DraftKings Inc.

Hello everyone, thank you for joining us and welcome to the DraftKings second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Matt Rapoport, Vice President of Finance. Please go ahead.

Good morning, everyone, and thank you for joining us today. Certain statements we make 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 materially from our historical results or from our forecast. 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. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release slide presentation and business update. 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 Robins, Chief Executive Officer and Co-Founder of DraftKings who will share some opening remarks and an update on our business. Following Jason's remarks, our Chief Financial Officer, Alan Ellingson, will provide a review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins.

Thank you, Matt. Good morning, everyone, and thank you all for joining. We had a fantastic second quarter. Our core business continues to grow and is generating significant free cash flow, and our newly launched predictions offering is growing faster than we anticipated. We are executing on the super app strategy that we laid out in our investor day in March, and we are seeing massive new customer acquisition in states without regulated sports We generated $115 million of adjusted EBITDA in the quarter, which would have been even better if not for customer-friendly sport outcomes and our higher-than-expected customer acquisition. Strong retention and engagement of our newly acquired customers, along with sportsbook-friendly World Cup outcomes in July, have been a positive tailwind so far in the third quarter. Our core business is in an even stronger place as a result and is on track to generate approximately $1 billion for adjusted EBITDA in 2026. Our confidence in our ability to win in predictions has only grown. After including our expected investment predictions, we are maintaining our fiscal year 2026 revenue guidance range of $6.5 billion to $6.9 billion and adjusted EBITDA guidance range of $700 million to $900 million. Let me start with company-wide metrics. Customer acquisition, retention, and engagement all exceeded our expectations in the second quarter. Customer acquisition grew nearly 75% year-over-year as interest in the NBA Finals and the World Cup surged. Notably, in the second quarter, we achieved our best enterprise-wide customer acquisition cost since the first quarter of 2025. We acquired roughly 30% more customers in this quarter than we had planned, and we leaned in, investing about 10% more in customer acquisition spend as we saw the data and captured that incremental demand. Even with that investment, Underlying customer acquisition costs came in approximately 25% better than we anticipated. We view this as a pull forward of acquisition and optimized use of investment. In the second quarter, monthly unique payers growth accelerated 9% year over year and more than 6% when excluding World Cup only customers. Sports consumer volume, which includes sportsbook handles plus predictions consumer volume, increased 15% year over year in the second quarter. It is clear that our super app rollout is already paying dividends. While we have all seen the amazing social content showing global World Cup fans traveling to North America for the tournament, it is important to note that 100% of our new customers are North America-based, and we expect them to generate gross profit for years to come. Spanish language availability within our app also proved popular and helped us reach new customer segments. We will upgrade our Super app again in August and expect to have the best offering across our main verticals, including predictions this NFL season. We are on offense. The core business is firing. Sportsbook handle increased 11% year-over-year in the second quarter, while parlay handlements continue to rise. For the third consecutive quarter, our handle share across sportsbook states improved year-over-year. When normalizing for sport outcomes and customer acquisition, revenue increased 10% year-over-year in the second quarter. On a trailing 12-month basis, net revenue per unique customer grew 14% year-over-year in the first half of 2026. A view that smooths the timing of customer acquisition and reflects the durable growth in revenue we generate from each customer. Our data is also confirming that there is no discernible impact from prediction markets on our sportsbook revenue. We continue to see only about 1% customer overlap between our sportsbook and the largest prediction market operator in sportsbook states, which tells us these platforms are drawing a fundamentally different and largely professional audience. Based on internal analysis, We estimate that 80 to 90% of prediction market consumer volume in sportsbook states comes from professional betting syndicates and institutional traders, which is volume that mostly would not have been on sportsbooks to begin with. This continues to strengthen our confidence that predictions is a large and incremental opportunity. Lastly, our strong core performance was matched on the cost side. We operated with discipline in the quarter and cost management will continue to be a major focus for the company going forward. We have confidence in the underlying earnings power and free cash flow generation of the business. Now, diving deeper into predictions. Let me start with the customer. DraftKings Sports is now live nationwide, housing all of our customer offerings under a single app umbrella, which is proving to be a significant accelerator to our business. Over 600,000 customers have engaged with our predictions offering year-to-date. The pace of adoption has far surpassed our expectations, and we are acquiring these customers at attractive customer acquisition costs, well below what we invest to acquire Sportsbook customers. Early data on volume per customer and month-over-month retention is similar to a sportsbook customer, which is what we expected. More than half of our predictions customers have engaged with combos, and combos are already approaching 20% of predictions consumer volume. As a result of strong acquisition, retention, and engagement, we are seeing rapid volume growth. From April to July, our annualized total volume traded grew nearly 5x, from $2.3 billion to $11 billion. This is only the beginning, and we expect to build on this momentum as we improve our offerings. That engagement starts with our offering, which we expect to be best in class this NFL season. We are building on more than a decade of experience across Sportsbook, Fantasy, and iGaming, and we know what sports customers want. Our Sportsbook and iGaming apps are top-rated in the industry by third parties for a reason, and we will bring that same excellence to predictions with intuitive customer experience, content packaging, and promotional mechanics that already resonate with sports fans. We significantly improved our offering in the second quarter as we executed on the roadmap we laid out at Investor Day. We expanded our sports content offering from April to July by over 25 acts, and now offer over 30 markets per MLB, NBA, and WNBA game, including player markets and quarter, period, and inning markets. And we broadened our coverage across multiple soccer leagues. This step was bolstered by the launch of combos, which have quickly become one of the most popular ways for customers to engage with our offering. In June, we launched our in-house exchange, DKX, and in July, we attained approval as a Futures Commission merchant from the National Futures Association. Both steps position us to rapidly expand content depth, improve the end-to-end customer experience, and capture more of the unit economics and lifetime value of our customers. We are also seeing meaningful traction on the market-making side as we leverage our industry-leading sportsbook modeling and risk management capabilities. We are live on three exchanges and consistently making markets on both singles and combos at a profit. While still early, we are seeing double-digit share in the markets where we participate. Now that DKX is live and our market maker is integrated, the opportunity is even more compelling. As DKX grows, it will create more opportunities for our market maker, while deeper and more diverse liquidity will make our own offering more attractive to customers. This is a core differentiator that will provide a meaningful lifetime value advantage versus our competitors. As always, we are focused on the economics. As we continue to improve our platform and monetization over the next several years, we believe that we can generate lifetime values on predictions customers similar to those on our sportsbook customers. Our vertical integration is what makes this possible. We own three key layers of the prediction stack in-house. The brokerage, the exchange, and the market maker. This integration lets us capture economics across the entire value chain. We are the only operator that has all three up and running today, which gives us a structural lifetime value advantage over our competitors. While the revenue per customer may be lower than that of our sportsbook offering, the high margin profile of the business supports a similar level of gross profit per customer over time. We have driven meaningful lifetime value improvement in Sportsbook for nearly a decade through our top-rated offerings, and we are confident we can win that same playbook and predictions. To wrap up predictions, the similarity of predictions customer metrics to Sportsbook customer metrics, our advantage lifetime value position, and our playbook to develop and innovate on a leading predictions offering all underpin our confidence that we can win in the space. We are already seeing encouraging results, and our share rose as the second quarter progressed. We are excited to update you over the next quarter as this momentum continues. NFL Kickoff is next. We continue to enhance the Super App ahead of football season, which will deliver a sports experience that no other operator can match. A top-rated sportsbook offering and a fully vertically integrated predictions offering. We enter the season from a position of strength with a strong floor, access to nationwide customers, and a playbook for how to win in sports that leverages our in-house marketing, product, and technology infrastructure. At our investor day, we laid out a path to a $55 billion to $80 billion industry gross revenue opportunity by 2030 and at least a 30% long-term adjusted EBITDA margin. And the progress we made in the second quarter made that path more tangible. We are moving with urgency and discipline. We are not building to participate. We are building to lead and win. With that, I will turn it over to our Chief Financial Officer, Alan Ellingson.