DraftKings(US:DKNG)2025-08-07 11:01markdown Part I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) DraftKings Inc.'s unaudited condensed consolidated financial statements as of June 30, 2025, covering balance sheets, operations, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $4.47 billion, liabilities grew to $3.46 billion, and equity remained stable at $1.01 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,261,969 | $788,287 | | Total current assets | $1,786,699 | $1,533,761 | | Goodwill | $1,555,116 | $1,555,116 | | **Total assets** | **$4,474,302** | **$4,283,725** | | **Liabilities & Equity** | | | | Liabilities to users | $724,969 | $979,453 | | Term B Loan, net | $578,499 | $— | | Convertible notes, net | $1,257,751 | $1,256,429 | | **Total liabilities** | **$3,464,674** | **$3,273,099** | | **Total stockholders' equity** | **$1,009,628** | **$1,010,626** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, net income significantly improved to $157.9 million on $1.51 billion revenue, a turnaround from prior-year operating loss Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$1,512,507** | **$1,104,441** | **$2,921,313** | **$2,279,437** | | Income (loss) from operations | $150,644 | $(32,388) | $104,313 | $(171,226) | | **Net income (loss)** | **$157,936** | **$63,822** | **$124,072** | **$(78,746)** | | Diluted EPS | $0.30 | $0.10 | $0.23 | $(0.17) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $54.9 million for H1 2025, a significant improvement, with financing providing $253.1 million Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities | $54,905 | $(41,006) | | Net cash from Investing Activities | $(74,278) | $(456,534) | | Net cash from Financing Activities | $253,134 | $(52,469) | | **Net change in cash** | **$233,761** | **$(550,009)** | | Cash at end of period | $1,563,954 | $1,073,484 | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business operations, accounting policies, recent acquisitions, debt structure, and numerous legal proceedings - DraftKings operates online sports betting (Sportsbook) in **26 of 32 live U.S. jurisdictions** and iGaming in **6 U.S. jurisdictions** as of June 30, 2025[27](index=27&type=chunk)[28](index=28&type=chunk) - The company acquired Jackpocket, a digital lottery courier, on May 22, 2024, for **total consideration of $773.1 million**, **comprising $452.3 million in cash** and **$320.8 million in equity**. This **resulted in $550.4 million of goodwill**[34](index=34&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company acquired Simplebet, a sports betting provider, on December 3, 2024, for **total consideration of $134.6 million**, including cash, equity, and contingent consideration[41](index=41&type=chunk)[42](index=42&type=chunk)[44](index=44&type=chunk) - In March 2025, the company entered into a **$600.0 million Term B Loan facility**, maturing in March 2032[55](index=55&type=chunk) - The company is involved in **numerous legal proceedings**, including patent infringement cases (Winview, Arrow Gaming, Colossus), class action lawsuits regarding promotions and marketplace NFTs, and an IRS audit concerning excise taxation of fantasy sports[102](index=102&type=chunk)[109](index=109&type=chunk)[204](index=204&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial performance, highlighting a 36.9% revenue increase to $1.5 billion, improved net income, and strong KPI growth [Financial Highlights and Trends](index=38&type=section&id=Financial%20Highlights%20and%20Trends) The company reported strong financial growth for Q2 2025, with revenue up 36.9% to $1.51 billion, net income of $157.9 million, and Adjusted EBITDA more than doubled Financial Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,512,507 | $1,104,441 | $2,921,313 | $2,279,437 | | Net Income (Loss) | $157,936 | $63,822 | $124,072 | $(78,746) | | Adjusted EBITDA | $300,644 | $127,967 | $403,273 | $150,357 | - Revenue growth was driven by **continued healthy customer engagement**, **efficient acquisition of new customers**, **expansion of Sportsbook into new jurisdictions**, **higher structural Sportsbook hold percentage**, and the **impact of the Jackpocket acquisition**[217](index=217&type=chunk) [Key Performance Indicators](index=39&type=section&id=Key%20Performance%20Indicators) Key metrics showed positive trends in Q2 2025, with MUPs growing 6.5% to 3.3 million, ARPMUP increasing 29.1% to $151, and Sportsbook Net Revenue Margin improving - Average Monthly Unique Payers (MUPs) increased by **6.5%** to **3.3 million** in Q2 2025, primarily due to **strong retention and acquisition**, along with the **impact of the Jackpocket acquisition**[220](index=220&type=chunk)[227](index=227&type=chunk) - Average Revenue per MUP (ARPMUP) increased by **29.1%** to **$151** in Q2 2025, driven by **improved Sportsbook hold percentage** and **more efficient promotional reinvestment**[225](index=225&type=chunk)[228](index=228&type=chunk) Sportsbook Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Sportsbook Handle | $11,474,841 | $10,793,014 | 6.3% | | Sportsbook Revenue | $997,872 | $686,889 | 45.3% | | Sportsbook Net Revenue Margin | 8.7% | 6.4% | N/A | [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Q2 2025 revenue grew 36.9% to $1.51 billion, outpacing cost of revenue, leading to improved gross margin and a shift to $150.6 million operating income - Q2 2025 revenue **increased by $408.1 million (36.9%) YoY**, primarily driven by **a $390.1 million increase** in Sportsbook and iGaming revenue[245](index=245&type=chunk) - Cost of revenue as a percentage of revenue **decreased by 3.6 percentage points** to **56.5%** in Q2 2025, reflecting **improved Sportsbook hold rate and promotional efficiency**[247](index=247&type=chunk) - The company achieved **income from operations of $150.6 million** in Q2 2025, a **significant turnaround** from a **loss of $32.4 million** in Q2 2024[245](index=245&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, DraftKings held $1.26 billion in cash, supported by convertible notes and a new $600 million Term B Loan, with an active stock repurchase program - The company had **$1.26 billion in cash and cash equivalents** as of June 30, 2025, which is believed to be **sufficient for at least the next twelve months**[268](index=268&type=chunk) - In March 2025, the company secured a **new $600 million Term B Loan facility**[271](index=271&type=chunk) - Under its **$1.0 billion stock repurchase program**, the company **repurchased 6.5 million shares for $242.7 million** in the first six months of 2025[273](index=273&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in market risk exposure occurred during the six months ended June 30, 2025, as referenced in the 2024 Annual Report - There have been **no significant changes** in the company's exposure to market risk during the first six months of 2025[281](index=281&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[282](index=282&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[283](index=283&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is detailed in Note 13 of the condensed consolidated financial statements, covering patent disputes, class actions, and regulatory inquiries - Information on legal proceedings is detailed in **"Note 13 — Commitments and Contingencies"** of the financial statements[285](index=285&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes from the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - The company refers to the risk factors described in the 2024 Annual Report, indicating **no material changes**[286](index=286&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details on the $1.0 billion stock repurchase program, with approximately 2.9 million shares repurchased during Q2 2025 Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 539,815 | $33.04 | | May 2025 | 190,947 | $35.18 | | June 2025 | 2,141,058 | $35.43 | | **Total Q2** | **2,871,820** | **N/A** | - As of June 30, 2025, approximately **$709.3 million remained available** for future repurchases under the authorized **$1.0 billion program**[288](index=288&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) This section discloses securities trading plans established by directors and executive officers, including CEO Jason Robins' prepaid variable forward sale contract - On May 13, 2025, CEO Jason Robins entered into a **prepaid variable forward sale contract** obligating him to deliver up to **306,997 shares** of Class A common stock after the May 13, 2030 maturity date[294](index=294&type=chunk) - On May 14, 2025, Director Jocelyn Moore entered into a **Rule 10b5-1 trading plan** for the sale of up to **4,861 shares**, terminating on August 29, 2025[295](index=295&type=chunk)