Slide 1: Analyst Day Presentation March 2020
Analyst Day Presentation March 2020
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation is for informational purposes and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of DraftKings Inc. (“DraftKings”, “DK” or “the Company”), Diamond Eagle Acquis
Slide 3: Legal Disclaimer (Continued)
Legal Disclaimer (Continued) Use of Non-GAAP Financial Matters This presentation includes non-GAAP financial measures, including EBITDA and Adjusted EBITDA. DEAC, DraftKings and SBT believe that these non-GAAP measures are useful to investors for two principal reasons. First, they believe these meas
Slide 4: Introduction & Today's Agenda
Introduction & Today’s Agenda
Slide 5: How We've Evolved: Eight Years of Growth
How We’ve Evolved: Eight Years of Growth 12MM 10.7MM 9.3MM 7.5MM 6.4MM REGISTERED ACCOUNTS 1.5MM 300k 2013 100k 2012 2014 2015 2016 2017 2018 2019 2020 DraftKings begins its operations DK crowns first million dollar winner 21st Century Fox becomes the first major media company to invest in DraftKing
Slide 6: Where We Are Today: DraftKings and SBTech On a Combined Basis
Where We Are Today: DraftKings and SBTech On a Combined Basis: OFFICES EMPLOYEES | 6 Notes: (1) >430MM in combined pro forma unaudited revenue for year 2019 *Upon closing of business combination 2.1K+ 26 COUNTRIES OPERATIONAL $430M+ IN TOTAL REVENUE (1) 12 WORLDWIDE #1 DAILY FANTASY SPORTS PLATFORM
Slide 7: Today's Agenda Will Dive Into The Following Areas
Today’s Agenda Will Dive Into The Following Areas Global Sportsbook TAM(1) Expected U.S. OSB and iGaming TAM(2) iGaming Opportunity with live New DK OSB(4) Entertainment and Leader in the U.S. Market Rated DFS and Sportsbook Platform(3) U.S. and International Licenses a Global, Vertically-Integrated
Slide 8: The Opportunity
The Opportunity
Slide 9: Massive Global Market Opportunity
Massive Global Market Opportunity .. - --.... -...,. •-.... "'='""'"' ... '-" - ---" ,:..... • • ---- ...c:•-• • • - - -............ -... ... --..,_ ---- .l>. GLOBAL MOVEMENT TOWARDS REGULATION ,---Bingo 3% Casino 35% Market Size: $456 billion Gaming Machines I Slots 20% Regulated •Regulatory Moment
Slide 10: The U.S. Online Sports Betting Market is Estimated to be $18-23 Billion at Maturity
The U.S.Online Sports Betting Market is Estimated to be 518-23 Billion at Maturity .. - --.... -...,. • - .... "'='""'"' ... '-" - ---" ,:.....• • ---- ...c:•-• • • ----........ .... -... ... --..,_ ---- .l>. ESTIMATED U.S. ONLINE SPORTS BETTING MARKET AT MATURITY (S irbl illions.) A\ Average Analys
Slide 11: Sports Betting is Legalized in States Representing Just Over One-third of the U.S. Population
Sports Betting is Legalized in States Representing Just Over One-third of the U.S. Population Following the repeal of the Professional and Amateur Sports Protection Act (PASPA) in May 2018, 21 states, representing approximately 36 percent of the U.S. population, have legalized sports betting in some
Slide 12: States Have Active Mobile Legislation
19 States Have Active Mobile Legislation Mobile Authorized Retail Only Authorized Active Mobile Legislation Being Considered DK Currently Live with Mobile (1) DraftKings live in Oregon via SBTech (2) New Mexico is live with retail only by provision of tribal compacts | 12 Source: DraftKings internal
Slide 13: U.S. iGaming is the Next Wave
U.S. iGAMING is the Next Wave ● iGaming is nearly a half billion dollar industry in New Jersey; growth has accelerated since the introduction of OSB in August 2018 ● Based on an extrapolation of NJ, we estimate the U.S. iGaming opportunity to be approximately $21 billion in GGR Source: New Jersey Di
Slide 14: The U.S. OSB and iGaming Opportunity: ~$40BN TAM
The U.S. OSB and iGAMING Opportunity: ~$40BN TAM DRAFTKINGS’ ONLINE SPORTS BETTING TRAJECTORY $18BN Implied Total U.S. Market(1) 65% of U.S. Population with Legalized OSB(2) 20-30% DraftKings’ OSB Market Share = DRAFTKINGS’ iGAMING TRAJECTORY $21BN Implied Total U.S. Market(3) 30% of U.S. Population
Slide 15: Competitive Positioning and Differentiation
Competitive Positioning Differentiation and 2/17/20
Slide 16: Unique & Sustainable Differentiation Across Our Entire Ecosystem
Unique & Sustainable Differentiation Across Our Entire Ecosystem , .... . · - -·,]--..., . - - - - - - ... ._ ·-- -· ··._ -....... ...--.... - ....:=..-----.J>,. I POWERFUL IN HOUSE TECHNOLOGY PLATFORM PROPRIETARY DATA SCIENCE & ANALVTICS iGAMING DAILY FANTASY SPORTS SPORTSBOOK [ COMPLIANCE RESPONSI
Slide 17: Keys to Our Unique & Sustainable Differentiation
9 Keys to Our Unique & Sustainable Differentiation SBTech platform, after Business Combination | 17 1 Trusted Brand Preferred real-money gaming brand among US consumers 2 Daily Fantasy User Database 4M+ users, 8+ years of data creates huge head start for acquisition 3 Our Marketing Machine Tech-driv
Slide 18: The DraftKings Marketing Machine
The DraftKings Marketing Machine
Slide 19: Core Pillars Driving the DraftKings Marketing Machine
Core Pillars Driving the DraftKings Marketing Machine The DraftKings Deep understanding & relationships with our target segment Marketing Database & national scale creates sustainable CAC advantage Machine Our Analytics | 19 Our Platform Enables marketing at scale & optimized LTV Drives optimal mark
Slide 20: Strong Top of Mind Brand Awareness & Preference Among Core Audiences
Strong Top of Mind Brand Awareness & Preference Among Core Audiences SPORTSBOOK * ** * ** Q4 2019 Quarterly Brand Tracker Commissioned by DraftKings, fielded by ProdegeMR Sportsbook Tracker: N=354 (Placed a wager on an online sportsbook in the P12M who live in a state where DraftKings Sportsbook is
Slide 21: 4M+ Unique Payer Database — More Than Just a Marketing List
4M+ Unique Payer Database — More Than Just a Marketing List Loyal to the Brand, Primed for Low-Friction Onboarding | 21 Source: Internal DraftKings Analytics as of 2/28/2020. “Payer” is any user who has successfully placed a paid sportsbet or casino wager on DraftKings Sportsbook App or entered a pa
Slide 22: DFS Database Drives Significant CAC Advantage
DFS Database Drives Significant CAC Advantage and Will Continue to be Competitive Advantage New Jersey Unique Paid Users ~30% of NJ payers are from our existing NJ DFS database New states follow similar trend DFS Database advantage exists proportionately in >40 states(2) DFS Database continues to gr
Slide 23: National CAC Efficiencies Realized As We Scale
National CAC Efficiencies Realized As We Scale Average Effective Cost per Thousand (“eCPM”)(1) National Scale matters: ● CAC improves significantly with shift into national advertising ● Single platform allows for ongoing acquisition in advance of OSB legalization ● Operators with greatest populatio
Slide 24: Sophisticated Data Science Drives Marketing Decisions
Sophisticated Data Science Drives Marketing Decisions 8+ Years, 4+ Million Payers Billions of Data Points Data Science drives deep user Insights, enabling intelligent cross-channel marketing Marketing automation delivers the right message, to the right user at the right time Model Driven Approach ma
Slide 25: Case Study: Personalized Push Notification
Case Study: Personalized Push Notification Sends Right Message to Right User at Right Time PERSONALIZED OFFER TO USER dk-abenton ● Plays Classic PGA contests ● Likes $50K+ top prizes ● Entry Fee range: $5 - $20 dk-BadNBougee ● Plays NFL Limited entry contests ● Likes $75K+ top prizes ● Entry Fee ran
Slide 26: Our Foundation: Product, Technology & Data
Our Foundation: Product, Technology & Data
Slide 27: Core Pillars Driving DraftKings Product, Technology and Data
Core Pillars Driving DraftKings Product, Technology and Data DraftKings Product, Technology, & Data Note: (1) Scale defined as volume of financial transactions & API requests handled in 1 minute at at peak time (see Slide 35) | 27 Speed to Market Flexible back-end enables fast & cheap entry into new
Slide 28: User-Centric Approach Results in App Satisfaction & Strong Engagement
User-Centric Approach Results in App Satisfaction & Strong Engagement FanDuel FanDuel Points Bet William Hill BetAmeric theScore a FOXBet (1) Source: comScore monthly average from 1/2019-1/2020 (2) Data is aggregate of all Draftkings-tagged pages across ComScore. Inclusive of DFS, Sportsbook, iGamin
Slide 29: Scalability, Intelligence & Speed: The Infrastructure Driving our Products
Scalability,Intelligence & Speed: The Infrastructure Driving our Products & Technology .. - --.... -...,. •-.... "'='""'"' .... '-" - ---" ,:..... • •---- ...c:•-• • •----........ .... -... ... --..,_ ---- .l>. The DraftKings you see DAILY FANTASY SPORTS SPORTSBOOK iGAMING SPORTS BETTING PLATFORM 3R
Slide 30: Daily Fantasy Sports: The Early Foundation for Our Speed & Innovation
Daily Fantasy Sports: The Early Foundation for Our Speed & Innovation Launched ~4 years after DFS incumbents, rapidly rose to market leadership Agile technology allowed delivery of huge range of consumer products and prizes: ● ● ● 16 Sports 6 Game Types 133 Millionaires Crowned User-centric approach
Slide 31: Online Sportsbook: First to Market, Dynamic Product Evolution
Online Sportsbook: First to Market, Dynamic Product Evolution Early to market in seven U.S. states. (1) Have paced U.S. online industry with innovative betting products: ● First & only online paid pools & brackets, in-game ‘flash betting’ experience Set to become only vertically integrated sportsboo
Slide 32: Our Combination With SBTech Will Make Us the Only Vertically Integrated Online Sportsbook
Our Combination With SB Tech Will Make Us the Only Vertically Integrated Online Sportsbook in the U.S. Dynamic User Experiences Sports Betting Platform ● ● Native App and Desktop Data driven, personalised experiences Security and Stability Authentic Sports Experience (logos, stats, player and team i
Slide 33: Deep Dive: How the SBTech Platform Will Allow DraftKings Sportsbook to Control its Own Destiny
Deep Dive: How the SB Tech Platform Will Allow DraftKings Sportsbook to Control its Own Destiny Innovative 3rd party integrations Over 30,000 / Month In-Play Events Set Payout & Set Odds By sport, league, and bet market, match status Intelligent Bet Acceptance Engine Dedicated Pricing with over 2,00
Slide 34: iGaming: Product Innovation Drove Rapid Rise in Market Share
iGaming: Product Innovation Drove Rapid Rise to No. 1 in Market Share Launched iGaming offering inside Sportsbook app, increasing speed to market & cross-sell: ● 46% of NJ DK Sportsbook users have placed a casino bet(1) Launched in-house iGaming studio; 50% of total handle now comes from DK Games(2)
Slide 35: Nimble Proprietary Technology Platform Capable of Operating at Large Scale
Nimble Proprietary Technology Platform Capable of Operating at Large Scale Tens of Thousands Financial Transactions in 1 minute at peak time ~1 Million Peak API requests in 1 minute 99.97% Up Time supporting massive | 35 Decoupled and highly scalable Integrated Wallet Across All DK Products Secure c
Slide 36: Single-Wallet Technology Enables Seamless Multi-State, Multi-Product Experience
Single-Wallet Technology Enables Seamless Multi-State, Multi-Product Experience User experiences single wallet no matter where he/she is or what he/she is playing | 36 User moves from state to state and / or from product to product DK creates compliant virtual sub-wallets in background to support th
Slide 37: Flexible Back End Enables Rapid Entry Into New Jurisdictions
Flexible Back End Enables Rapid Entry Into New Jurisdictions Leverage flexible back end built for DFS in 40+ jurisdictions Users with DraftKings only need one account, one wallet and one Sportsbook App to play in any state where we operate Can meet unique state requirements easily with minimal incre
Slide 38: Data Science Creates a Personalized User Interface Within our Products
Data Science Creates a Personalized User Interface Within our Products Our Personalization Engine applies across all elements of our product, from deposit recommendations to sport and bet type | 38
Slide 39: Differentiated Investment in Responsible Gaming & Consumer Data Protection
Differentiated Investment in Responsible Gaming & Consumer Data Protection level 1 certified platform & iGaming, with more being | 39 Secure Payments ● Payment Card Industry (PCI) ● Users know that all transactions can be trusted with us ● Many payment methods available today for Sportsbook added Ga
Slide 40: Unit Economics & Enterprise Profitability
Unit Economics & Enterprise Profitability
Slide 41: Customer LTV Increasing
Customer LTV Increasing NEW JERSEY NET REVENUE BY COHORT(1) Key Takeaways Each cohort has expanded in both years since the introduction of OSB and iGaming In the first full-year with all products live (i.e. 2019), 2012-2017 cohorts experienced a 4.1x increase in revenue relative to 2017 Size of new
Slide 42: Expected New Jersey Contribution Profit Demonstrates Speed to Profitability
Expected New Jersey Contribution Profit Demonstrates Speed to Profitability ($ in millions) ✓ Early outsized promotion and marketing spend is critical for initial user acquisition − Declines as percentage of revenue as user base grows in each state ✓ Improving contribution profit as marketing spend
Slide 43: New Jersey Expected to Achieve 38% Contribution Margin
New Jersey Expected to Achieve 38% Contribution Margin ILLUSTRATIVE NEW JERSEY UNIT ECONOMICS (EXPECTED YEAR 5) (% of Net Revenue) Note: Figures may not foot due to rounding and are displayed as percentage of net revenue. | 43
Slide 44: Illustrative Path to $1 Billion+ in EBITDA
Illustrative Path to S1 Billion+ in EBITDA , .... . · - - ·,]--..., . - - - - - - ... ._ ·-- - ···._ -....... ....--.... - ....:=..-- ---.J>,. ($in billions) $3.7 ... 31 $0.4 As a result of the acquisition of SBT, new DK will: Assumes 65% of population has live OSB and 30% of population has live iGa
Slide 45: Combined Company Projection Model
ibdroot\projects\IBD-NY\dryer2019A\637818_1\03. Presentations\23. Analyst Day\_Analyst Day Presentation\DK Investor Presentation_IP Updates v02.pptx Combined Company Projection Model ($ in millions) $700 2020 Assumptions Online sportsbook live in current "line-of-sight" states, which represent appro
Slide 46: 2019 Quarterly Seasonality
2019 Quarterly Seasonality ProForma CombinedCo 2019 Revenue by Quarter % of Full Year 2019 37% 2019 solid foundation to think about seasonality On margin, expect Q1 to be slightly larger going forward as more OSB-friendly sporting events thus modestly shifting overall quarterly activity into Q1 Q1 2
Slide 47: Proposed Transaction Summary
IBDROOT\PROJECTS\IBD-NY\DRYER2019A\637818_1\03. Presentations\23. Analyst Day\_Analyst Day Presentation\DK Analyst Day Updates (11-Mar-2020).pptx Proposed Transaction Summary Diamond Eagle Acquisition Corp. is a publicly listed special purpose acquisition vehicle with over $400 million in cash DEAC
Slide 48: Components of DraftKings' Standalone P&L
IBDROOT\PROJECTS\IBD-NY\DRYER2019A\637818_1\03. Presentations\23. Analyst Day\_Analyst Day Presentation\DK Analyst Day Updates (10-Mar-2020).pptx Components of DraftKings’ Standalone P&L RESULTS OF OPERATIONS ($ in millions) FY2019 Select Commentary ■ Less: Cost of Revenue (104) Taxes, platform, pay
Slide 49: Thank You
Thank You