DraftKings Inc. (Nasdaq: DKNG) (“DraftKings” or the “Company”)
today announced results for the third quarter of 2024. The Company
also posted a third quarter 2024 business update and an earnings
presentation on the Investor Relations section of its website at
investors.draftkings.com.
Third Quarter 2024
Highlights
For the three months ended September 30, 2024,
DraftKings reported revenue of $1,095 million, an increase of $306
million, or 39%, compared to $790 million during the same period in
2023. The increase in the Company’s third quarter 2024 revenue was
driven primarily by continued healthy customer engagement,
efficient acquisition of new customers, the expansion of the
Company’s Sportsbook product offering into new jurisdictions,
higher structural sportsbook hold percentage, improved promotional
reinvestment for Sportsbook and iGaming, and the impact of the
acquisition of Jackpocket Inc. (“Jackpocket”), which closed on May
22, 2024.
“DraftKings delivered strong performance in the
third quarter with the return of NFL and college football,” said
Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.
“With major sports converging on the calendar, we are
well-positioned to build on this momentum as we further enhance our
top-ranked sportsbook app with additional live betting features and
exciting new NBA markets. Our focus remains on driving sustainable
revenue growth and profitability in 2025 and beyond.”
“We achieved healthy results across our core
value drivers in the third quarter with efficient customer
acquisition and promotional reinvestment as well as improvement in
our structural sportsbook hold percentage,” said Alan Ellingson,
DraftKings’ Chief Financial Officer. “The midpoint of our inaugural
fiscal year 2025 revenue guidance equates to 31% year-over-year
growth, and we are well-positioned to deliver $900 million to $1
billion of Adjusted EBITDA in 2025.”
Continued Healthy Growth in Customer
Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”)
increased to 3.6 million average monthly unique paying customers in
the third quarter of 2024, representing an increase of 55% compared
to the third quarter of 2023. This increase reflects strong unique
player acquisition and retention across DraftKings’ Sportsbook and
iGaming products, the expansion of its Sportsbook product into new
jurisdictions and the impact of the acquisition of Jackpocket.
Excluding the impact of the acquisition of Jackpocket, MUPs
increased by approximately 27% compared to the third quarter of
2023.
- Average Revenue per MUP (“ARPMUP”)
was $103 in the third quarter of 2024, representing a 10% decrease
compared to the same period in 2023. The decrease was primarily due
to lower ARPMUP for Jackpocket customers, when compared to
customers of DraftKings’ existing product offerings prior to the
acquisition, partially offset by improvement in the Company’s
structural Sportsbook hold percentage and improved promotional
reinvestment for Sportsbook and iGaming. Excluding the impact of
the acquisition of Jackpocket, ARPMUP increased approximately 8%
compared to the third quarter of 2023.
- Detailed financial data and other
information for the third quarter of 2024 is available in the
financial statements set forth below under the caption “Financial
Results.”
Fiscal Year 2024 and 2025
Guidance
- DraftKings is introducing a fiscal
year 2025 revenue guidance range of $6.2 billion to $6.6 billion,
which equates to approximately 31% year-over-year growth based on
the midpoints of the Company’s updated fiscal year 2024 revenue
guidance range and the Company’s fiscal year 2025 revenue guidance
range.
- DraftKings continues to expect
fiscal year 2025 Adjusted EBITDA to be in the range of $900 million
to $1.0 billion, which the Company previously announced on August
1, 2024.
- DraftKings is revising its fiscal
year 2024 revenue guidance due to the impact of customer-friendly
sport outcomes early in the fourth quarter of 2024 to a range of
$4.85 billion to $4.95 billion from the range of $5.05 billion to
$5.25 billion, which the Company previously announced on August 1,
2024. The Company’s updated 2024 revenue guidance range equates to
year-over-year growth of 32% to 35%.
- DraftKings is revising its fiscal
year 2024 Adjusted EBITDA guidance due to the impact of
customer-friendly sport outcomes early in the fourth quarter of
2024, partially offset by promotional optimization and expense
efficiency. The Company now expects fiscal year 2024 Adjusted
EBITDA of between $240 million and $280 million compared to its
prior fiscal year 2024 Adjusted EBITDA guidance of between $340
million and $420 million, which the Company previously announced on
August 1, 2024.
- The Company’s guidance for fiscal
years 2024 and 2025 includes all of its existing mobile sports
betting and iGaming jurisdictions as well as Jackpocket.
- DraftKings’ revenue and Adjusted
EBITDA guidance for fiscal years 2024 and 2025 does not include the
impact of mobile sports betting launching in Missouri. DraftKings
expects to launch its Sportsbook product in Missouri pending market
access, licensure, regulatory approvals, and contractual approvals
where applicable.
Mobile Sports Betting and iGaming
Footprint
- DraftKings is live with mobile
sports betting in 25 states and Washington, D.C. which collectively
represent approximately 49% of the U.S. population.
- DraftKings is also live with
iGaming in 5 states, representing approximately 11% of the U.S.
population.
- DraftKings is live with its
Sportsbook and iGaming products in Ontario, Canada, which
represents approximately 40% of Canada’s population.
- On November 5, 2024, Missouri
voters passed a ballot initiative that legalized sports betting in
the state. DraftKings expects to launch its Sportsbook product in
Missouri pending market access, licensure, regulatory approvals,
and contractual approvals where applicable.
- DraftKings expects to launch its
Sportsbook product in Puerto Rico pending market access, licensure,
regulatory approvals, and contractual approvals where
applicable.
Webcast and Conference Call
Details
As previously announced, DraftKings will host a
conference call and audio webcast tomorrow, Friday, November 8,
2024, at 8:30 a.m. ET, during which management will discuss the
Company’s results for the quarter and provide commentary on
business performance. A question-and-answer session will follow the
prepared remarks.
To listen to the audio webcast and live question
and answer session, please visit DraftKings’ investor relations
website at investors.draftkings.com. A live audio webcast of the
earnings conference call will be available on the Company’s website
at investors.draftkings.com, along with a copy of this press
release, the Company’s Quarterly Report on Form 10-Q, a slide
presentation and a third quarter 2024 business update. The audio
webcast will be available on the Company’s investor relations
website until 11:59 p.m. ET on December 31, 2024.
Financial Results
DraftKings’ third quarter 2024 financial
results, as well as the financial results for the respective
comparative periods, are presented below:
|
DRAFTKINGS INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Amounts in thousands, except par value) |
|
|
|
September 30,2024 |
|
December 31, |
|
|
(Unaudited) |
|
2023 |
Assets |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
877,822 |
|
|
$ |
1,270,503 |
|
Restricted cash |
|
|
13,807 |
|
|
|
11,700 |
|
Cash reserved for users |
|
|
264,886 |
|
|
|
341,290 |
|
Receivables reserved for
users |
|
|
341,817 |
|
|
|
301,770 |
|
Accounts receivable |
|
|
64,358 |
|
|
|
47,539 |
|
Prepaid expenses and other
current assets |
|
|
81,207 |
|
|
|
98,565 |
|
Total current
assets |
|
|
1,643,897 |
|
|
|
2,071,367 |
|
Property and equipment,
net |
|
|
52,924 |
|
|
|
60,695 |
|
Intangible assets, net |
|
|
891,910 |
|
|
|
690,620 |
|
Goodwill |
|
|
1,456,009 |
|
|
|
886,373 |
|
Operating lease right-of-use
assets |
|
|
83,292 |
|
|
|
93,985 |
|
Equity method investments |
|
|
12,598 |
|
|
|
10,280 |
|
Deposits and other non-current
assets |
|
|
132,346 |
|
|
|
131,546 |
|
Total
assets |
|
$ |
4,272,976 |
|
|
$ |
3,944,866 |
|
|
|
|
|
|
Liabilities and
Stockholders’ equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
700,720 |
|
|
$ |
639,599 |
|
Liabilities to users |
|
|
930,614 |
|
|
|
851,898 |
|
Operating lease liabilities,
current portion |
|
|
11,277 |
|
|
|
11,499 |
|
Other current liabilities |
|
|
4,124 |
|
|
|
46,624 |
|
Total current
liabilities |
|
|
1,646,735 |
|
|
|
1,549,620 |
|
Convertible notes, net of
issuance costs |
|
|
1,255,757 |
|
|
|
1,253,760 |
|
Non-current operating lease
liabilities |
|
|
75,762 |
|
|
|
80,827 |
|
Warrant liabilities |
|
|
25,439 |
|
|
|
63,568 |
|
Long-term income tax
liabilities |
|
|
73,835 |
|
|
|
72,810 |
|
Other long-term
liabilities |
|
|
119,332 |
|
|
|
83,975 |
|
Total
liabilities |
|
$ |
3,196,860 |
|
|
$ |
3,104,560 |
|
Commitments and
contingent liabilities |
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
Class A common stock, $0.0001
par value; 900,000 shares authorized as of September 30, 2024
and December 31, 2023; 501,081 and 484,598 shares issued and
487,169 and 472,697 outstanding as of September 30, 2024 and
December 31, 2023, respectively |
|
$ |
47 |
|
|
$ |
46 |
|
Class B common stock, $0.0001
par value; 900,000 shares authorized as of September 30, 2024
and December 31, 2023; 393,014 shares issued and outstanding
as of September 30, 2024 and December 31, 2023 |
|
|
39 |
|
|
|
39 |
|
Treasury stock, at cost;
13,912 and 11,901 shares as of September 30, 2024 and
December 31, 2023, respectively |
|
|
(490,352 |
) |
|
|
(412,182 |
) |
Additional paid-in
capital |
|
|
7,836,271 |
|
|
|
7,149,858 |
|
Accumulated deficit |
|
|
(6,306,377 |
) |
|
|
(5,933,943 |
) |
Accumulated other
comprehensive income |
|
|
36,488 |
|
|
|
36,488 |
|
Total stockholders’
equity |
|
$ |
1,076,116 |
|
|
$ |
840,306 |
|
Total liabilities and
stockholders’ equity |
|
$ |
4,272,976 |
|
|
$ |
3,944,866 |
|
DRAFTKINGS INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(Amounts in thousands, except per share data) |
|
|
|
Three months endedSeptember 30, |
|
Nine months endedSeptember 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
|
$ |
1,095,490 |
|
|
$ |
789,957 |
|
|
$ |
3,374,927 |
|
|
$ |
2,434,536 |
|
Cost of revenue |
|
|
742,434 |
|
|
|
543,454 |
|
|
|
2,115,917 |
|
|
|
1,575,517 |
|
Sales and marketing |
|
|
339,943 |
|
|
|
313,323 |
|
|
|
896,318 |
|
|
|
909,943 |
|
Product and technology |
|
|
103,581 |
|
|
|
89,005 |
|
|
|
285,051 |
|
|
|
266,999 |
|
General and
administrative |
|
|
208,126 |
|
|
|
130,761 |
|
|
|
547,461 |
|
|
|
427,493 |
|
Loss from
operations |
|
|
(298,594 |
) |
|
|
(286,586 |
) |
|
|
(469,820 |
) |
|
|
(745,416 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
9,200 |
|
|
|
14,420 |
|
|
|
38,479 |
|
|
|
39,626 |
|
Interest expense |
|
|
(872 |
) |
|
|
(670 |
) |
|
|
(2,199 |
) |
|
|
(1,991 |
) |
Gain (loss) on remeasurement
of warrant liabilities |
|
|
21 |
|
|
|
(7,751 |
) |
|
|
(8,282 |
) |
|
|
(44,827 |
) |
Other (loss) gain, net |
|
|
(4,620 |
) |
|
|
(1,217 |
) |
|
|
(5,801 |
) |
|
|
(1,153 |
) |
Loss before income tax
(benefit) provision and loss from equity method
investment |
|
|
(294,865 |
) |
|
|
(281,804 |
) |
|
|
(447,623 |
) |
|
|
(753,761 |
) |
Income tax (benefit)
provision |
|
|
(1,287 |
) |
|
|
1,291 |
|
|
|
(75,208 |
) |
|
|
3,310 |
|
Loss from equity method
investment |
|
|
110 |
|
|
|
8 |
|
|
|
19 |
|
|
|
450 |
|
Net loss attributable
to common stockholders |
|
$ |
(293,688 |
) |
|
$ |
(283,103 |
) |
|
$ |
(372,434 |
) |
|
$ |
(757,521 |
) |
|
|
|
|
|
|
|
|
|
Loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.60 |
) |
|
$ |
(0.61 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.64 |
) |
DRAFTKINGS INC. |
NON-GAAP FINANCIAL MEASURES |
(Unaudited) |
(Amounts in thousands, except per share data) |
|
|
|
Three months endedSeptember 30, |
|
Nine months endedSeptember 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Adjusted EBITDA |
|
$ |
(58,504 |
) |
|
$ |
(153,414 |
) |
|
$ |
91,853 |
|
|
$ |
(302,053 |
) |
Adjusted Earnings (Loss) Per
Share |
|
$ |
(0.17 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.09 |
|
|
$ |
(0.71 |
) |
DRAFTKINGS INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
(Amounts in thousands) |
|
|
|
Nine months endedSeptember 30, |
|
|
|
2024 |
|
|
|
2023 |
|
Cash Flows from
Operating Activities: |
|
|
|
|
Net loss attributable to
common shareholders |
|
$ |
(372,434 |
) |
|
$ |
(757,521 |
) |
Adjustments to reconcile net loss to net cash flows used in
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
204,755 |
|
|
|
146,722 |
|
Non-cash interest (income) expense, net |
|
|
27 |
|
|
|
(554 |
) |
Stock-based compensation |
|
|
271,307 |
|
|
|
284,946 |
|
Loss on remeasurement of warrant liabilities |
|
|
8,282 |
|
|
|
44,827 |
|
(Gain) loss from equity method investment |
|
|
19 |
|
|
|
450 |
|
Loss on marketable equity securities and other financial assets,
net |
|
|
— |
|
|
|
75 |
|
Loss on sale of Vegas Sports Information Network, LLC |
|
|
5,817 |
|
|
|
— |
|
Deferred income taxes |
|
|
(80,604 |
) |
|
|
4,527 |
|
Other income (expenses), net |
|
|
4,632 |
|
|
|
(1,944 |
) |
Change in operating assets and
liabilities, net of effect of acquisitions: |
|
|
|
|
Receivables reserved for users |
|
|
(30,955 |
) |
|
|
(49,402 |
) |
Accounts receivable |
|
|
(13,792 |
) |
|
|
24,174 |
|
Prepaid expenses and other current assets |
|
|
(20,704 |
) |
|
|
(20,757 |
) |
Deposits and other non-current assets |
|
|
446 |
|
|
|
(3,983 |
) |
Operating leases, net |
|
|
145 |
|
|
|
1,907 |
|
Accounts payable and accrued expenses |
|
|
44,635 |
|
|
|
79,047 |
|
Liabilities to users |
|
|
61,839 |
|
|
|
170,161 |
|
Long-term income tax liability |
|
|
1,025 |
|
|
|
(1,605 |
) |
Other long-term liabilities |
|
|
8,138 |
|
|
|
5,112 |
|
Net cash flows
provided by (used in) operating activities |
|
$ |
92,578 |
|
|
$ |
(73,818 |
) |
Cash Flows from
Investing Activities: |
|
|
|
|
Purchases of property and equipment |
|
|
(8,148 |
) |
|
|
(19,885 |
) |
Cash paid for internally developed software costs |
|
|
(71,059 |
) |
|
|
(60,006 |
) |
Acquisition of gaming licenses |
|
|
(14,820 |
) |
|
|
(10,971 |
) |
Proceeds from marketable equity securities and other financial
assets |
|
|
— |
|
|
|
24,425 |
|
Cash paid for acquisition, net of cash acquired |
|
|
(392,501 |
) |
|
|
— |
|
Other investing activities, net |
|
|
(1,656 |
) |
|
|
(481 |
) |
Net cash flows used in
investing activities |
|
$ |
(488,184 |
) |
|
$ |
(66,918 |
) |
Cash Flow from
Financing Activities: |
|
|
|
|
Proceeds from exercise of warrants |
|
|
— |
|
|
|
— |
|
Purchase of treasury stock |
|
|
(78,170 |
) |
|
|
(59,351 |
) |
Proceeds from exercise of stock options |
|
|
6,798 |
|
|
|
8,842 |
|
Net cash flows used in
financing activities |
|
$ |
(71,372 |
) |
|
$ |
(50,509 |
) |
Net decrease in cash and cash equivalents, restricted cash, and
cash reserved for users |
|
|
(466,978 |
) |
|
|
(191,245 |
) |
Cash and cash equivalents,
restricted cash, and cash reserved for users at the beginning of
period |
|
|
1,623,493 |
|
|
|
1,778,825 |
|
Cash and cash
equivalents, restricted cash, and cash reserved for users at the
end of period |
|
$ |
1,156,515 |
|
|
$ |
1,587,580 |
|
|
|
|
|
|
Disclosure of cash and
cash equivalents, restricted cash, and cash reserved for
users |
|
|
|
|
Cash and cash equivalents |
|
|
877,822 |
|
|
|
1,111,596 |
|
Restricted cash |
|
|
13,807 |
|
|
|
— |
|
Cash reserved for users |
|
|
264,886 |
|
|
|
475,984 |
|
Cash and cash
equivalents, restricted cash, and cash reserved for users at the
end of period |
|
$ |
1,156,515 |
|
|
$ |
1,587,580 |
|
|
|
|
|
|
Supplemental
Disclosure of Noncash Investing and Financing
Activities: |
|
|
|
|
Investing activities included in accounts payable and accrued
expenses |
|
$ |
1,788 |
|
|
$ |
(408 |
) |
Equity consideration issued in connection with acquisitions |
|
$ |
331,557 |
|
|
$ |
— |
|
Decrease of warrant liabilities from cashless exercise of
warrants |
|
$ |
46,416 |
|
|
$ |
1,812 |
|
Supplemental
Disclosure of Cash Activities: |
|
|
|
|
(Decrease) increase in cash reserved for users |
|
$ |
(76,404 |
) |
|
$ |
6,331 |
|
Non-GAAP Financial Measures
This press release includes Adjusted EBITDA and
Adjusted Earnings (Loss) Per Share, which are non-GAAP financial
measures that DraftKings uses to supplement its results presented
in accordance with U.S. generally accepted accounting principles
(“GAAP”). The Company believes Adjusted EBITDA and Adjusted
Earnings (Loss) Per Share are useful in evaluating its operating
performance, similar to measures reported by its publicly-listed
U.S. competitors, and regularly used by security analysts,
institutional investors and other interested parties in analyzing
operating performance and prospects. Adjusted EBITDA and Adjusted
Earnings (Loss) Per Share are not intended to be substitutes for
any GAAP financial measures, and, as calculated, may not be
comparable to other similarly titled measures of performance of
other companies in other industries or within the same
industry.
DraftKings defines and calculates Adjusted
EBITDA as net income (loss) before the impact of interest income or
expense (net), income tax provision or benefit, and depreciation
and amortization, and further adjusted for the following items:
stock-based compensation; transaction-related costs; litigation,
settlement and related costs; advocacy and other related legal
expenses; gain or loss on remeasurement of warrant liabilities; and
other non-recurring and non-operating costs or income, as described
in the reconciliation below.
DraftKings defines and calculates Adjusted
Earnings (Loss) Per Share as basic or diluted earnings (loss) per
share attributable to common stockholders before the impact of
amortization of acquired intangible assets; stock-based
compensation; transaction-related costs; litigation, settlement and
related costs; advocacy and other related legal expenses; gain or
loss on remeasurement of warrant liabilities; and other
non-recurring and non-operating costs or income, as described in
the reconciliation below.
DraftKings includes these non-GAAP financial
measures because they are used by management to evaluate the
Company’s core operating performance and trends and to make
strategic decisions regarding the allocation of capital and new
investments. Adjusted EBITDA and Adjusted Earnings (Loss) Per Share
exclude certain expenses that are required in accordance with GAAP
because they are non-recurring items (for example, in the case of
transaction-related costs and advocacy and other related legal
expenses), non-cash expenditures (for example, in the case of
amortization of acquired intangible assets, depreciation and
amortization, remeasurement of warrant liabilities and stock-based
compensation), or non-operating items which are not related to the
Company’s underlying business performance (for example, in the case
of interest income and expense and litigation, settlement and
related costs).The unaudited table below presents the Company’s
Adjusted EBITDA reconciled to its net income (loss), which is the
most directly comparable financial measure calculated in accordance
with GAAP, for the periods indicated:
|
|
Three months endedSeptember 30, |
|
Nine months endedSeptember 30, |
(amounts in thousands) |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income (loss) |
|
$ |
(293,688 |
) |
|
$ |
(283,103 |
) |
|
$ |
(372,434 |
) |
|
$ |
(757,521 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
Depreciation and amortization (1) |
|
|
89,952 |
|
|
|
50,245 |
|
|
|
204,755 |
|
|
|
146,722 |
|
Interest (income) expense, net |
|
|
(8,328 |
) |
|
|
(13,750 |
) |
|
|
(36,280 |
) |
|
|
(37,635 |
) |
Income tax (benefit) provision (2) |
|
|
(1,287 |
) |
|
|
1,291 |
|
|
|
(75,208 |
) |
|
|
3,310 |
|
Stock-based compensation (3) |
|
|
87,552 |
|
|
|
78,353 |
|
|
|
271,307 |
|
|
|
284,946 |
|
Transaction-related costs (4) |
|
|
840 |
|
|
|
681 |
|
|
|
24,333 |
|
|
|
1,106 |
|
Litigation, settlement, and related costs (5) |
|
|
20,448 |
|
|
|
3,891 |
|
|
|
40,572 |
|
|
|
10,590 |
|
Advocacy and other related legal expenses (6) |
|
|
6,018 |
|
|
|
— |
|
|
|
6,303 |
|
|
|
— |
|
(Gain) loss on remeasurement of warrant liabilities |
|
|
(21 |
) |
|
|
7,751 |
|
|
|
8,282 |
|
|
|
44,827 |
|
Other non-recurring costs and non-operating (income)
costs (7) |
|
|
40,010 |
|
|
|
1,227 |
|
|
|
20,223 |
|
|
|
1,602 |
|
Adjusted
EBITDA |
|
$ |
(58,504 |
) |
|
$ |
(153,414 |
) |
|
$ |
91,853 |
|
|
$ |
(302,053 |
) |
_______________________________________ |
(1) The amounts include the amortization of acquired intangible
assets of $55.5 million and $29.2 million for the three months
ended September 30, 2024 and 2023, respectively, and $121.2 million
and $88.0 million for the nine months ended September 30, 2024 and
2023, respectively. |
(2) The Company recorded a discrete income tax benefit of $75.8
million during the second quarter of 2024 which was attributable to
non-recurring partial releases of the Company's U.S. valuation
allowance as a result of the purchase accounting for
Jackpocket. |
(3) Reflects stock-based compensation expenses resulting from the
issuance of awards under incentive plans. |
(4) Includes capital markets advisory, consulting, accounting and
legal expenses related to evaluation, negotiation and integration
costs incurred in connection with transactions under consideration
and pending or completed transactions and offerings, including
costs relating to our completed acquisitions of Jackpocket and
Sports IQ Analytics Inc. |
(5) Primarily includes external legal costs related to litigation
and litigation settlement costs deemed unrelated to our core
business operations. |
(6) Reflects non-recurring and non-ordinary course costs relating
to advocacy efforts and other legal expenses in jurisdictions where
we do not operate certain product offerings and are actively
seeking licensure, or similar approval, for those product
offerings. This adjustment excludes (i) costs relating to advocacy
efforts and other legal expenses in jurisdictions where we do not
operate that are incurred in the ordinary course of business and
(ii) costs relating to advocacy efforts and other legal expenses
incurred in jurisdictions where related legislation has been passed
and we currently operate. |
(7) Primarily includes the change in fair value of certain
financial assets, as well as our equity method share of investee’s
losses and other costs relating to non-recurring and non-operating
items. For the three and nine months ended September 30, 2024,
this amount also includes $27.8 million in expense related to
the discontinuance of our Reignmakers product offering,
$7.5 million in expenses related to the termination of a
market access agreement, and a $5.8 million loss on the sale
of Vegas Sports Information Network, LLC ("VSIN"). For the nine
month period ended September 30, 2024, these costs are offset by
$20.9 million related to gaming tax credits as a result of audits
and appeals related to prior periods. |
The unaudited table below presents the Company’s
Adjusted Earnings (Loss) Per Share reconciled to its basic earnings
(loss) per share attributable to common stockholders, which is the
most directly comparable financial measure calculated in accordance
with GAAP, for the periods indicated:
|
|
Three months endedSeptember 30, |
|
Nine months endedSeptember 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Basic earnings (loss) per
share attributable to common stockholders: |
|
$ |
(0.60 |
) |
|
$ |
(0.61 |
) |
|
$ |
(0.78 |
) |
|
$ |
(1.64 |
) |
Adjusted for: |
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
|
|
0.11 |
|
|
|
0.06 |
|
|
|
0.25 |
|
|
|
0.19 |
|
Discrete tax benefit attributed to the Jackpocket
acquisition (1) |
|
|
— |
|
|
|
— |
|
|
|
(0.16 |
) |
|
|
— |
|
Stock-based compensation (2) |
|
|
0.18 |
|
|
|
0.17 |
|
|
|
0.57 |
|
|
|
0.62 |
|
Transaction-related costs (3) |
|
|
— |
|
|
|
— |
|
|
|
0.05 |
|
|
|
— |
|
Litigation, settlement, and related costs (4) |
|
|
0.04 |
|
|
|
0.01 |
|
|
|
0.08 |
|
|
|
0.02 |
|
Advocacy and other related legal expenses (5) |
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
(Gain) loss on remeasurement of warrant liabilities |
|
|
— |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.10 |
|
Other non-recurring costs and non-operating (income)
costs (6) |
|
|
0.08 |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
Adjusted Earnings
(Loss) Per Share* |
|
$ |
(0.17 |
) |
|
$ |
(0.35 |
) |
|
$ |
0.09 |
|
|
$ |
(0.71 |
) |
_______________________________________ |
* Weighted average number of shares used to calculate Adjusted
Earnings (Loss) Per Share for the third quarter and year to date
period ended September 30, 2024 was 486.2 million and 480.0
million, respectively. Totals may not sum due to rounding. |
(1) The Company recorded a discrete income tax benefit of $75.8
million during the second quarter of 2024 which was attributable to
non-recurring partial releases of the Company's U.S. valuation
allowance as a result of the purchase accounting for
Jackpocket. |
(2) Reflects stock-based compensation expenses per share resulting
from the issuance of awards under incentive plans. |
(3) Includes capital markets advisory, consulting, accounting and
legal expenses related to evaluation, negotiation and integration
costs incurred in connection with transactions under consideration
and pending or completed transactions and offerings, including
costs relating to our completed acquisitions of Jackpocket and
Sports IQ Analytics Inc. |
(4) Primarily reflects external legal costs related to litigation
and litigation settlement costs, in each case per share, deemed
unrelated to DraftKings’ core business. |
(5) Reflects non-recurring and non-ordinary course costs per share
relating to advocacy efforts and other legal expenses in
jurisdictions where DraftKings does not operate certain product
offerings and is actively seeking licensure, or similar approval,
for those product offerings. This adjustment excludes (i) costs
relating to advocacy efforts and other legal expenses in
jurisdictions where DraftKings does not operate that are incurred
in the ordinary course of business and (ii) costs relating to
advocacy efforts and other legal expenses incurred in jurisdictions
where related legislation has been passed and DraftKings currently
operates. |
(6) Primarily includes the change in fair value of certain
financial assets, as well as the Company’s equity method share of
the investee’s losses and other costs relating to non-recurring and
non-operating items, in each case per share. For the three and nine
months ended September 30, 2024, this amount also includes
$27.8 million in expense related to the discontinuance of our
Reignmakers product offering, $7.5 million in expenses related
to the termination of a market access agreement, and a
$5.8 million loss on the sale of VSIN. For the nine month
period ended September 30, 2024, these costs are offset by $20.9
million related to gaming tax credits as a result of audits and
appeals related to prior periods. |
Information reconciling forward-looking fiscal
year 2024 and fiscal year 2025 Adjusted EBITDA guidance to its most
directly comparable GAAP financial measure is unavailable to
DraftKings without unreasonable effort due to, among other things,
certain items required for such reconciliations being outside of
DraftKings’ control and/or not being able to be reasonably
predicted. Preparation of such reconciliations would require a
forward-looking balance sheet, statement of income and statement of
cash flow, prepared in accordance with GAAP, and such
forward-looking financial statements are unavailable to the Company
without unreasonable effort. DraftKings provides a range for its
Adjusted EBITDA forecast that it believes will be achieved;
however, the Company cannot provide any assurance that it can
predict all of the components of the Adjusted EBITDA calculation.
DraftKings provides a forecast for Adjusted EBITDA because it
believes that Adjusted EBITDA, when viewed with DraftKings’ results
calculated in accordance with GAAP, provide useful information for
the reasons noted above. However, Adjusted EBITDA is not a measure
of financial performance or liquidity under GAAP and, accordingly,
should not be considered as alternatives to net income (loss) or
cash flow from operating activities or as indicators of operating
performance or liquidity.
About DraftKings
DraftKings Inc. is a digital sports
entertainment and gaming company created to be the Ultimate Host
and fuel the competitive spirit of sports fans with products that
range across daily fantasy, regulated gaming, and digital media.
Headquartered in Boston and launched in 2012 by Jason Robins, Matt
Kalish and Paul Liberman, DraftKings is the only U.S.-based
vertically integrated sports betting operator. DraftKings’ mission
is to make life more exciting by responsibly creating the world’s
favorite real-money games and betting experiences. DraftKings
Sportsbook is live with mobile and/or retail sports betting
operations pursuant to regulations in 28 states, Washington, D.C.,
and in Ontario, Canada. The Company operates iGaming pursuant to
regulations in five states and in Ontario, Canada under its
DraftKings brand and pursuant to regulations in three states under
its Golden Nugget Online Gaming brand. DraftKings owns Jackpocket,
the leading digital lottery app in the United States. DraftKings’
daily fantasy sports product is available in 44 states and certain
Canadian provinces. DraftKings is both an official daily fantasy
and sports betting partner of the NFL, NHL, PGA TOUR, WNBA and UFC,
as well as an official daily fantasy partner of NASCAR, an official
sports betting partner of the NBA and an authorized gaming operator
of MLB. In addition, DraftKings owns and operates DraftKings
Network a multi-platform content ecosystem with original
programming. DraftKings is committed to being a responsible steward
of this new era in real-money gaming with a Company-wide focus on
responsible gaming and corporate social responsibility.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including statements about the
Company and its industry that involve substantial risks and
uncertainties. All statements, other than statements of historical
fact, contained in this press release, including statements
regarding guidance, DraftKings’ future results of operations or
financial condition, strategic plans and focus, user growth and
engagement, product initiatives, and the objectives and
expectations of management for future operations (including
launches in new jurisdictions and the expected timing thereof), are
forward-looking statements. In some cases, you can identify
forward-looking statements because they contain words such as
“anticipate,” “believe,” “confident,” “contemplate,” “continue,”
“could,” “estimate,” “expect,” “forecast,” “going to,” “intend,”
“may,” “plan,” “poised,” “potential,” “predict,” “project,”
“propose,” “should,” “target,” “will,” or “would” or the negative
of these words or other similar terms or expressions. DraftKings
cautions you that the foregoing may not include all of the
forward-looking statements made in this press release.
You should not rely on forward-looking
statements as predictions of future events. DraftKings has based
the forward-looking statements contained in this press release
primarily on its current expectations and projections about future
events and trends, including the current macroeconomic environment,
that it believes may affect its business, financial condition,
results of operations, and prospects. These forward-looking
statements are not guarantees of future performance, conditions or
results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside DraftKings’ control and that could cause actual
results or outcomes to differ materially from those discussed in
the forward-looking statements. Important factors, among others,
that may affect actual results or outcomes include, but are not
limited to, DraftKings’ ability to manage growth; DraftKings’
ability to execute its business plan and meet its projections;
potential litigation involving DraftKings; changes in applicable
laws or regulations, particularly with respect to gaming; general
economic and market conditions impacting demand for DraftKings’
products and services; economic and market conditions in the media,
entertainment, gaming, and software industries in the markets in
which DraftKings operates; market and global conditions and
economic factors, as well as the potential impact of general
economic conditions, including inflation, rising interest rates and
instability in the banking system, on DraftKings’ liquidity,
operations and personnel, as well as the risks, uncertainties, and
other factors described in “Risk Factors” in DraftKings’ filings
with the Securities and Exchange Commission (the “SEC”), which are
available on the SEC’s website at www.sec.gov. Additional
information will be made available in other filings that DraftKings
makes from time to time with the SEC. The forward-looking
statements contained herein are based on management’s current
expectations and beliefs and speak only as of the date hereof, and
DraftKings makes no commitment to update or publicly release any
revisions to forward-looking statements in order to reflect new
information or subsequent events, circumstances or changes in
expectations, except as required by law.
Contacts
Media:
Media@draftkings.com
@DraftKingsNews
Investors:
Investors@draftkings.com
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