DraftKings Inc
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
DKNG$18.51-21.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0001883685-24-000018
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001883685-24-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 92 current paragraphs.
39 unchanged; 36 reworded; 12 added; 1 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
•the timing, amount or duration of our Stock Repurchase Program;
Current report
Revenue increased by $229.5 million and $634.9 million in the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, respectively, primarily due to continued healthy customer engagement, efficient acquisition of new customers, the expansion of the Company’s Sportsbook product offering into new jurisdictions, a higher structural sportsbook hold percentage, and the impact of our acquisition of Jackpocket Inc. (“Jackpocket”), which was completed on May 22, 2024.
Current report
ARPMUP decreased in the three months ended June 30, 2024, compared to the same period in 2023, primarily due to lower ARPMUP for Jackpocket customers when compared to DraftKings’ existing product offerings prior to the Jackpocket
Current report
(2)The Company recorded a discrete income tax benefit of $75.8 million during the second quarter of 2024 which was attributable to non-recurring partial releases of the Company's U.S. valuation allowance as a result of the purchase accounting for the Jackpocket Transaction.
Current report
Revenue. Revenue increased by $229.5 million, or 26.2%, to $1,104.4 million in the three months ended June 30, 2024, from $874.9 million in the three months ended June 30, 2023. The increase was primarily attributable to our online gaming revenues, which increased $237.5 million, or 27.9%, to $1,087.3 million in the three months ended June 30, 2024, from $849.8 million in the three months ended June 30, 2023, due to MUPs increasing by 50%, partially offset by ARPMUP decreasing by 15% as compared to the three months ended June 30, 2024. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, the expansion of our Sportsbook product offering into new jurisdictions and the Jackpocket Transaction. The decrease in ARPMUP was due to lower ARPMUP for Jackpocket customers when compared to customers for DraftKings’ existing product offerings prior to the Jackpocket Transaction, customer friendly sport outcomes, and an increase in new customer promotional investment for our Sportsbook and iGaming product offerings, partially offset by structural improvement in our Sportsbook hold percentage.
Current report
Cost of revenue as a percentage of revenue increased by 1.8 percentage points to 60.1% in thethree months ended June 30, 2024, as compared to 58.3% in thethree months ended June 30, 2023, reflecting, in part, an increase in promotional reinvestment for our Sportsbook and iGaming product offerings and increased amortization.
Current report
Sales and Marketing. Sales and marketing expense increased $8.2 million, or 3.9%, to $215.7 million in the three months ended June 30, 2024, from $207.5 million in the three months ended June 30, 2023. The increase was partially attributable to higher advertising costs of $13.1 million.
Current report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Current report
Product and Technology. Product and technology expense increased $3.5 million, or 2.0%, to $181.5 million in the six months ended June 30, 2024, from $178.0 million in the six months ended June 30, 2023 due to increased headcount in our product and engineering departments.
Current report
Other (Loss) Gain, net. We recorded a loss of $1.2 million in the six months ended June 30, 2024, as compared to a gain of 0.1 million in the six months ended June 30, 2023.
Current report
Net Income (Loss). Net income (loss) improved by $395.7 million to a net loss of $78.7 million in the six months ended June 30, 2024, as compared to a net loss of $474.4 million in the six months ended June 30, 2023, for the reasons discussed above.
Current report
Stock Repurchase Program. As noted above, on June 30, 2024, our Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of our Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws.
Removed paragraphs (1)
Previous report
Revenue increased by $405.3 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to the strong performance of our Sportsbook and iGaming product offerings as a result of robust customer acquisition and retention, the successful launches of our Sportsbook product offering in additional jurisdictions, and improved promotional reinvestment for Sportsbook and iGaming.
Reworded paragraphs (36)
Previous wording
We are a digital sports entertainment and gaming company that provides users with online sports betting (“Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as retail sportsbook, media and other consumer product offerings. We are also involved in the design and development of sports betting and casino gaming software for online and retail sportsbooks and iGaming operators.
Current wording
We are a digital sports entertainment and gaming company that provides users with online sports betting (“Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as retail sportsbook, media, digital lottery and other consumer product offerings. We are also involved in the design and development of sports betting and casino gaming software for online and retail sportsbooks and iGaming operators.
Previous wording
Our mission is to make life more exciting by responsibly creating the world’s favorite real-money games and betting experiences. We accomplish this by creating an environment where our users can find enjoyment and fulfillment through Sportsbook, iGaming and DFS, as well as media and other online consumer product offerings. We are also highly focused on our responsibility as a steward of this new era in real-money gaming. Our ethics guide our decision making, with respect to both the tradition and integrity of sports and our investments in regulatory compliance and consumer protection.
Current wording
Our mission is to make life more exciting by responsibly creating the world’s favorite real-money games and betting experiences. We accomplish this by creating an environment where our users can find enjoyment and fulfillment through Sportsbook, iGaming and DFS, as well as media, digital lottery and other online consumer product offerings. We are also highly focused on our responsibility as a steward of this new era in real-money gaming. Our ethics guide our decision making, with respect to both the tradition and integrity of sports and our investments in regulatory compliance and consumer protection.
Previous wording
Our priorities are to (a) continue to invest in our product offerings, (b) launch our product offerings in new jurisdictions, (c) create replicable and predictable state-level unit economics in sports betting and iGaming and (d) expand our other online consumer product offerings. When we launch our Sportsbook and iGaming product offerings in a new jurisdiction, we invest heavily in user acquisition, retention and cross-selling until the new jurisdiction provides a critical mass of users engaged across our product offerings.
Current wording
Our priorities are to (a) continue to invest in our product offerings, (b) launch our product offerings in new jurisdictions, (c) create replicable and predictable jurisdiction-level unit economics in sports betting and iGaming and (d) expand our other online consumer product offerings. When we launch our Sportsbook and iGaming product offerings in a new jurisdiction, we invest heavily in user acquisition, retention and cross-selling until the new jurisdiction provides a critical mass of users engaged across our product offerings.
Previous wording
Our current technology is highly scalable with relatively minimal incremental spend required to launch our product offerings in new jurisdictions. We will continue to manage our fixed-cost base in conjunction with our market entry plans and focus our variable spend on marketing, user experience and support and regulatory compliance to become the product of choice for users and to maintain favorable relationships with regulators. We also expect to improve our profitability over time as our revenue and gross profit expand as states mature, and our variable marketing expenses and fixed costs stabilize or grow at a slower rate.
Current wording
Our current technology is highly scalable with relatively minimal incremental spend required to launch our product offerings in new jurisdictions. We will continue to manage our fixed-cost base in conjunction with our market entry plans and focus our variable spend on marketing, user experience and support and regulatory compliance to become the product of choice for users and to maintain favorable relationships with regulators. We also expect to improve our profitability over time as our revenue and gross profit expand as jurisdictions mature, and our variable marketing expenses and fixed costs stabilize or grow at a slower rate.
Previous wording
We are continuing to increase our profits by utilizing the efficient customer acquisition that is enabled by the transition from local to regional to national advertising, maintaining strong customer retention, improving monetization from increased frequency of customer play and higher hold percentage, as well as scaling benefits from investments in our product offerings and technology and general and administrative functions. In any given period, we expect to achieve profitability on a consolidated Adjusted EBITDA basis when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the percentage of the U.S. adult population that has access to our product offerings and the other factors summarized in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.
Current wording
We are continuing to increase our profits by utilizing the efficient customer acquisition that is enabled by the transition from local to regional to national advertising, maintaining strong customer retention, improving monetization from increased frequency of customer play and higher hold percentage, as well as scale benefits from investments in our product offerings and technology and general and administrative functions. In any given period, we expect to achieve profitability on a consolidated Adjusted EBITDA basis when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the percentage of the U.S. adult population that has access to our product offerings and the other factors summarized in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.
Previous wording
Monthly Unique Payers (“MUPs”). We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, or Marketplace product offerings via our technology. For reported periods longer than one month, we average the MUPs for the months in the reported period. Although the number of unique paid users includes those users that have participated in a real-money, paid engagement using only promotional incentives (which has not been a material number of users to date), which are fungible with other funds deposited into their wallets on our technology, it does not include users who have made a deposit but have not yet had a real-money, paid engagement.
Current wording
Monthly Unique Payers (“MUPs”). We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, digital lottery or Marketplace product offerings via our technology. For reported periods longer than one month, we average the MUPs for the months in the reported period. Although the number of unique paid users includes those users that have participated in a real-money, paid engagement using only promotional incentives (which has not been a material number of users to date), which are fungible with other funds deposited into their wallets on our technology, it does not include users who have made a deposit but have not yet had a real-money, paid engagement.
Previous wording
The chart below presents our average MUPs for the three months ended March 31, 2023 and 2024:
Current wording
The charts below present our average MUPs for the three and six months ended June 30, 2023 and 2024:
Previous wording
The chart below presents our ARPMUP for the three months ended March 31, 2023 and 2024:
Current wording
The charts below present our ARPMUP for the three and six months ended June 30, 2023 and 2024:
Previous wording
The increase in MUPs for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook product offering into new states, partially offset by a decline in DFS MUPs.
Current wording
The increase in MUPs for the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook product offering into new states and the impact of our acquisition of Jackpocket (the “Jackpocket Transaction”).
Previous wording
ARPMUP increased in thethree months ended March 31, 2024, compared to the same period in 2023, primarily due to structural improvement in our Sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming.
Current wording
Transaction, customer friendly sport outcomes, and an increase in new customer promotional investment for our Sportsbook and iGaming product offerings as a result of strong customer acquisition. ARPMUP increased in the six months ended June 30, 2024, compared to the same period in 2023 primarily due to structural improvement in our Sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming, slightly offset by the lower ARPMUP for Jackpocket customers.
Previous wording
We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense (net), income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
Current wording
We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income or expense (net), income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.
Previous wording
The table below presents our Adjusted EBITDA reconciled to our net loss, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, for the periods indicated:
Current wording
The table below presents our Adjusted EBITDA reconciled to our net income (loss), which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, for the periods indicated:
Previous wording
(1)The amounts include the amortization of acquired intangible assets of$29.3 million and $29.8 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(1)The amounts include the amortization of acquired intangible assets of $36.4 million and $28.9 million for the three months ended June 30, 2024 and 2023, respectively, and $65.7 million and $58.8 million for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
(2)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
Current wording
(3)Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.
Previous wording
(3)Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration and pending or completed transactions and offerings, including costs relating to the Jackpocket transaction in 2024.
Current wording
(4)Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration and pending or completed transactions and offerings, including costs relating to our acquisitions of Jackpocket and Sports IQ Analytics Inc. in 2024.
Previous wording
(4)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.
Current wording
(5)Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.
Previous wording
(5)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.
Current wording
(6)Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.
Previous wording
(6)Primarily includes the change in fair value of certain financial assets, as well as our equity method share of investee’s losses and other costs relating to non-recurring and non-operating items.
Current wording
(7)Primarily includes the change in fair value of certain financial assets, as well as our equity method share of investee’s losses and other costs relating to non-recurring and non-operating items. For the three and six months ended June 30, 2024, this amount includes $20.9 million related to product tax credits as a result of audits and appeals related to prior periods.
Previous wording
Product and Technology. Product and technology expense increased $0.7 million, or 0.8%, to $88.8 million in the three months ended March 31, 2024, from $88.1 million in the three months ended March 31, 2023.
Current wording
Product and Technology. Product and technology expense increased $2.7 million, or 3.1%, to $92.7 million in the three months ended June 30, 2024, from $89.9 million in the three months ended June 30, 2023 due to increased headcount in our product and engineering departments.
Previous wording
Interest Income (Expense), net. We recorded net income interest of $14.4 million in the three months ended March 31, 2024, compared to $11.1 million in the three months ended March 31, 2023, due to fluctuations in cash balances and interest rates.
Current wording
Interest Income (Expense), net. We recorded net interest income of $13.5 million in the three months ended June 30, 2024, compared to $12.7 million in the three months ended June 30, 2023, due to fluctuations in cash balances and interest rates.
Previous wording
Loss on Remeasurement of Warrant Liabilities. We recorded a loss on remeasurement of warrant liabilities of $18.1 million in the three months ended March 31, 2024, compared to a loss of $17.0 million in the three months ended March 31, 2023, due to changes in the underlying share price of our Class A common stock.
Current wording
Gain (Loss) on Remeasurement of Warrant Liabilities. We recorded a gain on remeasurement of warrant liabilities of $9.8 million in the three months ended June 30, 2024, compared to a loss of $20.0 million in the three months ended June 30, 2023, due to changes in the underlying share price of our Class A common stock.
Previous wording
Other (Loss) Gain, net. We recorded a loss of $0.7 million in the three months ended March 31, 2024, as compared to a gain of $0.0 million in the three months ended March 31, 2023.
Current wording
Other (Loss) Gain, net. We recorded a loss of $0.4 million in the three months ended June 30, 2024, as compared to a nominal gain in the three months ended June 30, 2023.
Previous wording
Net Loss. Net loss decreased by $254.6 million to $142.6 million in the three months ended March 31, 2024, as compared to a net loss of $397.1 million in the three months ended March 31, 2023, for the reasons discussed above.
Current wording
Net Income (Loss). Net income (loss) improved by $141.1 million to a net income of $63.8 million in the three months ended June 30, 2024, as compared to a net loss of $77.3 million in the three months ended June 30, 2023, for the reasons discussed above.
Previous wording
Revenue. Revenue increased by $405.3 million, or 52.7%, to $1,175.0 million in the three months ended March 31, 2024, from $769.7 million in the three months ended March 31, 2023. The increase was primarily attributable to our online gaming revenues, which increased $417.0 million, or 56.7%, to $1,152.2 million in the three months ended March 31, 2024, from $735.2 million in the three months ended March 31, 2023, due to MUPs increasing by 22.8% and ARPMUP increasing by 25.0% as compared to the three months ended March 31, 2023. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook product offering into new jurisdictions. The increase in ARPMUP was due to structural improvement in our Sportsbook hold percentage and improved promotional reinvestment for our Sportsbook and iGaming product offering.
Current wording
Revenue. Revenue increased by $634.9 million, or 38.6%, to $2,279.4 million in the six months ended June 30, 2024, from $1,644.6 million in the six months ended June 30, 2023. The increase was primarily attributable to our online gaming revenues, which increased $654.5 million, or 41.3%, to $2,239.5 million in the six months ended June 30, 2024, from $1,585.0 million in the six months ended June 30, 2023, due to MUPs increasing by 34.5% and ARPMUP increasing by 3.7% as compared to the six months ended June 30, 2023. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook product offering into new jurisdictions. The increase in ARPMUP was due to structural improvement in our Sportsbook hold percentage and improved promotional reinvestment for our Sportsbook and iGaming product offering.
Previous wording
Cost of Revenue. Cost of revenue increased $188.3 million, or 36.1%, to $710.1 million in the three months ended March 31, 2024, from $521.7 million in the three months ended March 31, 2023. This increase was in part due to revenue growth from our expanded product and jurisdictional footprint, including the launch of our Sportsbook product offering in Ohio, Massachusetts, Kentucky, and Maine throughout 2023 as well as Vermont and North Carolina in 2024. In particular, the cost of revenue increase was primarily attributable to an increase in our variable expenses, such as product taxes and payment processing fees, which increased $124.6 million and $25.6 million, respectively. The remaining increase was primarily attributable to an increase in our variable platform costs resulting from additional customer activity.
Current wording
Cost of Revenue. Cost of revenue increased$341.4 million, or 33.1%, to$1,373.5 million in thesix months ended June 30, 2024, from$1,032.1 million in thesix months ended June 30, 2023. This increase was in part due to revenue growth from our expanded product and jurisdictional footprint, including the partial period impacts of the launch of our Sportsbook product offering in Massachusetts, Kentucky, and Maine throughout 2023, as well as in Vermont and North Carolina in 2024. In particular, the cost of revenue increase was primarily attributable to an increase in our variable expenses, such as product taxes and payment processing fees, which increased $210.1 million and $52.1 million, respectively. The remaining increase was primarily attributable to an increase in our variable platform costs resulting from additional customer activity.
Previous wording
Cost of revenue as a percentage of revenue decreased by 7.4 percentage points to 60.4% in the three months ended March 31, 2024, as compared to 67.8% in the three months ended March 31, 2023, reflecting, in part, structural improvement in our Sportsbook hold rate and improved promotional reinvestment for our Sportsbook and iGaming product offerings, partially offset by a change in revenue mix from our more mature DFS product offering to our Sportsbook and iGaming product offerings, which, in general, produce revenue at a higher cost per revenue dollar relative to our more mature DFS product offering.
Current wording
Cost of revenue as a percentage of revenue decreased by 2.5 percentage points to 60.3% in thesix months ended June 30, 2024, as compared to 62.8% in thesix months ended June 30, 2023, reflecting, in part, structural improvement in our Sportsbook hold rate and improved promotional reinvestment for our Sportsbook and iGaming product offerings, partially offset by a change in revenue mix from our more mature DFS product offering to our Sportsbook and iGaming product offerings, which, in general, produce revenue at a higher cost per revenue dollar relative to our more mature DFS product offering.
Previous wording
Sales and Marketing. Sales and marketing expense decreased $48.4 million, or 12.4%, to $340.7 million in the three months ended March 31, 2024, from $389.1 million in the three months ended March 31, 2023. The decrease was partially attributable to lower advertising costs of $22.5 million, as well as reduced stock-based compensation expense of $6.1 million.
Current wording
Sales and Marketing. Sales and marketing expense decreased $40.2 million, or 6.7%, to $556.4 million in the six months ended June 30, 2024, from $596.6 million in the six months ended June 30, 2023. The decrease was partially attributable to lower advertising costs of $9.4 million, as well as reduced stock-based compensation expense of $6.5 million.
Previous wording
General and Administrative. General and administrative expense increased $13.8 million, or 8.6%, to $174.3 million in the three months ended March 31, 2024, from $160.5 million in the three months ended March 31, 2023. This increase was primarily driven by an increase in transaction-related costs of $4.9 million and an increase in non-core litigation costs of $6.8 million partially offset by a decrease in stock-based compensation expense of $7.2 million.
Current wording
General and Administrative. General and administrative expense increased $42.6 million, or 14.4%, to $339.3 million in the six months ended June 30, 2024, from $296.7 million in the six months ended June 30, 2023. This increase was primarily driven by an increase in transaction-related costs of $23.0 million and an increase in non-core litigation costs of $13.4 million partially offset by a decrease in stock-based compensation expense of $4.4 million.
Previous wording
We had$1.2 billion in cash and cash equivalents as of March 31, 2024 (excluding restricted cash and cash reserved for users, which we segregate on behalf of our paid users for all jurisdictions and product offerings). We believe our cash on hand is sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months. We will continue to evaluate our long-term operating performance and cash needs and believe we are well positioned to continue to fund the operations of our business long-term.
Current wording
We had $815.9 million in cash and cash equivalents as of June 30, 2024 (excluding restricted cash and cash reserved for users, which we segregate on behalf of our paid users for all jurisdictions and product offerings). We believe our cash on hand is sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months. We will continue to evaluate our long-term operating performance and cash needs and believe we are well positioned to continue to fund the operations of our business long-term.
Previous wording
Debt. In March 2021, we issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million (the “Convertible Notes”). The Convertible Notes mature on March 15, 2028, subject to earlier conversion, redemption or repurchase. In connection with the pricing of the Convertible Notes and the exercise of the option to purchase additional Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to DraftKings Inc.’s Class A common stock upon any conversion of the Convertible Notes. The net cost of $124.0 million incurred to enter into the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheet. As of March 31, 2024, the Convertible Notes, net of issuance costs, balance was$1,254.4 million.
Current wording
Debt. In March 2021, we issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million (the “Convertible Notes”). The Convertible Notes mature on March 15, 2028, subject to earlier conversion, redemption or repurchase. In connection with the pricing of the Convertible Notes and the exercise of the option to purchase additional Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to DraftKings Inc.’s Class A common stock upon any conversion of the Convertible Notes. The net cost of $124.0 million incurred to enter into the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheet. As of June 30, 2024, the Convertible Notes, net of issuance costs, balance was $1,255.1 million.
Previous wording
Leases. We have lease arrangements for certain corporate office facilities, data centers, and motor vehicles. As of March 31, 2024, the Company had lease obli gations of $90.2 million, with$11.3 million payable within 12 months.
Current wording
Leases. We have lease arrangements for certain corporate office facilities, data centers, and motor vehicles. As of June 30, 2024, the Company had lease obli gations of$89.6 million, with$11.5 million payable within 12 months.
Previous wording
Other Purchase Obligations. We have certain non-cancelable contracts with vendors, licensors and others requiring us to make future cash payments. As of March 31, 2024, these purchase obligations were $1,329.4 million, with $368.6 million payable in the remainder of 2024.
Current wording
Other Purchase Obligations. We have certain non-cancelable contracts with vendors, licensors and others requiring us to make future cash payments. As of June 30, 2024, these purchase obligations were $1,235.8 million, with $249.8 million payable in the remainder of 2024.
Previous wording
Operating Activities. Net cash used in operating activities in the three months ended March 31, 2024 improved $131.1 million to $70.4 million, compared to $201.5 million in the three months ended March 31, 2023, mainly reflecting an improvement in net loss, net of non-cash items, of $237.7 million, offset by changes in operating assets and liabilities.
Current wording
Operating Activities. Net cash used in operating activities in the six months ended June 30, 2024 decreased $178.2 million to $41.0 million, compared to $219.2 million in the six months ended June 30, 2023, mainly reflecting an improvement in net income (loss). Net income (loss), net of non-cash items, of$284.2 million, offset by changes in operating assets and liabilities.
Previous wording
Investing Activities. Net cash used in investing activities during the three months ended March 31, 2024 increased by $11.6 million to $39.2 million from $27.6 million during the same period in 2023, mainly reflecting an increase in cash paid for acquisition of gaming licenses of$10.2 million.
Current wording
Investing Activities. Net cash used in investing activities during the six months ended June 30, 2024 increased by $429.6 million to $456.5 million, compared to $27.0 million in the six months ended June 30, 2023, mainly reflecting an increase in cash paid for acquisitions, net of cash acquired of $392.0 million.
Previous wording
Financing Activities. Net cash used in financing activities during the three months ended March 31, 2024 increased by $5.5 million to $30.6 million from $25.2 million during the same period in 2023, primarily reflecting increased cost of purchasing treasury stock related to the satisfaction of withholding taxes due upon the vesting of restricted stock units.
Current wording
Financing Activities. Net cash used in financing activities during the six months ended June 30, 2024 increased by $14.6 million to $52.5 million, compared to $37.8 million in the six months ended June 30, 2023, primarily reflecting increased cost of purchasing treasury stock related to the satisfaction of withholding taxes due upon the vesting of restricted stock units.
Previous wording
During the three months ended March 31, 2024, there were no changes to the critical accounting estimates discussed in the 2023 Annual Report.
Current wording
During the six months ended June 30, 2024, there were no changes to the critical accounting estimates discussed in the 2023 Annual Report.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Cost of Revenue. Cost of revenue increased$153.1 million, or 30.0%, to$663.4 million in thethree months ended June 30, 2024, from$510.3 million in thethree months ended June 30, 2023. The increase was due, in part, to revenue growth from our expanded product and jurisdictional footprint, including the launch of our Sportsbook product offering in Ohio, Massachusetts, Kentucky and Maine throughout 2023, as well as in Vermont and North Carolina in 2024. In particular, the cost of revenue increase was primarily attributable to an increase in our variable expenses, such as product taxes and payment processing fees, which increased $85.5 million and $26.5 million, respectively. The remaining increase was primarily attributable to an increase in our variable platform costs resulting from additional customer activity and an increase in amortization of intangible assets of $13.3 million.
Current report — wording carried from elsewhere
General and Administrative. General and administrative expense increased $28.8 million, or 21.2%, to $165.1 million in the three months ended June 30, 2024, from $136.3 million in the three months ended June 30, 2023. This increase was primarily driven by an increase in transaction-related costs of$18.1 million and an increase in non-core litigation costs of$6.7 million.
Current report — wording carried from elsewhere
The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods:
Current report — wording carried from elsewhere
Interest Income (Expense), net. We recorded net income interest of $28.0 million in the six months ended June 30, 2024, compared to $23.9 million in the six months ended June 30, 2023, due to fluctuations in cash balances and interest rates.
Current report — wording carried from elsewhere
Loss on Remeasurement of Warrant Liabilities. We recorded a loss on remeasurement of warrant liabilities of $8.3 million in the six months ended June 30, 2024, compared to a loss of $37.1 million in the six months ended June 30, 2023, due to changes in the underlying share price of our Class A common stock.