DraftKings(US:DKNG)2025-05-09 13:32Financial Data and Key Metrics Changes - The company generated $1,409,000,000 in revenue for Q1 2025, representing a 20% year-over-year growth [12] - Adjusted EBITDA for the same period was $103,000,000 [12] - The company revised its fiscal year 2025 revenue guidance to $6,200,000,000 to $6,400,000, down from the previous guidance of $6,300,000,000 to $6,600,000, due to customer-friendly outcomes in March [14] - Adjusted gross margin increased to 45%, up more than 100 basis points year-over-year [14] Business Line Data and Key Metrics Changes - Sportsbook handle increased 16% year-over-year to $13,900,000,000, consistent with expectations [13] - Structural sportsbook hold percentage improved to 10.4%, an increase of 60 basis points year-over-year [13] - Actual sportsbook hold percentage was 9.5%, impacted by customer-friendly outcomes during the NCAA basketball tournament [13] Market Data and Key Metrics Changes - The company noted that online gaming remained resilient in mature jurisdictions during economic downturns, with strong customer metrics consistent with forecasted trends [10] - The company experienced a headwind of $170,000,000 to revenue and $111,000,000 to adjusted EBITDA due to customer-friendly outcomes year-to-date [15] Company Strategy and Development Direction - The company is focused on enhancing product offerings and optimizing promotional deployment to drive higher structural sportsbook hold percentages [7] - The management emphasized the importance of M&A as part of an overall strategy to create shareholder value, citing past acquisitions that have yielded positive results [21] - The company is exploring international expansion opportunities but remains focused on growth within the U.S. market [67] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that recent volatility in sports outcomes is random and not indicative of a fundamental change in the market [24] - The company expects to generate free cash flow of about $750,000,000 in fiscal year 2025 [17] - Management remains optimistic about the rest of 2025, highlighting strong customer engagement and product improvements [121] Other Important Information - The company completed Q1 with $1,100,000,000 in cash after repurchasing shares [10] - Promotional reinvestment as a percentage of gross gaming revenues was more efficient year-over-year [14] Q&A Session Summary Question: Thoughts on M&A boundaries and strategy - Management views M&A as part of an overall evaluation for shareholder value creation, citing successful past acquisitions [21] Question: Concerns over structural hold versus actual hold - Management is confident that structural hold and actual hold will converge over time, despite recent unfavorable outcomes [24] Question: Handle growth trends and expectations - Management noted a slight slowdown in handle growth in April but expects high single digits to low double-digit growth moving forward [31] Question: iGaming growth rates and promotional strategies - Management believes iGaming growth should be higher, with significant improvements made in product and marketing leading to accelerated growth [34] Question: Market share in basketball and live betting performance - Management indicated that they gained market share in basketball, driven by significant growth in live betting options [45] Question: Advertising spend and efficiency - Management noted softening in digital advertising costs, allowing for potential increased spending in that area [79] Question: Capital allocation and share repurchases - Management confirmed a commitment to a $1,000,000,000 buyback program, having repurchased $140,000,000 in Q1 [108]