Draftkings Inc. · NASDAQ:DKNG
Draftkings — SPAC Merger (January 2020)
30 slides from Draftkings's SPAC merger presentation, Jan 13, 2020
Slide 1: Investor Presentation January 2020
| INVESTOR PRESENTATION JANUARY 2020
Slide 2: Legal Disclaimer
| LEGAL DISCLAIMER This investor presentation (“Investor Presentation”) is for informational purposes and does not constitute an offer to sell, a sol ici tation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of DraftKings Inc. (“ DraftKings ”, “DK
Slide 3: Legal Disclaimer (Continued)
| LEGAL DISCLAIMER (CONTINUED) Use of Non - GAAP Financial Matters This presentation includes non - GAAP financial measures, including EBITDA. DEAC, DraftKings and SBT believe that these non - GAAP measures are useful to investors for two principal reasons. First, they believe these measures may ass
Slide 4: The DraftKings / Diamond Eagle Team
| THE DRAFTKINGS / DIAMOND EAGLE TEAM Harry Sloan Principal Founder of Diamond Eagle Jason Robins Chief Executive Officer and Co - Founder of DraftKings Jason Park Chief Financial Officer of DraftKings 3 Co - founded DraftKings in 2011 and has served as DraftKings’ Chief Executive Officer since ince
Slide 5: Our Mission and Vision
| “We make life more exciting by responsibly creating the world’s favorite real - money games and betting experiences” “To build the best, most trusted, and most customer - centric destination for skin - in - the - game fans, to develop the most innovative and entertaining real money gaming products
Slide 6: Premier Brand in Digital Sports Entertainment and Leader in the U.S. Market
| 2 Premier Brand in Digital Sports Entertainment and Leader in the U.S. Market TABLE OF CONTENTS #1 Rated DFS and Sportsbook Platform (3) Massive Global Sports Betting and iGaming Opportunity 1 3 DraftKings and SBTech Together Create a Global, Vertically - Integrated Powerhouse 4 Attractive Economi
Slide 7: Massive Global Market Opportunity
| $364 $371 $382 $398 $400 $38 $42 $46 $51 $56 2015A 2016A 2017A 2018A 2019E Brick & mortar Online / mobile 6 MASSIVE GLOBAL MARKET OPPORTUNITY GLOBAL MOVEMENT TOWARDS REGULATION Source: Eilers and Krejcik Gaming. 2018 Oxford Economics U.S. population estimates. H2 Gambling Capital Global All Produc
Slide 8: U.S. Online Sports Betting Market Estimated at $18-23 Billion at Maturity
| $18 $22 $23 $18 ESTIMATED U.S. ONLINE SPORTS BETTING MARKET AT MATURITY ($ in billions) 7 1 THE U.S. ONLINE SPORTS BETTING MARKET IS ESTIMATED TO BE $18 - 23 BILLION AT MATURITY Source: NJ Department of Gaming Enforcement; H2 Gambling Capital Global All Product Summary Report, June 2019; U.S. Cens
Slide 9: U.S. State Sports Betting Legalization Status
| Source: “ U.S. sports betting tracker” from Gambling Compliance; “Where is sports betting legal in the U.S.?” from Legal Sports Report, U.S. Census Data as of July 2018 ( https:// www2.census.gov/programs - surveys/popest/tables/2010 - 2018/state/totals/nst - est2018 - 02.xlsx ). Note: States with
Slide 10: U.S. iGaming Is the Next Wave
| $123 $149 $197 $246 $299 $ 452 $21 billion 2014A 2015A 2016A 2017A 2018A 2019E Implied U.S. Market NEW JERSEY iGAMING GGR U.S. i GAMING IS THE NEXT WAVE Source: New Jersey Division of Gaming Enforcement. (1) Reflects actual data through September 30, 2019, which is then annualized. (2) Extrapolati
Slide 11: The U.S. OSB and iGaming Opportunity: ~$40BN TAM
| $18BN Implied Total U.S. Market (1) 10 1 THE U.S. OSB AND i GAMING OPPORTUNITY: ~$40BN TAM Source: Eilers and Krejcik Gaming, New Jersey Division of Gaming Enforcement. (1) Based on extrapolation of New Jersey market on page 7. (2) OSB is legalized in states representing 24% of the U.S. population
Slide 12: DraftKings' DFS Business Is a Distinct Competitive Advantage
| 11 DRAFTKINGS ’ DFS BUSINESS IS A DISTINCT COMPETITIVE ADVANTAGE ( 1) National survey of current online sports wagerers ages 21 – 54, n = 447 conducted by Arnold Worldwide in April 2018 . 2 DRAFTKINGS ’ DFS ADVANTAGE ~60%+ DFS Market Share 43 States Live 4 Million+ DFS Paid Users $213MM 2019E Reve
Slide 13: DFS Database Provides Immediate Source of Online Sports Betting and Gaming Users
| 4MM+ Unique Paid User Database 12 DFS DATABASE PROVIDES IMMEDIATE SOURCE OF ONLINE SPORTS BETTING AND GAMING USERS 2 We have a 4MM+ unique paid user database Our “single account” platform creates a seamless user experience across offerings As evidenced in NJ, we have proven cross - sell capabiliti
Slide 14: Success in Online Sports Betting
| 31% 65% 67% 100% 43% 35% 26% 13% 7% 13% New Jersey West Virginia Indiana Oregon 13 SUCCESS IN ONLINE SPORTS BETTING Source: State gaming and lottery commissions, Legal Sports Report. Note: NJ market share separates Stars/Resorts and PointsBet GGR from DraftKings’ and FanDuel’s licenses, respective
Slide 15: Success in iGaming - New Jersey
| 14% 16% 17% 15% 5% 5% 5% 4% 9% 8% 7% 5% 7% 6% 6% 6% 9% 8% 8% 7% 6% 8% 8% 8% 10% 9% 9% 9% 10% 9% 10% 14% 14% 14% 13% 15% 18% 16% 16% 17% Q1 2019 Q2 2019 Q3 2019 Q4 2019 14 SUCCESS IN i GAMING – NEW JERSEY Source: New Jersey Division of Gaming Enforcement . D ata as of November 30 , 2019. (1) Based
Slide 16: DraftKings & SBTech: A Fully Integrated Platform
| Provide fuel for growth through cost synergies of $ 100MM+ at maturity and industry - leading unit economics 15 DRAFTKINGS & SBTECH: A FULLY INTEGRATED PLATFORM THAT ENABLES DRAFTKINGS ’ MISSION 3 First - to - market with innovative products focused on the U.S . sports fan Ability to control our p
Slide 17: SBTech: A Leader in Online Gaming Technology
| 16 SBTECH: A LEADER IN ONLINE GAMING TECHNOLOGY COMPANY OVERVIEW REVENUE BY GEOGRAPHY 1,080+ employees 8+ global offices 20+ regulated markets / jurisdictions 10+ years of experience Positioned as one of the fastest growing tech firms within sports betting, with an omni - channel solution Proven t
Slide 18: Technology Enables Multi-Channel Access to Users Globally
| TECHNOLOGY ENABLES MULTI - CHANNEL ACCESS TO USERS GLOBALLY 3 Powered by DraftKings’ branded OSB and iGaming platform White Label B2C Plug and play direct - to - consumer OSB and iGaming offering Lottery - Run Back - end turnkey OSB and iGaming technology solution Retail Sportsbook Traditional bri
Slide 19: CAC Advantage Due to DFS Database and Marketing Know-How
| $120 $95 $75 $40 Local Regional National (30% OSB Live) National (65% OSB Live) 18 CAC ADVANTAGE DUE TO DFS DATABASE AND MARKETING KNOW HOW Note: OSB and iGaming database figures reflect paid users from OSB launch in August 2018 through September 30, 2019. (1) Excludes existing out - of - state DF
Slide 20: Proven Revenue Retention Drives LTV
| 2014 2015 2016 2017 2018 2019E 2012-14 2015 2016 2017 2018 2019 19 PROVEN REVENUE RETENTION DRIVES LTV 4 NEW JERSEY NET REVENUE BY COHORT (1) (1) Cohort year determined by user’s first paid activity, whether DFS, OSB, or iGaming. (2) 2018 data reflects five months of live OSB and one month of live
Slide 21: Expected New Jersey Contribution Profit Demonstrates Speed to Profitability
| $26 $120 $153 $196 $21 $84 $111 $152 $8 $27 $44 $72 ($10) ($11) $9 $49 GGR NGR Gross profit Contribution profit 20 4 EXPECTED NEW JERSEY CONTRIBUTION PROFIT DEMONSTRATES SPEED TO PROFITABILITY NEW JERSEY SERVES AS EXAMPLE OF STATE - BY - STATE ECONOMIC RAMP Note: Reflective of initial performance
Slide 22: New Jersey Expected to Achieve 38% Contribution Margin
| 100% 50% 38% Net Revenue Taxes Platform Processing Revenue Share Gross Margin External Marketing Contribution Margin (18)% (10)% (7)% (15)% (13)% 21 NEW JERSEY EXPECTED TO ACHIEVE 38% CONTRIBUTION MARGIN 4 ILLUSTRATIVE NEW JERSEY UNIT ECONOMICS (EXPECTED YEAR 5) (% of Net Revenue) Note: Figures ma
Slide 23: Illustrative Path to $1 Billion+ in EBITDA
| $0.3 $2.3 $0.7 $0.4 $3.7 $(1.8) $2.0 $(0.4) $1.7 $(0.6) $0.1 $1.2 Net Revenue COGS Gross Profit External Marketing Contribution Profit SG&A Synergies EBITDA Assumes 65% of population has live OSB and 30% of population has live iGaming, and then rolls forward 5 years to “maturity” Assumes DK has 25
Slide 24: Combined Company Projection Model
| Source: Management projections. 23 COMBINED COMPANY PROJECTION MODEL 5 HISTORICAL / PROJECTED NET REVENUE ($ in millions) ASSUMPTIONS 2020 Assumptions — Online sportsbook live in current "line - of - sight" states, which represent approximately 10% of the U.S. population — iGaming live in NJ and P
Slide 25: Proposed Transaction Summary
| 24 PROPOSED TRANSACTION SUMMARY Diamond Eagle Acquisition Corp. is a publicly listed special purpose acquisition vehicle with over $400 million in cash DEAC has agreed to combine with DraftKings and SBTech — Values the combined DK and SBT business at $2.7 billion (based on book value of DEAC) — Re
Slide 26: Appendix
APPENDIX
Slide 27: Combined Company P&L
| 26 COMBINED COMPANY P&L ($ in thousands) For the Nine Months Ended For the Twelve Months Ended September 30, 2019 December 31, 2018 Net Revenue $268,773 $308,533 Cost of Revenue 114,080 113,911 Sales and Marketing 129,791 150,077 Product and Technology 54,934 44,905 General and Administrative 86,7
Slide 28: DraftKings KPI Comparison Over Time
| 27 DRAFTKINGS KPI COMPARISON OVER TIME USERS IN 000’S Nine months ended September 30, Year ended December 31, 2019 2018 2018 2017 Monthly Unique Payers (“MUPs”) 565 485 601 574 Average Revenue per MUP (“ARPMUP”) $38 $30 $31 $28 Monthly Unique Payers (“MUPs”) — We define MUPs as the number of uniqu
Slide 29: Experienced and Founder-Led Leadership Team
| 28 EXPERIENCED AND FOUNDER - LED LEADERSHIP TEAM Years experience Oversees strategy and operations and drives funding and partnerships Duke University ( B.A. Economics , B.S . Computer Science) Founded DraftKings in 2011 Jason Robins Chief Executive Officer (Co - founder) 16 Oversees technology, p
Slide 30: SBTech Has an Experienced Management Team
| 29 SBTECH HAS AN EXPERIENCED MANAGEMENT TEAM TO DRIVE CONTINUED GROWTH Years experience Joined in February 2016 Previously held research positions at Deutsche Bank and Numis Securities Richard Carter Chief Executive Officer 14 Joined in December 2018 to manage global operations Previously held lea