revenue to full range $XXX guidance midpoint. XXXX

and by $XXX shared improvement, that guidance million customer-friendly the we also full by XXXX guidance revenue our our as from May. range to sport XXXX and structural $XXX or launch the adjusted stronger midpoint. The our outcomes include to guidance at in $XX EBITDA to customer million and improving are million bridge offset We year of acquisition EBITDA today adjusted the retention, partially expected XXXX negative in sportsbook third in quarter engagement and August hold negative

of in see the presentation the posted details can the we earnings website. bridge You our to

In less terms year of approach adjusted to gross we define XX.X% our increasing contribution $XXX now we expect profit, which are XXXX million marketing gross our in full rate adjusted to XXXX. year, to profit external as guidance fiscal XX%. margin We

investment year to our we when external than billion to We cash second of ended continue $X.X to quarter balance May. With less grow marketing with than be prior and including consistent in of to the more regard sheet, our end fixed and with expect with billion XX% to cash. plan the guidance cost $X.X now even

net costs a software XXXX, in reminder, expect $XXX of be fiscal source and capital As we a approximately changes development for and of modest expenditures year to million capitalized working capital cash.

continue We level in XXXX. of expect this to CapEx

our on XXXX guidance. full Moving to year

for a in with a strong increase to rapid are adjusted cost continued due EBITDA scaled revenue structure. We poised fixed growth, coupled

double from fiscal XXXX, billion revenue or compared to range the $X.X of growth than XXXX billion our guidance incremental revenue expect $X XXXX. more of of For revenue our to and the revenue nearly $X.X midpoint billion we in

to XXXX to XXXX our year-over-year which adjusted the and growth than since more Our $X.X guidance than year EBITDA million billion $XXX of million adjusted fiscal compared for range guidance $XXX is to of midpoint EBITDA adjusted of $XXX more equates improvement EBITDA million, XXXX.

Our to for launch the adult guidance XXXX population. includes range investments of approximately X%

we and year excited on guidance forward Investor sharing and addition, excellent details had Day. That XX%, XXXX the of we which of XXXX midpoints the concludes our our now the upcoming for In trajectory flow-through fiscal at an third expect we business. delivery. based questions. our quarter In sum, and We are very look forward EBITDA look will to open more about year-over-year line adjusted to our percentage up we ranges, remarks,

[Operator Instructions] first America. comes Our of Bank from Shaun Kelley with question

Just start sales wanted marketing. and to with

overall more year-over-year, I quarter. during was seeing this implying actually we and the believe external many I marketing marketing learned quarter think one of sales even down the your things and declined

look about on make to do year, investments the you you enabling still that I actually As wondering And could, if could if sort to I talk you pattern out a And just to year? what's to? was just seasonality, new about that and us we how that elaborate you bit meaning bit mix, customers little also we next should of think both little continues. just think hope existing a across and versus the marketing acquired external

Shaun. Thanks,

other correct that potential of inclusive in year, as further expect decline North as well and that marketing states. in Carolina you're to we next do external is launches some So

existing marketing our legalization. And predicting not biggest So that external there. and new the all as states is have less mature, we're specifically legalized, reason less any the I think we see why that states spend states

still continuing in acquire our customers old to estate even are We vintages.

spend not of state. But allocated those. So X, it's same the the we X do to have still certainly year, nearly as the level first in at marketing

as mature, So that states comes down.

right that states just change. see an on some what so we year, we next to based forecasting kind launch, And which is seeing course, we But as the happen, maturing, we're new of could expect business year. launch if now significant decline generally, is marketing external expected, next that the come very of that online we're

Greff comes Our Jeff question next from with JPMorgan.

about sorry that. Joe, Sorry,

And you when the contribution roll at vintages? at up to look between you older at there out states meaningful look newer OSB how you Or and look forecast. coming the your are you guidance and When XXXX from cohorts states, when your more a and is different states? older and looking you --

actually that a at more our going Day in on are detail We great it's XXth. specific into to much the granular topic Yes, Investor question. dive very

way the So then much maturity And and if sort the about think population obviously, you growing. could still sharing forward I older curve, different states about relative the detail the look there. vintages is at I of it to think are think look sizes very of you the

vintage be OSB run percentage think per we population, weeks. not just OSB specific go and will think a with on are won't also detail the how so look then each more So will mix front on XXth. going picture much in on I larger. And by about forward give on -- of much. run whether sternly a and it's basis, you a how And the that and Investor big of warned I the they a into a actually question very or of iGaming, more based but team of the if Day, you to the great couple this then But capita was of about -- my is you IR to kind sharing it's to

Morgan from Our Stephen question Stanley. comes Grambling with next

promotions for Clearly, questions to 'XX marketing existing planning whether protect savings perhaps new entrants guidance And into a from about you How in versus that environment, there's provided? been competitive there XXXX need you're the lot that the reallocation who be concerns or discussing? are share. or of could folks you a

-- it's question. continue We great a

of expect to there of kind extrapolated, look that gross see that continue margin XXX increase couple promotions. different as a I year-over-year know a Obviously, our decline them overall iGaming tricky but actually it's couple a that QX. decline for in we seats. OSB always you report of to of saw to in We about can rate year-over-year. promotion be at a in We states know, data are bps business a and saw

we promotion disciplined. a mostly time rate rate seen increase decline. this don't of stay a Last multiple to little we and to waves think We increase, that's of increase a competition. XXX gross XXX in expect Next forecasted hold I time. definitely, We huge that competition. and our year, didn't There's disciplined. saw stayed margin We've bps do wave there, of promotional we'll too. But bit from we

competition stay emerge. a of data what for promotion to and a I scenarios so we through think important think point, execute types And to rate continue. certainly X, disciplined, So think the just then of the But think us X continue user naturally, that of last at done all to have quarters to different decent base contemplated will amount experience that might we've focus we if on to guidance. And seeing new customers. trends well, on and the goes I variety is much to do optimization. our promotion matures we see we've I down thing this continue for of bringing which in been just that the different I is And historical and continuing that along,

Deutsche with next Our question from Santarelli Carlo comes Bank.

what to thinking Jason, your think the about you context shown had up, the for and you about when revenue it share of share that's guidance you within that channels. gains is net think about I of relative next -- guidance? cetera? EBITDA XX% in Is the XQ. context you How guys you that in across blended year's guys the consistently the really guys both do think are moving stepped release the within but up have How 'XX et flattish, guys

great Yes, it's question. same typically look way, mean project of data what cohorts on historical the at and I based guided which we've a always is sort and that. we forward

flat we a this generally significant lot outperformed share. just So And share increase. by think of a implies a such why implicitly, margin that year was our I

certainly share not that historical there, what's we that at and our implicitly guidance, confident that So believe embedded projection changed. can. going year. any in look for forward. flat cohorts, opportunity as the We But banking kind which implies next and far methodology have on We're of we some we as hasn't

maybe gross processing, having scale that guess point you be Analyst think your to buckets, point going far or share? How those that costs, forward. to you laid of a kind of question like expect about kind revenue processing kind whittling of et I cetera, like next that as or XX% it whether platform Day the improving the out the would this contribute on how guys steady when that looking receive of and March from of based some some back do -- down of to And at a flow obviously, kind then are state at we gross talking margin? of around within that. evolution you the And think of becomes margins I through your and generate Great. guys

it's Park, yes. Carlo, Jason

the improvement had whether great the period. the time declining do. what well, basis improving and I'll improve. cost excellent margin multiple around initiatives and to on alluded both to part, gross of guided to the -- of the -- runway months So sort of scale in already fixed we're related had our goods start XXX costs rate do and or XXXX a question through, on on negotiations to the primarily also Jason continues promo to discipline point have bottom We'll We And structure, primarily do vendor into XXX And add reinvestment gross cost throughout those great going as the marketing line. external statement, exerting the continuing continue discounts. through rate flow end we goods a of think guidance I'd to of to sold and of a level costs. achieve and XX margin is embedded I our volume margin we've just And that. Then EBITDA gross provide income within are the those long as margin improvement, at within continued sold we

time also base, expect over in just bring mentioned, Yes. benefits largest improvement That's volume rate that the of And down. the I the margins of one we having trip, we gross definitely scale. think driver continued promotion is Jason of But thresholds negotiations, margin maturity of with that to certainly, some gross down. existing which contracts just as brings will have addition

that's was or Jason, where Like in going Yes, and the enrolling? just X? kind of I is is next of that that. with that -- time ongoing what Or kind year frame

I think but it's things than gets on do. you rates would mean, a vendors really. I certain cap we at Google I ongoing, imagine better for point, that out,

goes comes yes, is kind so it's things do that basis. and areas bigger, And get down more up, on you just just an you as less I generally how to percentage rate think you ongoing I in afford be to So that's as even the able because revenue think continue leverage if get thing. of work pay volume all those these a it's -- to can

all this the team structure. and around optimize have focuses is COGS looking ways continually much that We a on pretty for year to

comes next Our Jefferies. question from with David Katz

the year something keeping prepared about up come flow If talk what start which to I your about to has brings like just is similar the a next cash XXX remarks, until at talked think with never and CapEx think level. I'd you statement. in that guidance, we about 'XX now,

to to accumulate you I'd may positioned or to can a a you just how managing a Obviously, about happen. us up, And do little sense yourself give think thinking on color California to about around love want start cash. some how for for that. you state like Florida whatever pile You start maybe you or get But keep more that? you're

the investments looking at Yes, actually can to it's going different time basically the a through organic question. spending options, structure at increasing how shareholders. maximum optimization, including buybacks, And great looking we've do over value it's opportunities something make, for just long we capital been deliver we term all

a something now. now feel we have said, fortunate in We've are that It's definitely to decisions this discussing that as a focused been, to side. those have creation and say So to actively value question we'll real on on from that trajectory to but something it great as making definitely really our position is more here. optimally the you question. we But a great that feel we through, point. cash very getting think And about flow good we're

Our with next from question comes Joe Susquehanna. Stauff

in quick. that, just and obviously, comment Is of Ohio, the sports just you Two 'XX. wondering -- guess, you had improvement, is in your structural improvement you the U.S. pretty if higher, that now questions. hold. for in fair calendar? to just an mentioned, and the X that's it you're the an assumption user I to you on had get guide gross getting that? was assume for into X months I level margin growth could And then it, adult within wondering, Mass What Jason, X% penetration call

questions. great So

potentially on of there's of side, what that's hold we opportunities, On structural today. the some to now, same we're line rate that. on But sight to. have we Obviously, level we we that right think, hold increase forecasted continue the basically

what that's sorry, second put the I'm question? we in. So was And what

Yes.

many a et you've pretty there, wondering on to out X% got you Ohio and where user is cetera. growth, to trying been, Just comment I'm And customers adult penetration, Mass And how terms are estimate given in now. had quickly. where of more you that

Yes. It's the a in older haven't another found states. ceiling great question. I we mean yet

in We launched our customer of like that that have is first since which obviously continue continue bordering lot a healthy and New state other states we Jersey, acquisition. Even has customers. state we to a to acquire launch, is

the say digits So ceiling older well of population hard where to adult in some our penetration states. terms the of into in double is. We're

reach a think with we continue I So it to product to If to really has we continue do the think ceiling audience up can a to find we innovate lot appealing more period this then and a have to continue to the yet. time. it how ways evolve But at customers, to to point, make wider I long found of go continue product. not more the over certainly,

Our Politzer comes Fargo. question from Wells next Dan with

see I you're about philosophically a level mid-X hold upper was at maybe hoping is to guess bit more there now? along the think trade-offs kind how target maybe I hold long for about of little you for limit relative I And you do kind of as could the or mean you to LTV -- or talk relative the customer? you a that, it the with see term.

you're about almost I think sense we'll because be think getting increase mean a to from. I question optimizing. continue where really something analyzing this depends in And that on it's just hold and it always is Yes. that tricky to

they of a I continue to can hold to continuing and by have on hold side do things the hold, wants that think that than then or I really products worse forcing making demand either they if create you the pricing other people your higher think, that have into it, job, great your don't market. want raise and of If customer you're that raising the

to think a that's on negative LTV. I have obviously potentially impact going

products we're created we this focused a creating cash we've to we've on So very seen out. SGP -- number and and from the customer with -- of on think

objective about about We have be talking we're customer I'm and that than fits the of that our of that excited this double kind going I at a being Investor great which better new really we're holding love launching, to the for one that, average. Day

on So the long a I customer it's think and And LTV. have really on about we runway front. maximizing the focusing that

promotions try obviously, is anything that's see are just So what end, we product is most turn it's that having anything, accordingly. But whether retention but And holds of the introduced important the variable. adverse really that we've LTVs. obviously or Hold in the on we'll concept higher an if is the a dials sort variable, on. to focused do team the that particular effect is variable, or a

it do upside So is very I drivers creation across it, think much it's tricky because not. something how think you're than value lot again, more across doing hold the spectrum. little a room focused a all but that LTV for there that, on there's And I depends

comes with Our Fishman next question MoffettNathanson. from Robert

just separately, has that company you increased with your any can On how profitability. long-term you importantly, competitors games can thoughts driver total streaming and the over total your NFL updated some this then be on streaming DraftKings. for live vision iGaming, legalization, of big app benefits of whether a in games your for there's for think still discuss using And of confidence despite early days your on revenue? iGaming Maybe past year company also year,

great So questions.

online the betting. around on markets per all -- tremendous legal sports noted namely we're with in opportunity iGaming the the population, is in only we of too. But still has and I'd population point roughly opportunity the probably piece TAM sports XX% that's not under believe one, talked bit a little XX% growing On to still capita basis there. I one as is about, oldest mean, Obviously, past, now. our U.S. of first iGaming, the still legalized. the betting of business half Huge a because as not having Xx our we've

confidence at I'm charge. But that beginning, and positioned years. and about I but think that see there the and didn't road in creating there's exciting to coming that we've fact would bringing we it's time well and of much sports product more can It's feel will sports that continue then at did leading of prioritizing exciting do the product things the now our the something didn't I I to road out I of so it's that know we full at we're that you'll as feel end cut streaming look. far have think opportunity of special to opportunity, as up the just parts now example I innovation. on deliver and mean, value very matter just under-talked at, -- said, we're it right in much is #X as in value other of adding look it of get evaluate. And and things the where long the we this it's think market momentum a just And because up much things like point. And question a app, and great really the the something as thought have one evolution a time out an all. going in are one, creating the company, NFL, and It's customer really before there's to industry just map is out glad results the and do definitely of generated. is we tremendous there's the the value. like states value where that opportunity value business. we start and the map there, really and a as people this that that had I in something to we So that so to kind an be continue believe so still that much we for And market are generating position having probably many we have agree we things that's there's many like innovation so create for in so the can feel make there you're we a we we And that this the still right the into great market

Our with Securities. Barry next question from Jonas Truist comes

of the state OSB you legalize expectations access? about where maybe Can to wave for get and you your talk could next

Obviously, Yes, in It's top top of great that's the in the the map, states already lot you couple that one to of look question. the legalized. Obviously, had at outside some say. have hard last traction X still has is out biggest years get momentum if little that there XX meeting a year. Florida and Texas and and California California, Texas there, ballot of not path we prizes and some a be again still with of but until longer the hopefully, those Florida this initiatives. Obviously, 'XX big requiring Georgia are might

we in but those the on kind of of are states, I of really there. left the the them path year. terms clearest population So really the now and and of to what in probably likelihood would out states that in then And say big is timing midsized good Georgia, still had hard is. And traction say more progress Minnesota last

be people but into figure bills towards There's I the to be there legislative year, of the in Missouri, states year end think out think continues around. routes. some some a the either sudden, too, all session didn't upcoming going every sessions, year, lot there's we many QX. for that starting introducing momentum potential And I of that play. as about next there's of a one in early are usually and we think which like that interesting some there could the of start then to that's think always that there's in I one. And complications anticipate

of ones So months, more are think handful X on. have the we'll X know eye year, I definitely next those a and a the we'll states lot we but our this get some more or in

And your in your guidance user And a Great. ESPN reflected just you bet follow-up, for some explicitly? base? is then coming trialing this with online from at mid-football expect season, do all

waves competition start. many really so not seen market. from We've highly we competitive always fierce It's like much now, pretty we a had had haven't of competition and a the

most competitors So end, an will will that experience customers will certainly, and customers better we in there and promos go best to product, that give there just and the best take will have we always come that people our the to give to experience. happen. But we be that And a expect are the gravitate will believe that try them experience.

to competitive different think think of But we've stay guidance. could going to that times, through other guidance very a probably it. managing we're a like. and experience thought play feel And we only and have out range. We based times. in few with it's now, will look what we this through do flavors definitely been sorts disciplined, of I contemplated not fashion That's our all we've scenarios it that in So similar the on we have a environment why

data. a have also of lot We

guidance that So range possibly confident of scenarios our the on we encompass is any competitive going pretty variety feel could emerge front. that to

Our with question comes UBS. Robin Farley next from

just a have I'm have there that X were topic factored sounded in were market some would saying of prior. questions. share It you point. that to where sort of are shop kind One a up guidance or is based forward flat wondering to I at And given coming I your with on just either back. is temporarily competitors you follow-up kind guess the degree close of what like you but might be

about a OSB versus aggregate cumulative we see customer not behavior other? consumer behavior customer? now it's that you and when quarter? compared benefit consumer a to right so are any from happening other revenues from what's basis, there you us that by if per all? And market one you I'm like my that's about iGaming would impact kind a a on impacted, Or state, there this consumer And of but is, is Could can you strength share just this thinking more the thinking sense an person between -- there, at think and of give factor quarter -- was or question see an share in then any year wondering -- could didn't just in concerns next difference

the mean think share. first best a to I the towards question. be kind and it Great to data. is probably at flattish question, looking on seasonal share a the the due And to cohorts the going way methodology we're historical flat necessarily like it right? guidance wouldn't is to implicitly moment, just Because gravitate of about

in point recent more than So of month would time like share it period steady-state share time this of a really type a encompass a thing. of like over

really I as and including But So that's we we think customer might I we see noted, scenarios historical share scenarios properly those impacts all then variety encapsulated itself guidance really a based contemplates would impacts, to data, And it. the behavior. have that range. different range about how feel on of like any the competitive to in I think

us, me really, you that's think have would So of guidance multiple then our we was flat the think? in But having there's to of customers that share our be really, waves actually what just confidence some through And flat an your share. with disappointment impact guide kind that -- dissatisfied a gaining and and us I that a share necessarily element ways, of up OSB some disappointment. that. don't gain going cohorts We've team if in to question been about mean And it's customers, going of a think continue goal to I is share the been I us and expect anticipating matter we really it. end I for Obviously, think think our we I choose noted, there. And to doesn't not. But share. we're assumption second methodology always how as in think that to weren't you implicit to competition. And we sticky how might sense. I that just the that was sort on also to is be in of sorry, share. iGaming gain That we're continue I'm is forecast I the of that flattish

behavior, the little is the one Kind if months? looking few different a in Yes. the other bit consumer last of or

OSB Yes. event customer seasonal sport and the sports very on certainly is are year. fact driven. the bet iGaming matter the really people that OSB changes throughout of and key customers, the throughout that There But the calendar between The is year. difference the the

there more versus that. and betting you're of the kind of the same like times like going just now or So something all in heavy to time. sport of it's iGaming debt have right is summer

sport certainly, iGaming. platform differences into customers overall mean we more activity while cross-sell because So the on for have more

year. customer like whole On have pronounced downtime less There's isn't times, than things that, basis, to -- the going more throughout throughout lot it's and more much it, change but people during the to individual some more tend seasonality holiday OSB steady behavior much the the but to year. much their a customer,

from Bernie Our comes & question Needham with McTernan Company. next

'XX years, 'XX growth supporting just the as explosive been the of couple Revenue some slowing for guidance growth been growth the has year-over-year has we last of 'XX? revenue What are really that to over but move the stepping down. have from the tailwinds

Yes.

increasing. $X for close base it's at year. size revenue absolute really actually the our it's the mean you think growth, of in look billion next just I the if to I guide

the be in growth, to bigger, healthy very that to going So base is certainly, the plus percentage XX, gets range. XX just as harder keep

can new that's increase thing. there's think an if a on Obviously, the that there's I really new states either to So big of decrease lack states that. or effect

what of off very something, next revenue. or base billion past. billion, the a I But we on. coming $X percentage to that's It's -- think we're give say, it across keep very year you in healthy matter all adding do of growth as long-term So we're just think of increase large did the an state because same doesn't TAM the always give I our about see nearly cohorts. revenue seeing a of $X eye doesn't percentage same really of as should still And

Our Barclays. Montour next comes question Brandt with from

your how of you lift, share, getting market driver So comparison of getting in there. customers And just from one a older much the side that, on sort of more certain out in I'm in main any iGaming, benefit the momentum competitor growth sort headline another OSB those if the sequential you that growth as share quarter in quarter had are growth a those and saw at cross-sell call customers, sequential OSB slots disruption share curious to the Golden from of penetration if stuff that that of angle. from you and news.

Yes.

mentioned such is talked steady business, about. really, better to more more a think able ago, just questions and cross-sell we and I And as under I efficiently more I data acquire strong test the iGaming a growth. think things. So be few It's business, get we just to continue

more from a percentage We a states there. cross-sell. of the because So see lot such have legalize I as our customers don't upside iGaming think ton of there's reacquire a you to share come large does of

little got the Golden that Golden of Nugget actually The we is other Nugget first platform. launched we I'd in thing on DraftKings note Pennsylvania. boost bit a that on That the state, is was

over So -- that. the a trajectory do the new every launch. to continue migrate from Golden We early we in positive -- on was migrate migrated to really of very then gaming. to to there online expect Nugget we're about going next benefit haven't for any other continuing more couple results there. And see all Nugget and feel We saw docket strong Pennsylvania That's some really excited Golden pretty much we're to state actually states the migrate yet. going quarters, on states.

So the really, a I there's optimize also the and hopefully, migrate something and share more as think to that little states iGaming. that's these increase, we contributed of juice other bit to that some continue in

Clark Lampen comes with question BTIG. from next Our

exploring, fact, of year, is most of right, saying, app around Nugget. I as like Pennsylvania. much cost isn't means other there guess, remind Nugget I legacy something direct if actually least the the the done I accrue lifting It's I benefit stand-alone that I in question. on also as up of of opportunities? of were guess, moving us. guidance share stack. it Is behind really sort made this Golden guys, first-party Are it that terms were from to share? to [indiscernible] third-party heard I you guess, you the the with just I that the the or comments at versus going us, mix product contemplated. Could that's heavy that wanted in guess, stack? sounds is to sort you on product migration you moving onto is Appreciate efficiencies of next Golden there launched in to really you're kind know Or mainly follow some savings and that then

Yes.

that affect showing materialize. actually as we a to and our certain as do that better, better, expect the will it's with the year, -- fully we synergies will sold great I synergy. think time So converts to, share upside very was cost those product We see There's on monetizes timing on side the better. alluded cost get customers have of question. timing And some and frames existing pretty when but also some And next to of customers we some what they goods have there, they're given actually contracts there's material that our data determined side. you retains that not are savings new well impact and then revenue platform consistent things

some the of like upside feel really well. there's one, Golden And story. Nugget So is as same kind there

We haven't built a in or there. massive increase share anything

Obviously, be brand, in in could DraftKings share than X coming is what we will excited ago mean, where was I And noted, that. gain iGaming, contributor. out when we we're you can we now about brands, been it a hopefully, certainly too. do migration are think thought if upside to a I or So for XX% almost the some we a on cap did And very share But see which that us. with have the you it's combine interesting and we brand. X lower hopes as the there's year high that about up.

feel So lots we're tailwinds map the exciting the XXXX there. pretty in like of bullish product on potential and iGaming opportunity road

with a you mix year enable the sort past? year this in and we I that relative same aggressive, it of should products also? about, to little Does saw of Or I think guys the more be next guess, we bit guess, first-party sort

to even revenue those invest tail first-party of things things some and like a the like over you larger certainly, amortize going things say, more much to tail it's as investments and sense that. I iGaming on products business more long and grows in-house, mean, I more make more in games, and games and base, and can bringing should these

and a larger the we think have build to have So that tail with don't always able change to always we're to have. games of, is we'll that and to also over cannibalizing partners. third-party try and of that to base third-party we revenue and content, and games longer others going bring differentiated course, such it's to to amortize just be come continue as that IP the whether otherwise effect have certain in-house. And won't you games and or sense course, our of share changed market iGaming There's up more investments product well. we'll and base want make more it's trying that have new the that of hasn't innovate that But gain to rights I some are as

something size doing. the that longer of the just on that always But today. economic think emerges So that's as some we're of games that tail exist doesn't will argument increase it, there be I an do we

from comes of question Michael next Canaccord. Our Graham

on the product I topic development want minute. follow to up for a

of to them that product great had thinking? leadership like development a they've just ethos Google, Facebook, the one to extend things your You strategic has Like institutionalize related such historically from to is prominent how over thinking that that engineering-led couple? of Netflix, innovation an time. really years. able next I'm over I'm in pace been enabled wondering of the kind can seen we've great over the that, of accelerate last the big giants, couple tech And

of lot part differentiator, to actually been be innovation, then on those the is a at last of absolutely there absolutely the into invest organization that is best. the we I We've the essential is, day from platform really pretty product was the from of first of I industry of own like several question, feel late the a that once a as of and until foremost, and the the that it experience, much things expect acquired Obviously, to really X afterwards, we increase. across that we strategic marketing, to had that your in of really day customer us. And the go forefront feel into many that's elements the some really important, thing heart differentiator that years right and X analytics, be wins, are the And other over XXXX. far X. But that ongoing order that first and and pace think you're absolute to and has had the thinking. something A are said product soul mean, I other our has been our technology like do work lot business cleanup we has of we that technology. as for

less had really X investments mention innovate. it's been that that So that rapidly just we to than there's many to fact the that full we've just time infrastructure to make kind positioned over more years runway. Not had of other now us

the in AI better do efficient, teams teams to improve them how So the customer, always quicker. can team velocity make building in always for a developer our How whether we more only we and but do do trying way. We're about make we're implementation balancing on PAM, think not pace outside innovation. products integrate structure that we how PAM so of there to unlock API-driven innovate of also it's features and out efficiency our of we're an different

complex. as or some more easier. organization larger it an also the there And making it sure. gets for said, natural of to for jurisdictions, -- you just is of tendency is gets that investment as it more infrastructure But is the piece get cultural And

push a faster that that to end to constant, and I try more our just drive innovate not on So so there's velocity. think, accept can a at to we efficiency

from comes with Jed Kelly question next Our Oppenheimer.

Great.

to back going Just hold.

do your reduce the that As with the guidance, and more just assume you for in And you the whole on engage it October, layer just that does percentages hold? parlay -- continue forecast become November more to December? more that expect then does sports, to customers ability does the XQ and playing Like consistent? around more you line products, that percentage saw volatility in

the steady. how the other really, pretty everything, your I think tight having whether the outcome. And of more hold. tighter, it, more already and certainly different as hold more goes just meaning on will it as forecasting tighter business, of on on, first bets There's as think more data variety, question types I terms expected great. far on any do question, rate just as in time get make and we're we So it really, of mix affects as more market sport forecast it's sports, gets or which in, is matures, metric the

one grows, susceptible all So more adoption, is of bet one it's the the as live outcome in are anything or that, to sport, you type as sports effect. concentrated more betting what get sport more you think like of exactly

So as decrease. also, that more matures more time And people as smooth on whole goes and on states and does more of volatility think we the as and iGaming, event. try outcome-driven iGaming based products, expect more much as see play to do base it sort iGaming as things we also same on rate because will any vary I not thing, out more the

of ways it. think So that's a about couple to

sport outcomes the hold. It's the assumed QX did As kind guide, structural favorable far of opposite we've same. as in QX October. We of see the some

different believe wouldn't appropriately in of hold then exact build necessarily into I take we the our approach we say of remainder hold will the we in what the guidance we're but always expected scenarios might occur. an agnostic outcome that line, range, So that is but October structural sorts when year, sort and of in forecasting all be

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

prop DFS to and player DraftKings and good [indiscernible] that there? on player in And your and your any potentially York, its business betting all directly hasn't sports DFS of cracking Michigan? on business. thoughts York But be via props down secondly that, Michigan, participated OSB New some via could for Florida, New competition

a down betting that said $X It's I for number us. this think revenue happening there's thing And question. that's that states right good don't the a the is just illegal now up, alone, into market. I about I of I good mess in believe, on AGA, legal hope definitely the cracking legal market billion leakage

So it's costing a revenues in real tax probably point. issue close at this billion and $X to states

hope to and in that situation, But our market. fair states we on potential market I happens, back thought deal we big come share that of certainly we that legal leaking contemplate direct really we that doing. for happy of not to think something impacts something any get there on the our could a see if the to the It's be depending and business. that's haven't some a definitely we're So And illegal it. into about revenue guidance the

Impressive Good performance guys. luck.

Thank you.

Our next comes question with from Jordan Securities. JMP Bender

that quarters, overall gains new share space true versus other I From pushing player GGR the is market rates guys hold apps growing in players a of you conversion wondering share if sense the of market? coming from much a was in and finding versus had existing how recent just even

all rate is down. I metrics up, we combination think things. see going in a it's rates I right our internally, direction. across of and OSB rates mean, of iGaming multiple hold promotional up, the Retention are reinvestment

All of of of dynamics, that of any of true. wallet that competitor is all independent sort

from them say historically but We players versus of of math, they reasonable truly of coming certainly have they of the place is retaining gain getting really competitors. We know one we hard that their then or much don't that, to by So competition stealing to they're concentrate that amongst acquiring to an the to really on players players play just tried best sort and know. that how been the is competition want new decide factor to yes, the hard that those it's much we're certainly to share share it's say of better amount us that into think disproportionately it players And market increase. It's based relative how relative a to multiple has apps. led another. we're driven some how and players advantage, and those much

you Jason legalization you to launched my say you're moving yet. your are legalized follow-up, incremental assuming believe within I not guys year that's away assuming legalization then for guidance? Great. And next said X% Park, revenue Is from that

correct. That's

launches X% of the in represent Our revenue guidance includes states that population. total assumed of

comes next Cowen. TD with from Stephen Our question Glagola

got and what took be that, license, you the QX, then If you QX for some Jersey quarter, maintained in driven pretty was OSB significant share Can on more do by XXXX? New in Jersey? on revenue the the share there? you're you like New DraftKings driving with provide this VIP I quantify think, state And market and can to color doing just to activity in almost XX%. expect how upside the what's much

question. good Very

was the product I point, a relative winning to been up state. is we start story share to Jersey our New by us. a a It in off New across then today. And weaker a are building dropping first largest first state that we for candidly, But one that VIP states. focused lost real of of on, competition and quite our early we, product, from It we on Jersey. down most has driven to great and team be got at a continues had lot great hot ended the a segments the and bit to and casual think we're in where great experience, the out really our

Jersey, All iGaming clip. not performing of continues everywhere to grow acquisition be any a and steady see once well. New anymore strong wrong. in there New New decade at a has quite in continues and that our that Jersey Connecticut was thought launch New else segments growth growth are to for would of to acquisition customer very Pennsylvania Jersey, and and in a bit been have York like Continue Customer and whoever around

been Jersey a think was we we're to put given there lot the point opportunity enhancements us, when of always you of we've many very and that that it product have focal I made. big And so grateful together, improvements was first many of obviously customers experience a all some to a in seen there days. that for state, and kind and New and we've the of our us that a shot our that early has recapture So made lot products given knew have

Our next question Macquarie. comes from Chad with Beynon

some North balance Has your North the of America, focus now some where given changes. America terms is the out given looking in just outside is? markets, of reward changed sheet given regulation of where Understanding kind in remains anything right in risk the that and settling international product

long the We also marketing focus aware we're gaming world upside and infrastructure, And will we're global think and of And term, has has benefited here. position. there's really portable us very a in understand product what there. We globe. That feel throughout the investments strong the of technology said, believe obviously the developing singular the a now, building lot us of are operational infrastructure a us we that that helped our lot and in right we other for market in I market. and largest be been is

obviously sure and in to the way global if here. And very keep we that figure make So we expense think the something continue that's we're that never of we it's of a opportunity, would And about certainly that a so us. said, can always important in don't us is cognizant we want capitalize out that think lot of. really other on to over opportunities, easily. mind find U.S., in the just And which tremendous as But I do our what's we benefited to having will. focus, as of the at is we focus ways front I opportunity that think longer-term and to give is the up focus time that

with DeCree CBRE. John from comes question next Our

that contribution a guess, older quicker? you quicker, And more than new at? states those with can trends. more the talk broad behavior if insights just mature one states the on that what penetrating in mature seeing size? or look -- evolves if don't So sit. but any in of little versus question, of how metrics average been of at starting talk ground. they sophisticated new kind curious a states lot the average a from the customer could I that you're question consumer you maybe a reaching that bet guys terms Maybe as vintages? they notion some just about you're Covered bit have you know you kind about Are trending? I of deposit point you those Are launch or of where

data a lot different It's the at one. and different really gathered there's It's insight a that from Yes. looking interesting fascinating be can of question, all an states.

stay population your So to increased -- the kind a penetration of happening. has the to definitely if adult of more at to penetration in question, fast how answer -- that's I high as terms you level noted, rate

customers a of we're some therefore, that of of later also deeper, just early we other types we're acquiring also the the customers base customers, is As larger result, the that not imagine, of acquiring in we in customers new up might brought acquired in overall, means acquired acquiring efficiency going We're most some show a you the in it's same of very And still of markets. markets. But because states we've seen increased that cohort days. us large valuable. such early CAC CAC the lot down a in a initial that new just of incredibly really influx has really for other

to And we seeing. So as go, have the dynamics things that as we've the they things. in way that product made that's something affected we're also the far improvements definitely and other CRM, there's do

it's using I people getting come to on effect. the certain higher and starting states, increases in retrain get like behaviors customers with that. generally So has accustomed we've way. And monetization versus launched opposite to to to coming of some mix products a of immediate It in a things older we're in think new when people product that the because parlay easier they're in these the to kind used new products seeing try states different

factors of of customers a The seeing early be increasing with population So positive we're of that capturing, customers the of you're CACs levers strong We're that us. incredibly casual where metrics days the of in and ramp new the you're and moving we from die in cohorts. launching improvements so there those early some those -- improvements think seeing kind the of some the states, relative in are I in things. penetration much gates. But for CRM a to just seeing X also the But early product resulting made are, continue impact more Both very I lot coming to hard faster overall, phase net in impact high-level more out of LTVs them we great think, well. saw as there. overall,

any call today's closing the portion Ladies Jason turn back Q&A like I'd and the Robins of to gentlemen, over this concludes for to conference. remarks.

you year Thank about call. us joining an all today's up excellent for DraftKings. XXXX, to for Really shaping be excited on

close if beyond, of things QX for EBITDA also And very and bang. excited positive and be excited to more, about year looking time. the of results not a great meaningfully and the lots the ahead really our on first the for year equally, forward with very to having So proud XXXX adjusted product team side

good insights couple the rest lots ahead. has Thanks. milestones next Day hope additional we at opportunity, about to forward We'll sharing you We're XX. weeks. I So of see and again our excited a on Investor of of great November XX. everybody look on November the

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

wonderful disconnect, You day. have may and a now