DraftKings Inc. (Nasdaq: DKNG) (“DraftKings” or the “Company”)
today announced its third quarter 2023 financial results. The
Company also posted a third quarter 2023 business update and an
earnings presentation on the Investor Relations section of its
website at investors.draftkings.com.
Third Quarter 2023
HighlightsFor the three months ended September 30, 2023,
DraftKings reported revenue of $790 million, an increase of $288
million, or 57%, compared to $502 million during the same period in
2022 driven primarily by continued healthy customer engagement,
efficient acquisition of new customers, the expansion of the
Company’s Sportsbook product offering into new jurisdictions,
product innovation leading to increased parlay mix and thus higher
hold percentage, and improved promotional reinvestment for
Sportsbook and iGaming.
“Our fantastic third quarter results demonstrate
the positive impact of our product and technology investments as
well as excellent preparation and execution by our entire
organization,” said Jason Robins, DraftKings’ Chief Executive
Officer and Co-founder. “Our new and differentiated features and
functionality have created an exceptional user experience that
sustains engagement for our mobile sports betting and iGaming
customers. We also delivered another successful online sportsbook
launch in Kentucky and look forward to additional launches in Maine
and in North Carolina, pending licensure and regulatory approvals.
We expect to generate approximately $200 million of positive
Adjusted EBITDA in the fourth quarter of 2023 based on the midpoint
of our updated fiscal year 2023 guidance and look forward to
sharing our multi-year outlook at our Investor Day on November
14th.”
“DraftKings continues to acquire customers in an
efficient manner, sustain customer engagement, improve its
sportsbook structural hold and promotional reinvestment for
Sportsbook and iGaming, and demonstrate fixed cost discipline,”
said Jason Park, DraftKings’ Chief Financial Officer. “As a result
of our outstanding performance in the third quarter, we are raising
the midpoint of our fiscal year 2023 revenue guidance to $3.695
billion from $3.5 billion and improving the midpoint of our fiscal
year 2023 Adjusted EBITDA guidance to ($105) million from ($205)
million. We are poised for a rapid increase in Adjusted EBITDA as
we anticipate strong revenue growth coupled with a scaled fixed
cost structure will continue. These trends provide for a long
runway of margin improvement. Our fiscal year 2024 guidance at the
midpoints of $4.65 billion in revenue and positive $400 million of
Adjusted EBITDA implies incremental year-over-year revenue growth
of almost $1 billion and an increase in Adjusted EBITDA of more
than $500 million.”
Continued Healthy Growth in Customer
Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”)
increased to 2.3 million average monthly unique paying customers in
the third quarter of 2023, representing an increase of 40% compared
to the third quarter of 2022. This increase reflects strong unique
payer retention and acquisition across DraftKings’ Sportsbook and
iGaming products as well as the expansion of its Sportsbook product
into new jurisdictions.
- Average Revenue per MUP (“ARPMUP”)
was $114 in the third quarter of 2023, representing a 14% increase
compared to the same period in 2022. This increase was primarily
due to an increase in the Company’s structural sportsbook hold rate
and improved promotional reinvestment for Sportsbook and
iGaming.
- Detailed financial data and other
information for the third quarter of 2023 is available in the
financial statements set forth below under the caption “Financial
Results.”
Raising 2023 Revenue Guidance and
Improving 2023 Adjusted EBITDA Guidance; Introducing 2024 Revenue
and Adjusted EBITDA Guidance
- DraftKings is raising its fiscal
year 2023 revenue guidance to a range of $3.67 billion to $3.72
billion from the range of $3.46 billion to $3.54 billion, which the
Company previously announced on August 3, 2023. The
Company’s updated 2023 revenue guidance range equates to
year-over-year growth of 64% to 66%.
- DraftKings is also improving its
fiscal year 2023 Adjusted EBITDA guidance. The Company
now expects fiscal year 2023 Adjusted EBITDA of between ($95)
million and ($115) million compared to its prior fiscal year 2023
Adjusted EBITDA guidance of between ($190) million and ($220)
million, which the Company previously announced on August 3,
2023.
- DraftKings is introducing a fiscal
year 2024 revenue guidance range of $4.50 billion to $4.80 billion,
which equates to more than 25% year-over-year growth based on the
midpoints of the Company’s fiscal year 2023 revenue guidance and
the Company’s fiscal year 2024 revenue guidance.
- DraftKings is also introducing
fiscal year 2024 Adjusted EBITDA guidance of between $350 million
and $450 million.
- The Company’s revenue and Adjusted
EBITDA guidance for fiscal years 2023 and 2024 includes all of its
existing jurisdictions as well as mobile sports betting in Maine,
Puerto Rico, Vermont, and North Carolina. Maine, Puerto Rico and
North Carolina are pending launch. Vermont has authorized mobile
sports betting and is running an RFP process for which DraftKings
has submitted a bid. These states collectively represent
approximately 5% of the U.S. population, and all state launches are
pending market access, licensure, regulatory approvals, and
contractual approvals where applicable.
Mobile Sports Betting and iGaming
Footprint
- Following the launch of its
Sportsbook product in Kentucky on September 28, 2023, DraftKings is
live with mobile sports betting in 22 states that collectively
represent approximately 45% of the U.S. population.
- DraftKings is also live with
iGaming in 5 states, representing approximately 11% of the U.S.
population.
- DraftKings is live with its
Sportsbook and iGaming products in Ontario, Canada, which
represents approximately 40% of Canada’s population.
- DraftKings announced it has reached
an agreement in principle with the Passamaquoddy Tribe paving the
way for the launch of its Sportsbook product in Maine. DraftKings
expects to launch its Sportsbook product in Puerto Rico and North
Carolina after securing market access. Vermont has authorized
mobile sports betting and is in the process of running an RFP
process for which DraftKings has submitted a bid. All state
launches are pending market access, licensure, regulatory
approvals, and contractual approvals where applicable.
- In 2023, 12 states that
collectively represent approximately 24% of the U.S. population
have either introduced legislation to legalize mobile sports
betting or introduced bills that may result in sports wagering
referendums during an upcoming election. In addition, 5 states that
collectively represent approximately 14% of the U.S. population
have either introduced legislation to legalize iGaming or
introduced a bill that may result in an iGaming referendum during
an upcoming election.
Webcast and Conference Call
DetailsAs previously announced, DraftKings will host a
conference call and audio webcast tomorrow, Friday, November 3,
2023, 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 2023 business update. The audio
webcast will be available on the Company’s investor relations
website until 11:59 p.m. ET on December 31, 2023.
Financial ResultsDraftKings’
third quarter 2023 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, 2023 |
|
|
| |
(Unaudited) |
|
December 31, 2022 |
| Assets |
|
|
|
| Current
assets: |
|
|
|
|
Cash and cash equivalents |
$ |
1,111,596 |
|
|
$ |
1,309,172 |
|
| Cash reserved for users |
|
475,984 |
|
|
|
469,653 |
|
| Receivables reserved for
users |
|
209,485 |
|
|
|
160,083 |
|
| Accounts receivable |
|
27,778 |
|
|
|
51,097 |
|
| Prepaid expenses and other
current assets |
|
143,079 |
|
|
|
94,836 |
|
| Total current
assets |
|
1,967,922 |
|
|
|
2,084,841 |
|
| Property and equipment,
net |
|
64,927 |
|
|
|
60,102 |
|
| Intangible assets, net |
|
718,958 |
|
|
|
776,934 |
|
| Goodwill |
|
886,373 |
|
|
|
886,373 |
|
| Operating lease right-of-use
assets |
|
77,180 |
|
|
|
65,957 |
|
| Equity method investments |
|
9,630 |
|
|
|
10,080 |
|
| Deposits and other non-current
assets |
|
136,526 |
|
|
|
155,865 |
|
| Total
assets |
$ |
3,861,516 |
|
|
$ |
4,040,152 |
|
| |
|
|
|
| Liabilities and
Stockholders’ equity |
|
|
|
| Current
liabilities: |
|
|
|
| Accounts payable and accrued
expenses |
$ |
594,067 |
|
|
$ |
517,587 |
|
| Liabilities to users |
|
856,334 |
|
|
|
686,173 |
|
| Operating lease liabilities,
current portion |
|
12,132 |
|
|
|
4,253 |
|
| Other current liabilities |
|
65,930 |
|
|
|
38,444 |
|
| Total current
liabilities |
|
1,528,463 |
|
|
|
1,246,457 |
|
| Convertible notes, net of
issuance costs |
|
1,253,089 |
|
|
|
1,251,103 |
|
| Non-current operating lease
liabilities |
|
76,926 |
|
|
|
69,332 |
|
| Warrant liabilities |
|
53,695 |
|
|
|
10,680 |
|
| Long-term income tax
liability |
|
68,253 |
|
|
|
69,858 |
|
| Other long-term
liabilities |
|
79,668 |
|
|
|
70,029 |
|
| Total
liabilities |
$ |
3,060,094 |
|
|
$ |
2,717,459 |
|
| Commitments and
contingent liabilities |
|
|
|
| |
|
|
|
| Stockholders'
equity: |
|
|
|
| Class A common stock, $0.0001
par value; 900,000 shares authorized as of September 30, 2023
and December 31, 2022; 477,198 and 459,265 shares issued and
465,906 and 450,575 outstanding as of September 30, 2023 and
December 31, 2022, respectively |
$ |
46 |
|
|
$ |
45 |
|
| Class B common stock, $0.0001
par value; 900,000 shares authorized as of September 30, 2023
and December 31, 2022; 393,014 shares issued and outstanding
as of September 30, 2023 and December 31, 2022 |
|
39 |
|
|
|
39 |
|
| Treasury stock, at cost;
11,292 and 8,690 shares as of September 30, 2023 and
December 31, 2022, respectively |
|
(391,484 |
) |
|
|
(332,133 |
) |
| Additional paid-in
capital |
|
7,045,655 |
|
|
|
6,750,055 |
|
| Accumulated deficit |
|
(5,889,322 |
) |
|
|
(5,131,801 |
) |
| Accumulated other
comprehensive income |
|
36,488 |
|
|
|
36,488 |
|
| Total stockholders’
equity |
$ |
801,422 |
|
|
$ |
1,322,693 |
|
| Total liabilities and
stockholders’ equity |
$ |
3,861,516 |
|
|
$ |
4,040,152 |
|
DRAFTKINGS INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Amounts
in thousands, except loss per share data)
| |
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Revenue |
$ |
789,957 |
|
|
$ |
501,938 |
|
|
$ |
2,434,536 |
|
|
$ |
1,385,328 |
|
| Cost of revenue |
|
543,454 |
|
|
|
372,692 |
|
|
|
1,575,517 |
|
|
|
998,838 |
|
| Sales and marketing |
|
313,323 |
|
|
|
321,714 |
|
|
|
909,943 |
|
|
|
840,695 |
|
| Product and technology |
|
89,005 |
|
|
|
76,299 |
|
|
|
266,999 |
|
|
|
234,853 |
|
| General and
administrative |
|
130,761 |
|
|
|
186,261 |
|
|
|
427,493 |
|
|
|
590,476 |
|
| Loss from
operations |
|
(286,586 |
) |
|
|
(455,028 |
) |
|
|
(745,416 |
) |
|
|
(1,279,534 |
) |
| Other income
(expense): |
|
|
|
|
|
|
|
| Interest income |
|
14,420 |
|
|
|
6,969 |
|
|
|
39,626 |
|
|
|
10,360 |
|
| Interest expense |
|
(670 |
) |
|
|
(668 |
) |
|
|
(1,991 |
) |
|
|
(1,982 |
) |
| (Loss) gain on remeasurement
of warrant liabilities |
|
(7,751 |
) |
|
|
(6,797 |
) |
|
|
(44,827 |
) |
|
|
20,199 |
|
| Other income (expense),
net |
|
(1,217 |
) |
|
|
8,257 |
|
|
|
(1,153 |
) |
|
|
40,566 |
|
| Loss before income tax
provision and loss from equity method investment |
|
(281,804 |
) |
|
|
(447,267 |
) |
|
|
(753,761 |
) |
|
|
(1,210,391 |
) |
| Income tax provision
(benefit) |
|
1,291 |
|
|
|
3,177 |
|
|
|
3,310 |
|
|
|
(77,580 |
) |
| Loss from equity method
investment |
|
8 |
|
|
|
50 |
|
|
|
450 |
|
|
|
2,479 |
|
| Net loss attributable
to common stockholders |
$ |
(283,103 |
) |
|
$ |
(450,494 |
) |
|
$ |
(757,521 |
) |
|
$ |
(1,135,290 |
) |
| |
|
|
|
|
|
|
|
| Loss per share
attributable to common stockholders: |
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.61 |
) |
|
$ |
(1.00 |
) |
|
$ |
(1.64 |
) |
|
$ |
(2.63 |
) |
DRAFTKINGS INC.NON-GAAP
FINANCIAL MEASURES(Unaudited)(Amounts in thousands, except
loss per share data)
| |
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Adjusted EBITDA |
$ |
(153,414 |
) |
|
$ |
(264,211 |
) |
|
$ |
(302,053 |
) |
|
$ |
(671,854 |
) |
| Adjusted Loss Per Share |
$ |
(0.35 |
) |
|
$ |
(0.62 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.64 |
) |
DRAFTKINGS INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(Amounts
in thousands)
| |
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
| Operating
Activities: |
|
|
|
|
Net loss |
$ |
(757,521 |
) |
|
$ |
(1,135,290 |
) |
|
Adjustments to reconcile net loss to net cash flows used in
operating activities: |
|
|
|
|
Depreciation and amortization |
|
146,722 |
|
|
|
120,629 |
|
|
Non-cash interest (income) expense, net |
|
(554 |
) |
|
|
985 |
|
|
Stock-based compensation expense |
|
284,946 |
|
|
|
448,636 |
|
|
Loss from equity method investment |
|
450 |
|
|
|
2,479 |
|
|
Loss (gain) on remeasurement of warrant liabilities |
|
44,827 |
|
|
|
(20,199 |
) |
|
Loss (gain) on marketable equity securities and other financial
assets |
|
75 |
|
|
|
(32,483 |
) |
|
Deferred income taxes |
|
4,527 |
|
|
|
(78,051 |
) |
|
Other expenses, net |
|
(1,944 |
) |
|
|
(5,109 |
) |
|
Change in operating assets and liabilities, net of business
combinations: |
|
|
|
|
Receivables reserved for users |
|
(49,402 |
) |
|
|
(34,691 |
) |
|
Accounts receivable |
|
24,174 |
|
|
|
13,834 |
|
|
Prepaid expenses and other current assets |
|
(20,757 |
) |
|
|
(20,669 |
) |
|
Deposits and other non-current assets |
|
(3,983 |
) |
|
|
(1,989 |
) |
|
Operating leases, net |
|
1,907 |
|
|
|
698 |
|
|
Accounts payable and accrued expenses |
|
79,047 |
|
|
|
129,233 |
|
|
Liabilities to users |
|
170,161 |
|
|
|
136,650 |
|
|
Long-term income tax liability |
|
(1,605 |
) |
|
|
(11,200 |
) |
|
Other long-term liabilities |
|
5,112 |
|
|
|
9,476 |
|
|
Net cash flows used in operating activities |
$ |
(73,818 |
) |
|
$ |
(477,061 |
) |
| Investing
Activities: |
|
|
|
|
Purchases of property and equipment |
|
(19,885 |
) |
|
|
(19,903 |
) |
|
Cash paid for internally developed software costs |
|
(60,006 |
) |
|
|
(46,513 |
) |
|
Acquisition of gaming licenses |
|
(10,971 |
) |
|
|
(3,919 |
) |
|
Proceeds from marketable equity securities and other financial
assets |
|
24,425 |
|
|
|
— |
|
|
Cash paid for acquisition, net of cash acquired |
|
— |
|
|
|
(96,507 |
) |
|
Other investing activities, net |
|
(481 |
) |
|
|
(5,090 |
) |
|
Net cash flows used in investing activities |
$ |
(66,918 |
) |
|
$ |
(171,932 |
) |
| Financing
Activities: |
|
|
|
|
Proceeds from shares issued for warrants |
|
— |
|
|
|
44 |
|
|
Purchase of treasury stock |
|
(59,351 |
) |
|
|
(22,012 |
) |
|
Proceeds from exercise of stock options |
|
8,842 |
|
|
|
5,125 |
|
|
Net cash flows used in financing activities |
$ |
(50,509 |
) |
|
$ |
(16,843 |
) |
|
Net decrease in cash and cash equivalents and restricted cash |
|
(191,245 |
) |
|
|
(665,836 |
) |
| Cash and cash equivalents and
restricted cash at the beginning of period |
|
1,778,825 |
|
|
|
2,629,842 |
|
| Cash and cash
equivalents and restricted cash, end of period |
$ |
1,587,580 |
|
|
$ |
1,964,006 |
|
| |
|
|
|
| Disclosure of cash,
cash equivalents and restricted cash: |
|
|
|
|
Cash and cash equivalents |
$ |
1,111,596 |
|
|
$ |
1,382,651 |
|
|
Cash reserved for users |
|
475,984 |
|
|
|
581,355 |
|
|
Total cash, cash equivalents and restricted cash, end of
period |
$ |
1,587,580 |
|
|
$ |
1,964,006 |
|
| |
|
|
|
| Supplemental
Disclosure of Noncash Investing and Financing
Activities: |
|
|
|
| Equity consideration issued
for acquisitions |
$ |
— |
|
|
$ |
460,128 |
|
| Investing activities included
in changes in accounts payable and accrued expenses |
$ |
(408 |
) |
|
$ |
12,835 |
|
| Decrease of warrant
liabilities from cashless exercise of warrants |
$ |
1,812 |
|
|
$ |
— |
|
| Supplemental
Disclosure of Cash Activities: |
|
|
|
| Increase in cash reserved for
users |
$ |
6,331 |
|
|
$ |
104,405 |
|
| Cash paid for interest |
$ |
— |
|
|
$ |
— |
|
Non-GAAP Financial Measures
This press release includes Adjusted EBITDA and
Adjusted Income (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 Income
(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
Income (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
Income (Loss) Per Share as basic and diluted 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 Income (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 loss, which is the most
directly comparable financial measure calculated in accordance with
GAAP, for the periods indicated:
| |
Three months ended September 30, |
|
Nine months ended September 30, |
|
(amounts in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Net loss |
$ |
(283,103 |
) |
|
$ |
(450,494 |
) |
|
$ |
(757,521 |
) |
|
$ |
(1,135,290 |
) |
| Adjusted for: |
|
|
|
|
|
|
|
|
Depreciation and amortization (1) |
|
50,245 |
|
|
|
46,089 |
|
|
|
146,722 |
|
|
|
120,629 |
|
|
Interest income, net |
|
(13,750 |
) |
|
|
(6,301 |
) |
|
|
(37,635 |
) |
|
|
(8,378 |
) |
|
Income tax provision (benefit) |
|
1,291 |
|
|
|
3,177 |
|
|
|
3,310 |
|
|
|
(77,580 |
) |
|
Stock-based compensation (2) |
|
78,353 |
|
|
|
126,038 |
|
|
|
284,946 |
|
|
|
448,636 |
|
|
Transaction-related costs (3) |
|
681 |
|
|
|
751 |
|
|
|
1,106 |
|
|
|
15,030 |
|
|
Litigation, settlement, and related costs (4) |
|
3,891 |
|
|
|
1,390 |
|
|
|
10,590 |
|
|
|
5,786 |
|
|
Advocacy and other related legal expenses (5) |
|
— |
|
|
|
16,558 |
|
|
|
— |
|
|
|
16,558 |
|
|
Loss (gain) on remeasurement of warrant liabilities |
|
7,751 |
|
|
|
6,797 |
|
|
|
44,827 |
|
|
|
(20,199 |
) |
|
Other non-recurring costs and non-operating (income) costs (6) |
|
1,227 |
|
|
|
(8,216 |
) |
|
|
1,602 |
|
|
|
(37,046 |
) |
| Adjusted
EBITDA |
$ |
(153,414 |
) |
|
$ |
(264,211 |
) |
|
$ |
(302,053 |
) |
|
$ |
(671,854 |
) |
|
________________________________ |
|
(1) |
The amounts include the amortization of acquired intangible assets
of $29.2 million and $29.8 million for the three months ended
September 30, 2023 and 2022, respectively, and $88.0 million and
$76.1 million for the nine months ended September 30, 2023 and
2022, respectively. |
| (2) |
Reflects stock-based compensation expenses 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 proposed, pending or completed
transactions and offerings, including costs relating to DraftKings’
acquisition of Golden Nugget Online Gaming, Inc. in 2022. |
| (4) |
Primarily includes external legal costs related to litigation and
litigation settlement costs deemed unrelated to DraftKings’ core
business operations. |
| (5) |
Reflects non-recurring and non-ordinary course costs 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. |
The unaudited table below presents the Company’s
Adjusted Loss Per Share reconciled to its basic loss per share
attributable to common stockholders, which is the most directly
comparable financial measure calculated in accordance with GAAP,
for the periods indicated:
| |
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| Basic loss per share
attributable to common stockholders |
$ |
(0.61 |
) |
|
$ |
(1.00 |
) |
|
$ |
(1.64 |
) |
|
$ |
(2.63 |
) |
| Adjusted for: |
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets |
|
0.06 |
|
|
|
0.06 |
|
|
|
0.19 |
|
|
|
0.18 |
|
|
Discrete tax benefit attributed to the GNOG acquisition |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.18 |
) |
|
Stock-based compensation (1) |
|
0.17 |
|
|
|
0.28 |
|
|
|
0.62 |
|
|
|
1.04 |
|
|
Transaction-related costs (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.03 |
|
|
Litigation, settlement, and related costs (3) |
|
0.01 |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
Advocacy and other related legal expenses (4) |
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
|
0.04 |
|
|
Loss (gain) on remeasurement of warrant liabilities |
|
0.02 |
|
|
|
0.02 |
|
|
|
0.10 |
|
|
|
(0.05 |
) |
|
Other non-recurring costs and non-operating (income) costs (5) |
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.09 |
) |
| Adjusted Loss Per
Share* |
$ |
(0.35 |
) |
|
$ |
(0.62 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.64 |
) |
|
________________________________ |
|
* |
Weighted average number of shares used to calculate Adjusted Loss
Per Share for the third quarter and year to date period ending
September 30, 2023 was 464.8 million and 460.8 million,
respectively; totals may not sum due to rounding. |
| (1) |
Reflects stock-based compensation expenses per share resulting from
the issuance of awards under incentive plans. |
| (2) |
Reflects capital markets advisory, consulting, accounting and legal
expenses per share related to evaluation, negotiation and
integration costs incurred in connection with proposed, pending or
completed transactions and offerings, including costs relating to
DraftKings’ acquisition of Golden Nugget Online Gaming, Inc. in
2022. |
| (3) |
Primarily reflects external legal costs related to litigation and
litigation settlement costs, in each case per share, deemed
unrelated to DraftKings’ core business. |
| (4) |
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. |
| (5) |
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. |
Information reconciling forward-looking fiscal
year 2023 Adjusted EBITDA and fiscal year 2024 Adjusted EBITDA
guidance to its most directly comparable GAAP financial measure,
net income (loss), 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, provides 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 an alternative to net income (loss) or cash flow from
operating activities or as an indicator 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 24 states 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’ daily fantasy sports product is
available in 44 states, certain Canadian provinces, and the United
Kingdom. DraftKings is both an official daily fantasy and sports
betting partner of the NFL, NHL, PGA TOUR, 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 both DraftKings
Network and Vegas Sports Information Network (VSiN), to provide 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 including the potential adverse effects of the
global coronavirus pandemic (or the emergence of additional
variants or strains thereof), 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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