DraftKings(DKNG)2024-08-02 16:18Financial Data and Key Metrics Changes - DraftKings generated 128 million, with customer acquisition exceeding expectations as new OSB and iGaming customers increased nearly 80% year-over-year [9][10] - The company revised its fiscal year 2024 revenue guidance to a range of 5.250 billion, reflecting a year-over-year growth of 38% to 43% [11] - Adjusted EBITDA guidance for fiscal year 2024 was revised down to 420 million, influenced by increased tax rates in Illinois and the inclusion of Jackpocket [11][12] Business Line Data and Key Metrics Changes - The structural Sportsbook hold percentage improved year-over-year to approximately 10% [10] - Adjusted gross margin for Q2 was 43%, primarily due to better-than-expected customer acquisition and promotional reinvestment [10] - The integration of Jackpocket is on track to generate positive adjusted EBITDA in fiscal year 2025 [6] Market Data and Key Metrics Changes - The company anticipates a healthy customer acquisition environment to continue through the latter half of the year, indicating a potentially larger US online gaming opportunity [5] - The launch of Sportsbook in Washington, DC, contributed to the updated revenue guidance [11] Company Strategy and Development Direction - DraftKings plans to implement a gaming tax surcharge in high tax states starting January 1, 2025, which is expected to enhance adjusted EBITDA [5][6] - The company is focused on enhancing its product offerings, including new features for Sportsbook and iGaming, and aims to double the number of new games released this year compared to last year [7] - The Board authorized a share repurchase of up to 900 million to $1 billion for fiscal year 2025, driven by underlying business momentum and customer acquisition trends [13] - Management emphasized the importance of transparency with customers regarding the gaming tax surcharge and its impact on pricing [35] Other Important Information - The company divested VSiN and shuttered Reignmakers to focus on core operations [40] - DraftKings is not currently pursuing organic growth in Latin America but would consider M&A if opportunities arise [40] Q&A Session Summary Question: Discussion on the surcharge strategy and competitor reactions - Management believes each company will act in its best interest regarding the surcharge, and they will monitor the situation closely [14] Question: Impact of Illinois tax increase on future models - Management indicated that strong customer acquisition and engagement trends should offset the Illinois tax increase, maintaining adjusted EBITDA expectations [15] Question: Changes in customer acquisition costs and engagement - Management noted no increase in existing player costs, with new customer acquisition driving the current growth [21] Question: Plans for higher new user acquisition costs - Management stated that the majority of marketing spend is flexible and can be adjusted based on market conditions [24] Question: Signs of consumer weakness in older states - Management reported no signs of consumer weakness and noted strong cohort behavior [31] Question: Strategy for Latin America - Management indicated a focus on the US market and would consider M&A for Latin America if pursued [40] Question: Contribution profit margin differences in high tax states - Management acknowledged that contribution margins are significantly affected by high tax rates, particularly in states like New York [58]