Good day, and thank you for standing by. Welcome to the DraftKings Q1 2023 Earnings Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Stanton Dodge. 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 and Chief Executive Officer of DraftKings, who will share some opening remarks and an update on our business, and Jason Park, Chief Financial Officer of DraftKings, who 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, and thank you all for joining. I'm excited to be with you today and share that DraftKings is off to an excellent start in 2023. Revenue growth has been outstanding, supported by strong customer retention, acquisition and engagement, as well as better structural hold percentage than anticipated. First quarter revenue increased 84% year-over-year, and we are increasing our full year revenue guidance to a range of $3.135 billion-$3.235 billion, implying growth of 42% year-over-year at the midpoint, which is pretty remarkable off of a revenue base of $2.2 billion in full year 2022. At the same time, achieving efficiency remains a relentless focus. Our mantra of revenue growth and cost efficiency is gaining even more momentum throughout the organization. Due to both our strong revenue growth and our ongoing efforts to capture efficiencies, primarily within external marketing and our fixed costs, we are on the cusp of achieving profitability on an adjusted EBITDA basis. We expect to be approximately break even on an adjusted EBITDA basis in the second quarter, and we expect to achieve nearly $150 million of positive adjusted EBITDA in the fourth quarter. For the full year, we are improving our adjusted EBITDA guidance to a range of -$290 million to -$340 million, or an increase of 21% at the midpoint versus our February full year guidance. Turning to our product offerings, DraftKings has continued to introduce unique sports wagering opportunities by most recently launching live Same Game Parlays for MLB, supported by our in-house trading platform. We continue to invest in our in-house trading capabilities and technology in advance of the NFL season this fall. In iGaming, we estimate that we achieved number one GGR share in the U.S. at 26% in the first quarter. Our homegrown games continue to function as a key differentiator. For example, our exclusive DraftKings Jackpot product is now live in three states across more than 100 slots and table games. We also launched DK Horse, our standalone horse racing app, at the end of March, which offers wagering on races from hundreds of domestic and international tracks, including all three Triple Crown races, beginning with this weekend's Kentucky Derby. I am proud of the team and culture we have in place. In particular, I am proud of our team for their relentless focus on efficiency and expense management over the past 12 months. Our work on achieving ANDs is not done, and we feel great about the trajectory of our business. With that, I will turn it over to Jason Park, Chief Financial Officer. Thank you, Jason. I'll hit on the highlights, including our Q1 performance and our new and improved 2023 guidance. Please note that all income statement measures discussed, except for revenue, are on non-GAAP adjusted EBITDA basis. As Jason mentioned, the organization is executing very well and that is showing up in our results. We achieved $770 million of revenue in the quarter, which is 84% higher than our first quarter 2022 revenue. Our adjusted EBITDA of - $222 million in Q1 significantly outperformed our expectations. Structural hold percentage was better than anticipated with parlay handle mix up 400 basis points year-over-year, while promotional intensity declined, together supporting a more than 600 basis point improvement in our adjusted gross margin rate. We were particularly pleased with the results in our older state vintages. In each of our 2018-2019 and 2020-2021 state vintages, first quarter 2023 handle grew more than 25% compared to the same period in 2022. GAAP revenue grew at least 80% year-over-year. Adjusted gross margin rate increased at least 1,200 basis points year-over-year. External marketing spend declined at least 10% year-over-year. These strong results and our visibility into continued improvement have enabled us to raise our full year 2023 revenue guidance range to $3.135 billion-$3.235 billion, from $2.85 billion-$3.05 billion. We are also improving our full year 2023 adjusted EBITDA guidance range to - $290 million to $340 million from - $350 million to $450 million, or by $85 million at the midpoint. The bridge from our February full year 2023 guidance to our May full year 2023 guidance includes increases due to stronger customer retention, acquisition and engagement, structural sportsbook hold improvement, and favorable sport outcomes in the first quarter, which were partially offset by the timing of our recognition of a loyalty program expense. Customer retention, acquisition and engagement are exceeding expectations and account for approximately $195 million of the revenue improvement and approximately $80 million of the adjusted EBITDA improvement. Our structural sportsbook hold percentage forecast is also higher, supported by our introduction of in-house Same Game Parlay capabilities. This trend accounts for approximately $20 million of the revenue improvement and approximately $15 million of the adjusted EBITDA improvement. Favorable sport outcomes in the first quarter contribute approximately $20 million to the revenue improvement and approximately $15 million to the adjusted EBITDA improvement. Last, expense recognition timing is a $25 million headwind to our improved full year adjusted EBITDA guidance. As a result of greater visibility into our new loyalty program, costs that were originally expected to be expensed in the first quarter of 2024 are now expected to be expensed throughout 2023. This additional expense accrual in 2023 will not result in additional cash outflow. In terms of our full year 2023 adjusted gross margin percentage, we continue to expect to land in the range of 42%-45%. With regard to our balance sheet, we ended the first quarter with $1.1 billion of cash and now plan to end the year with more than $800 million of cash before our expected inflection to generating positive adjusted EBITDA for the full year 2024 under any reasonable new state launch scenario. In sum, we had a strong first quarter and underlying drivers are improving our outlook for 2023 and beyond. That concludes our remarks, and we will now open the line for questions. Certainly. Ladies and gentlemen, if you do have a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. In one moment for our first question. Our first question will come from Shaun Kelley of Bank of America. Your line is open. Hi, good morning, everyone, and thank you for taking my question. For either Jason or Jason, you know, just obviously wanted to talk about the revenue performance, you know, excellent in the quarter. I wanted to get your sense on if the thesis here is around improved customer retention, engagement, you know, what products or product changes in your suite are continuing that? Kind of how did this play out through the first quarter? I think, you know, from what we understand, it sounds like March was just an exceptional pickup for DraftKings. Can you talk a little bit about both that cadence and your product mix that may be helping continue engagement beyond, you know, traditional NFL season? Thank you, Shaun. Appreciate it. I think you're right. It really, the theme on the revenue side has been, customer retention, monetization. Also, we've had tremendous acquisition results. We acquired 57% more first time players year-over-year on a 27% lower cost of acquisition. Really pleased on that front too. It's been, you know, our OSB and iGaming products that have been carrying the load for us. We've been seeing, you know, really the big trend difference year-over-year is last year, we saw a bigger drop off after the NFL season ended after the Super Bowl. This year, I think due to some CRM optimization, some product enhancements on the sports betting side, as well as some, you know, similar things that we've been doing on the iGaming side. We've just seen much stronger retention flowing, you know, into late February and March and seems to be continuing into Q2 as well. Great. Maybe just as a quick follow-up, you know, as we think about the revenue outlook and the increase in the quarter, you know, are faster paybacks contemplated in that as well, as we think about just kind of what you're seeing on the individual state level? I think that's been a thesis around particularly the Ohio and Massachusetts launches. You know, is that contemplated in the revenue outlook increase here, or is that an opportunity, you know, going forward? No, absolutely. I mean, really, the way to think about it is the strong acquisition we've been seeing and have been continuing to see in those new state launches and the speed with which we penetrated into the mid-to-high single digits of population, adult population. I think that sets up for both a faster payback, meaning, you know, what used to be a two to three year time to profitability is being pulled in. Also, you know, we think that there will be more revenue contribution from those states in-year as well. It's absolutely a driver of the increased revenue forecast. I would add, Shaun, as we indicated the increase in our Q4 EBITDA, I think that a big part of that improvement is exactly what you're referring to. Thank you both. One moment for our next question. Our next question will come from Bernie McTernan of Needham & Company. Your line is open. Great. Good morning. Thanks for taking the questions. maybe to start just the reiteration of the 42%-45% gross margin guide for the year. Just given the strong performance of 1Q, just any puts and takes we should be thinking about for the remainder of the year here? I think the biggest thing is the increased acquisition that we've seen, customer acquisition. As we've noted in the past, new users are where a lot of promotion dollars are spent, and that therefore drives up the promotion dollars. That said, we are reiterating the same guide of 42%-45%. We don't see that being any different on the year. Certainly you'll see some, you know, fluctuations quarter to quarter. You'll see some things, you know, some of that show up in the flow-through rate. That's probably the biggest moving part, but overall, we don't expect it to change, you know, outside of that range this year for gross margin percentage. Understood. Not wanting to step on the toes of any maybe future potential Investor Day, but now that you've posted back-to-back quarters of really strong results on profitability, any changes to thoughts on long-term profitability or, you know, maybe getting to those long-term targets sooner? Well, you're right, we are planning on covering that at the Investor Day, so I'll hold off on comment on that until then. We will certainly have more to say about that later this year. Fair enough. Thank you. Thank you. One moment. One moment for our next question. Our next question will come from Ed Young of Morgan Stanley. Your line is open. Hi. My question relates to Slide Six about the increasing pace of customer acquisition. The 6% you've achieved in Massachusetts in the first, I guess, 50-60 days suggests that the pace is continuing to improve even further with the 23 cohort. Can you just talk to the drives of this? How much of that is related to your playbook? How much of that is the sort of stage you're at in terms of the market? Particularly, I wonder if you could comment on to what extent any of that's reflective of the competitive situation and the actions of others that were informing those faster paybacks. Thanks. I mean, I do think it's all of the above. I think, you know, all of the factors you just mentioned, all three factors are contributing in our tailwinds right now. You know, one, I think we've very much optimized our go-to-market. We now are, you know, close to two dozen states at this point. I think we've had a lot of time to really optimize that and feel very good about our new state playbook. Secondly, you know, you're seeing the effects of national advertising. That really, I think, especially in the case of Ohio and Massachusetts and Maryland, which came late, you know, or shortly following the case of Massachusetts, the NFL season, you know, a lot of that probably quick ramp was at least in part the result of, you know, a switch to national advertising, which made it more, that these states that in the past, maybe for a new state launch, hadn't seen as much of, you know, the advertising during an NFL season. Ohio and Maryland and Massachusetts saw advertising on our national advertising all year, all NFL season long. I think also there's a lot of momentum in the industry. People travel to different states, they have friends playing, so I think that's helped with faster ramp. I do think that competitively, you're right, that there's been a lot more consolidation in the last few state launches to the top two players in the sportsbook market, and I think that that's also driving it as well. Great. Thank you. Just quick follow-up on iGaming. You talked about some of the internal improvements in terms of retention through the end of the NFL season into March. I wonder if you could just, again, broaden the competitive environment question there on iGaming. Are you seeing anything particularly different in that environment? Is that informing the market share as well, or do you think it's sort of primarily sort of internal actions that's leading to that share increase? Thanks. you know, I think it's again, a mix of both. I think that, you know, you're certainly seeing both. I also think that because the cross-sell is so strong between sports betting and iGaming, that as we gain share in sports betting, we're naturally gonna gain some share in iGaming as well if we continue to do a good job with the cross-sell, which we have been doing. I think that's a big factor to consider also. Great. Thank you. One moment for our next question. Our next question will come from Carlo Santarelli of Deutsche Bank. Your line's open. Hey, guys. good morning, and thanks for taking my question. Jason, you mentioned in your prepared remarks that parlay handle was up about 400 basis points year-over-year. Could you maybe put some parameters around, A, kind of the influence that had on hold on a stabilized basis? Maybe not in the quarter, but maybe some sensitivity around that. B, could you perhaps give us kind of an estimate of what that number looks like at an absolute level? The hold rate? Sorry, the mix, the parlay mix. I don't. Yeah, we haven't disclosed that. I think, you know, we are looking right now at least for Q1, a hold rate that was in the mid-8s. It was roughly a 250 basis point year-over-year increase, and that was a combination of outcomes which were unfavorable last year and a little bit favorable this year, as well as that increased parlay mix that drove the increase. Great. Okay. Then as a follow-up, I believe last year your marketing was a little bit over $800 million. In steady state, how do you guys think about that number relative to revenue, as a percentage of revenue? I think, you know. No, sorry, post-launch. Sorry, go ahead. Et cetera. Yeah, I think you're right. It does depend, you know, in the short term, of course, on state launches. Long term, in our Investor Day, I think What did we say? About 7%-8% of revenue? A little bit more. About 10%, I believe, of revenue in our Investor Day. I think for now, as I noted on an earlier question, we'll be updating some of those metrics later this year at our new Investor Day. For now, I think we're comfortable saying we think that that's the right number. You know, I think that potentially as revenue grows, it doesn't mean that marketing would need to continue up from there. I think if you sort of take the snapshot that we put in our last Investor Day, I think at that level of scale, it looks about right. I also think that, you know, to the extent that revenue continues to grow from there, I don't think marketing has to grow linearly either. Carlo, I think marketing as a percentage of sales is a perfectly good sort of outside-in metric. Internally, we'll just continue to look at LTV to CAC as a state is in that fifth, sixth, seventh year and adjust the marketing total marketing expense dollars to reflect the adults that are left to be acquired. As we've provided those statistics on our older states, you can see that those, the absolute marketing dollars, are declining in the older states. Got it. Thank you, guys. Appreciate it. One moment for our next question. Now our next question will come from Barry Jonas of Truist Securities. Your line is open. Oh, great. Thanks. We've seen some deals across the space recently. Curious how you're thinking about M&A here? No, right now, it's not really a focus of ours. You know, we feel like we've had really strong organic growth. We're executing very well competitively. We're seeing natural consolidation of market share happen, in the U.S. I think right now, that's our focus. You know, it doesn't mean that down the road, M&A couldn't become more interesting. At the moment, we're very focused on execution. Great. Just as a follow-up, curious where you think from a state legalization perspective, where are the biggest opportunities for OSB and maybe iGaming expansion exist today? Thanks. Yeah, it's a great question. I think, you know, right now the states that we are seeing active bills that I think have a shot of moving, Texas, which, you know, we'll see. It's, different by the day, what I hear there. North Carolina, Minnesota, and I think Vermont are the ones that have the best shot to moving. Kentucky, of course, already passed this year. We don't have any update yet on the timing of launch, but we expect by our August call, we'll have a little bit more clarity there and can factor that into any future guidance to the extent that it's relevant to this year. Then, on the iGaming side, I think, you know, there's a lot of bills right now. I don't know that most of them have a good shot of moving this year. You know, the state that I think probably has the best chance on the iGaming front this year would be Illinois. Thank you so much. One moment for our next question. Our next question will come from Daniel Politzer of Wells Fargo. Your line's open. Hey, good morning, everyone. I just wanted to dive a little bit more into gross margin. Obviously, it came in nicely above. I was wondering if you could maybe unpack this a bit and talk to, you know, the puts and takes here in terms of gaming taxes, the platform costs, processing costs, and then, and the rev share. I mean, which of these pieces are tied to GGR versus handle, and what kind of moves around quarter-over-quarter? Because this is, obviously, was a big source of the upside, and we've already talked about that a little bit, but any more color there would be great. Yeah, good question. I mean, I think gross margin rate was obviously higher on a year-over-year basis by 600 basis points. Underneath that is a bunch of state complexion, Dan. You've got investment through promo dollars, which is a headwind to gross margin rate in Ohio and Massachusetts. At the same time, we're lapping a heavy promotional Q1 with the New York and Louisiana launches in Q1 of 2022. That's probably one of the largest factors that impact gross margin rate in any given period. In a bigger picture, the other elements, taxes, those are fairly well known from a statutory tax rate. Platform costs, we continue to be very thoughtful about vendors that sit within our platform costs, and you hear us talking about bringing in-house more of our game offerings, both on the OSB and iGaming side. In terms of market access, as a scale operator, we believe we get fantastic rates in states that do require market access fees. I think, you know, those are, you know, the biggest levers and elements of our gross margin rate. Got it. Thanks. Just one quick follow-up, if I may. On third quarter, I don't think expectations really change much there. Is there an expectation that maybe, you know, for Massachusetts, Ohio, maybe even Maryland, you know, you have the first football season and there's, you know, we should expect an uptick in promotions there? Or is there some element that I'm missing that maybe you should be aware of? Yeah. I think you're right in the sense that we expect that given some of the early acquisition trends we've seen in those states and knowing that Massachusetts hasn't even had any football yet, it was, you know, March Madness, but there's still, you know, probably a significant audience out there. We are baking in an increased acquisition assumption, which results in Q3, even though there might be, you know, sort of similar to what Jason was saying on the gross margin side, there's a lot of puts and takes there, too. You know, it'll probably net out, slightly better than we thought. You know, I think that's really gonna depend on how strong the customer acquisition is, and overall, H2 should definitely be better. It's really just a question of depending on acquisition trends, which are a little hard to predict in these states at that early stage of the NFL season, how much falls in Q4 versus how much falls in Q3. Got it. Thanks so much, and nice quarter. Thank you so much. Thanks, dude. One moment for our next question. Our next question will come from Benjamin Chaiken of Credit Suisse. Your line is open. Hey, how's it going? Thanks for taking my questions. I think in your previous comments last quarter, you targeted fixed cost for 23 to be up 10%-15% year-over-year. I know Jason, in a letter, in the prepared remarks, you talked about low single-digit cadence in 2Q. How are you thinking about the full year fixed cost guides? Is Is it still that 10%-15%, or has it moved around at all? Yeah, absolutely maintaining the 10%-15% on a full year basis, we called out single digit for Q2. As you could see that the fixed costs in Q1 were higher than that. Yes, maintaining the 10%-15% full year fixed cost growth. Okay. I'm kind of doing this on the fly, but that implies roughly, you know, low single digit, flat to low single digit decline in external marketing year-over-year. You know, to Carlo's question, you have some new state launches in there, which implies that the legacy states, if you will, external marketing, is coming down pretty dramatically. Is this national advertising, better product? How do you think about it? Are you pleasantly surprised, or is this all kind of according to plan? Thanks. No, I think this is according to plan. Certainly, I think the speed with which we're seeing it happen is a pleasant surprise. I think the trends are what we expected. You know, where we land on the year will be roughly flat, I believe. I think, you know, there is some plus or minus that could occur based on results. As Jason Park noted earlier, we very much, you know, treat this fluidly and are looking at the data real-time. You know, as we see how, especially Q2, I think is pretty, you know, we're pretty certain where we'll be there. I think Q3 is, you know, a little bit of flexibility depending on results. I think we expect to be in the flattish range year-over-year. If we spend a little more, I think that would also probably come with an incremental revenue expectation in Q4. I don't think anything would change on the adjusted EBITDA front. Understood. Thank you. One moment for our next question. Our next question will come from Jed Kelly of Oppenheimer & Co. Your line is open. Hey, great. Thanks for taking my question. Two, if I may. One longer term. You know, Jason, how do you think about the right approach in terms of managing the optimal hold percentage you wanna generate with the, you know, maximum number of users? My follow-up is, you know, you saw very strong growth in the vintage states. I think you said 10% unique user growth. Where are those unique users coming from? Is that more consumers being of legal age, or are you actually getting new users? Does that include Golden Nugget, or is that all organic? Thank you. Yeah, thanks. On the first question, I think the answer is we don't know yet. If you look around the world, there's markets that have significantly higher hold rates than anyone in the U.S. I've heard is targeting, simply due to, you know, some of the legal frameworks there. You know, so the point is there's a variety of data points. I know there's a lot of moving parts if one were to wanna try to put that puzzle together. I think we're very much gonna treat it iteratively, the key for us is really product market fit. Driving hold up by increasing the take, meaning making worse odds for players, is not something that I think is really being considered right now. Creating products that people want and that they retain well on and that they continue to use and get enjoyment out of, is the method. I think, you know, to the extent that we are able to keep doing that, and I think we have a lot of ideas, obviously, we've talked a lot about parlay and driving that, but there's other products like Cash Out and things like that, where there's certainly opportunity. You know, the way we think about it internally is not, hey, let's drive hold up. It's how do we get more adoption, and how do we make sure we're retaining and getting, you know, satisfaction from customers on these products? And the outcome, the consequence of that is higher hold rate. I think if we continue to approach it that way, you know, there's probably a good deal of still upside there. Where it ends is anyone's guess. We're gonna watch the data and continue to be very data-driven as a company. I'm sorry, what was the second question? Population. Where's the 10% unique user growth coming from in vintage states? You know, there's always new people coming into the market. We still haven't reached, we think, the ultimate TAM. meaning, you know, in a given, older vintage state. We have to remember we're still, you know, even in the oldest of states, less than five years into this thing. You know, I mean, iGaming, I guess, in New Jersey has been around longer, but for OSB, and outside of New Jersey, iGaming hasn't been around for more than four or five years anywhere either. I think four years is the most. Really, it's still early innings, and I think that, at this stage of most any market, you'd expect to see continued user growth and, you know, continued penetration of the population. You know, there are under the covers, you're right, there's always people that are reaching legal age. There's always people moving in and out of states. There are moving parts, but I think a lot of it is just like with any product, you don't get 100% of the adoption on day one. You get some, you know, of the most, you know, avid and excited users, and that's something we consider when we're setting our CAC targets, that you do get more casual customers as time goes on. There's still a lot of market out there. I think a lot of this is product-driven, too. The more that we create products that can appeal to the mainstream and that can be more, you know, easier and less intimidating, I think, for the average customer to understand, the more that user growth will continue. Thank you. One moment for our next question. Our next question will come from Robert Fishman of MoffettNathanson. Your line's open. Hi. Good morning. Given the current weak ad market backdrop, can you just discuss how that's helping with your additional ad buying efficiencies both on the national and local basis? Maybe, I don't know, if possible, to compare how much you're paying for an ad spot in the playoff this year compared to last year? Yeah, no doubt that there's been a reduction in market rate for advertising. It's been, you know, different in different channels. If you look at it kind of from a macro perspective, it's definitely happening across the board. You know, there is some offset in certain channels of that because there are limits placed on inventory specifically for our category. As an example, the NFL has put a restriction on, I believe it's five spots per game. Don't quote me on the number, but, you know, there's some. I think it's five per game. You know, naturally, that changes things. It doesn't have the same effect maybe in other forms of media where, you know, auto and insurance and others are competing and driving the market. No doubt, if you look at it on a kind of macro basis, there's been a reduction in ad rate, and that's part of, alongside optimization, why we've been able to have such a significant increase in customers, but actually to get that with a decrease in CAC. You usually don't see that. Usually, when you have a 50%+ increase in customers, your CAC goes up a little bit, and we saw a 27% year-over-year decline in Q1. That makes a lot of sense. Thank you. Just maybe big picture, with the current competitive landscape, it seems clear to us at least that you cemented DraftKings as a winner for this long-term opportunity. Can you just talk about plans to keep growing your market share from here and maybe even potentially close the gap with FanDuel? Yeah. I mean, first, you know, we don't take anything for granted. We assume that there's always gonna be a very competitive market and that, we don't assume we've won anything or that we have anything that we can bank on yet. I think that keeps a lot of the edge and the competitive drive for the company. No doubt, having a big competitor in FanDuel, you know, also is helpful. It gives us somebody on the OSB side to feel like we can chase down. I think, you know, similarly on the iGaming side, we've been chasing down BetMGM. For the first time in Q1, we're able to pass them for number one market share in iGaming, which we're very proud of. You know, definitely, I think having that competitive landscape is helpful in keeping our employees focused on who we need to beat. At the same time, we also understand that new competitors can enter the market at any time, and we can't take anything for granted and have to assume that we always have to be serving the customer and innovating and creating new products and new features. You know, over time, we believe that that's the key to driving loyalty is just best product, best customer experience. Got it. Thank you. I would add, if you look at the market shares relative to FanDuel on a year-over-year basis, our handle share increases are fairly comparable. It just reiterates that, you know, hold rate continues to be a very large focus area of DraftKings and again, hold rates through product mix and bringing customers additional products that they enjoy. I think as we continue to make progress on hold rate, that's going to help with relative market share vis-à-vis FanDuel. Thank you. One moment for our next question. Our next question will come from Joseph Stauff of SIG. Your line is open. Jason. I'm Jason. ask about just frame how much wider, say, your product depth is this year versus last, especially in the second quarter? I don't know how you can frame for us, like how much wider NBA product is, or especially second quarter versus last, especially as I see it kind of going into May, five states still in play, obviously Knicks and Celtics, which have huge and probably betting handle? No, I mean, you're right that the product is really night and day year-over-year. I think particularly as you look at the sportsbook product, not that we haven't made as much progress in iGaming, but, you know, it was starting from a standpoint where last Q2, we were, you know, about six, seven months removed going into the quarter from our migration, and now we've had a full extra year under our belt. We've introduced micro markets for NBA, baseball, and several other sports that are really a unique feature that nobody else has. We're the only company in the space now with live Same Game Parlay. We didn't even have Same Game Parlay a year and a half ago. Now we have the only live NBA Same Game Parlay and also the only live MLB Same Game Parlay in the market. We're continually innovating on a number of features. We added parlay insurance and just many, many other markets that didn't exist last year. I think you're exactly right. The depth and not just in terms of the markets, although certainly there's been a tremendous amount of breadth and depth increase in the markets, but of the features and the capabilities as well, has been very transformational in terms of our ability to compete for market share and to win the customer. Appreciate that. Then can you just remind us on O and your efforts and your initiatives to GNOG in particular, and just remind us of maybe the be fully, say, implemented in the market? Yeah. GNOG is, we're still focusing on the migration there and believe that we are on track. I think that, you know, GNOG has certainly been a good addition in terms of, you know, it's part of the story of why we've been able to get to number one market share. I will say that I think that the best is really still ahead there because, as long as it's, you know, not on our platform, we're not realizing the vast majority of the synergies that we put out when we did the deal, and I think those are all still on the come. We're very excited about the migration, and I think when I say synergy, it's not just the cost. Obviously, there's cost savings, also just having a superior product with better revenue and monetization on the players. You know, smoother customer experience, easier to use, superior merchandising, driving more, you know, cross-sell between games. I think all of that, easier flows on the customer acquisition side. We know for a fact that our PAM is converting at a better rate on new users than the GNOG conversion rate. Lots of good things there. We haven't realized them yet. Very excited about that and hope to start to see some of that materialize in the back half of the year. Really impressive results. Thank you so much. One moment for our next question. Our next question will come from Clark Lampen of BTIG. Your line's open. Hi. Good morning. Thanks very much. Jason, given a lot of the positive things that are happening now with the U.S. business that we've covered already on the call so far, I'm curious whether we're at a point where either near or medium term you'd feel more comfortable entertaining opportunities to expand the business maybe a little bit more broadly in overseas markets? You know, for us right now, the opportunity in the U.S. is so significant, and we are so well positioned here that that has to be the focus. At some point down the road, international will become of interest, but right now we're very focused on the U.S. At the same time, you know, obviously we understand that the capabilities that we're building on the product side, the technology side, these will be things that will give us high leverage and, you know, create really strong EBITDA margins were we to expand into international markets because a lot of the same tech and product is usable without having to add a ton of incremental cost. It's something down the road we'd consider, but right now, we think the U.S. is still in the very infancy stages. We are so strongly positioned. We're growing our market share. We're growing at a faster clip. The investments we're making are working and we wanna continue to fuel that as much as possible. Understood. Then, maybe coming back to product, we've seen, you know, some of your peers of late, looking to bolster their first party offerings. I'm curious, understanding that the priority is really building in-house, there is, you know, sort of bigger picture, a widening gap between you, FanDuel, and the rest of the sports betting market. Would you consider additional acquisitions as a means of sort of both improving the offering and magnifying that trend? Or is there one market, whether it's OSB or iGaming, where that makes more sense? You know, at this point, I don't think that that's really a focus either. You know, we're seeing market share consolidate organically, and I think at a certain point down the road, that'll reach some sort of ceiling, and then we'll evaluate that at that point. Right now, I think we feel like the, you know, similar answer to your prior question that, what we're doing is working. Companies all the time make mistakes by getting distracted when they have something that's really working instead of just focusing, and I think that's something that we feel is really important, to just continue to keep the team focused on the prize right now. Thanks very much. One moment for our next question. Our next question will come from Chad Beynon of Macquarie. Your line's open. Morning. Thanks for taking my question. As we think about the revenue guidance, Q1 was 24% of that, which I believe is slightly higher than normal, and you called out, you know, all the items that led to that strong performance. As we think about normal seasonality, understanding that, you know, it's a moving target with these structural hold changes, is there anything that, you know, that you're comfortable with providing to us just in terms of how that could look? What's really hinged on that fourth quarter or what the middle of the year could look like? Thanks. Yeah, it's a great question. I mean, I think that, if you're comparing to last year, we had unusually low hold last Q1 because of unfavorable sport outcomes. You know, in any given quarter, that can swing you. That's part of why we really focus more on annual guidance and giving some color around, you know, relatively how much we expect to fall in different, you know, halves or quarters. It does vary a little bit based on that, although over the course of the year, it tends to even out. You will see some fluctuations in terms of the revenue distribution. Also, you'll see some changes depending on timing of state launches and other things like that. I think that's really why it was a bit different, is that last year, we had really low hold. Well, it was still, you know, outcome driven, and there have been some structural hold changes that have improved too. We did see really poor sport outcomes in Q1 last year relative to this year, and that's been a big difference. As far as anything baked into future quarters, a lot of what we also improved throughout last year was already taking effect in the back half of the year. We have other initiatives that we think could lead to some upside this year, but of the things that we know we have that we've baked into our forecast, a lot of that was already realized in the back half of last year. You know, you see a bigger impact in Q1 and potentially, in the first part of Q2 as well. Whereas, you know, as we get closer to H2, some of that is kind of lapping year-over-year. Okay. Helpful. Thanks, Jason. With respect to just media tie-ins, you've done some of these exclusive live broadcasting partnerships. It appears that there will be more opportunities if you want to kind of expand with other partners in the media space. Just wondering what you've seen, you know, from success or failure with some of these exclusive deals that you've had, if the engagement is higher and maybe it's worth exploring some of those opportunities that could come up in the next 12-24 months. Yeah, I mean, I think for us, you know, continuing to optimize there is a big part of optimizing our marketing. You know, really it's a deal by deal thing. At this point, we have tremendous data, not just from our decade plus of daily fantasy sports, but now from almost five years of sports betting on what types of media deliver what types of results. That's been a big part of our year-over-year optimization. I also think that the market environment has improved, which we noted earlier on a previous question. There's a lot to like in the media space. From, you know, the standpoint of deals, we evaluate each deal on a deal-by-deal basis. The hurdle is if we were to take those same dollars and spend them on the open market, could we do at least as well? If we think we can do at least as well, then why tie them up? you know, it has to be a deal where we feel like we have some sort of strategic advantage, either access to good efficient spend at an increased scale that wouldn't be achievable elsewhere, or some sort of, you know, deal that would give us favorable pricing or, you know, something that would make it so that, having a tie-in, a tie-up of dollars versus flexibility into dollars would make sense for us. Makes sense. Thank you very much. One moment for our next question. Our next question will come from Robin Farley of UBS. Your line is open, Robin. Great. Thanks. I had two questions. One is just a follow-up. I'm sorry, I don't know if you clarified how much of the GNOG acquisition contributed to that, the 10% increase in unique users. Then I had a question also on, you know, your guidance sort of typically includes every year being 7%-9% of the population. That would take, you know, quite a few of those, smaller states you mentioned, having to legalize this year to kind of achieve that, increased access to the population for 2024. If you're, you know, if you don't see those sort of multiple legalizations, I mean, obviously if it's Texas, not an issue, but, I really referring to the other ones, is there enough organic growth from your existing states to maintain guidance even if you don't get, you know, multiple legalizations this year for 2024? Thanks. Thank you, Robin. On the first question. We actually, it's like for like. It wasn't just we took GNOG and added it in and kept no GNOG in the base. In fact, if you look at GNOG, it's actually a little bit of a downward drag on that 10% number. It would have actually been higher if you just looked at the DraftKings brand. It's, it's all included. That's, that's in there. On the second question, you know, as far as like it's gonna vary year to year, right? Right now, I think if you look at bills that are live, you could see a scenario where it's above what we forecasted below or right on. Obviously, if Texas comes through, that plus Kentucky alone is already over the target. If Texas does not, you still get into that sort of range that we've said is an expectation if North Carolina, Minnesota, and Vermont end up passing alongside Kentucky. I think either of those are potential scenarios to get at or above. Obviously, if, you know, some or none of those bills pass, then we won't. I think too early in the year to kind of call that as far as the implications and what they would be, I mean, we were still seeing nearly double year-over-year revenue growth in our older state vintages in Q1. We mentioned that earlier. I think, you know, again, people need to remember that even the oldest of states are still less than five years into this thing. There's still a ton of just organic growth happening. I do think long-term TAM, we need to continue to see state legalization. I wouldn't make too much out of whether we're above or below in any year. In fact, one of the interesting implications is really on the specific 2024 numbers. If we see less legalization, I don't really expect a tremendous difference to 2024 revenue, because a lot of the, you know, states that might legalize this year would end up launching throughout 2024. There'll be new user acquisition, things like that. So it probably won't really move the needle a whole lot on revenue, maybe a little bit, but not a ton. where it really would have an effect would be on the EBITDA, which, you know, obviously we wanna see more state legalization, but in the short term, less would mean more. Less state legalization would mean more EBITDA in 2024. You know, it's kind of an interesting way to look at it as well, I think. Great. Thanks very much. Thank you. One moment for our next question. Our next question will come from Jordan Bender of JMP Securities. Your line is open. Great. Thanks for taking my question. If we think about your legacy customers, does the promotional intensity of those players maybe look consistent with more international markets, or do you think there's still more room to save on promotions coming from those cohorts? I mean, I think definitely there's more room. It's similar to how we look at Hold. It, it can't be, you know, something where we create a worse customer value proposition, a worse experience, and you don't need to. There's plenty of levers just by making sure we get the right things targeted to the right people so that they're actually, you know, generating incremental GGR alongside the promotional dollars and having the effect that we want. There's optimization of bonus hunters still out there, which we've been very focused on. There's all sorts of levers that you can pull. Then there's still just the natural decline that you're gonna see over time as the market matures. I think you can look across Europe and see that trend in a number of different markets. No doubt there's still room there, and that's still a focus area for the team. At the same time, you know, we feel like there's no real absolute target. It's certainly about maximizing long-term NPV and player value. We're also leaving the flexibility to say that if you can find wins where you can really drive increased revenue or retention through promotions that pay back quickly, then we want you to pursue that as well. Great. Thanks. For my follow-up, on DK Horse, you know, should we be thinking about that as a revenue driver for you guys, or is that more of kind of a cross-sell opportunity into other areas of the business? Thanks. I mean, it'll have a revenue impact, but it'll be fairly de minimis on the year. We're still rolling it out. It's in, I think, 15 states now. You know, still in the process of doing that. I think we'll have more to say probably and more, more information on that once we get through the Triple Crown, particularly the Kentucky Derby, which, I think will give us a sense of, you know, what kind of customer acquisition we can expect. You know, and I think really it's still new enough that I wouldn't necessarily ascribe a whole lot of revenue this year to it. As we get smarter about how to utilize that product and cross-sell between it and Sportsbook and iGaming, I think you'll continue to see a bigger and bigger impact. It's something that we felt was important to add to our product portfolio and we'll also work to better integrate long term. Great. Thanks, Jason. Nice quarter. Thank you. One moment for our next question. Our next question will come from Ryan Sigdahl of Craig-Hallum Capital Group. Your line's open. Good morning, guys. Nice job. Thank you. Curious on Massachusetts? You guys defended your home turf very nicely there, took number one handle share by a commanding lead. How important was that psychologically to win the early battleground? I guess, did you change your spend and your strategy versus running the normal playbook that you say applied in Maryland or Ohio? You know, I think really the only thing that, we changed in terms of strategy was just making it clear that we're a hometown company, and obviously, that's unique to here. Other than that, it was pretty much the same playbook. I think, you know, New England in particular, we tend to love our own here, so we feel like that was a really good angle for this market and it worked. It was very effective from a market share perspective and a new customer acquisition perspective. we'll continue to do that, but otherwise it's the same state playbook that we've been optimizing over the last, you know, 20+ states, and I think that was the biggest reason, you know, that we've had success in penetrating because you saw similar adult penetration, maybe not quite as much market share, but similar, you know, acquisition and adult penetration in Ohio and Maryland as well. Just for my follow-up, with the live Same Game Parlay products for the NBA Major League Baseball, has that accelerated in-game betting in total, or is it just a shift in what people are betting on live and being, you know, margin accretive rather than incremental? It's definitely incremental. I mean, I think that right now we're seeing both parlay. I know we talk about parlay a lot, but we're also seeing in-game grow. You know, there's a lot of upside there. I think the biggest upside in in-game is just figuring out how to get the video feeds, lower latency for people who wanna do the, you know, play-by-play type of betting. No doubt, live Same Game Parlay has driven an increase in engagement in-game. Thanks. Good luck, guys. Thank you. One moment for our next question. Our next question will come from John DeCree at CBRE. Your line is open. Good morning, everyone. Thanks for taking my questions. Maybe the first one, which is probably a little bit of summary from a couple components that we've talked about this morning already, but with structural hold rate going up and then, you know, particularly in vintage cohorts, the promotional intensity is moderating or coming down, but yet your customer retention seems to be increasing nicely, which is a really nice tailwind. I was wondering if you kind of talk about, you know, what you think is kind of driving that success for you? Presumably, you know, customer value is going up or if they're spending more, but also coming back more frequently. I think it really starts with product. Better product will create stickier customers. I think customer experience has been a big focus. We've had significant improvements in our CX year-over-year, including the introduction of chat and other things that I think have helped a lot. Our CRM on the marketing front has been optimized, you know, for several years now, and I think we've made a lot of year-over-year improvements in that, you know, especially as it relates to some of the post-Super Bowl retention and cross-sell into iGaming. I think the CRM team has done a fantastic job. Really, it's been execution across the business. I think, you know, it's been a lot of really good work by a lot of great people across the whole company. Thanks. That's helpful. Maybe an easy one for Jason Park. I think cash at the end of the year is expected to be around $800 million. In the past, I think you've been comfortable with capitalization. Is it fair to assume with that cash balance and profitability trajectory improving that you're still comfortable with your capitalization at this point? Very comfortable with our capitalization. No need for additional capital. Great. Thanks, Jason. great quarter, guys. Congratulations. Thank you. I would now like to turn the conference back to Jason for closing remarks. Thank you all for joining us on today's call. We're off to a strong start in 2023 and are excited about the rest of the year and beyond. I look forward to speaking with you over the next few weeks and hope you all stay safe and well. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.