DraftKings (DKNG) 2 Aug 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to DraftKings First Quarter 2024 Earnings Call. [Operator Instructions] Please be is advised that this conference is being recorded. I would like to turn the call over to your speaker today, Alan Ellingson, DraftKings Chief Financial Officer. Please proceed.

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

GAAP. DraftKings' be substitute operating are or non-GAAP During These be in this financial and quarterly certain useful call, in in on to measures believe available our report found GAAP our we as financial XX-Q discuss not filed on evaluating in Reconciliations management our should prepared measures may and performance. SEC. these isolation measures with be measures can for with will that comparable in accordance earnings non-GAAP results which also the the considered website most of DraftKing's Form release directly presentation a

have on Hosting update Officer some an the and call today, opening remarks will Jason Robins, DraftKings, who of and business. share Executive the Chief Co-Founder we

Following review I provide our financials. will Jason's of remarks, a

We the questions. line will to open then

Robins. will call I the to over turn Jason now

X Good today. on all joining. morning, key to for and like points during There thank I'd are that call you focus our

efficient First, acquisition. we achieving strong customer are and

state year-over-year than OSB second New launches. while year-over-year quarter, no and iGaming customers in the XX% new period XX% declined more increased CAC nearly a with

larger may previously the gaming that acquisition online customer than and the healthy the continue even which the thought. could half anticipate to indicate be we opportunity year We through back possibly beyond, environment of U.S.

XX% the plan Illinois. January gaming surcharge X, sports tax implement high believe operators have rates we we XXXX. have Second, that states a for above reasonable tax solution and to X betting multiple starting tax including states, We a in

adjusted believe surcharge. beyond XXXX this exists upside potentially and in We gaming additional EBITDA for from tax

great integration off to Jackpocket is a the start. Third,

transaction XXXX. in fiscal hit future reiterating deal to that EBITDA for to of excited positive the and the are the our we provided we multiyear generate track announcement year the for year expect the Fourth, guidance billion adjusted XXXX. are in $X expectation in fiscal $XXX million to on are and about We EBITDA adjusted

quarter would provide an Finally, last capital we that allocation. said on we update

in are stock. that $X business will expectation Board a our This announce conviction generate to We years. pleased A our authorized Class cash repurchase trajectory strong that common in reflects share coming authorization up we of flow our significant the inaugural of our billion to the our of and free

DraftKings all like also to the are emphasize I'd season. us of for start that at football very of excited

continuing Our great position differentiate in are we features investing a for functionality product in to Sportsbook and by as new iGaming. is ourselves and

football, MLB, college In college recently NFL, prop and player launched Sportsbook, we NBA, wagers NHL, for basketball tennis. in-house

parlays broadened our spread include total We progressive wagers. also in to

In and streaming. with experience addition, plan we to NFL watch integrate a bet

In Nugget gaming in third-party iGaming, overall ranked #X the were DraftKings Golden survey. #X and recent Online apps a and

improved will games double our this year compared interface year We last track the recently number on promote to to we and new are discoverability. to game of release

healthy, turn will business that, With Ellingson. it beyond. over excited about Alan half fundamentals and XXXX very and second In closing, our the are I we to of are

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

and XX% year-over-year strong fundamentals of growth revenue, quarter. our $XXX As $X.XXX in generated adjusted Jason mentioned, We EBITDA. business of million representing the second billion were

year-over-year, playoff nearly and customer even games. was and expectations. year-over-year. fewer-than-anticipated handle improved XX% iGaming engagement with with Handle in DraftKings, exceeded our expectations strong XX%. and Importantly, healthy retention to were expectations [indiscernible] to our that line approximately acquisition our OSB as in NBA increased resulted new exceeded Structural Customer sportsbook customers

corresponding quarter Operating to margin customer administrative second for due was marketing, expenses expectations to across the we and with acquisition gross organization. better-than-expected revenue general technology our as the operating were expenses, primarily reinvestment. consistent balance product growth including continue and and promotional with XX%, and the Adjusted sales and efficiency

strong a our We equates to Moving year Sportsbook $X.XX revenue billion on as updated to range billion. of acquisition, existing in our and XX% by $X.XX our customers fiscal expect D.C. revenue engagement the recent billion Jackpocket billion to to trends $X.XX is and growth guidance. to guidance of range $X XXXX XX%. in for as inclusion in retention of customer Washington, now The of The of increase launch from year-over-year range well driven the

prior year adjusted tax our XXXX recent account Jackpocket mentioned $XXX Washington, $XXX are revision million expectations as Sportsbook acquisition fiscal sportsbook from of the guidance $XXX the revising as strong customer in million. our to of million, rate, to to D.C. The into million Illinois its well launch inclusion $XXX EBITDA We also in raising new takes range

fiscal For our now gross modestly. to increase we adjusted XXXX, year expect margin

at primarily investments and to brand. Jackpocket in rate to to year-over-year. high due single-digit a We The the increase sales expense expect marketing mid increase is

of approximately to income. continue expect working capital expenditure, capital source as well software approximately $XXX in capitalized cash development million with million be and We free as $XXX net from bridge flow based the cash EBITDA and of adjusted between changes modest combined to a costs on annual interest

to And represent terms and down flat on compensation we year-over-year revenue expense XXXX. a to stock-based in in continue basis fiscal to year X% dollar of approximately XXXX be expect

$XXX the underlying expect the benefit potential due momentum, to including adjusted the second to our continue in range ahead acquisitions of billion when in higher customer Looking fiscal including upside We time. which business in year we tax $X we XXXX, online surcharge of are of multiple apply Sportsbook million to to the EBITDA half noted have this not believe exists, XXXX. tax that states additional gaming we at high those operators,

our XXXX fiscal year November. report on guidance details with earnings more next provide to expect our We in

our remarks. That concludes

the open line We questions. will for now

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

the an how is follow? out helpful. fleshing the a And interesting I was appreciate competitors the was thought which a do And about really Just react all hoping about surcharge or you how not What moment, degree circumstances? bit would those may strategy the really under I may strategy. talk which to information. just to for you be more

Thank you, question. David. Great

own every what's think company I has to best their for do business.

imagine I see. others but think know is would come then we we what's us. I calculus, conclusion, believe don't if our for that's best the have this to same would to really And we'll and that

ways what We we ideas better but like never you this thought quite might than came be be other a that know. And other for through implement something might up. obviously, to the there how this bit, to

we'll So now see happens. we do June X what and between have and some time

Right. follow-up, with we in should to Illinois, the impact be for Interesting. think lot assuming models and through sort include in for that on as it just reflecting surcharge going And a quick the If aside. surcharge, respect impact might Alan, the that of any we putting a our we how there. help, no future? about as think to Just

offset seeing way is any can positive the then to All think year. overperformance we the with the on outperformance Jackpocket next I'll D.C., the for Illinois are detail. and customer should best tax well Washington, deliver the answer I as expectation customers trends underlying handle quickly of as increase think it year acquisition, with side. existing next launch to But add EBITDA our our about Alan that and

next So any billion year. to million even in if get see EBITDA $X we don't we will adjusted the fee, from benefit still $XXX

Sean from comes question Kelley next Our with BofA.

sort of or Jason investments I the rest think Alan, subject increased here of update of is about lot customer environment. of some acquisition the the continued a of Obviously, making. the you're the

expectations lower kind seems obviously of profit flow-throughs higher So net to revenue to the XXXX and about specifically the impact here start. is be asking

implies implied the reacceleration. guidance Just right now some

kind haven't seems revenue -- the here. given that you've be explicit guidance undertone of You only to

kind your move let's cause it in be the potentially we adds the and environment would we're some you of see where for change So to DraftKings the would say, of kind there. environment from at offsets strong into acquisition if And rich next And of year? would what customer to as today? continue remains doesn't, mind

Yes, it's a great question.

a about customer of marketing, on. new customers promotions. we explain spend if little get what's another going new bit dime to didn't even One, Just

and while didn't the revenue. it that that right, drag we're And a a bottom will certainly the we're elsewhere seeing remainder you're So It improved revenue seeing still for little on EBITDA. hit line the or enough has year. -- actually side the outperformance revenue on bit of

think, that seeing. we're and just I of the customers kind business the of the underlying demonstrates, So that strength

needed that's kind to tax offset offset you a little we'll need next increase. when make get expect we that to to year, together, all because more order Illinois in the revenue math bit the do work, that put So gaming of to

the of billion. $XXX to to million how So that's kind you $X get

more And always upside that would beyond of the if customer of those and seeing. either like increased potential hot as feel happen. revenue-driven in X then we launches now, trends instituting fee as states. a for any Right in there's that. can the will we're additional next from built be on amount Illinois then year, tax And that or that far state lot the things depend gaming the degree Obviously, acquisition we've we're that some impact of

year obviously, means same-state basis more customer more and just if longer think as acquisition a again. then think might over the year. sort next a I could numbers thing following you that of So change bigger of that launches But this And bit. of things term there's investment, state type

think see in wouldn't EBITDA next million think to So reason a to I right $XXX I about basis, adjusted of no -- deliver think state as able way in the that billion be EBITDA to it. $X year. that's to today, on But we same

comes Our next Grambling with Morgan question Stanley. from Stephen

to a in the primarily cost Are players? change to Or coming ask any existing follow existing Sean's And on from on are and also still even the it uptick customer maybe acquisition, want states? that up you is in greater question, different states? you engage new but seeing from sustain seeing new Just way.

player-driven players It's so an really mix-driven existing. to are across not board. And is of we player all the existing interestingly, the and mix So meaning new seeing increase it in cost. new

in But from in we year, big late So if X certainly, launch you had Massachusetts and we Carolina remember last got having Ohio states, some boost North QX. QX. launched

this around less QX. there time launches state frame this So were in year, none and new

DC QX have did that didn't July. but numbers launched We in the that affect was recently,

really as come states, way. lift across states, across look you the really, it's Golden on if particular products. product. We We And then boost in that to the on in got a Nugget at did it migrated So and it to it's has strength existing there. we across some products, too. from conversion platform been saw really, definitely brand DraftKings some and But see

Greff with Joe from comes JPMorgan. question next Our

the the Jason, on just acquisition follow-up versus defense second competition? cost the that of this do impacting new pivot? is this the half you react? you meaning grow And wanted customer presently, base year. I plans versus downside? to my of ask in What new higher changes the user do to offense, healthy. the to much environment user mentioned if How How that then environment's acquisition to is, that you How

I we questions. We that in think, we, our data our and rule great mean, Yes, I have based is competitively. don't returning. customer our consistent very says make acquisition X-year on spend payback decisions react what been

So as an in decline. an excuse an and increase QX increase year-over-year me, had -- over XX% XX% players in -- over new XX% CAP we noted, we almost

right? me really numbers, massive been hard to is spend looking looks monitoring marketing deliver of results," just it's right? you So I "We type closely. are same those at say mean and can you're saying, those And to your no team with numbers when productive more the mean coming we've really, that, and quality cohort to solid. I everything

I So now. growing The strong just is environment particularly quickly. a it's right market think

fish just are it's really the to to fish I got so biting, think speak. when -- you

back second So so the really I absolutely to the to way think it data. other and by the the about same that's your if other question, way, just it the offensive it. follow way. token, And It's goes we'll kind more think following of

digital, good the our of is vast is of spend of marketing days flexible. TV, of matter can for So can even in is out majority in and very it We we usually. news the A it quickly. a move lot us move out the of

we a us can easy to quite us at when we easily what's really we opposite And quality, same make cohort as telling that data deeper strong. see If the and start or working it's be the see really, in investing levels. paybacks to way the adjust we to because see what decline we if is are adjustments start So there. should for

tax And do corporate -- corporate cash the a rate? what's Alan, you the becoming when cash -- with start taxpayer gaming

'XX, of all We'll 'XX probably 'XX at don't or until cash minimum but and our soonest. taxes paying 'XX start through we in NOLs expect a run of to amount the

Our Lampen next question from Clark BTIG. with comes

to existing guess state customer in want to launch standpoint, acquisition creating, from this leaning the guess, I and a environment of performance. obvious around you sort what's I topic to dynamic made back one, curious, you're the I Jason, favorable come of I absence of comments like quarter into? more changes, last the sort from I'm that guess,

TAM terms sort addressing? can that where really enough faster have to customer a actually picked interest right reach has Or where maybe and pace at tax weren't sense it we that of spend expected now? the down Is of it factor sort something up than expanding come suggests push in you more a you of of previously is cohorts more, makes

a it's things of to primarily. you exactly it's said a hard and the pinpoint, great both I think Yes, but question that combination

We getting we've of how the for So is a marketing about the on for that kind bang as states our we're you're of how regardless giving. the same but keeps see gift the your buck, it. state operating one, from many now, footprint, bigger cost for footprint, more increased perspective, your this years national in, we've this talked

deeper state So weren't pockets the continues spend our as little our which unlock more our you're to meeting we've to right. little in grown to a us It allows reach previously. payback bit just a thresholds that efficiency, bit ability improve footprint, absolutely and

this of do think a buzz ton the NBA, of busy most I the because just is now, time It's typically overall Secondly, but lots season. of NFL in frame there's only going biggest industry momentum that get Bowl, from the right of acquisition fall time us, is that with the NFL to year bigger a period. kind whole whole the perspective, customer guess, Super usually for I

in see I the of anything, be as now, data. approach. monitoring no Obviously, very adjust because customer that, And if that's to see changes, we're spend right acquisition. going and noted think, down. I really, reason to any we're we'll our to closely slow adjust think really expect build still earlier, we're going time And our and least strong you'd it But year, to seeing very the if busy we

time slow don't going know So I down would year. the why that busiest into the of

be I Understood. a large sort good and was for was guess, just going other on if announced might little the tactical sort outflows. the and tech guess, a result year last of advantage follow-up Is that's repurchase reminder be dislocations, to a I it some price? take to Football nature? think have fair you scale been the Or something utilization formulaic today. a that I of bigger the There season Alan, for to of more hope would stock authorization of I of also guys guess, buyback event? Alan, fairly more rumors swings that be in for 'XX And wrote smaller that, deals. have of of you intra-quarter is more in this pretty so, a potential Jackpocket. bit

it, to We create think we or of But years. some be take over to expect able being than X little the X to shares be formulaic I $X fully back just I get the A finalized. to anticipate ideally do like with buy billion would the Class while next consistency. it next more

it be flexibility, to dislocations the And as any price. have the will will a advantage bulk mean, take of as But noted, certainly be we'll noted, share formulaic. I in I you think Alan Yes. some it mix. of

Fishman comes next MoffettNathanson. Our from with question Robert

in of bit. And would OSB then gears if you think some the -- headwinds on how of seeing any about of more you older maybe? shifting your weakness are guys Curious, signs little of quarters? consumer states and couple your see in any we a And impact macro next iGaming, the

this Given Some did, NFL the functionality. see did think, competitors with and anything the experience of year? the streaming, expected you curious, watch your integration I have of last bet

learned NBA. NFL rights that any about year this you thoughts product that And anything exploring So about you pushed the early these enhancement? last the season into for

Yes.

we're on the industry as our whatsoever. Hard versus to absolutely behavior consumer at your we're an is to strong seeing weakness And signs unique all-time well. on super noted, as seeing really much acquisition how question, of high in think board. customer first no is across I of really, any the macro. cohort But know end, our that healthy

us. So that everything on good looks for front really

we it we really anything this On wasn't It and that along. the value our thing had was great the things betting our were side, to of anything year. lot did. get we bet all think make to year other customers. that that so will competitors last last Doing that we do a add We didn't to saw It's a and cut. just great many watch live trying done wanted more

do was it sort think style, way in do to I haphazard it want a our in to of And we right.

we first integration great only it back because are we and of and get kind want sure is somebody of impression. video a hack this true them tries to it one want come make So wasn't say you if really some it, just that we fee, was shot creating a together, at experience a but to

on that this we off and So coming season. we way, think map I the -- better between would our the road we right this for sure felt [ desire like we did other it ] make decided add our things to in be

Ben with from Sachs. comes question next Goldman Our Miller

as a using then surcharge are discrete insights back around the in guess A/B to behavior Can as process just this? any from any surcharge. the you testing gaming share can might the there have done, on that tax customer of more And you I measure you mitigation a behind advance thought opposed just lever? about talk announcing

Sure.

thought it. of discussed a some open to I there definitely as So And said, are better and of it. ways idea different along, we're lot doing comes

I it that way something be in hotel taxis, think name at the the thing done taxes buy you even if it's important is pay the typically store, at you the sort of whether you look it. you when other industries, tax or that sales

consumer. itemed and subsidizing we're to passed line it. obviously the this of a case, typically along out It's usually XXX% separately In chunk

how trying transparent most be do. our to we versus it's So with and done isn't obfuscate was be that line to our in consistent also it, in we sort commitment with very typically just thought of customers everything which customer-friendly to

So or I that because that know customers people but even if they notice, is the think I there's appreciate along, transparency. long passed pricing if and prefer some the maybe high hiding their state maybe something of buried it And benefit they else. not don't love to a tax term, in I were it implemented to being think don't over knowing

Was any you there share guys that? any A/B from customer testing done could behavior you that that

still, I A/B X in No, is it's do like haven't. work we're What think it. there's we to We to doing test are states. hard launching And actually -- to we that. something implement

on of what we'll nominal is And that So it we but enough amount. I comparable consumer but data pretty other it certainly will from clean enough see test, states the expect a and the impact would impact think, think an behavior be understanding there. from that a read I of AB we won't a have obviously, have perfect

charge. for presentation, XX-something, If forget we win example, Illinois, exact would if a it meet I a you be bet provided for at the to the -- look $XX investor you XX-ish number in $XX, the materials

difference to charged importantly, of people the all. really a also, negatively obviously, in our compete And idea ability and a invest illegal the their and nominal, But fairly might makes which pays it margin. taxes make has to product no market, So just it's other the more some huge react with things. ability and being into XXX% of to reasonable to revenue at

And market that be state in properly invest in a it's high with to to and a feel the illegal tax So rate. for customer an very products us competitive and has We able better, be experience that somewhere for a ultimately than doesn't will then the consumers they'd step feel pay have experience maybe is important that rather product they if strong that else understand. as and product.

comes Our Robin with next UBS. from Farley question

or about look quick a -- when then ask, Latin to would America, the think that pursue to in the stake organically increased of just wanted that you strategy use in you I might question earlier And that get acquisition follow-up something sort market? something M&A you acquisition. on commentary is about to customer

I numbers? what's year-over-year. share consistent we customer pretty guess, lag the looked higher up acquisition time that the share the and in think market between showing market should how Your about

M&A. to couple on if of organically question One, have do answer things. be pursue. we a we it either. don't to Latin America. not currently So would would through It probably your any to We said, were that do plans That

on we've I think we're opportunity. the U.S. really focused, in online noted gaming past, the as winning

we In fact, Reignmakers. just of we shuttered months, couple last VSiN, in the divested

we're theme more just mean And company a focused mantra and I So that's than a focus, our ever I focus, core. focus. on is throughout been think the

But were So think I that would through it something, M&A that point. likely for reason. definitely very make to we to be want do

chunk and to don't question them on something We sorry, take like I'm ] share. And with brain distract here a of that. then [ thrust -- our want big second

we're and competitors exactly our know I that acquisition assume would seeing if are to because customer hard robust So well. as

were to I X should acquiring us, quarter unique that's show of up within So know to or If us. unique it if pretty quickly customers. a don't it the

seeing it Nugget a from. things in we're most market, is experiencing migration part, products. states, the Golden guess But the of entire like customer now across across is I little acquisition that industry well, for entire extra some getting guess think caveat an case could be the bit -- there of strong that the because the But right very we're boost I my is the

macro more anything think industry as it's trend So a as else. I much of

from with Wells question next comes Our Fargo. Dan Politzer

those look that with incremental a EBITDA. that at of your of million, I EBITDA. of both in first your compares drag of terms retention a in about positive one, add but terms revenue If quarter slide adjusted But positive, it's First customer where They just $XXX stronger would right? the figures acquisition, were engagement. deck, and

kind So to is any acquiring I monetization customers? versus better as bridge, of new million there of out $XX existing drag to customers this of break guess as part the it EBITDA relates way question maybe of loss the is, your

question. think great from Maybe that incremental mean a from range. best I it I XX-ish to a comes the kind It's the way in what each. into you but that customers somewhere of is somewhere existing you bit about Yes. little can flows revenue if higher, think the percent assume through around there, then back

And revising just and to an coming well important note, the other sure any we more customer too, think cost, we customer guidance point. make thing about spend more didn't this it's on I'd new I acquisition just from promos incremental When want understand I and come money even people EBITDA marketing, because talk if as customers in.

that So we expect new of customers year. the were which did this acquire under this in we forecasted, to number we case if

customer advertising And if people zero on still customer on headwind, line that see because mentioning we means marketing, would is just more new promos. even more from in we which up more you're signing dollars promos new spent a

It's that's a good a bad not thing. So thing.

took really away can't new we what the long-term do, that's which a is profit a control. And something Obviously, within would over customer good something think unless offers, we never large believe But long the end, that it of element not TAM. growing term. that we creates is our and it's But more control. really we in I

pull there York, Pennsylvania it. other higher the New well, as such And that quickly Got or of surcharge. my maybe states, you're the reductions some steps can you're going Are as going levers on In those just additional that. to then to implement marketing Illinois, implement to offset any for follow-up you in that taxes?

Yes.

part continue in think the do so of of that, this the invest can to place we state. idea in I to is

states, that invest York going fine. a DraftKings doing lot a XX% -- have to and other rate, line say, one of another way all "Look, think would That's But And where back going think that's way including -- I'm at a I so everyone level at is adjust I tax marketing in investment. rate in-state to pulled New to the is heavily companies on is of have effectively which promotions tax with invest XX% it. I'm example in state." a we're that I and great

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Our with SIG. next from question Joe comes Stauff

and describe, the please. Jason, could, if you Alan, questions, see I wanted to Jason X of say, sort iCasino.

this First opportunity at point.

wanted You golden have in your GNOG just of ask We're was piece and obviously, about, fully cohort. existing ramped up that then the to initial contributor states. to of it material particular, second a in is And the launched. say, And growth? aware, MUP economics customer acquisition

but question how in be guess economics and LTVs so all of what and I seen for terms cohorts after that? forth. X the the observing. between them? X, the over like be you've One year very wondering on think, different in versus is X observe, was year it you're year wondering and X just can lower, what it'd you main would what time, I But are the based economics and Whether year just the

a question. it's great Yes,

alike. positive better So outperform conversion really noted, a flows, which we more starting experience, products customer and is products bright said, board, been That ever all across since has really much seeing sorts GNOG and things. DraftKings we spot we're on customer states of the to those off, platform, a as migrated acquisition

definitely have seen We GNOG spike.

we're but excited So there. about that the brand compared that was potential a material to and the contributor growth we're DraftKings, for still sure. very for small to relatively see It's that going

to acquisition. important the to contributor on more an come definitely So there, outperformance but customer

player this see then the you as of the gets just sport on based iGaming different It's a cohort look first. day. acquire in also you LTVs well, sure a but OSB we player some you that question. quality. on, is We've time acquired whether thing not as And versus a decline every matter one at Obviously, a time past what cohort goes in on it's factor, time. noted see single to onto for on And or

we drive state they're other differential There's based noted rates that acquired Obviously, number that there's different of a iGaming. the elements LTVs. whether that on and like factors have definitely tax played and in,

complex at launch. into is in there state of goes certainly, of of as how players get LTV. time we is to that So that lots quality one of declines a or them that an course, X player your go look you're underlying of on strongest the year variables because, going the But first

So that in. something to of it. little out is tends time. closely factor after a We monitor that bit we It asymptote

like it where strongest year and than on of you getting that few X flattens then just are you But get depending get Usually, declines. or first players not the players doubt, it's day out. the you no get or X. state it perpetually kind players kind years So of weaker a the in

Our DB. comes Carlo next with question Santarelli from

the I First base? just XX%. to growth -- wanted to Draft in -- customer does The include as that the off, Jackpocket clarify XX% customers, the some it pertains

just brand That's new as GNOG and customers No. DraftKings well. the on to

and fair at to $XXX likely know XX% I question up, secondly, $XXX it of that million And million on generating, flow-through it it, believe to are the you more than the existing the XXX more the period? response that or rest at delta estimate GNOG, call [indiscernible] net new from negative net Is Jason, that customers of customers. Dan's the customers. Is incremental like of kind customers. was revenue, revenue And just then the said acquired existing less, what flow-through the through around this of way, -- customers of okay. revenue year XX% And I through That's helpful. on carry as follow look net looked is is EBITDA. on to, payback other you the kind the hence the And then your the to for XXX math take And the accurate? would new

That's close.

acquired, of them end their get revenue would year, -- is the the of months the so also play. we definitely that be of on customers but about? it would this or the will that say QX, negative new depending What be generate chunk in X acquired customers many they So significant But after a customer positive. new by timing, X positive year. some will promo

complicated So about. bit little it's a to think

separate way X that's in the that's to you you going flow think I into best promo the and can because line, flows positive level, of somewhere as revenue the is thinking of of are out. to about through how it that think revenue, Instead it. at and new XX% spending around a of how customers. rest And And we're customer those of on dollars the through the bet. can the back it would then it dollars XXs, more But promo bottom

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

offsetting Maybe the that that's to much just How line engagement, moving truly start, customers this the EBITDA is on or acquired retention 'XX. over that for customer sticking bridge of versus much to 'XX year? the that you've how really stronger Illinois, acquisition existing of customers

Sorry. Say one it more time?

the is the and then Illinois Yes. EBITDA a is bridge, In big big offset engagement the customer line. retention negative so

know by you have the been much to how better you want is this of that expect there existing customers outperformance year? truly versus acquire to that and before acquired and year that this customers driven So

XXXX, know answer out. right? Is the you that know Do don't proportionately breaks it to how -- that? I

amount We this is call, won't for the existing it break of it but out disproportionate customers.

ramp to time. over tend customers New up

on customers, little on customers. new the we're performance So you the the can existing And which on less existing of. still exploring retention and assume the bit of our the value customers, and that heavier engagement it's the a

higher the in then margin ones? tax on high profit lower rate the the just those rate significantly is versus focus And Perfect. different tax states Okay. contribution given states,

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Jed Oppenheimer. question comes next with from Our Kelly

view your real cause are But mix? What seen the you have Or would to and some back more it's not you on on in surcharge, hold? it. way hold obviously then different. how Or maximize parlay you circling just like, hey, change any hold, your structural trends Just you drive changing implement potentially important hold? to of engagement a maybe ask quickly to the to different are And it?

question. Great Yes.

hear let that think be don't So our we'll change implement obviously, attention there would know. feedback. reason to we now, paying as that us And certainly we're any it. we if I anything of makes mind, customer But wouldn't you close

there. the I side, very continue focus we think on much to hold

I mix a thing. bet largely think it's still

increase ton Certainly, to our we our increase mix of room average count and still. parlay leg feel like a there's

very team is focused So on that.

focusing think as of though we're platform on such as betting I also betting. the other parts live well,

whole more bit year focused mix. on I it's we're still than last all that where mix, but maybe just think So rate it balanced a little about was probably and bet very

call real just then in or quick, drag Reignmakers down And terms on anything EBITDA of to out headwind? shutting

Yes. Reignmakers fairly immaterial. is

factor So any wouldn't way. it I in, in

for company think been mantra then focus, earlier, really potential a around I about I has just And I risk. the said focus, eliminating and the distraction focus. think us, it's as

opportunity And we're right profit Let's on maximize the the of we're go space. win gaming online that's that in think what U.S. driving now. focusing and amount I

Securities. comes question Truist with next Jonas Barry Our Instructions] from [Operator

meaningful Do the as states to market? starting number by to combat a these you market offshore react [indiscernible]. of seen banning We've see the to actions illegal

is the think I particularly bigger iGaming so. ever. ironically, space mean the right I market, than illegal in now,

know minors just consumers in not. companies and to and sure it's there's that And think marketing don't don't not state. put legal zero what's legal They controls sorts what's know that they're oftentimes their things. on these I make of if other

think it's and good the to regulators So on do see it. I starting to big it's focus a issue

that lot think maximizing their this, legal and the as and and current the industry, into which up so to well much sure, ramp market revenues legal states that still bet And is doing But in making tied of purpose still for pent-up that regulate market. there both I the for there's prefer fact many demand would the thing people there's so a there's that you're for seeing a despite growth that is for of protect are consumers. is their long-term the health to as TAM the sure and

that be think absolutely to it's I that, a continues focus. essential

happy hopefully, I'm it, So we'll and see see more of to it.

comes question next from with Our Mizuho. Chaiken Ben

themselves? another acquisition -- questions. will customer one, color I on do integrating that then to watch have users into access kind on of subsidize quick I so, have on integration, opportunity. very opportunity significant to And the you DraftKings' guess, an Jackpocket require and Two the imagine the And product timing? integrating Or agree? app to if anyway? bet will games will be I'd two, guess you that tactically any

bet included. just is think watch I the and

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OSB Draft as do plan haven't quite we and Kings, So integrating on Timing, we DraftKings as yet. products into Jackpocket. products casino well determined those integrating into

products want all long of our past, But do some when I of do we, cross-sell plan on have term, other all that and those point. available into will versus exactly what slots brand-to-brand, I we directly and how implement kind we said things echo our product brands. definitely through at depend through priorities our And that think when more we have the to we linkage to of in is road map.

guess integrating Does as business? acquisition that Would sense? you make other think you've would be a you very quick a kind it do Or for already significant those acquired catalyst follow-up. I the of portions of agree just customer that customers?

acquired those all haven't definitely We No. customers.

the continue Jackpocket do that experience cross-sell. to that's know stronger that customers those to we stronger I as always So integrated I to yield and planning great agree in going also it interim, we having vehicle it. But we're for see into product would be cross-selling them acquiring the a reason is think a conversion, DraftKings. and from fully

that So a no doubt, you're correct boost. will be that,

from Our Montour comes next with Barclays question Brandt

So on one surcharge. more the

VIPs outcomes in more thought plan, states. would We you if that term? suit. a larger at customers the that, the potential would more. nobody players, recreational your help more especially hold that a think Just customer actually this there acquisition potentially And the thinking move And mix? through your you're the could of to same that would accelerating longer time, existing and penetrating affect Is that follows

and multi-leg is payout very to because betting Certainly, the that sensitive like less Yes, it's a are parlays great question. things I the think players going large. be already

on our worth strong mean it the might that So I -- across few customer we're we paying hopeful I thought about get players enough us view investment And product how is they get really that a our I extra that. hadn't the as affect spectrum. in and maybe experience cents we're bet. a being making

we math, to line top at to not run worthwhile perspective. it certainly, accordingly. we that and it just But we will that be if where decide it plays from make have what how of the like bit see everything data, think would I bottom the we'll quite you a line do deterioration out do look and a something take

whatever to but and we'll and we'll see optimistic, analytics I'm do. tell have data follow So to the us have to

some just more more little then together bit and Jackpocket. term. on Great. you're Jackpocket, in this in piecing just year Jason, a a investing integration comments, marketing The sounds longer follow-up your of like

So you confidence in what you're just the gives to in that guide in in to 'XX you -- inflect positive understand going trying I'm your your drivers your some out deck? there. laid of that

to adjusted positive Jackpocket growth able Well, revenue be us EBITDA really, confidence we'll right now it's gives achieve on XXXX. that in the we're seeing

reminder, low they from that So they've as been Also a standpoint. well CAC. have extremely really an doing

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Our next Jason comes JMP. from with question Bender Citizens

serious the to skins talk changed in the I act some over has But unused like your be not that cost tool access lever There's room Oregon. move states dynamic the can savings want supply-demand to much drive point agreements. a obviously New to states maybe long and and in York with market as on renegotiation term? a to

we deals pretty some have there's we in good probably Most think states, I room feel already. there.

don't there's think it there's of some but bit longer a I optimization, optimization. feel we I the long-term So where a we a little are probably struck most of deals. be think ton deals lot very because there's will And term

deals. XX-year to X- like So

skins. great of think to of And thing. be got early open place it's that do we they -- before I think think states really were industry the I we a lot just a though have there as of even established many level the states up, also rates, But I anything, that we And the come supply-demand start will like in have.

bit, So a I think too. little will hopefully help that

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

that and was sequentially. at Jackpocket XX, to Up organic Normally, out increased given quarter break almost much $X DraftKings acquisition? of flattish Nugget versus MUP able Looking seasonality. the you kind a million. of Slide how Are Golden just

Obviously, given it Jackpocket. the No? mostly It database, was customer of was most the their it, of the boosted new Jackpocket. too, but size substantial acquisition

No.

that and got Half half. wrong. It was sorry. I'm not. I

corrected. with have data people brain me. my better stand Thanks in apparently next for I to than Okay. I

it's and half So half. about

Our from next comes Michael with Canaccord. Graham question

coming feature. you to But the we tremendous, like Jason, hear ask watch period season. that wanted on had, and willing parlays I this on products head perform have just of game up. you're think seasonal introducing don't you wanted in thoughts have the as but platform to the you the the just you bet upside important Obviously, comments share from about your here NFL same kind to how will and into any product the

product last the really more the about NFL. going over back-end performance into doing been months has work we've have lot of feel several we been A excited I stuff. the

like sports. like bet for is cash like pages less that bringing sure unavailable. features. for out Adding types, So are many obvious they front-end trading up things are maybe aren't sure things for making pricing or immediately But in-house that the making faster, markets locked and where launching our things parlay. that show new longer making have new And and as crash less, also, time load game we up same markets app don't sure because

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ship team September the frame? time to what about the thinks want do So it August, in we as

product And do beginning entire of our how orient year, the road then we that. and -- around starting map at calendar the

lot I new going a over season is lot as of up you'll pop see that X So weeks. ship to the approaches. the think we of a next product And to be stuff done the X

next Macquarie. question from Beynon from Chad comes Our

guess, there. I Does big we about, that temperature ask news a ago some Obviously, decision landscape the this of out learned to in wanted change I Florida. months few been of a that's tribal some that the what TAM, Jason, of if move accelerate offer? Could they ability then you of digital? in to with importantly, other forward the your tribal to believe partner states of they more could these decide companies. terms on And the

left in Foxwoods, various Yes. obviously, travel probably several Pequot Maine, others. few of Mills I that that I a tribes want communities Draft but in Connecticut, the in partners is and already now to there out, Passamaquoddy in Kings out. it some do Michigan, think in including don't momentum Bay leave a any tribe number are has states,

sometimes that continue to time being where of our in California, if great that and of partner believe just you record, track we over like we've like also tribes. great partners tribal And the had there's anything, it choice states to are we a any takes of and partners. think I But education XX talk some

about it there, obviously as openness. that about is alignment think much as I getting it's

regards like politically all each are own one all a way. unique, in -- state and is otherwise their And just in unique so bit states each

think that now some momentum at than of it kind way. to look we have So But more there's ever. I do

come that us close done was that tribes one tribal think agreeing this to to we a seeing it session, I seeing tribes hopeful is is what that I'm next a the And Minnesota tribes got think about about -- that to ask gets can and bill all session. passing very I do. and the another you're state we're and deal. past

openness. it's different So the about stakeholders It's to not sometimes, even about state align. getting within

with Jeff Stifel. next Our comes question Stantial from

the all, commentary some fully changed into I sequential iCasino-led more a at from investing digging towards of Golden that guess, is acquisition. Nugget uplift that Golden the Jason, conversion to looking Nugget Maybe your has you iCasino on bit transition. rates philosophy player platform talked some this on now at about But player strategically, further cohort integrated.

cross-sell I here versus the sports on iCasino-led But returns Historically, CAC, that you're the offset? thinking has acquiring curious based just focus user strategy on more that shifted higher player. users believe LTV this around acquisition at you're if higher been recent to with all seeing

Yes, we And so. of wouldn't analytics. it dollars putting I philosophy as returns. I with we best change think much our -- us the as the continuing see where where describe feel the a mean philosophical following as and data really I the

therefore, then better. should you higher proportion spend. So would an should our that of as more GNOG, mean acquisition dollars that in get on because when performance there naturally, And see noted, performing flow a increase you it's

with we first think better seeing, some we're noted, we've where dollars is that get what it's has cross-sell It's best that's moving return, just are of and you -- right? not customer inherently and we of a But kind result, investment, been do acquisition think shift what towards iGaming doing definitely performance done. I the it. we again, been on based as all the So consistent which around that always way

and acquiring our first get we advantage and to doing the iGaming customers, where of that. see iGaming invest taking way, an of that opportunity the where It also most But certainly, the just by is, directly that's it. we still means that's was bulk customer, efficient in we're of

Our comes TD from Cowen. next with question Lance Vitanza

to And the regarding talking Is on just about maybe of Illinois, Obviously, you surcharge can quarter. have surcharge parts. upside is designed about does beyond successful. but recapture? just it great surcharge, lost talk a to focus to have the get rate the potential on I'm to due EBITDA X million question what I increase? the percentage the $X I'm to that to extent Congratulations sense one the just trying tax guide billion for $XXX a fiscal 'XX. the the

Yes.

it -- way the and is covering the such So calculated set of that are XX% revenue DraftKings targeting amount we taxes. gross we we

then And the higher up remaining rate XX%. so basically, the is be designed it would offset. way to think of to to XX%, fee be any tax than the is we the that's paying would And

you on state New York, large handle tax the do number. the do could rate a see that's XX% is, that we're But where you if top public the quite XX%, all take and in line taxes do result? it's big bit that is the in New would And a in a Obviously, XX%, math So because versus any it the big the see can we about York. and like question from think a that's number. a you of as reports, deterioration math XX% paying

that. we where to get need you our And So I there. to there's think you bit but in obviously, cannibalizing reconsider a handle saw decline see if fully to quite substantial were a plan, a that, point we of cushion would

me you've mean, highly out, would do A/B on that done any haven't data testing, winnings. I but at least, customer But you have around and seen would tells inelastic, Well, just than I that gut actually be activity know guts? you other mid-single-digit and surcharge that my -- our bear this

Yes.

places right, best industries parts online gaming we either are of the other an as The charge of by have customers example. the like think more our from world. where regime from industry countries I is There tax other you're or or in companies way. really and because data Germany other the Australia

states It's way, but a not number of hotels this in to see charged in change it, from but about I that really all gripe of Also, it's And the to people noted done because conceptually similar. on but industries very taxis, behavior various it. have customer. don't may the this get taxes earlier we exactly call,

level. depends So you're it the on right,

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surcharge last part glad of And Right, to the my visible right. consumers. that you're I'm question, making

making a As you market operators the obviously, possibly lower visible, point the Illinois more this here. support intended tax, visible ultimately tax is calculus issue? Do wondering, of you XX% policy, if part counterproductive. and generate grassroot around That to rates? -- and X rational seems in making raise to the out, And black referring shortsighted, tax surcharge think pay you could that awareness i.e., unfair I'm for

paying our becomes with entered getting pretty starts that element just But certainly to an operators Well, compete that's there higher Obviously, level. you're zero any when XX%, untenable. thinking. illegal at than have it there's tough When into you right. tax, it

their we more in like not -- it? It's So consider the I wouldn't states their has. York, done getting and from haven't of absence us or in differently nobody not why something hearing New constituents, in think to this, passed do industry that anything doing customers. They're

to may that like hearing be something weren't they some from I if wouldn't they citizens it. now make think -- because, hearing they don't So this states being is do we charged. that be from that that Obviously, may more anything reconsider their people

mean, like but sponsorship -- look sports. spend, if you for like on of like in from voters you not maybe bet to I of York. local the and don't when in I hear New the It's from But It's aren't not at they go guess, you based think on not I decide hotels. are pay I that a to massive the much number mentioned that some teams as states [indiscernible]. taxis that comparisons end, going getting like

higher of because the feel they states some think are that have proposition I So things. like value of where costs in bring they certain and they because can

to that make to to decision have business, not up have the a That's do and I to certainly, business And decision that I illegal with a that policy as to that's But to us. accordingly. going we they're to most taxes And make. am we the believe have advocate will make market. allow we And that. for continue hopeful compete us more states see

rates around XX% have states that don't. country tax of under. or just a It's majority vast the look, you of the If handful

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

call. for all you us today's thank joining Well, on

are We beyond. the and of are second optimistic really XXXX continued for about excited Thank and future, in XXXX the your and you half well-positioned for success support.

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

have wonderful disconnect, You and may day. a now