• Revenue: $4.8 billion for fiscal year 2024, a 30% increase year-over-year.
• Adjusted EBITDA: Improved by $332 million year-over-year to $181 million in 2024.
• Free Cash Flow: Positive for the first time in company history.
• Customer Base: Increased 42% year-over-year to 10.1 million.
• Fourth Quarter Revenue: $1.393 billion, representing 13% year-over-year growth.
• Fourth Quarter Adjusted EBITDA: $89 million.
• Structural Sportsbook Hold Percentage: Increased 80 basis points year-over-year to 11.2% for the fourth quarter.
• Adjusted Gross Margin: 45% for the fourth quarter.
• Fiscal Year 2025 Revenue Guidance: Raised to $6.3 billion to $6.6 billion, representing 32% to 38% year-over-year growth.
• Fiscal Year 2025 Adjusted EBITDA Guidance: Reaffirmed at $900 million to $1 billion.
• Fiscal Year 2025 Adjusted Gross Margin Guidance: Expected to be in the range of 46% to 47%.
• Fiscal Year 2025 Free Cash Flow Guidance: Approximately $850 million.

• Warning! GuruFocus has detected 5 Warning Signs with DKNG.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DraftKings Inc (NASDAQ:DKNG) reported a 30% year-over-year revenue increase to $4.8 billion for 2024.
• The company achieved positive free cash flow for the first time in its history.
• DraftKings Inc (NASDAQ:DKNG) acquired 3.5 million new customers at record low acquisition costs, increasing its total customer base by 42% year-over-year to 10.1 million.
• Adjusted EBITDA improved by $332 million year-over-year to $181 million.
• DraftKings Inc (NASDAQ:DKNG) is optimistic about future growth due to increasing structural sportsbook hold percentages and potential online gaming legalization in the US.

Negative Points

• There was a slowdown in handle growth across the industry in the fourth quarter of 2024.
• DraftKings Inc (NASDAQ:DKNG) faces challenges in promotional intensity, which may impact net revenue margins.
• The company is cautious about raising guidance too early in the year despite strong early 2025 performance.
• DraftKings Inc (NASDAQ:DKNG) is navigating regulatory challenges and uncertainties in new market expansions and tax implications.
• The company is still working on improving its live betting product and integrating acquisitions to enhance its offerings.

Q & A Highlights

Q: How concerned are you about the slowdown in handle growth in the fourth quarter, and what can drive reacceleration in 2025? A: Jason Robins, CEO: We believe the slowdown was influenced by factors like one less NFL game and distractions around the election. However, we've seen a rapid acceleration in handle growth since the election passed and into the new year, giving us confidence in our 2025 outlook.

Q: What is DraftKings' stance on entering the events contracts and prediction markets? A: Jason Robins, CEO: It's early, but we are actively watching the space. We are interested in seeing how it develops, especially with upcoming regulatory decisions like the CFTC ruling.

Q: Can you discuss the promotional intensity for 2025 and how it might evolve? A: Jason Robins, CEO: We expect a meaningful decline in promotional intensity in 2025. Our strategy is to optimize around an EBITDA margin close to 30%, and we will continue to streamline costs to achieve this.

Q: How does volatility and hold impact your willingness to buy back shares? A: Alan Ellingson, CFO: We plan to be programmatic with our buybacks, tying them to our free cash flow and maintaining consistency quarter-over-quarter.

Q: What are the prospects for in-play betting in the US, and how does it compare to Europe? A: Jason Robins, CEO: We are making significant progress in product development and working with broadcasters for low latency streams. The US sports are well-suited for in-play betting, and we expect adoption to grow as we enhance the customer experience.

Q: Why didn't you raise EBITDA guidance despite strong early 2025 performance? A: Alan Ellingson, CFO: It's early in the year, and we prefer to stay consistent with our guidance. We are comfortable with the range provided and will monitor performance as the year progresses.

Q: How do you view the potential for international expansion? A: Jason Robins, CEO: While international expansion is of interest, our primary focus remains on the US and Canada. We will be opportunistic and deliberate, exploring international opportunities as they arise.

Q: What are your thoughts on accepting cryptocurrency as a form of payment? A: Jason Robins, CEO: We are considering it, but regulatory acceptance is a key factor. Only a few states are currently open to it, so it doesn't feel like a huge opportunity yet. If more states become open, we will take a closer look.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.