DraftKings Inc (DKNG) reported its second-quarter financial results after the closing bell on Wednesday. Below are the transcripts from the Q2 earnings call, which took place Thursday morning.

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 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 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, Co-Founder and Chief Executive Officer 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.

DraftKings set records for revenue and adjusted EBITDA in the second quarter as revenue growth accelerated to 37% year over year. We are pleased to be maintaining our fiscal year 2025 guidance with Revenue expected to be closer to the high end of our range as strong underlying momentum in the business and sportsbook-friendly outcomes in the second quarter position us to absorb an exciting new state launch. We are sharing five key takeaways today. First, we are in the early innings of adjusted EBITDA growth. Product enhancements are driving strong revenue growth while prudent cost discipline and efficiency initiatives across the organization are delivering meaningful adjusted EBITDA margin expansion. Our second-quarter adjusted EBITDA was over $300 million and double our prior record. Looking ahead, we have conviction in our profitability expanding further as we drive towards our 30% adjusted EBITDA margin target over time.

Second, DraftKings is positioned for success this fall with the upcoming NFL and NBA seasons. We continue to innovate our number one-rated Sportsbook product, delivering an experience that moves uniquely at the speed of sports. This manifests in a best-in-class live betting product along with hyper-flexible merchandising and social features that allow customers to engage with the biggest sports narratives as they unfold in real time.

Third, sports outcomes tend to normalize over the long term, but typically benefit either the sportsbook or our customers in the short term. In May and June combined, Sportsbook outcomes benefited the company and added $110 million to our revenue.

Fourth, we continue to monitor events surrounding federally regulated prediction markets and are actively exploring ways to enhance shareholder value through this opportunity. As always, we value our relationships with both industry stakeholders and policymakers and we’ll work collaboratively as we evaluate next steps.

Fifth, we continue to allocate capital to target the highest risk-adjusted returns and maximize shareholder returns over the long term. In the first two quarters of this year, we repurchased 6.5 million shares through our stock repurchase program while continuing to invest in organic growth initiatives.

In the second quarter, we achieved company records for both revenue and adjusted EBITDA. Revenue increased 37% year over year to $1,513,000,000 and we generated $301,000,000 of adjusted EBITDA representing a 20% adjusted EBITDA margin. Sportsbook Net revenue increased 45% year over year which exceeded our expectations. Net revenue margins increased over 230 basis points year over year and also set a company record at 8.7%. Sportsbook handle increased 6% year over year to approximately $11.5 billion. Live betting handle increased 16% year over year as we continue to innovate and extend our lead in that category. Structural sportsbook hold percentage increased 100 basis points year over year to 10.9% and actual sportsbook hold percentage exceeded 11.5% due to sportsbook-friendly outcomes. Our parlay handle mix increased 430 basis points year-over-year, Sportsbook promotional reinvestments as a percentage of gross gaming revenue improved year over year by nearly 600 basis points due to both sportsbook-friendly outcomes as well as continuing optimization of promotions. We also expect to continue benefiting from existing customer accounting for a higher percentage of our overall customer mix.

IGaming Net revenue was consistent with their expectations and increased 23% year over year. Driven by strong growth in active IGaming customers. We are continuing to see engagement with jackpots increasing rapidly as gross gaming revenue increased over 100% year over year. Our adjusted gross margin increased to 48%, increasing more than 400 basis points year over year. As a result of higher sportsbook hold percentage and improved promotional efficiency across our product offerings, our operating expenses, including marketing, continue to be in line with our expectations. We are leveraging our scale and brand to drive highly efficient customer acquisition while continuing to exert cost discipline across the organization. We are also already seeing some benefits from utilizing artificial intelligence and other new technologies.

Now I’ll touch on our fiscal year 2025 guidance. In May, we guided fiscal year 2025 revenue of $6.2 billion to $6.4 billion and adjusted EBITDA of $800 million to $900 million. Today we are maintaining those ranges. More specifically, we are on track to deliver revenue close to the high end of the $6.2 billion to $6.4 billion range due to sportsbook-friendly outcomes in the second quarter as well as continuing strength across our core value drivers. We are on track to deliver adjusted EBITDA near the midpoint of the $800 million to $900 million range as our higher annual revenue positions us to absorb our anticipated mobile Sportsbook launch in Missouri. Notably, our guidance now includes anticipated financial impacts from DraftKings launching mobile sports betting in Missouri later this year. Our guidance also now includes anticipated financial impacts from higher tax rates in New Jersey, Louisiana, and Illinois. The company guidance for fiscal year 2025 does not include the potential launch of a predictions market offering. We are also providing the following fiscal year 2025 guidance detail. We now expect our Sportsbook Net revenue margin to exceed 7.5% ahead of the range of 7 to 7.5% that we had provided last quarter. We continue to expect an adjusted gross margin of 46%, an increase of more than 300 basis points year over year compared to fiscal year 2024. We continue to expect stock-based compensation expense to represent 6% of revenue in fiscal year 2025. We continue to expect free cash flow of approximately $750 million in fiscal year 2025. That concludes our remarks and we will now open the line for questions.

DraftKings Q2 FY2025 Earnings Call Transcript

DraftKings Inc (DKNG) reported strong Q2 FY2025 financial results, including 37% YoY revenue growth to $1.513 billion and adjusted EBITDA of $301 million. The company maintained its FY2025 guidance, citing sportsbook-friendly outcomes and a mobile sports betting launch in Missouri. Key highlights include record sportsbook handle, improved margins, and focus on AI-driven innovation.