Draftkings Inc. · NASDAQ:DKNG
Draftkings — Investor Day (March 2021)
45 slides from Draftkings's investor day presentation, Mar 9, 2021
Slide 1: DraftKings Investor Day March 2021
| 1 DRAFTKINGS INVESTOR DAY MARCH 2021
Slide 2: Legal disclaimer
| 2 Legal disclaimer No Offer or Solicitation This presentation does not constitute a solicitation of a proxy, consent or authorization with respect to any securities of DraftKings Inc . (“DraftKings”, “the Company”, “we” or “us”) . This presentation also does not constitute an offer to sell or the
Slide 3: Legal disclaimer (continued)
| 3 Legal disclaimer (continued) Forward - Looking Statements and Non - GAAP Financial Measures This presentation, and the accompanying oral presentation, contain forward - looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934 , as amended, and the Private Secu
Slide 4: Executive Summary
ae RAFT “KINGS EXECUTIVE SUMMARY
Slide 5: Investor Day executive summary
| 5 Investor Day executive summary 2020 actual results suggest a $67B+ combined online sports betting (“OSB”) and iGaming North American TAM; legalization trends continue to be positive Market share for OSB and iGaming is at run rate of 30% and 19%, respectively, as evidenced by Q4 2020; DraftKings
Slide 6: TAM and Legalization
ae RAFT “KINGS TAM AND LEGALIZATION
Slide 7: Estimated U.S. Online Sports Betting Gross Revenue
| 7 $23 $24 $24 $36 $29 $22 UK AU U.S. Population Method GDP Method Estimated U.S. Online Sports Betting Gross Revenue ($ in billions) Our latest estimate of the U.S. OSB market is at least $22B at 100% legalization Source: NJ Department of Gaming Enforcement; H2 Gambling Capital Global All Product
Slide 8: NJ's first football season performed near the mid point of all OSB states
| 8 NJ’s first football season performed near the mid point of all OSB states, with more recently launched states outperforming NJ • We benchmarked Gross Revenue per Adult for the first consecutive September through December period for ten states • Used September to December to control for seasonali
Slide 9: iGaming is tracking to be at least a $40B market in the U.S.
| 9 iGaming is tracking to be at least a $40B market in the U.S. at 100% legalization • NJ iGaming was nearly $1B industry in 2020; growth has accelerated since the introduction of OSB in August 2018 • Based on an extrapolation of 2020 NJ iGaming market, the U.S. opportunity is $37B in Gross Revenue
Slide 10: OSB is legal in states representing 27% of the U.S. population; iGaming at 11%
| 10 Source: U.S. Census Bureau Note: States within each category sorted by launch date where applicable. Live DKNG states sorted by DKNG launch date. Washin gto n, DC is considered a state for the purposes of this page. (1) Indicates states that have legalized sports betting in some form. (2) Indic
Slide 11: Canadian OSB and iGaming TAM of $5B to $8B
| 11 Canadian OSB and iGaming TAM of $5B to $8B is a meaningful upside opportunity Estimated Canadian Online Sports Betting and iGaming Gross Revenue ($ in billions) • There was significant legislative momentum in Canada on both the federal and provincial level in 2020 • Legislation has been introdu
Slide 12: DraftKings could achieve $5.0-$7.3B North American gross revenue at maturity
| 12 DraftKings could achieve $5.0 - $7.3B North American OSB and iGaming gross revenue at maturity Source: NJ Department of Gaming Enforcement; H2 Gambling Capital Global All Product Summary Report, June 2019; U.S. Census Bu rea u; U.K. Office for National Statistics; U.S. Bureau of Economic Analys
Slide 13: Market Share
ae RAFT “KINGS MARKET SHARE
Slide 14: Number of Live States by Operator
| 14 Number of Live States by Operator Only three OSB operators in 10+ states; DraftKings live in more states than any operator Source: DraftKings Internal Analysis Note: Does not include 21 operators who are only live in 1 state. (1) DraftKings is currently live in NJ, WV, IN, OR, PA, NH, IA, CO, I
Slide 15: Keys to our unique and sustainable differentiation
| 15 9 keys to our unique and sustainable differentiation Preferred real money gaming brand among U.S. consumers ~5M paid users, 9+ years of data creates meaningful head start for acquisition Tech driven platform drives optimization based on player specific LTV Outpacing competition with mobile prod
Slide 16: We are a market leader in both OSB and iGaming
| 16 Nationwide OSB Market Share (1) – Q4 2020 • 30% gross revenue market share in states where we were live with OSB during Q4 2020 • 19% gross revenue market share in states where we were live with iGaming during Q4 2020 Nationwide iGaming Market Share (2) – Q4 2020 We are a market leader in both
Slide 17: Marketing and Brand
ae RAFT “KINGS MARKETING AND BRAND
Slide 18: DraftKings is the most recognized and preferred app across DFS, OSB, and iGaming
| 18 11% 31% 39% 53% 67% 3% 12% 12% 22% 38% 1% 8% 10% 24% 34% CBS ESPN Yahoo! FanDuel DraftKings Top of Mind Preferred Unaided Awareness DraftKings is the most recognized and preferred app across DFS, OSB, and iGaming Source: Q4 2020 Quarterly Brand Tracker Commissioned by DraftKings, fielded by Pro
Slide 19: Key relationships across sports and entertainment
| 19 DraftKings has established key relationships across the sports and entertainment space Select League Deals Select Teams and Venues Deals Select Media and Other Deals
Slide 20: Sophisticated data science drives marketing decisions
| 20 Sophisticated data science drives marketing decisions Source: DraftKings internal data Note: “Payer” is any user who has successfully placed a paid sports bet or casino wager on DraftKings’ Sportsbook App or ente red a paid contest on DraftKings’ Daily Fantasy Sports App. Social Direct Mail Pro
Slide 21: Optimization of marketing promotions and in-game content integrations
| 21 Optimization of marketing promotions and in - game content integrations are continuing to drive and improve customer acquisition and retention
Slide 22: Product & Technology
ae RAFT “KINGS PRODUCT & TECHNOLOGY
Slide 23: Suite of #1 rated apps with broad differentiated offerings
| 23 We have built a suite of #1 rated apps with broad differentiated offerings and unparalleled user experience Source: DraftKings internal data • Launched 19 new sports and game types in 2020, driving $120M+ in Entry Fees • Revenue from in - game contests grew 150% YoY and 170% for the Super Bowl
Slide 24: The 4 Cs of DraftKings product strategy
| 24 Our major roadmap investments in 2021 and beyond will be driven by the 4 Cs of DraftKings product strategy C Control DraftKings will control its own destiny across every consumer product it operates by owning and operating all of its own core technology C Content DraftKings will offer the broad
Slide 25: Games connected by a shared proprietary platform
| 25 Our games are all connected by a shared proprietary platform that creates a seamless, data science enriched experience across all our products and jurisdictions Name: Paul Balance: $20 Location: New Jersey Balance : $20 Recommended Contest: UFC $100K ($3 Entry) SB Conversion Offer: McGregor 1 s
Slide 26: Vertically integrated iGaming product
| 26 Our vertically integrated iGaming product is differentiated and driving outsized results • $14.2B (1) total wagered since launch, with more than half on DraftKings homegrown games (2) • 26 DraftKings games built in 2019 and 2020, with 20+ more planned to launch in 2021 • Cross - Sell is a key d
Slide 27: Migration to in-house bet engine on schedule
| 27 Migration to in - house bet engine on schedule; we will fully control our OSB product upon migration • U.S. Sports Focus: More pre - match lines, live player props, and unique betting markets with a focus on U.S. sports fan • Betting Control: More refined control at the market and user level fo
Slide 28: Unit Economics
ae RAFT “KINGS UNIT ECONOMICS
Slide 29: Unit economics: what we have learned this year
| 29 Unit economics: what we have learned this year NJ achieved positive contribution profit in only its second full year, reinforcing our conviction that the average state will be contribution profit positive two to three years after launch LTV CAC • Consistently cross sell 60%+ of active DFS playe
Slide 30: Promo rate in a state stabilizes over time
| 30 Year 1 Year 2 Year 3 Year 4 Year 5 Existing New Promo Rate Promo rate in a state stabilizes over time as customer mix shifts from mostly new to mostly existing Note: Bars are not drawn to scale. (1) Defined as customers who have been playing OSB or iGaming for more than one year. (2) Defined as
Slide 31: Gross margins improving across states
| 31 Gross margins improving across states due to scale and vertical integration Note: Cost buckets represent expected Year 5 average across the 10 multi - operator states in which we are currently live. (1) We are currently live in 10 multi - operator OSB states and 4 multi - operator iGaming state
Slide 32: >80% customer retention and >100% revenue retention
| 32 >80% customer retention and >100% year over year revenue retention • Have 40 quarterly cohorts across 9 states (3) since launch of OSB in Q3 2018 • 10 of 40 cohorts have four or more consecutive full quarters of OSB and/or iGaming retention data • Eight of the ten cohorts have between four and
Slide 33: Superior cross selling capabilities
| 33 65% 64% 63% 50% 57% 69% 59% NJ WV IN PA NH CO IL Superior cross selling capabilities set the foundation for a strong state launch • We have ~5M unique paid user DFS database (+20% vs. prior year) • Our “single account” platform creates a seamless user experience across offerings • As evidenced
Slide 34: Significant CAC efficiencies as we reach national scale
| 34 We expect to achieve significant CAC efficiencies as we reach national scale (1) eCPM calculated as average CPM divided by marketing efficiency. Marketing spend is still relatively inefficient; less than 3 years since the repeal of the PASPA Opportunity to realize regional benefits from overlap
Slide 35: Gross Profit Payback – One and Two Year Cohorts
| 35 Gross Profit Payback – One and Two Year Cohorts (N=10) (1) Early cohorts have paid back 70% on a gross profit basis in one year Note: Bars are not drawn to scale. Q1 indicates first full quarter following a cohort’s acquisition quarter and does not nece ssa rily align to the first quarter of a
Slide 36: Gross Profit Payback – Two Year Cohorts
| 36 Gross Profit Payback – Two Year Cohorts (N=2) (1) Two Year Cohorts have easily paid back on a gross profit basis in two years Note: Bars are not drawn to scale. Q1 indicates first full quarter following a cohort’s acquisition quarter and does not nece ssa rily align to the first quarter of a ca
Slide 37: NGR and Contribution Profit – New Jersey
| 37 ~$210 ~$65 Net Revenue Contribution Profit Units turn contribution profit positive in Year 2 or Year 3 as cohorts stack on top of each other Note: Does not include DFS or retail businesses. Contribution profit reflects gross profit less external marketing. (1) Slight discrepancies in 2019 contr
Slide 38: Enterprise EBITDA
ae RAFT “KINGS ENTERPRISE EBITDA
Slide 39: Increasing long-term Adjusted EBITDA estimate to $1.7B
| 39 Increasing long - term Adjusted EBITDA estimate to $1.7B • Assumes 65% of U.S. population has live OSB and 30% of U.S. population has live iGaming, and then rolls forward 5 years to “m atu rity” • Assumes DKNG has 25% and 17.5% market share in U.S. OSB and U.S. iGaming, respectively • Assumes 6
Slide 40: Capital Structure
ae RAFT “KINGS CAPITAL STRUCTURE
Slide 41: Minimal dilution expected in 2021
| 41 Minimal dilution expected in 2021 Note: Table does not include Class B shares, which have no economic or participating rights. Excludes any potential dilution fro m performance - based options and RSUs. (1) Based on Treasury Stock Method (“TSM”); assumes DKNG share price as of 4 - March - 2021
Slide 42: Appendix
AFT KINGS APPENDIX
Slide 43: Methodology for cohort customer retention and revenue retention
| 43 Detailed overview of methodology for cohort customer retention and revenue retention • Year 1 is defined as the first 4 full quarters following a cohort’s acquisition quarter. For example, Year 1 is Q1 2019 to Q4 2019 f or a customer acquired in Q4 2018. • Year 2 is defined as the 4 full quarte
Slide 44: Question and Answer Session
| 44 QUESTION AND ANSWER SESSION
Slide 45: Thank You
rok Zs THANK YOU