Thank you for standing by. Welcome to the DraftKings Q2 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentations, there will be a question-and-answer session. To ask a question at that time, please press star one one on your touch-tone telephone. As a reminder, today's conference call is being recorded. I would now like to hand the conference off to your host, Mr. Stanton Dodge, Chief Legal Officer. Sir, you may begin. Good morning, everyone, and thanks for joining us today. 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 presentation, 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, Chief Executive Officer and Chairman of DraftKings, who will share some opening remarks and an update on our business. Jason Park, Chief Financial Officer of DraftKings, will provide a review of our financials. We will then open the line to questions. I will now turn the call over to Jason Robins. Good morning, everyone, and welcome to DraftKings Q2 earnings call. I want to touch on a few topics today. Let me start off with my thoughts on Q2. I'm really pleased with how we performed in the quarter. We generated $466 million in revenue, which exceeded the midpoint of the guidance we provided on our Q1 earnings call by $33 million, and we outperformed the midpoint of our A djusted EBITDA guidance by almost 40%. Our core B2C revenue grew 68% versus Q2 of last year. Our organization is executing very well. We have struck a great balance of continuing to drive top line growth while also capturing meaningful efficiencies that are helping our bottom line. From a top-line perspective, our customers are playing more frequently than we expected, and we're seeing great success driving parlay mix in our sports book product. In fact, our parlay bet mix increased by 1,700 basis points in the quarter compared to Q2 of 2021. I really love how we are merchandising our same game parlays, which I think have great personality. Hopefully, you have seen our new parlay merchandising in the app, which gives our customers fun ways to engage with these types of wagers. We're also making great strides on improving the customer experience, such as ease of getting money on and off the platform and many other areas related to overall app usability and experience. We expect to continue to make these investments on an ongoing basis. On the cost side, we continue to drive efficiencies during Q2. We captured $40 million of 2022 cost opportunities on top of the $50 million we captured in Q1. These efficiencies are in a variety of non-compensation areas and are a great demonstration of how our organization rallied around an important initiative and delivered great results. Looking forward to the back half of the year. We are geared up and ready to go. For online sports betting, the NFL season is right around the corner and our sports betting app is in fantastic shape with many new features and markets. Enhancing our parlay offering has been a top priority. We rolled out parlay insurance, which allows customers to avoid an outright loss if one of the legs in their parlay misses. We developed the capability for customers to void an individual leg of a Same Game Parlay bet without voiding the entire parlay. Finally, we will be launching a feature that allows multiple Same Game Parlays to be combined into one. Turning to new markets, we are seeing the benefits of the migration to our own bet engine, which gives us the speed and flexibility to offer differentiated North American-focused markets. We were the first to release look-ahead lines for all 272 NFL games. We also introduced new markets for Major League Baseball, such as wagers based on pitch speeds and pitch counts per plate appearance, and Same Game Parlays for UFC fights. We will have more markets for the NFL that we plan to roll out when the season starts. Our social functionality is continuing to develop. Engagement with our feature that allows a customer to tail or fade their friend's bet has been growing rapidly. We also launched betting groups, which makes it easier for groups of friends to engage together on the platform. While our social features are still very early in their lifecycle, engagement has been very encouraging and we are continuing to invest in developing this functionality as a differentiator for DraftKings. Turning to our iGaming product, performance continues to be very strong. Gross revenue for the DraftKings brand on a same state basis grew 35% year-over-year in the quarter. We are also focused on capturing the marketing, growth margin, and G&A synergies from the Golden Nugget Online Gaming transaction that we outlined in the past. We understand the GNOG target customer better than ever and have already started tests around cross-marketing the Landry's and Golden Nugget Online Gaming databases and optimizing marketing mix, marketing messages, keyword optimization, and other tactics to grow our overall iGaming business. In addition, we began our efforts to migrate the GNOG app to the DraftKings platform, which we estimate will be complete in the back half of 2023. I'm also quite excited about how our recent investments in Web3 technology and DraftKings Marketplace have positioned us over the past year to launch major new and disruptive fantasy sports games, Reignmakers Football. In preparation for the NFL season kickoff, our customers are currently building up their collections of player card NFTs, which are officially licensed digital collectibles through our exclusive multi-year agreement with the NFLPA. As the season starts, Reignmakers Football customers will be able to use their player cards to build fantasy lineups and compete in no-fee contests for over $1 million in prizes every week. We will even crown a world champion this season at the $1 million Reignmakers Football World Championship live from New Orleans. Beyond our NFLPA licensing agreement, we have also agreed to terms with the UFC to build Reignmakers UFC, featuring officially licensed NFT cards from their active roster. Our UFC relationship in this new Reignmakers game have already been announced, including the pre-launch Heatwave Series. The full Reignmakers UFC game is expected to go live in late Q4 this year and will continue the momentum we've built around this new game franchise. We believe that nobody else in our industry is driving innovation in this way, and we think it's a great example of how DraftKings is forward-thinking in sports entertainment. Our Web3 strategy implements use cases for blockchain and NFT technology that are endemic to our core business, disrupt the sports fan experience, and create differentiation for DraftKings that help separate us from the past. We look forward to deepening our long-term customer relationships with this new experience. Moving to our outlook. Most importantly, our online gaming business is very healthy, and we are continuing to execute on operating efficiency. As a result, we are improving the midpoints of our full year 2022 guidance for revenue and Adjusted EBITDA. I now wanna spend a few minutes discussing Q3. As many of you know, our Q3 revenue and Adjusted EBITDA have the potential for high upside or downside volatility for two primary reasons. First, a significant amount of the quarter's expected revenue comes in the final three weeks of September due to the beginning of the NFL season. Hold rate tends to normalize over the course of a full NFL season, but it can vary significantly over the course of a few weeks. This can have a pronounced impact on Q3, considering July and August are amongst the lightest months of the year from a sports calendar perspective. Second, the last few weeks of September are heavy in terms of promotional activity, which is driven by customer acquisition and reactivation. While some of the promotions we run have predictable numbers behind them, there are others that depend on game outcomes, which amplifies potential volatility in Q3. In a few minutes, Jason Park will provide additional color on our guidance, as well as more detail on how to estimate DraftKings' financial performance after game outcomes from the first three weeks of the NFL are known. Looking ahead to the longer term, the outlook for new state launches next year and beyond continues to be excellent. We are preparing for OSB launches in Maryland, Ohio, Kansas, and Puerto Rico, which would make our sports book app available to 44% of the U.S. population, pending licensure and regulatory approval. In Massachusetts, the legislature passed a bill that is now pending executive action that would legalize retail and online wagering with professional and collegiate sports. Massachusetts represents an additional 2% of the U.S. population, and California is a huge opportunity with 12% of the U.S. population. Online sports betting is officially on the ballot with Proposition 27, and on November eighth, Californians will vote on whether they want regulated online sports betting while simultaneously helping solve issues such as homelessness, mental health, and addiction, while providing funding and economic opportunity for all of the state's tribes. Even assuming all of these states, including California, launch in late 2022 or in 2023, we have more conviction than ever in our ability to reach positive free cash flow with our current capital reserve. Despite that conviction, we are still making a concerted effort this year to drive efficiency opportunities and early GNOG synergies and have already identified approximately $100 million in cost reductions for this year. As I mentioned earlier, I am very proud of the team for striking a great balance through the first half of the year by driving strong revenue growth while also making improvements to our long-term cost structure. We look forward to continuing to balance these dual objectives. In addition, we are finalizing our plans for 2023. We expect our fixed cost growth next year to be much more moderate than over the past few years as we have reached scale across many of our departments. As it pertains to state-level economics, we continue to be on track to have at least 10 states that will be contribution profit positive this year. As these states mature further in 2023 and beyond, we expect them to generate meaningful free cash flow. Even assuming California launches next year, we expect that 2022 will be the year of peak-Adjusted EBITDA losses. We will share more specifics on our expectations for 2023 from both a revenue and A djusted EBITDA perspective on our next quarterly earnings call. I'm also focused on several other areas that are worth sharing with you. First, we are doubling down on our strategy and cultural approach to customer centricity. At DraftKings, the customer is at the center of everything we do. As we have grown our organization, we are actively putting mechanisms in place to ensure that this continues to be a defining element of our culture and how we make decisions. Second, we're focused on strong talent management with an emphasis on retaining and developing our top performers, building out world-class management, and building a culture where we manage underperformance efficiently and effectively. As we have slowed hiring, we have also used this as an opportunity to re-emphasize how critical it is to hold talent bar high. I've been very pleased to see how our team has rallied around the importance of these areas, as well as how the team has rallied around the other cost initiatives that we previously mentioned. Third, responsible gaming remains a big focal point for us as we continue to grow our footprint. We are laser-focused on creating best-in-class practices through research, training, and education. For example, we became the first U.S. operator to provide customers with access to BetBlocker software in July. BetBlocker is a leading responsible gaming and safer play not-for-profit charity. As a result of this collaboration, when DraftKings customers set restrictions on their gaming activity, those restrictions will apply across thousands of gaming sites, whether regulated or unregulated globally. Our responsible gaming team is doing a great job, and I am very proud to see their efforts being noticed externally as well. Our RG team took home three awards at this year's National Council on Problem Gambling conference. The awards recognized the team's outstanding commitment to social responsibility as it relates to problem gaming, as well as the efforts of two of our team members specifically who won individual awards at the conference for the work they do at DraftKings to promote and institute strong, responsible gaming practices and culture. I will now turn the call over to DraftKings CFO, Jason Park, who will discuss our second quarter results and updated 2022 guidance. Thanks, Jason, and good morning, everyone. I'll start off by providing color on Q2, and then I'll shift into our outlook for the back half of the year and beyond. Please note that all income statement measures discussed below, except for revenue, are on a Non-GAAP Adjusted EBITDA basis. We executed very well in Q2, and our customer activity continued to be very robust, with no indication that the macroeconomic environment is impacting engagement. In Q2, we generated $466 million of revenue and -$118 million of Adjusted EBITDA, both of which outperformed the guidance we provided on our Q1 earnings call. Our B2C segment grew 68% versus Q2 of 2021 compared to Q1 year-over-year growth of 44%. Our customers responded well to our improved merchandising of bet types, in particular, our prepackaged Same Game Parlays. Hold percentage was in line with our expectations, which was great to see, and customers were less reliant on promotions as Q2 saw a low overall promo reinvestment rate compared to prior quarters. We had 1.5 million monthly unique payers, which is 30% higher than the prior year period, and our average revenue per monthly unique payer was a record high $103, which is also 30% higher than the prior year period. Our Adjusted EBITDA of -$118 million was $72 million better than the midpoint of our guidance due to several factors. First, we had flow-through of our higher than expected revenue. Second, some expenses shifted out of Q2 into the back half of the year, notably marketing, as we continue to optimize our overall marketing approach. Please note that this category of expenses will not improve our 2022 full year EBITDA since it was simply due to timing. Finally, we have continued to make great progress on driving cost efficiencies throughout the business, including some early wins on achieving GNOG synergy. We expect these cost efficiencies will drive $40 million of savings in 2022 on top of the approximately $60 million we had previously identified in Q1. I am very proud of our team for rallying around several internal initiatives which have now resulted in approximately $100 million of in-year savings. Touching specifically on the $40 million of opportunities we identified in Q2, these were across a variety of areas up and down the P&L. Gross margin rate for Q2 was 41%, which is up roughly 900 basis points compared to the first quarter of this year. On a year-over-year basis, the 550 basis point decline was due to continuing mix shift out of our DFS product and the inclusion of New York, where gross margin is a rate headwind. I was pleased that the OSB and iGaming states where we were live prior to Q2 2021 saw rate improvement of approximately 700 basis points due to reduced promotional intensity. We continue to expect our gross margin rate to be roughly 40% for 2022, and then improve over the coming years as our promotional intensity naturally declines across our portfolio of states and we continue to improve our cost structure. Sales and marketing was up 18% versus Q2 of 2021, and external marketing spend was down on a year-over-year basis for the states that have been live for more than a year. We are very pleased with our LTV to CAC ratios and continue to be on track for three-year gross profit paybacks for our existing and new cohorts. Product and technology and general and administrative costs were up 39% and 83% respectively compared to the prior year period. The growth in P&T expenses is primarily the result of the additional engineering and product management resources we've added over the past year to ensure we are building the best products in the industry and to continuously strengthen our data science capabilities. For G&A, the growth is largely a reflection of the increased investment in our customer experience capabilities, which will continue to grow as we add new customers, but at a slower pace given our current scale. Going forward, we are planning for meaningfully slower fixed cost growth for 2023. We will have reached staffing scale in many of our departments by the end of this year, and the focus now is on delivering more with existing resources. Moving into guidance, we are pleased to be raising our full year revenue outlook to a range of $2.0 billion-$2.18 billion from a range of $2.055 billion-$2.175 billion, which increases the midpoint from $2.115 billion to $2.13 billion. The midpoint of our increased revenue guidance implies 64% growth compared to last year and H2 revenue of $1.2 billion-$1.3 billion. We are increasing our revenue guidance due to the strength we are seeing across our online gaming verticals with no perceivable degradation due to the macroeconomic backdrop. This is partially offset by a decrease in our 2022 outlook for Marketplace, primarily due to our updated understanding of how revenue will be recognized across the entire NFL season for our gamified NFTs, as well as some overall softness in the crypto markets. Looking at MUPs and ARPMUP, we expect ARPMUP growth to be modestly higher than MUP growth for the full year. In terms of quarterly seasonality, if hold is as we expect, Q3 revenue should grow nearly 100% year-over-year, assuming no new jurisdictions launch. If we see favorites winning consistently and large underdogs rarely winning, big parlay stacks hitting or certain promotions paying out in full due to game outcomes, that Q3 figure could come down meaningfully. The opposite is also true. I'll provide a few points of reference so that you all can understand the potential revenue volatility for Q3. First, we expect approximately $1 billion of OSB handle on NFL games in Q3. Second, last season, the average of our bottom three NFL hold weeks was approximately negative 10%. Third, as a rule of thumb, you can look at the five widest money line spreads for each week of the NFL season. If the underdog loses in each of those games, we would expect to have negative hold in that week. If the underdog wins in one or two of those five games, we would expect to have close to normal hold. If the underdog wins in 3, 4, or 5 of the games, we would expect to have better than expected hold. This rule of thumb is simplistic considering that specific spreads, over-unders, parlays, and relative game exposure impact it too, but it should give you a general sense of how revenue for the quarter is trending for OSB. Moving on to our Adjusted EBITDA guidance. We are pleased to be improving our full year 2022 guidance to a range of -$765 million to -$835 million, from a range of -$810 million to -$910 million, an improvement of the midpoint from -$860 to -$800. The roughly $60 million improvement in the midpoint primarily reflects the flow-through from our improved revenue outlook from the core business, the $40 million of additional cost efficiencies and early GNOG synergy wins that we have captured, and the timing shift in expenses from Q2 into the back half of the year. These items are partially offset by the high flow-through from lower marketplace revenue. From a quarterly perspective, we expect our Adjusted EBITDA loss in Q3 to be modestly wider than our Adjusted EBITDA loss in Q3 of 2021, assuming normal hold. As a reminder, revenue variance caused by favorable or unfavorable sport outcomes would also impact our Adjusted EBITDA at a high incremental margin. We expect Q4 to be our best Adjusted EBITDA quarter for the year as we benefit from higher seasonal revenue. Please note that our updated 2022 guidance includes only the jurisdictions in which we are live today. As you think about the rest of 2022, any states that launch would have minimal to negative top line impact initially as we promote in those states, and a negative impact on Adjusted EBITDA as we spend on external marketing to drive early customer engagement at CACs that are consistent with our 2- 3-year gross profit payback period target. With $1.5 billion cash as of June 30, our liquidity position remains strong, and we believe we are well capitalized to become free cash flow positive with existing resources. That concludes our remarks, and we will now open the line for questions. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your touchtone telephone. Again, to ask a question, please press star one one. One moment, please. Our first question comes from Michael Graham. Your line is open. Michael Graham, your line is open. Oh, hey, sorry. You cut out for a second. Thank you. Thanks for taking the question and, you know, congrats on the quarter. Tons of great proof points in there. I wanted to focus in on the MUP growth of 30%. You know, just wondering if you could comment a little bit on the mix between, you know, gross adds and retention, sort of, you know, what were some of the factors that drove each of those. I thought it was really great that, you know, in your pre-2021 markets, your promotional intensity is coming down so much. Can you just talk a little bit about, you know, some of the dynamics there? You know, are you confident that with less promotional intensity, you're still optimizing your customer growth? Thanks, Mike. First on the MUPs question. We were really happy with MUPs growth. You know, historically, Q2 is a relatively slower quarter from a sports calendar perspective. This year it was actually a tough comp because last year there were over 200 NBA games in May and June. This year there were only about 40-something. Real big difference there on the schedule side for one of the most popular sports. You know, we were really happy with 30%, which was one of our strongest quarters of growth in a while. You know, as far as like looking at you know, how we got there and some of your questions on marketing and promotion, we continue to optimize there. I think that, you know, it's just been always an area of focus for the company. The more data that we get, the better we can do. You know, we're also continuing to shift more into national marketing as we've said in the past. Once you get to kinda, you know, mid-30s% of the population, that starts to make more sense. But yeah, a lot of it's optimization that, you know, has been the result of many years of testing and, you know, lots of data and analytics. We also started to see some early synergies with GNOG, which is great, where we were able to, you know, continue to have the same kind of active customer base while optimizing our marketing across both of those brands. Yeah, I would add, Mike. Thanks, Jason. The MUP as J Rob just said, you know, right on with our expectations. The underlying retention rates that are an important part of the LTV outlook for each customer cohort were right on as well and consistent with what we've disclosed in the past, during our investor days. Good retention. We've always said that promotional intensity for existing cohorts decreases over time as the promotional offers for brand new customers is different than what is given to an existing customer, and that is all coming to fruition. All right. Thank you, Jason and Jason. Thank you. Thank you. Our next question comes from Shaun Kelley of Bank of America. Your line is open. Hey, good morning, everyone. Thanks for taking my question. I wanted to ask generally, you know, just to kind of probably a little bit clarify, but on the, you know, customer acquisition environment, I think it was pretty clear from your comments in the outlook that you're not actually changing your external marketing spend. A lot of that has to do with timing when it comes to the, you know, the broader guidance that you provided. Just could you sort of clarify that and maybe just talk to us a little bit more broadly? Because we have heard from some others that have reported thus far that, you know, the promotional environment actually has rationalized pretty dramatically in the last couple of months and maybe how that is also playing through, you know, your strategic opportunities. Thanks. Yeah. I think it's a bit of both. We definitely are finding some marketing optimization, both through the shift into national from local, as well as some early wins on the GNOG Synergy side. Those are things that we view as just pure optimization. Part of also what we look at as optimization is how we time our spending throughout the year. You know, I think that because of that, there are also some optimizations that have come from shifts that won't actually lower the overall amount of spend, but will make it such that the performance is better because we've timed it better. Yes, there is a reduction, but there is also some timing shift. It's a combination of both. Thank you very much. You're welcome. Thank you. Our next question comes from Jason Bazinet at Citi. Your line is open. Jason Bazinet, your line is open. Oh, thanks. Sorry. I just had a quick question. Are you guys surprised at the resiliency of the consumer? And if you aren't, are there any sort of details that you'd be willing to share about what's happening underneath the hood? In other words, are there any sort of dynamics that are happening between new customer spending and sort of more loyal customers that have been with you for a while? Thanks. Yeah, great question. I think, you know, I wouldn't say we're surprised. I think gaming has always sorta been known to be resilient. There's been a lot of research done on it, you know, in the U.S. in particular on the lottery, but throughout the world. Gaming has always been resilient to a variety of macroeconomic conditions. I wouldn't say we're surprised. Of course, like, even despite that, you know, we're all, you know, not taking that for granted, so it's nice to see and we're happy. I think we're, you know, we're still obviously not taking anything for granted. I would go as far as say we're surprised because I'd say that was our baseline expectation going in, and it's consistent with what's, you know, been seen through many decades of research across both brick-and-mortar and online. You know, as far as what's going on under the hood, it's really across the board. We're just continuing to see really strong retention numbers. Our average revenue per player, you know, as noted, went up 30% year-over-year. So, you know, it's really kind of across the board. There's nothing in particular I can point towards to say, you know, this segment's outperforming that one. Yeah, I would agree. We had at least three different teams try to unpack any trends in consumer behavior versus prior year versus expectations, looking at bet frequency, average bet size, a variety of other factors. Different teams had different hypotheses, and the net result was, wow, there's no discernible impact. Wow. Okay. Thank you very much. Thank you. Our next question comes from David Katz of Jefferies. Your line is open. Thanks for taking my questions. Number one, I wanted to just unpack the cost base a little bit. Obviously done well of trimming some things. When we look at advertising in particular, can you talk a bit about the base of, you know, advertising contracts that may be, you know, a bit more temporarily fixed or multi-year, you know, versus those that you can put your hands on the dials of, you know, more immediately and flex in and out as you move forward? Yeah, that’s disclosed in our 10-Q. You can look that up. We have a list of commitments. We don't break out which ones are marketing versus things like, you know, rent, lease agreements and other things. You could see what our overall long-term commitments are. What I would tell you is the majority of our spend is flexible. We certainly have some deals. We like those deals for the most part. There's a few that we'll probably optimize out of, and all of them are on relatively short-term contracts for the most part. The majority of our spend is flexible and we like it that way. Certainly with the right strategic deals, you know, we've leaned in and we think that that can be something that gives us a true differentiator on the marketing front. We also like having an opportunity to be flexible and to, you know, test and move things around. I will note that even within deals, we can do that. Marketing partners that we have deals with, we test all sorts of different things, so it's not like the media itself is fixed. We can optimize within that partner. You know, partners with large footprints, there's a lot of different things we can do, and I expect the performance of the deals to improve as we continue to optimize across the years. Perfect. If I can follow up quickly, on how you would sort of gauge the targeted parlay mix, at maturity and sort of where we are today, and what that does to your sort of overall hold rate as you approach it? I think we all don't know what it can get to. I mean, it's been increasing rapidly. As noted in our call, we had about a 1700 basis point increase year-over-year in terms of percentage of bets made as parlays. That's a pretty big gain. We're obviously not done. I think we can, you know, hopefully see it continue to go up. Right now, you know, I think a good ceiling, you know, minimum ceiling, I would say, is where FanDuel is, which you can see in the reports from some of the states. You know, we continue to close that gap and I think that, you know, they're continuing to increase too. It feels like there's a pretty high ceiling there. As far as what that does for hold, the way you could think of it is it's not even just parlay mix, it's number of legs. Every leg of a parlay is like its own bet. So the percentage that you would take would be taken off of each leg. So the more legs you can get, obviously, the, you know, more parlays, but more legs you can get on parlays is also another really good thing. You know, it can increase hold quite a bit. Obviously, you know, it depends on a number of different factors like the underlying holds of the market, but it definitely can increase hold quite a bit if you can get more parlays and more legs on those parlays. Thank you very much. You're welcome. Thank you. Our next question comes from Carlo Santarelli of Deutsche Bank. Your line is open. I wanted to talk a little bit about promotions. You know, we've heard several times that the promotional intensity has waned a little bit. When you look at kind of the data that we all can see, from a year-over-year perspective, and obviously, you know, the data isn't perfect. I'll be the first to acknowledge that. It doesn't necessarily appear that that's the case, whether you're looking at it as a percentage of handle on an absolute dollar basis or whatnot, in some of the states where it's trackable. Would you guys kind of maybe comment on what you're actually seeing out there with respect to promotions or if there's things within the promotional numbers that maybe we can't see and different, you know, ways people go about enacting the business that's making, that's giving the impression that promotions are kind of taming? You know, I think sometimes when people say promotions, they're also talking about advertising and they mix. I think it's part of what sometimes people are saying. As far as actual, like, you know, customer giveaway promotions, I think New York is a good case study where it's pretty clearly come back. You know, hard to tell, to your point, on the macro side because depending on the nature of the promotion, it can show up in areas of the state-reported numbers in different areas of the P&L. It is tough to tell. I can tell you on our end, we've seen in existing states a decline each year since launch year. That's been consistent. That hasn't been a recent thing since we launched OSB. We expect that to continue to be the case. You know, obviously, the mix of new states coming in, I'm sure, for example, if California's up and running before next NFL season, you're gonna see an uptick in promotions in that state, and that might drive, you know, some overall lifting. It kinda, there's a lot of moving variables, but the way we like to look at it is, in a state, year one should be the highest promotion year, and then it should decline until it reaches a steady state, which we've outlined in our investor day, what we expect that to be. That, that's really how we look at it, is on a state-by-state basis. When we look at what competitors are doing, you know, to your point, it's hard to tell. We obviously have a lot of qualitative evidence from our team going and looking at what's in the market. You know, we have a detailed competitive intelligence team that goes through and catalogs everything. You know, the impact on the actual revenue or other metrics in the P&L, it's tough to tell 'cause there's a lot of moving parts in the state reports, as we've noted in the past, are not necessarily capturing things consistently operator to operator. Yep. Thank you, Jason. That’s helpful. If I could, just one follow-up. I think the cash you used in the period was about $260 million. Obviously, you have the operating loss in there. I think it was $96 million of cash paid for acquisitions that kind of bridge the majority of that gap, along with the software cost and the traditional PPE. The $96 million, is that related to GNOG, or is that something incremental? No, that's absolutely a one-time cash usage in the quarter, Carlo, related to the GNOG acquisition. It was a paydown, and we took the option to prepay a term loan that came with the GNOG asset. Okay, got it. 'Cause that the funding of the acquisition was an all-cash deal, right? That was just something separate? Yeah, we had. Sorry, an all-stock deal. I apologize. Yeah, it was an all-stock deal. We chose to pay down the term loan, you know, just to keep our balance sheet healthier. Understood. Thanks, guys. Thank you. Our next question comes from Ed Young of Morgan Stanley. Your line is open. My question, I want to ask about ARPMUP, which was very strong in the quarter. I presume that was on strong hold, but you said hold was in line with your expectations. Were your expectations that it would be up? I'm referring to you saying you got very good traction increasing your parlay mix. What kind of proportion of the growth was driven by maybe hold and structural gains from product? Thanks. Yeah, it's a great question. I'm glad you asked 'cause it gives us a chance to unpack it a little bit. When we say it was in line with expectations, what we mean is based on sport outcome. That's typically what we like to share, hey, you know, 'cause those are things that aren't fundamental to the business. They're more just, you know, randomness of sport outcomes. If we have a quarter where there was a shift, positive, negative on the sport outcome side, of course, Q3 is the one where that's most likely to happen, given, you know, only three weeks of NFL having such an outsized impact on the quarter. However, exactly as you said, we did see parlay mix increase. We've been seeing that that was a year-over-year comparison for a couple quarters now since we you know launched our own Same Game Parlays and started promoting it more heavily back in you know Q3 of last year. So we did expect an increase in hold that would result from that and that was in line with our expectations as well. I would just add, Ed, two more components of the unpacking of ARPMUP. First, you've got the promotional decline, which is impacting your ARPMUP growth, which I allude to in the script. Then the other thing is product mix. So Q2, especially with this year, lapping last year's heavy NBA sport mix in the quarter and this year, the playoffs ending earlier. Just as a reminder, remember the 2020 to 2021 NBA season started late, so it ended late, versus this year it started more normal, so ended earlier than last year. What you're seeing also is a little bit of a product mix shift between iGaming and OSB in the quarter. Useful. Thank you. Thank you. Thank you. Our next question comes from Jed Kelly of Oppenheimer. Your line is open. Question two, if I may. One, can you just talk about your merchandising strategies around Same Game Parlay and how you think that compares to some of your other competitors? Can you give us any update on how your launches in Canada is going? Thank you. Sure. We recently launched some new merchandising zones in the app. I think that, you know, first step for us is to build the product and then, you know, obviously, as we continue to enhance that product, add more markets, bring more in-house. We also are, you know, focusing on how we market it and merchandise it in the app better. You know, really for us it's about having it feel native, not feel like we're pushing something on the customer. We use, you know, fun names that are in line with the sorts of things that we would name our daily fantasy contest that, you know, sports fans we think would find, you know, enjoyable and at times humorous. Just try to give them some personality. Really, you know, it's all data-based. You know, we test things to see what works. We're working on updating our data science engine so that those things become fully personalized. They're not yet, but we're working on that. There's a lot of, I think, behind-the-scenes work too that really optimizes getting the right thing in front of the right customer at the right time. You know, as far as Canada goes, I think, Ontario is kind of what we expected. We always said that we didn't think we'd be able to achieve quite the same share as we believe we will be able to achieve in the U.S. We have projected 10%-20%, you know, in Ontario as opposed to 20%-30% in the U.S. states. We also, you know, always had said pretty consistently that we thought it would be more of a slower grind, given the nature of the market, where there was just a lot of continuity between the gray market and now versus, I think the U.S. states, which, when they open up, it's really more greenfield. I think that those are some real key differences. For those reasons, we always sort of felt like Canada we can achieve strong share but probably, you know, wouldn't have quite the same ceiling that we believe we have in the U.S. And don't have the same expectation that we would have in the U.S. That said, we've always had a very strong DFS database there. We, you know, have a brand that's fairly well known in Canada. You know, I think for those reasons we do feel like we can do well there. Thank you. Thank you. Our next question comes from Joseph Stauff of Susquehanna. Your line is open. Maybe just a follow-up on costs. I wanted to check to see. Sorry, Joe. You got cut off at the beginning. We missed the first part. Can you start again? Yeah, sorry about that. I had a question on users and then maybe a follow-up on costs. You know, in the quarter, I wanted to check to see what user growth looked like in some of your, you know, older states, whether it be New Jersey and so forth. On the cost side, I'm wondering, you know, if we look at your historical CAC, I'm wondering what the right way to think about your increased use of network advertising and how that could flex it down. Sure. You know, first we continue to see growth across pretty much every state. I know that, you know, some of the oldest states we've had, we've looked and still see growth year-over-year in users there. That's been really encouraging. You know, this is really exactly what we hope for, that we can dial back on promotions and marketing spend and continue to see user growth, and that's what we're seeing. You know, as far as the CAC optimization question, I think what you're describing is exactly what we've also been talking about for the last couple of years, that early on there was some inefficiency on the marketing side because you had to localize everything and the rates are more expensive on a local basis, particularly on things like television. Being able to go to national networks, you know, certainly will help us optimize. You know, the nice thing about that is that it becomes a continuous tailwind because as more states get added, those same advertisements are reaching people that previously were not eligible to play the product. You don't have to do. I mean, we obviously will do, you know, some local heavy ups at the very start of a state launch, but they'll be shorter in burst and less intense because we have such a, you know, strong national footprint that we're starting to build. Understood. Thank you. Thank you. Our next question comes from Daniel Politzer of Wells Fargo. Your line is open. I have a two-part question on OpEx. Your sales and marketing I know is meaningfully lower in the quarter with some shifted out. Is there also an opportunity to benefit from lower media costs just given maybe a softening advertising market or as your competitors maybe offload some of their supply of traditional media spends? Then the other part, just in terms of the engineers, in terms of the FTEs, where are you in terms of count and where do you maybe look to get to as you continue to ramp there? Thanks. Yeah, it's a good question. I think. You know, I break it down a couple ways. First, you know, when it comes to television, particularly things like in-game advertising, the leagues and in some cases the networks are still putting you know, limitations on the number of spots that can be featured from our category in a given you know, game, for example. So, you know, unfortunately, that doesn't really. You know, if you see auto and other sorts of you know, large insurance categories, dialing back at all, I don't know if they are or not, but just as an example, that wouldn't really help us as much. You know, I think as time evolves, we'll have to see where that goes. In other channels, we do benefit a little bit, but, you know, not maybe as much as you would think from things like IDFA because, for example, on the app side, what we've really just seen is a shift away from iOS and into Android. iOS has gotten a little cheaper, which is good because, you know, we have more iOS customers. I think that, you know, overall, the market hasn't really changed a whole lot. It's just been more of a shift into Android. Some softening, but not too much. Probably where the biggest softening on the macro side is, which is, you know, television, unfortunately, our category is not benefiting from for the reason I described earlier. That said, you know, we continue to be able to optimize, as you noted on the quarter. You know, I think that, in some ways I'm actually very happy that it wasn't just due to rate reductions because it means we're finding real, meaningful, synergies with GNOG and real optimization opportunities. We'll have to, you know, see what happens with rates over time. Just on the engineers, the FTEs in terms of the ramp there. Sorry, say it one more time. As you continue to hire the engineers and ramp your full-time employees there, like where are you in terms of that ramp? You know. When we think about that. Yeah, I mean, we're still definitely adding engineers, but as we noted, we are meaningfully slowing fixed cost growth in 2023, which means less hiring in 2022 and certainly in 2023. You know, obviously heavy hiring in 2022 would lead to meaningful fixed cost growth in 2023. We are slowing quite a bit. I think that is because we're reaching scale in a number of our different departments, which is great to see. Engineering, we are still hiring, but we've slowed the pace there as well. I think across the board we've slowed down and in some departments are really starting to reach full scale. Thanks. Thank you. Our next question comes from Joseph Greff of J.P. Morgan. Your line is open. Hey, guys. Jason Park, I just wanted to follow up on your comment about, you know, taking out a meaningful amount of fixed costs. I guess that was more of a forward year commentary than elaborating on this year. Of the $2.9 billion of adjusted operating expenses this year, how much of that would you characterize as fixed? Obviously, G&A is gonna be a big component of that, you disclosed that. Does that comment about fixed costs coming down next year on an absolute basis, is that inclusive of, you know, new state launches such as Maryland, Ohio, Kansas, Puerto Rico, Massachusetts, and, you know, potentially California? Thank you. Yeah, great question. Yeah, absolutely. Looking into 2023, we've been consistent in saying that the fixed cost growth will slow down meaningfully into next year. In terms of more specifics, you know, we are working through our detailed budgeting process now. We'll be in a position to provide more color on what 2023 will look like, likely in our November earnings call. On your question around sort of incorporating new state thinking into our fixed cost growth, I would say, you know, we think about new states really down to the contribution profit level, gross profit minus dedicated advertising within each new state. I would say that new states at this point won't drive additional fixed cost growth. Thank you. Thank you. Our next question comes from Chad Beynon of Macquarie. Your line is open. Just in terms of the competition that you're seeing out there, I know there were a few competitors that kind of had a half-baked product last NFL season, and they have at least a strategy in place to attempt to gain market share this year. Do you expect that there will be any market share shifts this fourth quarter into NFL? Or do you think, you know, the big three, obviously including you guys, will be kind of stable as we see it? Thanks. You know, I feel very good about our NFL plan, and I think that, you know, we've kind of gotten used to each year for one reason or another, we hear chatter of, this or that competitor that are gonna make some big moves. You know, we feel like we've held pretty well, through all of that. I think, you know, we're just continuing to focus on our own, plans and making sure that we're being very customer-centric and doing the things that we think will help us have the strongest market share over the long term. My hope certainly is that we gain share. I can't really speak for, you know, others. I know you were asking about some of our competitors, you know, and whether they'd hold or gain or not. I don't know. We're not, you know, privy to some of the plans they have. I think on our end, we feel pretty excited about the plans we have for NFL season. We feel really good about the plans we have for, you know, activating around start, as well as continuing to maintain strong engagement, both, you know, customer acquisition, driving more parlays and better bet mix and all the key metrics. I think if we execute that plan, then we're hopeful that we'll actually gain some share in the back half of the year. Thank you very much. Appreciate it. You're welcome. Thank you. Our next question comes from Robin Farley of UBS. Your line is open. Thanks. I wonder for California, if you could remind us what you're expecting, you know, what that could be on a full year basis in terms of, you know, potential EBITDA loss initially, and then what your expectations are for maybe timing, you know, assuming the referendum would pass, what timing for that would be? Thanks. Thank you. It's a good question. You know, obviously, we're a little ways away from there. We gotta pass it first, and then, I think, you know, as far as what the potential impact of the P&L could be next year, both top and bottom line, you know, that's largely dependent on if it passes, of course, but then also timing of launch. So, you know, really hard to say. I think once we have more clarity, hopefully, you know, after the ballot initiative passes, you know, within a little bit of time, there'll start to be some clarity, if it passes, on when the launch might occur. At that point, I think we'll feel comfortable providing some estimates. Right now, there's just too many moving variables for us to do that. Yeah. I would add, Robin, you know, it's not just California, it's the pipeline, including Kansas, Maryland, Ohio, Puerto Rico, and it's, you know, knock on wood, Massachusetts. There is a lead time between the formal legalization and the launch, which is regulation writing and licensing process. It's always a little hard to tell on exactly what the launch date will be. In terms of the economics of a new state, we did provide some color in our March 2022 Investor Day on what percentage of the population we would expect to acquire over the first six months and the effect of CAC. So that at least helps you understand what the marketing investment would be in the early period were a state to launch sort of in the beginning of an NFL season. Okay, great. Thank you. Then just one quick follow-up. I think you kind of alluded to in your remarks was your withhold in the quarter, you know, as expected. I didn't think it was specifically said in the slides or anything, but I guess in your comments, is that what we should conclude on the hold impact in Q2? Thanks. Yes. We were very pleased with hold. It was as expected in the quarter. Great. Thank you. Thank you. Our next question comes from Bernie McTernan of Needham. Your line is open. For me first, just on keeping on California, Jason, you sound pretty bullish on the potential for the ballot initiative to pass last quarter. Just wanted to gauge your temperature to see if anything's changed in your thoughts on the probability there. Then for Jason Park, can you just put some context around the $100 million of cost reductions this year? Is that the run rate we should expect for the end of the year? How long should it take to get to that run rate level, and which line item should we expect to see it in? First on California, I think, you know, really nothing has changed. We kind of are where we expect it to be. You know, right now, we're very focused on educating voters about what the benefits to, you know, homelessness, mental health, also having a legal and regulated online sports betting market will help keep customers who are betting through illegal sites right now safe. I think there's quite a few benefits for California, and we're focused on trying to articulate that to the voters. We'll see where it goes, but we feel, you know, just as optimistic as we did a quarter ago, and I continue to believe that we'll get this over the line. But still, you know, long way to the election, so lots can happen. We're certainly not celebrating yet, and things could swing either way. Jason, do you wanna take the $100 million dollar? Yeah. Yeah. Yeah. You know, just to reiterate, we had alluded to about $60 million of 2022 opportunity, cost opportunity, that we talked about back in May, and another $40 million in 2022 opportunity that we were able to find in the quarter. So a couple things, Bernie. A, that $100 million is not on a full year basis, so going into 2023, that would improve just looking at it on a full year basis. I do feel like those are permanent improvements in our cost structure. B, some of those items. I mean, it was up and down the P&L, ranging from vendors that sit in our COGS, vendors in sales and marketing, product and technology, and G&A. To the extent that some of the savings were in COGS, you would expect the quantum to increase as revenue increases too, as we negotiate better rates on some of those folks. That's a little bit more color. In terms of specifically where the 100 came out from COGS versus P&T versus G&A versus S&M, it was really sort of across everything. I would say, you know, this was a really dedicated initiative that That we drove through the company. It's been a great mindset shift across the employee base to balance top-line growth with finding efficiencies. I think there's just a ton of buy-in company-wide that we can do this type of thing without impacting the customer. We're really proud of the outcome here, and we'll always be looking for more opportunities like that. Great. Thank you both. Thank you. Our next question comes from Brandt Montour of Barclays. Your line is open. Thanks for taking my question. Just on GNOG, a few months in now, after you know, gaining full control of that asset. I'm just wondering if you guys, you know, have an updated view on where you think your market share can get, on that, on the combined iGaming business. Yeah, I think, you know, a lot of that obviously remains to be seen, but right now we feel it's very consistent with what we've shared in the past in our Investor Day presentations. You know, perhaps there's a little upside there, but I think it's too early for us to sit here and say it's gonna be better than what we've previously shared. I think that's a good number to go off of and, you know, we feel like that's the right target for now. You know, you're right, we've had it for a quarter. It's still a very short period of time. We haven't migrated the platform yet. We haven't really been able to, you know, see the realization of some of the revenue synergies that we believe will occur from that. You know, we're cautiously optimistic that we can, you know, improve even beyond what we've said in the past. We're still too early to be saying, you know, we think it's gonna be any different than what we said previously. Great. Thanks so much. No problem. Thank you. Our next question comes from Jordan Bender of JMP Securities. Your line is open. Hey, hey, it's Jordan. Thanks for taking my question. The guidance raise for the full year was slightly less than the beat in the quarter. Outside of the marketplace revenues, is there kind of anything to call out in that guidance raise? Thanks. Well, you know, I think there's a couple things. One, you know, really the OSB and iGaming business are actually up. We are increasing the outlook there. Marketplace, the primary reason that changed is as we got closer to launching Reignmakers, you know, we updated our assessment of the way revenue needs to be recognized given that the games are played throughout the season. You know, and so not only does that shift some Q3 into Q4, it also shifts some H2 into 2023. Importantly, those cash flows are received in year, so that is consistent with what we thought in the past. From a, you know, GAAP accounting standpoint, some of the revenue will need to be recognized at later points in the season. That was the primary driver of why we didn't 100% flow through the beat. You know, last time we hadn't quite completed our assessment of revenue recognition, and the update was baked into this one. I do wanna reemphasize that we actually took up the forecast for OSB and iGaming. Great. Thank you. Thank you. Okay. This does conclude the conference portion of the call. I'll just turn the call back over to Jason Robins, CEO, for any closing remarks. Thank you all for joining us on today's call. We had an excellent second quarter. We continue to be excited about 2022, and we look forward to speaking with you over the next few weeks. I hope you all stay safe and well and are enjoying your summers. Thank you. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect.