Slide 1: Q4 2023 Earnings Presentation
Q4 2023 EARNINGS PRESENTATION February 15, 2024 | 1
Slide 2: Legal Disclaimer
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. (the “Company”
Slide 3: Q4 and current business highlights
Q4 and current business highlights 1 Q4 2023 core value drivers exceeded expectations; revenue of $1,231M increased 44% YoY and Adj. EBITDA(1) of $151M improved by $201M YoY 2 Increased OSB and iGaming share substantially YoY in Q4 2023 3 Increasing FY 2024 revenue and Adj. EBITDA guidance(2) midpoi
Slide 4: Q4 core value drivers exceeded our expectations
Q4 core value drivers exceeded our expectations Q4 Revenue and Adj. EBITDA(1) Guidance Compared to Actual Results $ Millions Core Value Drivers: Revenue +$146M and Adj. EBITDA +$80M Implied by Stronger Customer Higher OSB Hold due November 2nd Acquisition, Retention to Structural Unfavorable Q4 Four
Slide 5: Our OSB and iGaming share increased substantially YoY in Q4
Our OSB and iGaming share increased substantially YoY in Q4 Share Percentage(1) OSB iGaming 40% 28% 36% 35% 25% 32% 30% 28% Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Handle GGR (Gross Gaming Revenue) Net Gaming Revenue(2) GGR (Gross Gaming Revenue) Sources: State Gaming Reports
Slide 6: Raising FY 2024 guidance midpoint by $125M for revenue and $60M for Adj. EBITDA
Raising FY 2024 guidance midpoint by $125M for revenue and $60M for Adj. EBITDA(1) Updated FY 2024 Guidance vs. Prior FY 2024 Guidance $ Millions Stronger Customer Higher OSB Hold FY 2024 Guidance Acquisition, Retention due to Structural FY 2024 Guidance Provided 11/2/2023 and Engagement Improvement
Slide 7: We expect ~$1.1B of incremental revenue and ~$600M of incremental Adj. EBITDA in FY 2024
We expect ~$1.1B of incremental revenue and ~$600M of incremental Adj. EBITDA(1) on a YoY basis in FY 2024 Expected(2) DraftKings Revenue and Adj. EBITDA Assuming Zero Additional OSB and/or iGaming States $4,775 +$1,110 Millions of Dollars $3,665 $460 +$611 ($151) FY 2023 Revenue FY 2023 Adj. EBITDA
Slide 8: Jackpocket Acquisition
Wrart KINGS JACKPOCKET ACQUISITION
Slide 9: Transaction rationale
Transaction rationale 1 The U.S. lottery industry is massive with $100B+ in annual ticket sales and is projected to grow at a 5% CAGR through FY 2028(1) 2 Jackpocket is the #1 U.S. lottery app(2) and is expected to grow revenue 70%+ YoY in FY 2024E, ~15x faster than the broader U.S. lottery industry
Slide 10: The U.S. lottery industry is massive with $100B+ in annual ticket sales
The U.S. lottery industry is massive with $100B+ in annual ticket sales and is expected to grow ~5% YoY(1) U.S. Lottery Sales $138 ◼ 45 states have lotteries, representing 96% of the U.S. population ◼ ~50% of U.S. adults play lotteries annually(2) ◼ Typically, the revenue take rate for +5% CAGR lott
Slide 11: Jackpocket is the leading U.S. lottery app
Jackpocket is the leading(1) U.S. lottery app Jackpocket Overview Drivers of Differentiation Results Digital offering with a seamless customer $78M revenue in FY 2023(2) with a gross experience margin similar to DFS Automated back-end operations within a Operates in states representing 35% of comple
Slide 12: Jackpocket's revenue is expected to grow 70%+ YoY in FY 2024E
Jackpocket’s revenue is expected to grow 70%+ YoY in FY 2024E, ~15x faster than the U.S. lottery industry Jackpocket Revenue $135 Revenue Growth Drivers: ◼ Increasing adoption from existing lottery customers ◼ Attracting new customers to lottery with a digital experience ◼ Increasing customer moneti
Slide 13: Overlapping customers have 50%+ higher LTV
Cross-selling product offerings drives higher average customer LTV(1) Opportunity to Increase LTV ◼ Diligence revealed significant customer overlap between Jackpocket and DraftKings, implying a substantial cross-sell opportunity between product offerings OSB Overlapping customers(2) have 50%+ higher
Slide 14: Jackpocket's low CAC will drive more efficient marketing for DraftKings
Jackpocket’s low CAC(1) will drive more efficient marketing for DraftKings Opportunity to Lower CAC ◼ Jackpocket acquired ~660k new customers in FY 2023, at a CAC ~80% lower than DraftKings’ CAC ◼ Jackpocket’s customer database is 6.0M and continuing to grow ~80% More Efficient DraftKings FY 2023 CA
Slide 15: We expect the acquisition of Jackpocket to add Adj. EBITDA in FY 2026 and FY 2028
We expect the acquisition of Jackpocket to add Adj. EBITDA(1) of $60M to $100M in FY 2026 and $100M to $150M in FY 2028 Expected Incremental Revenue and Adj. EBITDA due to Jackpocket Acquisition in Existing OSB and iGaming States Alone(2) The legalization of new OSB and iGaming states would drive ad
Slide 16: Appendix
APPENDIX | 16
Slide 17: The number of unique customers on our platform is rising
The number of unique customers on our platform is rising Unique Customers in the Prior Twelve Months 7.1 6.6 6.2 6.0 5.2 4.9 4.4 4.5 4.0 3.8 Millions 3.4 3.2 2.6 2.4 1.9 1.9 1.9 1.9 1.9 1.7 1.7 1.7 1.7 1.8 1.8 1.4 0.9 0.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes Adjusted EBITDA, Adjusted EBITDA Flow-through Percentage, and Free Cash Flow, which are non-GAAP financial measures that DraftKings uses to supplement its results presented in accordance with GAAP. The Company believes Adjusted EBITDA, Adjusted
Slide 19: Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses GAAP to Non-GAAP Operating Expense Reconciliation $ Millions 31-Dec-23 30-Sep-23 30-Jun-23 31-Mar-23 31-Dec-22 30-Sep-22 30-Jun-22 31-Mar-22 GAAP Operating Expenses Cost of Revenue $717 $543 $510 $522 $485 $373 $313 $313 Sales
Slide 20: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Net Income (Loss) to Non-GAAP Adjusted EBITDA Reconciliation $ Thousands Three months ended December 31, Year ended December 31, 2023 2022 2023 2022 Revenue $ 1,230,857 $ 855,133 $ 3,665,393 $ 2,240,461 Cost of revenue 716,658 485,435 2,292,175
Slide 21: Non-GAAP Adjusted Earnings (Loss) Per Share Reconciliation
Non-GAAP Adjusted Earnings (Loss) Per Share Reconciliation Adjusted Earnings (Loss) Per Share Reconciliation: Three Months Ended December 31, 2023 Dollars $0.29 $0.06 $0.08 $0.24 ($0.10) (1) (2) GAAP Reported EPS Stock Based Compensation Other Non-GAAP Adj. Amort. of acq. intangibles Adjusted EPS(3)
Slide 22: DraftKings Share Count Detail
DraftKings Share Count Detail Share Count as of December 31, 2023 Thousands Common Shares Outstanding (31-December-23) 472,697 Vested Stock Options @ TSM(1) 18,718 Memo: Vested Stock Options 21,708 Diluted Shares Outstanding (With Vested Stock Options @ TSM) 491,415 DEAC Private Placement Warrants(2
Slide 23: DraftKings KPI Comparison
DraftKings KPI Comparison Key Performance Indicators Millions; Dollars ◼ Monthly Unique Payers (“MUPs”) Three months ended December 31, — We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, o