News

DraftKings announces gaming surcharge plan in high-tax states during Q2 earnings call

2?August?2024


(PRESS RELEASE) -- DraftKings today announced results for the second quarter of 2024 and that its Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of its Class A common stock.

This press release corrects the impact of the gain on remeasurement of warrant liabilities under Accounting Standards Codification 260 on U.S. GAAP diluted earnings per share for the quarter ended June 30, 2024. Diluted earnings per share was $0.10 (versus $0.12 reported in the original press release) for the quarter ended June 30, 2024. Adjusted Earnings Per Share of $0.22 for the quarter ended June 30, 2024 remains unchanged. Please refer to the end of this document for a reconciliation of Adjusted Earnings Per Share to its most directly comparable U.S. GAAP financial measure, diluted earnings per share.

Second Quarter 2024 Highlights
For the three months ended June 30, 2024, DraftKings reported revenue of $1,104 million, an increase of $230 million, or 26%, compared to $875 million during the same period in 2023. The increase in the Company’s second quarter 2024 revenue was driven primarily by continued healthy customer engagement, efficient acquisition of new customers, the expansion of the Company’s Sportsbook product offering into new jurisdictions, higher structural sportsbook hold percentage, and the impact of the acquisition of Jackpocket, which closed on May 22, 2024.

“We very efficiently acquired many more new customers than we expected and saw continued healthy existing customer engagement in the second quarter,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.?? “We will continue to capitalize on the healthy customer acquisition environment for the rest of 2024 which positions us to achieve $900 million to $1.0 billion of Adjusted EBITDA in 2025. Additionally, we plan to implement a gaming tax surcharge in high tax states that have multiple mobile sports betting operators on January 1, 2025 which could drive Adjusted EBITDA upside on an annual basis.”

“We are very excited about DraftKings’ Free Cash Flow trajectory,” said Alan Ellingson, DraftKings’ Chief Financial Officer. “In light of that, we are pleased to announce a $1.0 billion inaugural share repurchase authorization, which reflects our confidence in the Company’s attractive long-term outlook and healthy balance sheet.”

Monthly Unique Payers (“MUPs”) increased to 3.1 million average monthly unique paying customers in the second quarter of 2024, representing an increase of 50% compared to the second quarter of 2023. This increase reflects strong unique player acquisition and retention across DraftKings’ Sportsbook and iGaming products, the expansion of its Sportsbook product into new jurisdictions and the impact of the acquisition of Jackpocket. Excluding the impact of the acquisition of Jackpocket, MUPs would have increased by approximately 34% compared to the second quarter of 2023.

Average Revenue per MUP was $117 in the second quarter of 2024, representing a 15% decrease compared to the same period in 2023. The decrease was primarily due to lower ARPMUP for Jackpocket customers when compared to customers of DraftKings’ existing product offerings prior to the acquisition, customer friendly sport outcomes, and an increase in new customer promotional investment for the Company’s Sportsbook and iGaming product offerings as a result of strong customer acquisition.

Fiscal Year 2024 and 2025 Guidance
DraftKings is raising its fiscal year 2024 revenue guidance to a range of $5.05 billion to $5.25 billion from the range of $4.80 billion to $5.00 billion, which the Company previously announced on May 2, 2024. The Company’s updated 2024 revenue guidance range equates to year-over-year growth of 38% to 43%.

DraftKings is revising its fiscal year 2024 Adjusted EBITDA guidance. The Company now expects fiscal year 2024 Adjusted EBITDA of between $340 million and $420 million compared to its prior fiscal year 2024 Adjusted EBITDA guidance of between $460 million and $540 million, which the Company previously announced on May 2, 2024.

DraftKings continues to expect fiscal year 2025 Adjusted EBITDA to be in the range of $900 million to $1.0 billion, consistent with the guidance range provided at the Company’s Investor Day on November 14, 2023. The Company’s fiscal year 2025 Adjusted EBITDA guidance excludes the impact of the planned gaming tax surcharge.

The Company’s guidance for fiscal years 2024 and 2025 includes all of its existing jurisdictions as well as mobile sports betting in Washington, D.C.

On July 30, 2024, DraftKings’ Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of the Company’s Class A common stock. DraftKings may make repurchases of its Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws, subject to market conditions and other factors. The Company’s repurchase program does not require it to acquire any specific number or amount of Class A common stock and may be terminated at any time.
Mobile Sports Betting and iGaming Footprint

Following the launch of its Sportsbook product in Washington, D.C. on July 25, 2024, DraftKings is live with mobile sports betting in 25 states and Washington, D.C. which collectively represent approximately 49% of the U.S. population.

DraftKings is also live with iGaming in 5 states, representing approximately 11% of the U.S. population.

DraftKings is live with its Sportsbook and iGaming products in Ontario, Canada, which represents approximately 40% of Canada’s population.

DraftKings expects to launch its Sportsbook product in Puerto Rico pending market access, licensure, regulatory approvals, and contractual approvals where applicable.

To date in 2024, 10 jurisdictions that collectively represent approximately 12% of the U.S. population have either introduced legislation to legalize mobile sports betting or introduced a bill that may result in a mobile sports betting referendum during an upcoming election. In addition, 6 jurisdictions that collectively represent approximately 13% of the U.S. population have either introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.