To The Moon

$DraftKings Inc.(DKNG)$

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Q3 Financial Performance

DraftKings reported its Q3 2024 earnings with several key highlights:

• Revenue: The company posted $1.1 billion in revenue, a 39% year-over-year increase.

• Monthly Unique Payers (MUPs): MUPs reached 3.6 million, up 55% from the previous year.

• Adjusted EBITDA: The company reported an adjusted EBITDA loss of $59 million, an improvement from prior periods.

• Guidance: DraftKings revised its full-year 2024 revenue guidance to a range of $4.85 billion to $4.95 billion, down from the initial forecast of $5.05 billion to $5.25 billion. The adjusted EBITDA guidance for 2024 was also revised to $240 million to $280 million.

Despite missing some analyst expectations, DraftKings showed strong growth driven by customer engagement and expansion into new jurisdictions.

Reasons for earnings loss

DraftKings reported an adjusted EBITDA loss of $59 million in Q3 2024. Several factors contributed to this loss:

• Customer-Friendly Sports Results: Early sports results in Q4 were more favorable to customers, impacting revenue.

• Lower Average Revenue per MUP (ARPMUP): The inclusion of Jackpocket's lower-spending customer base led to a 10% decline in ARPMUP.

• Challenging iGaming Comps: The company faced tough comparisons in the iGaming segment.

• Promotional Spending: Increased promotional activities to attract new customers also impacted profitability.

Despite these challenges, DraftKings showed strong growth in revenue and user engagement.

Investment Highlights

These highlights demonstrate DraftKings' strong performance and potential for future growth.

• Strong Revenue Growth: DraftKings reported $1.1 billion in revenue, a 39% year-over-year increase.

• Customer Engagement: Monthly Unique Payers (MUPs) reached 3.6 million, up 55% from the previous year.

• Adjusted EBITDA: The company reported an adjusted EBITDA loss of $59 million, showing improvement from prior periods.

• Guidance Revision: DraftKings revised its full-year 2024 revenue guidance to a range of $4.85 billion to $4.95 billion, down from the initial forecast of $5.05 billion to $5.25 billion.

• Future Outlook: The company introduced its first fiscal year 2025 revenue guidance, with a range of $6.2 billion to $6.6 billion expected.

• Market Expansion: DraftKings is expanding its presence in new territories and launching new products, which is expected to drive future growth.

Risks:

• Regulatory Challenges: The company must navigate varying regulations across different states, which can impact its ability to operate and grow.

• High Competition: The online betting market is highly competitive, with numerous players vying for market share.

• Profitability Concerns: Despite strong revenue growth, DraftKings is not yet profitable, and aggressive spending on marketing and promotions impacts its bottom line.

• Economic Sensitivity: The company's performance can be affected by economic conditions, such as inflation and interest rates.

Rewards:

• Strong Revenue Growth: DraftKings reported a 39% year-over-year increase in revenue for Q3 2024.

• Market Leadership: The company holds a significant share of the online sports betting market in the U.S., positioning it well for future growth.

• Expansion Opportunities: With more states legalizing online betting, DraftKings has opportunities to expand its user base and increase revenue.

• Technological Advancements: The company leverages advanced technology to enhance user experience and optimize operations.

Investment Thesis

• Market Leadership: DraftKings is a leading player in the online sports betting and fantasy sports market, with a significant share in the U.S. market.

• Strategic Partnerships: DraftKings has formed strategic partnerships, such as becoming the official sportsbook of the Ultimate Fighting Championship, which strengthens its market position.

• Financial Performance: Despite reporting an adjusted EBITDA loss, the company has shown improvement and strong growth in user engagement.