Core Insights - DraftKings is expanding its market presence through exclusive media partnerships with ESPN and NBCUniversal, aiming to enhance brand visibility and customer engagement in a competitive sports gaming market [1][11][12] - The company is launching DraftKings Predictions, a new suite of sports event contracts, targeting states with limited access to online sports betting, which presents a significant growth opportunity [3][6][7] - DraftKings acknowledges the inherent risks associated with short-term sports outcomes affecting financial performance, but believes these will balance out over time [10] Media Partnerships - The partnership with ESPN positions DraftKings as the exclusive integration provider for live sports and digital platforms, covering 73% of national NBA broadcasts, which is expected to significantly boost customer acquisition [12] - The NBCUniversal agreement enhances DraftKings' omnichannel presence, allowing for improved cross-platform storytelling and user reach beyond traditional advertising [12][13] - These media partnerships are seen as long-term strategies to lower customer acquisition costs and drive scalable growth in a competitive landscape [13][14] Market Strategy - DraftKings is focusing on states where it does not currently operate sportsbooks, aiming to capture markets with substantial financial opportunities [7][9] - The company believes that the growth of prediction markets will facilitate the broader legalization of sports betting as states become more comfortable with real money gaming frameworks [9] - DraftKings' competitive edge lies in its technology, regulatory expertise, and existing customer base, which positions it favorably against pure-play prediction firms [8][9] Financial Performance - DraftKings reported a 2% increase in monthly unique player growth to 3.6 million, but lowered its forward guidance due to softer results, leading to a 7% decline in stock price [5] - The company's revenue is significantly influenced by sports outcomes, with Q2 results adding approximately $100 million to revenue, followed by a loss of over $300 million due to unfavorable NFL games in September and October [10]

Core Viewpoint - DraftKings is launching a prediction market for sports outcomes, which could transform a competitive threat into a growth opportunity despite a recent cut in its full-year outlook due to unfavorable sports outcomes impacting revenue [2][3]. Company Developments - DraftKings reported an adjusted loss of 26 cents per share, matching estimates but widening from a loss of 17 cents a year ago. Sportsbook handle increased by 10% year-over-year to $11.4 billion, while sportsbook revenue fell by 9.3% to $596.1 million. Total revenue rose by 4.4% to $1.144 billion, driven by a 25% increase in iGaming revenue to $451.3 million [7]. - The company has lowered its full-year revenue outlook to a range of $5.9 billion to $6.1 billion from a previous range of $6.2 billion to $6.4 billion. Additionally, the outlook for full-year adjusted earnings before interest, taxes, depreciation, and amortization has been cut to a range of $450 million to $550 million from $800 million to $900 million [8]. Market Position and Strategy - DraftKings is set to launch its prediction market, pending license approvals, targeting nearly half of the U.S. population in states without access to online sports betting. This market allows traders to buy and sell contracts based on specific sports outcomes, potentially increasing engagement and revenue [4]. - The company has secured exclusive marketing agreements with ESPN and NBCUniversal, which are expected to enhance its market presence and drive growth [3]. Competitive Landscape - Robinhood has entered the sports prediction market, joining competitors like Kalshi and Polymarket, which recently received a $2 billion investment from Intercontinental Exchange [5]. - DraftKings has been named as Disney's official sportsbook and odds provider, effective December 1, following the early termination of the ESPN Bet deal with Penn Entertainment [9]. Stock Performance - Following the announcement of its new sportsbook partnership with ESPN, DraftKings' stock initially fell over 6% to a two-year low but later rebounded to a 1.7% gain. Canaccord and BTIG have adjusted their price targets for DKNG stock to $54 and $42, respectively, while maintaining buy ratings [10][11].

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $1,144 million in revenue, representing a 4% year-over-year growth [16] - Adjusted EBITDA for Q3 was -$127 million, which was below expectations due to customer-friendly sports outcomes impacting revenue by over $300 million [16][10] - The fiscal year 2025 revenue guidance was revised to $5.9 billion-$6.1 billion, implying a growth of 24%-28% compared to fiscal year 2024 [18] Business Line Data and Key Metrics Changes - Sportsbook handle increased 10% year-over-year to $11.4 billion, with NFL handle growing 13% and NBA handle growing 19% season-to-date [17][7] - iGaming net revenue growth accelerated to 25% year-over-year, marking the fastest growth since Q1 2024 [8] - Customer retention rates for NFL Week One customers improved by over 300 basis points compared to the same weeks a year ago [7] Market Data and Key Metrics Changes - Total Sportsbook handle increased 17% year-over-year in October [8] - Parlay handle mix surged with year-over-year gains of 800 basis points for NFL and 1,000 basis points for NBA season-to-date [8] - Nearly half of the U.S. population remains without access to legal online sports betting, presenting a significant growth opportunity [12] Company Strategy and Development Direction - The company is launching DraftKings Predictions, which is viewed as a significant incremental opportunity to expand the total addressable market [11] - Exclusive marketing agreements with ESPN and NBCUniversal are expected to enhance brand affinity and broaden reach [8] - The company plans to focus on states where it does not currently offer Sportsbooks, targeting areas with the most financial opportunity [13] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in the long-term financial potential of the company, despite revising fiscal year 2025 guidance [5] - The impact of sports outcomes on financial results is acknowledged, with management emphasizing that these variances typically normalize over time [10] - The company is optimistic about the future growth of predictions and its potential to motivate more states to legalize online sports betting [12] Other Important Information - The board has authorized an increase in the share repurchase program from $1 billion to $2 billion, with plans to be active in share repurchases [14] - The company is investing in AI to improve cost structure and revenue trajectory, with some investments expected to pay back in 2026 [70] Q&A Session Summary Question: OSB hold percentage and confidence in recovery - Management acknowledged the frustration with recent customer-friendly outcomes but emphasized that over time, results normalize [21][22] Question: Addition of Greg Wendt to the board - Management expressed excitement about Greg Wendt's expertise in investing and capital markets, anticipating his contributions to strategy [25][26] Question: Volatility of hold due to Parlay - Management indicated that while increased parlay activity may introduce volatility, the focus remains on maximizing long-term value while managing risk [29][30] Question: Profitability of prediction markets - Management plans to adopt a conservative approach to investment in prediction markets, focusing on data-driven decisions as more information becomes available [32][33] Question: Conversations with regulators regarding prediction markets - Management highlighted the importance of relationships with regulators and the strategic focus on states without existing online sports betting [38][39] Question: Significance of the ESPN deal - Management emphasized the long-standing relationship with ESPN and the potential for significant growth through integration and marketing collaboration [51][52] Question: Impact of promotional spending on guidance - Management noted that most of the guidance adjustment was due to outcomes, with some additional spending anticipated for predictions and product development [62][63] Question: Investment focus for next year - Management indicated that core business investments would remain stable, with a focus on new states and AI technology [68][70] Question: Spanish-language app opportunity - Management expressed excitement about the upcoming Spanish-language app, particularly in light of the World Cup and the growing Hispanic demographic [92][95] Question: Attribution of parlay mix growth - Management attributed the growth in parlay mix to product innovation and effective promotional strategies, indicating a strong focus on this area moving forward [98][100]

Financial Data and Key Metrics Changes - In Q3 2025, the company generated $1,144 million in revenue, representing a 4% year-over-year growth [16] - Adjusted EBITDA for Q3 was negative $127 million, impacted by customer-friendly sports outcomes that affected revenue by over $300 million [16][10] - The company revised its fiscal year 2025 revenue guidance to $5.9 billion-$6.1 billion and adjusted EBITDA guidance to $450 million-$550 million, reflecting a growth of 24%-28% compared to fiscal year 2024 [18] Business Line Data and Key Metrics Changes - Sportsbook handle increased by 10% year-over-year to $11.4 billion, with strong engagement driven by promotions [17] - iGaming net revenue growth accelerated to 25% year-over-year, marking the fastest growth since Q1 2024 [8] - The parlay handle mix surged, with year-over-year gains of 800 basis points for NFL and 1,000 basis points for NBA season to date [8] Market Data and Key Metrics Changes - NFL handle grew 13% season to date, while NBA handle increased by 19% season to date, indicating an acceleration in growth compared to previous quarters [7] - Total sportsbook handle increased by 17% year-over-year in October [8] Company Strategy and Development Direction - The company is optimistic about future growth, driven by exclusive marketing agreements with ESPN and NBCUniversal, and the upcoming launch of DraftKings Predictions [5][12] - The focus will be on states without existing online sports betting, aiming to capture a new customer base and revenue stream [12][41] - The share repurchase program has been increased from $1 billion to $2 billion, indicating confidence in future cash flow [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of sports outcomes on financial results but emphasized that over time, these variances typically normalize [10][24] - The company remains confident in its long-term financial potential, citing strong customer retention rates and product enhancements driving engagement [5][7] - Management expressed excitement about the potential of DraftKings Predictions to expand the total addressable market [12] Other Important Information - The company is developing a Spanish-language app to cater to a growing demographic ahead of the 2026 World Cup [9][93] - The company has made significant progress in growing its sportsbook hold percentage and net revenue margin, primarily due to an increasing parlay handle mix [9] Q&A Session Summary Question: OSB hold percentage and confidence in future swings - Management acknowledged the frustration with recent outcomes but noted that over time, results tend to normalize, and the business model remains strong [21][24] Question: Value addition of new board member Greg Went - Management expressed excitement about Greg Went's expertise in gaming investment and his potential contributions to the company's strategy [25] Question: Volatility of hold due to parlay increases - Management indicated that while parlay betting can increase volatility, the focus remains on maximizing long-term value while managing risk appropriately [29][30] Question: Profitability of prediction markets - Management plans to adopt a conservative approach to investment in prediction markets, focusing on data-driven decisions and shorter payback periods [32][33] Question: Conversations with regulators regarding prediction markets - Management emphasized the importance of relationships with regulators and the strategic focus on states without existing online sports betting [38][41] Question: Significance of ESPN deal - Management highlighted the long-standing relationship with ESPN and the potential for significant customer engagement through integrated marketing efforts [51][52] Question: Breakdown of the $300 million impact on guidance - Management indicated that most of the impact was due to sports outcomes, with some additional considerations for prediction market spending [62] Question: Investment strategy for next year - Management stated that there would be minimal incremental investment in core business areas, with a focus on new states and AI technology [70] Question: Customer acquisition through Spanish-language app - Management expressed optimism about the potential for the Spanish-language app to capture a significant share of the growing Hispanic demographic [93][95] Question: Attribution of growth in parlay mix - Management attributed the growth in parlay mix to product innovation and effective promotional strategies [98][100]

Financial Data and Key Metrics Changes - In Q3 2025, DraftKings generated $1,144 million in revenue, representing a 4% year-over-year growth [14] - The company reported a negative adjusted EBITDA of $127 million for the quarter, which was below expectations due to customer-friendly sports outcomes impacting revenue by over $300 million [14][9] - For fiscal year 2025, revenue guidance was revised to $5.9 billion-$6.1 billion, down from the previous guidance of $6.2 billion-$6.4 billion, reflecting a growth of 24%-28% compared to fiscal year 2024 [17] Business Line Data and Key Metrics Changes - Sportsbook handle increased by 10% year-over-year to $11.4 billion, with a significant acceleration in October, where total sportsbook handle increased 17% year-over-year [16][6] - iGaming net revenue growth accelerated to 25% year-over-year in Q3 2025, marking the fastest growth since Q1 2024 [6] - Customer retention rates for NFL Week One customers improved by over 300 basis points compared to the same weeks a year ago [5] Market Data and Key Metrics Changes - The parlay handle mix surged with year-over-year gains of 800 basis points for NFL season to date and 1,000 basis points for NBA season to date [6] - NFL handle grew by 13% season to date, while NBA handle grew by 19% season to date, indicating an acceleration in growth compared to previous quarters [5] Company Strategy and Development Direction - The company is optimistic about its future, citing new exclusive marketing agreements with ESPN and NBCUniversal as key advantages [4] - DraftKings is set to launch DraftKings Predictions, which is viewed as a significant incremental opportunity to expand its total addressable market [10] - The company plans to focus on states where it does not currently offer sportsbooks, targeting areas with the most financial opportunity [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of customer-friendly sports outcomes on financial results but emphasized that these variances typically normalize over time [21][22] - The company remains confident in its long-term financial potential, with expectations of generating $450-$550 million in adjusted EBITDA for fiscal year 2025 [17] - Management highlighted the importance of maintaining strong customer engagement and product enhancements to drive future growth [5] Other Important Information - DraftKings has repurchased 9.3 million shares since the inception of its share repurchase program, with the board authorizing an increase in the program from $1 billion to $2 billion [12] - The company is developing innovative slot and jackpot content in iGaming and has brought in a new leader to solidify its position in this area [8] Q&A Session Summary Question: Concerns about OSB hold percentage and customer-friendly outcomes - Management acknowledged the frustration with recent outcomes but noted that such variances are part of the business and typically normalize over time [21][22] Question: Value of new board member Greg Went - Management expressed excitement about Greg Went's addition to the board, highlighting his expertise in investing and capital markets [24] Question: Balancing structural hold and volatility with increasing parlay offerings - Management emphasized the importance of maximizing long-term value while managing risk, acknowledging that volatility can occur during concentrated events [26][29] Question: Profitability of prediction markets - Management stated that they will take a conservative approach to investment in prediction markets, focusing on data-driven decisions and shorter payback periods [30][32] Question: Conversations with regulators regarding prediction markets - Management confirmed ongoing discussions with regulators to ensure compliance and to understand the market landscape [36][38] Question: Significance of the ESPN deal - Management highlighted the strategic importance of the ESPN partnership, which will enhance customer engagement and marketing efforts [45][46] Question: Impact of promotional spending on guidance - Management indicated that most of the guidance adjustment was due to sports outcomes, with some consideration for promotional spending related to new product launches [57] Question: Investment focus for the upcoming year - Management indicated that there would be minimal incremental investment in core business areas, with a focus on new states and AI technology [63][64] Question: Spanish-language app opportunity - Management expressed excitement about the upcoming Spanish-language app, particularly in light of the World Cup and the growing Hispanic demographic in the U.S. [86][88] Question: Attribution of growth in parlay mix - Management attributed the growth in parlay mix to a combination of product innovation and effective promotional strategies [90]

Q3 2025 EARNINGS PRESENTATION November 6, 2025 | 1 Legal Disclaimer Forward-Looking Statements This presentation 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 DraftKings Inc. ("DraftKings", the "Company", "we", "us" and "our") and its industry that involve substantial risks and uncertainties. All statements, other than statements of historical fact, ...

Core Insights - DraftKings experienced a significant decline in stock price following the release of its quarterly results and a weak forward guidance, with shares dropping over 7% to $25 during extended hours [1] Company Summary - The quarterly results published by DraftKings were disappointing, leading to a negative market reaction [1] - The forward guidance provided by the company was perceived as weak, contributing to investor concerns and the subsequent stock price drop [1]

Core Insights - Berkshire Hathaway, led by Warren Buffett, has reached an unprecedented cash reserve of $381.7 billion by the end of September [1] Group 1: Financial Position - The cash and cash equivalents held by Berkshire Hathaway have never been higher, indicating a strong liquidity position [1]

Revenue Performance - Total revenue for the three months ended September 30, 2025, was $1,144,019, a 4.4% increase from $1,095,490 in the same period of 2024[226] - Total revenue for the nine months ended September 30, 2025, was $4,065,332, a 20.5% increase from $3,374,927 in the same period of 2024[226] - Revenue increased by $690.4 million, or 20.5%, to $4,065.3 million in the nine months ended September 30, 2025, compared to $3,374.9 million in the same period of 2024[268] Net Loss and Income - Net loss for the three months ended September 30, 2025, was $(256,788), compared to a net loss of $(293,688) in the same period of 2024[226] - Net income (loss) attributable to common stockholders improved by $36.9 million, or 12.6%, to $(256.8) million for the three months ended September 30, 2025, from $(293.7) million in 2024[257] - Net loss decreased by $239.7 million to a net loss of $132.7 million in the nine months ended September 30, 2025, compared to a net loss of $372.4 million in the same period of 2024[280] Unique Payers and Revenue Metrics - Monthly Unique Payers (MUPs) increased by 1.5% in the three months ended September 30, 2025, compared to the same period in 2024[238] - Average Revenue per MUP (ARPMUP) increased by $3 or 3.0% for the three months ended September 30, 2025, compared to the same period in 2024[239] Sportsbook Performance - Sportsbook Handle increased by $1.0 billion, or 10.0%, to $11.4 billion in the three months ended September 30, 2025, from $10.4 billion in the same period of 2024[242] - Sportsbook Handle increased by $3.6 billion, or 10.9%, to $36.8 billion in the nine months ended September 30, 2025, from $33.2 billion in the same period of 2024[242] - Sportsbook Net Revenue Margin decreased by 1.1 percentage points to 5.2% in the three months ended September 30, 2025, from 6.3% in the same period of 2024[243] iGaming and Other Revenue - iGaming revenue for the three months ended September 30, 2025, was $451,300, a 24.9% increase from $361,460 in the same period of 2024[242] - iGaming revenue increased by $89.8 million, or 24.9%, to $451.3 million for the three months ended September 30, 2025, compared to $361.5 million for the same period in 2024[244] - Other revenue for the nine months ended September 30, 2025, was $284,953, a 32.5% increase from $215,055 in the same period of 2024[242] - Other revenue rose by $19.5 million, or 25.3%, to $96.6 million for the three months ended September 30, 2025, primarily due to interest income on customer deposits[245] Cost and Expenses - Cost of revenue increased by $41.6 million, or 5.6%, to $784.1 million for the three months ended September 30, 2025, driven by revenue growth and higher variable expenses[258] - Cost of revenue increased by $366.5 million, or 17.3%, to $2,482.4 million in the nine months ended September 30, 2025, from $2,115.9 million in the same period of 2024[270] - Cost of revenue as a percentage of revenue increased by 0.8 percentage points to 68.5% for the three months ended September 30, 2025, compared to 67.8% in 2024[259] - Sales and marketing expense increased by $40.9 million, or 4.6%, to $937.2 million in the nine months ended September 30, 2025, from $896.3 million in the same period of 2024[273] - Product and technology expense increased by $41.3 million, or 14.5%, to $326.4 million in the nine months ended September 30, 2025, from $285.1 million in the same period of 2024[274] - General and administrative expense decreased by $60.6 million, or 11.1%, to $486.9 million in the nine months ended September 30, 2025, from $547.5 million in the same period of 2024[275] Cash Flow and Financing - Cash and cash equivalents as of September 30, 2025, were $1,228.3 million, sufficient to meet current working capital and capital expenditure requirements for at least twelve months[281] - The cash and cash equivalents at the end of the period increased to $1,708.2 million as of September 30, 2025, compared to $1,156.5 million at the end of the same period in 2024[288] - The company experienced a net increase in cash and cash equivalents of $377.9 million during the nine months ended September 30, 2025, contrasting with a decrease of $466.9 million in the prior year[288] - Cash received from borrowing under the Term B Facility amounted to $588.1 million, contributing to a net cash provided by financing activities of $151.7 million for the nine months ended September 30, 2025, compared to a cash outflow of $71.4 million in 2024[291] - Stock repurchase program authorized up to $1.0 billion, with 8.2 million shares repurchased for $314.0 million in the nine months ended September 30, 2025[287] Interest Expense - The company experienced a significant increase in interest expense, with a net expense of $19.6 million for the three months ended September 30, 2025, compared to an income of $8.3 million in 2024[257] - Interest expense net recorded was $14.5 million in the nine months ended September 30, 2025, compared to $36.3 million of net interest income in the same period of 2024[276] Accounting and Risk - There were no changes to the critical accounting estimates discussed in the 2024 Annual Report, indicating consistency in financial reporting practices[294] - The company has not experienced significant changes in exposure to market risk during the nine months ended September 30, 2025[295] - Commitments and contingencies as of September 30, 2025, are summarized in the unaudited condensed consolidated financial statements[292]

Financial Performance - DraftKings reported Q3 2025 revenue of $1,144 million, a 4% increase from $1,095 million in Q3 2024[3] - DraftKings revised its fiscal year 2025 revenue guidance to $5.9 billion to $6.1 billion, indicating a year-over-year growth of 24% to 28%[8] - The company expects fiscal year 2025 Adjusted EBITDA to be between $450 million and $550 million[8] - Net income attributable to common stockholders for the nine months ended September 30, 2025, was a loss of $132.716 million, an improvement from a loss of $372.434 million in the same period of 2024[22] - Adjusted EBITDA for the nine months ended September 30, 2025, was $276.785 million, compared to $91.853 million for the same period in 2024, indicating a significant increase in operational performance[28] - Basic earnings per share attributable to common stockholders for the nine months ended September 30, 2025, was a loss of $0.27, an improvement from a loss of $0.78 in the same period of 2024[33] User Engagement - Monthly Unique Payers (MUPs) rose by approximately 2% to 3.6 million in Q3 2025 compared to the same period in 2024, with a 6% increase excluding Jackpocket[8] - Average Revenue per MUP (ARPMUP) increased to $106, representing a 3% growth year-over-year[8] Cash Flow and Liquidity - Cash flows provided by operating activities for the nine months ended September 30, 2025, were $342.382 million, up from $92.578 million in 2024, reflecting improved cash generation[22] - The company reported a net cash increase of $377.994 million in cash and cash equivalents, restricted cash, and cash reserved for users at the end of the period, compared to a decrease of $466.978 million in the prior year[22] - Cash and cash equivalents at the end of the period were $1.228 billion, up from $877.822 million at the end of the same period in 2024, showing a strong liquidity position[22] Investment and Expenses - Stock-based compensation for the nine months ended September 30, 2025, was $236.020 million, down from $271.307 million in 2024, indicating a reduction in equity-based expenses[22] - The company incurred $93.432 million in cash paid for internally developed software costs during the nine months ended September 30, 2025, compared to $71.059 million in 2024, reflecting ongoing investment in technology[22] - The company reported a net cash flow used in investing activities of $116.109 million for the nine months ended September 30, 2025, compared to $488.184 million in 2024, indicating a decrease in cash outflows for investments[22] - Proceeds from the Term B Loan amounted to $588.116 million, contributing to the financing activities during the period[22] Market Presence and Operations - The company is live with mobile sports betting in 25 states, covering approximately 49% of the U.S. population[7] - DraftKings operates mobile and/or retail sports betting in 28 states, Washington, D.C., and Ontario, Canada, and iGaming in five states and Ontario[37] - DraftKings' daily fantasy sports product is available in 44 states and certain Canadian provinces[37] Future Plans and Guidance - DraftKings announced an increase in its share repurchase program from $1.0 billion to $2.0 billion[4] - DraftKings plans to launch DraftKings Predictions in the coming months, pending licensure[8] - The company forecasts an Adjusted EBITDA range for fiscal year 2025, but cannot assure the predictability of all components due to external factors[35] Regulatory and Compliance - The company is actively seeking licensure for product offerings in jurisdictions where it does not currently operate[36] - DraftKings has a non-GAAP effective tax rate of 23% as of Q3 2025, reflecting its level of non-GAAP profitability[36] Partnerships and Community Engagement - DraftKings emphasizes responsible gaming and has developed educational tools for players[37] - The company has partnerships with major sports leagues including the NFL, NHL, and NBA[37] Risks and Uncertainties - DraftKings' forward-looking statements involve substantial risks and uncertainties, including macroeconomic factors[39] - The company cautions that actual results may differ materially from forward-looking statements due to various risks and uncertainties[39]