DraftKings Inc.

Good day and thank you for standing by. Welcome to DraftKings first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that these conferences are being recorded. I would like to turn the call over to your speaker today, Alan Ellenson, DraftKings Chief Financial Officer. Please proceed.

Good morning, everyone, and thank you for joining us today. Certain statements we made during this call may constitute forward-looking statements that are subject to risks, uncertainties, and other factors, as discussed further in our SEC filings, that could cause our actual results to differ material from our historical results or from our forecasts. We assume no responsibility to update forward-looking statements other than as required by law. During this call, management will also discuss certain non-GAAP financial measures that we believe may be useful in evaluating DraftKings operating performance. These measures should not be considered in isolation or as a substitute for DraftKings financial results prepared in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release and presentation, which can be found on our website and in our quarterly report on Form 10-Q filed with the SEC. Hosting the call today, we have Jason Robbins, co-founder and chief executive officer of DraftKings, who will share some opening remarks and an update on the business. Following Jason's remarks, I will provide a review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robbins.

Good morning, and thank you all for joining. There are five key points that I'd like to focus on during our call today. First, we are achieving strong and efficient customer acquisitions. New OSB and iGaming customers increased nearly 80% year over year, while CAC declined more than 40% year over year in the second quarter, a period with no new state launches. We anticipate the healthy customer acquisition environment to continue through the back half of the year and possibly beyond, which may indicate that the U.S. online gaming opportunity could be even larger than we previously thought. Second, we believe we have a reasonable solution for high-tax states, including Illinois. We plan to implement a gaming tax surcharge in the four states that have multiple sports betting operators and tax rates above 20% starting January 1st, 2025. We believe additional upside potentially exists for adjusted EBITDA in 2025 and beyond from this gaming tax surcharge. Third, the Jackpocket integration is off to a great start. We are on track to hit the multi-year guidance for the transaction that we provided in announcement and expect the deal to generate positive adjusted EBITDA in the fiscal year 2025. Fourth, we are excited about the future and are reiterating our expectation for $900 million to $1 billion of adjusted EBITDA in fiscal year 2025. Finally, we said last quarter that we would provide an update on capital allocations. We are pleased to announce that our board authorized the share repurchase of up to $1 billion of our Class A common stock. This inaugural authorization reflects our conviction in the strong trajectory of our business and our expectation that we will generate significant free cash flow in the coming years. I'd also like to emphasize that all of us at DraftKings are very excited for the start of football season. Our product is in a great position as we are continuing to differentiate ourselves by investing in new features and functionality for sportsbook and iGaming. In Sportsbook, we recently launched in-house player prop wagers for NFL, NBA, MLB, NHL, college football, college basketball, and tennis. We also broadened our progressive parlays to include spread and total wagers. In addition, we plan to integrate a bet-and-watch experience with NFL streaming. In iGaming, the DraftKings and Golden Nugget online gaming apps were ranked number one and number two overall in a recent third-party survey. We are on track to double the number of new games we will release this year compared to last year and recently improved our interface to promote game discoverability. In closing, our business fundamentals are very healthy and we are excited about the second half of 2024 and beyond. With that, I will turn it over to Alan Ellington.