What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-04 compared with 2023-05-05 · 98 added, 49 removed, 160 unchanged (48% of the section changed)

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consummated its acquisition of Golden Nugget Online Gaming, Inc.

(together with its subsidiaries unless the context requires otherwise, “GNOG”), pursuant to a definitive agreement and plan of merger, dated August 9, 2021 (the “GNOG Merger Agreement”), in an all-stock transaction (the “GNOG Transaction”).

(together with its subsidiaries, unless the context requires otherwise, “GNOG”), pursuant to a definitive agreement and plan of merger, dated August 9, 2021, in an all-stock transaction (the “GNOG Transaction”).

DraftKings’ consolidated financial statements exclude GNOG’s operations prior to the GNOG Closing Date, unless indicated otherwise.

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Unless otherwise indicated, the terms “DraftKings,” the “Company,” “we,” “us,” or “our” refer to DraftKings Inc.

(or, in respect of periods prior to the GNOG Closing Date, Old DraftKings), together with its consolidated subsidiaries.

(or, with respect to periods prior to the GNOG Closing Date, Old DraftKings), together with its consolidated subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

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The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.

Our historical results are not necessarily indicative of the results that may be expected for any period in the future as our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section entitled “Risk Factors” included elsewhere in this Report.

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• our inability to recognize deferred tax assets and tax loss carryforwards;

• market and global conditions and economic factors beyond our control, including the potential adverse effects of the global coronavirus (“COVID-19”) pandemic (or the emergence of additional variants or strains thereof), as well as the potential impact of general economic conditions, including inflation, rising interest rates and instability in the banking system, on our liquidity, operations and personnel;

• market and global conditions and economic factors beyond our control, including the potential adverse effects of the global coronavirus pandemic (or the emergence of additional variants or strains thereof), as well as the potential impact of general economic conditions, including inflation, rising interest rates and instability in the banking system, on our liquidity, operations and personnel;

• significant competition and competitive pressures from other companies worldwide in the industries in which we operate;

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• litigation and the ability to adequately protect our intellectual property rights.

These risks and other factors include those set forth under the caption “Risk Factors” in our 2022 Annual Report.

In addition to these risks, other factors that could cause or contribute to such differences include those set forth under the caption “Risk Factors” in our 2022 Annual Report.

Due to the uncertain nature of these factors, management cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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We also expect to improve our profitability over time as our revenue and gross profit expand as states mature, and our variable marketing expenses and fixed costs stabilize or grow at a slower rate.

Our path to profitability is based on the acceleration of positive contribution profit growth driven by increased revenue and gross profit generation from ongoing efficient customer acquisition enabled by the transition from local to regional to national advertising, strong customer retention, improved monetization from increased frequency of customer play and higher hold percentage, as well as scale benefits from investments in our product offerings and technology and general and administrative functions.

On a consolidated Adjusted EBITDA basis, we expect to achieve profitability when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the percentage of the U.S.

Our path to profitability is based on the acceleration of positive contribution profit growth driven by increased revenue and gross profit generation from ongoing efficient customer acquisition that is enabled by the transition from local to regional to national advertising, strong customer retention, improved monetization from increased frequency of customer play and higher hold percentage, as well as scale benefits from investments in our product offerings and technology and general and administrative functions.

In any given period, we expect to achieve profitability on a consolidated Adjusted EBITDA basis when total contribution profit exceeds the fixed costs of our business, which depends, in part, on the percentage of the U.S.

adult population that has access to our product offerings and the other factors summarized in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.

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The following table sets forth a summary of our financial results for the periods indicated:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(amounts in thousands)

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$ 874,927 $ 466,185 $ 1,644,579 $ 883,390

(77,270) (217,103) (474,418) (684,796)

Adjusted EBITDA (1)

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See “Non-GAAP Information” below for additional information about this measure and a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with U.S.

Revenue increased by $352.4 million in the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the strong performance of our Sportsbook and iGaming product offerings as a result of robust customer acquisition and retention, the successful launches of those product offerings in additional jurisdictions and reduced promotional intensity.

Revenue increased by $408.7 million and $761.2 million in the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022, respectively, primarily due to the strong performance of our Sportsbook and iGaming product offerings as a result of robust customer acquisition and retention, the successful launches of those product offerings in additional jurisdictions and reduced promotional intensity.

Key Performance Indicators

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We expect the number of MUPs to grow as we attract, retain and re-engage users in new and existing jurisdictions and expand our product offerings to appeal to a wider audience.

The chart below presents our average MUPs for the three months ended March 31, 2022 and 2023:

The charts below present our average MUPs for the three and six months ended June 30, 2022 and 2023:

Average Revenue per MUP (“ARPMUP”).

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ARPMUP is a key indicator of our ability to drive usage and monetization of our product offerings.

The chart below presents our ARPMUP for the three months ended March 31, 2022 and 2023:

The increase in MUPs for the three months ended March 31, 2023, compared to the same period in 2022, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming products as well as the expansion of our Sportsbook and iGaming products into new states, partially offset by a decline in DFS MUPs.

ARPMUP increased in the three months ended March 31, 2023, compared to the same period in 2022, primarily due to structural improvement in our Sportsbook hold rates and reduced promotional intensity.

The charts below present our ARPMUP for the three and six months ended June 30, 2022 and 2023:

The increase in MUPs for the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming products as well as the expansion of our Sportsbook and iGaming products into new states, partially offset by a decline in DFS MUPs.

ARPMUP increased in the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily due to structural improvement in our Sportsbook hold rate and reduced promotional intensity.

Non-GAAP Information

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GAAP, for the periods indicated:

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(amounts in thousands) 2023 2022 2023 2022

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Interest income, net (12,745) (1,929) (23,885) (2,077)

Income tax provision 1,368 469

Income tax provision (benefit) 651 (81,226) 2,019 (80,757)

Stock-based compensation (2)

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Transaction-related costs (3)

425 10,505 425 14,279

Litigation, settlement, and related costs (4)

4,136 2,446 6,699 4,396

Advocacy and other related legal expenses (5)

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Other non-recurring costs and non-operating (income) costs (6)

277 5,652 375 (28,830)

Adjusted EBITDA $ 72,972 $ (118,134) $ (148,639) $ (407,643)

(1) The amounts include the amortization of acquired intangible assets of $29.8 million and $19.2 million for the three months ended March 31, 2023 and 2022, respectively.

(1) The amounts include the amortization of acquired intangible assets of $28.9 million and $27.1 million for the three months ended June 30, 2023 and 2022, respectively, and $58.8 million and $46.3 million for the six months ended June 30, 2023 and 2022, respectively.

(2) Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans.

(3) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with pending or completed transactions and offerings, including costs relating to the GNOG Transaction in 2022.

(3) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with proposed, pending or completed transactions and offerings, including costs relating to the GNOG Transaction for the three and six months ended June 30, 2022.

(4) Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our core business operations.

(5) Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate certain product offerings and are actively seeking licensure, or similar approval, for those product offerings.

For the three months ended March 31, 2023 and 2022, we did not incur any such costs.

For the three and six months ended June 30, 2023 and 2022, we did not incur any such costs.

This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.

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Results of Operations

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022

The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods:

Three months ended March 31,

Three months ended June 30,

(amounts in thousands, except percentages) 2023 2022 $ Change % Change

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Loss from operations (69,045) (308,922) 239,877 77.6 %

Interest income, net 11,140 148 10,992 7,427.0 %

Interest income 13,411 2,590 10,821 417.8 %

Interest expense (666) (661) (5) 0.8 %

(Loss) gain on remeasurement of warrant liabilities (20,041) 14,315 (34,356) (240.0) %

Other income (expense), net 45 (5,573) 5,618 (100.8) %

Loss before income tax provision and loss from equity method investment (76,296) (298,251) 221,955 74.4 %

Income tax provision (benefit) 651 (81,226) (81,877) 100.8 %

Loss from equity method investment 323 78 (245) (314.1) %

Net loss $ (77,270) $ (217,103) $ 139,833 64.4 %

Revenue increased by $408.7 million, or 87.7%, to $874.9 million in the three months ended June 30, 2023, from $466.2 million in the three months ended June 30, 2022.

The increase was primarily attributable to our online gaming revenues, which increased $415.7 million, or 95.8%, to $849.8 million in the three months ended June 30, 2023, from $434.1 million in the three months ended June 30, 2022, due to MUPs increasing by 44.3% as compared to the three months ended June 30, 2022.

The increase in MUPs was due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook and iGaming product offerings into new jurisdictions.

Online gaming revenues also increased due to structural improvement in our Sportsbook hold rate and reduced promotional intensity, which contributed to ARPMUP growth of 33.4% compared to the three months ended June 30, 2022.

Cost of Revenue .

Cost of revenue increased $197.6 million, or 63.2%, to $510.3 million in the three months ended June 30, 2023, from $312.8 million in the three months ended June 30, 2022.

Our online gaming product offerings accounted for substantially all of this increase, reflecting growth in revenue from our expanded product and jurisdictional footprint, including the launch of our Sportsbook product offering in Kansas, Maryland, Massachusetts, and Ohio since June 30, 2022.

In particular, the cost of revenue increase was primarily attributable to an increase in our variable expenses, such as product taxes and payment processing fees which increased $132.8 million and $19.8 million, respectively.

The remaining increase was primarily attributable to an increase in our variable platform costs and revenue share arrangements resulting from additional customer activity.

Cost of revenue as a percentage of revenue decreased by 8.8% percentage points to 58.3% in the three months ended June 30, 2023, as compared to 67.1% in the three months ended June 30, 2022, reflecting, in part, structural improvement in our Sportsbook hold rate and reduced promotional intensity, partially offset by a change in revenue mix from our more mature DFS product offering to our Sportsbook and iGaming product offerings, which, in general, produce revenue at a higher cost per revenue dollar relative to our more mature DFS product offering.

Sales and Marketing.

Sales and marketing expense increased $10.0 million, or 5.0%, to $207.5 million in the three months ended June 30, 2023, from $197.5 million in the three months ended June 30, 2022.

The increase was primarily attributable to activities related to acquiring and retaining players, such as advertising and the development of marketing campaigns.

Product and Technology.

Product and technology expense increased $12.7 million, or 16.5%, to $89.9 million in the three months ended June 30, 2023, from $77.2 million in the three months ended June 30, 2022.

The increase primarily reflects additions to our product operations and engineering headcount.

General and Administrative.

General and administrative expense decreased $51.4 million, or 27.4%, to $136.3 million in the three months ended June 30, 2023, from $187.6 million in the three months ended June 30, 2022.

This decrease was primarily driven by a reduction in stock-based compensation expense of $42.5 million and a reduction in transaction-related costs of $10.1 million.

(Loss) Gain on Remeasurement of Warrant Liabilities.

We recorded a loss on remeasurement of warrant liabilities of $20.0 million in the three months ended June 30, 2023, compared to a gain of $14.3 million in the three months ended June 30, 2022 primarily due to changes in the underlying share price of our Class A common stock.

Other Income, Net .

We recorded a de minimis amount of other income, net in the three months ended June 30, 2023, as compared to a loss of $5.6 million in the three months ended June 30, 2022.

This increase was primarily attributable to a change in the fair value of certain financial assets recorded in the three months ended June 30, 2022.

Net loss decreased by $139.8 million to $77.3 million in the three months ended June 30, 2023, as compared to a net loss of $217.1 million in the three months ended June 30, 2022, for the reasons discussed above.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

The following table sets forth a summary of our consolidated results of operations for the interim periods indicated, and the changes between periods:

Six months ended June 30,

(amounts in thousands, except percentages) 2023 2022 $ Change % Change

Revenue $ 1,644,579 $ 883,390 $ 761,189 86.2 %

Cost of revenue 1,032,063 626,146 405,917 64.8 %

Sales and marketing 596,620 518,981 77,639 15.0 %

Product and technology 177,994 158,554 19,440 12.3 %

General and administrative 296,732 404,215 (107,483) (26.6) %

Loss from operations (458,830) (824,506) 365,676 44.4 %

Interest income 25,206 3,391 21,815 643.3 %

Interest expense (1,321) (1,314) (7) 0.5 %

(Loss) gain on remeasurement of warrant liabilities (37,076) 26,996 (64,072) (237.3) %

Other income, net 64 32,309 (32,245) (99.8) %

Loss before income tax provision and loss from equity method investment (471,957) (763,124) 291,167 38.2 %

Income tax provision 1,368 469 (899) 191.7 %

Income tax provision (benefit) 2,019 (80,757) (82,776) 102.5 %

Loss from equity method investment 442 2,429 1,987 81.8 %

Net loss $ (474,418) $ (684,796) $ 210,378 30.7 %

Revenue increased $352.4 million, or 84.5%, to $769.7 million in the three months ended March 31, 2023, from $417.2 million in the three months ended March 31, 2022.

The increase was primarily attributable to our online gaming revenues, which increased $348.5 million, or 90.1%, to $735.2 million in the three months ended March 31, 2023, from $386.7 million in the three months ended March 31, 2022, primarily due to MUPs increasing by 39.2% and ARPMUP increasing by 35.4%, in each case, as compared to the three months ended March 31, 2022.

MUPs and ARPMUP increased primarily due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook and iGaming product offerings into new jurisdictions, structural improvement in our Sportsbook hold rate and reduced promotional intensity.

Revenue increased by $761.2 million, or 86.2%, to $1,644.6 million in the six months ended June 30, 2023, from $883.4 million in the six months ended June 30, 2022.

The increase was primarily attributable to our online gaming revenues, which increased $764.2 million, or 93.1%, to $1,585.0 million in the six months ended June 30, 2023, from $820.8 million in the six months ended June 30, 2022, primarily due to MUPs increasing by 41.4% as compared to the six months ended June 30, 2022.

Online gaming revenues also increased due to structural improvement in our Sportsbook hold rate and reduced promotional intensity, which contributed to ARPMUP growth of 35.7% compared to the six months ended June 30, 2022.

Cost of Revenue .

Cost of revenue increased $208.4 million, or 66.5%, to $521.7 million in the three months ended March 31, 2023, from $313.4 million in the three months ended March 31, 2022.

Cost of revenue increased $405.9 million, or 64.8%, to $1,032.1 million in the six months ended June 30, 2023, from $626.1 million in the six months ended June 30, 2022.

The remaining increase was primarily attributable to an increase in our variable platform costs and revenue share arrangements resulting from additional customer activity.

Cost of revenue as a percentage of revenue decreased by 7.3 percentage points to 67.8% in the three months ended March 31, 2023, as compared to 75.1% in the three months ended March 31, 2022, reflecting, in part, structural improvement in our Sportsbook hold rate and reduced promotional intensity, partially offset by a change in revenue mix from our more mature DFS product offering to our Sportsbook and iGaming product offerings, which in general, produce revenue at a higher cost per revenue dollar relative to our more mature DFS product offering.

Cost of revenue as a percentage of revenue decreased by 8.1% percentage points to 62.8% in the six months ended June 30, 2023, as compared to 70.9% in the six months ended June 30, 2022, reflecting, in part, structural improvement in our Sportsbook hold rate and reduced promotional intensity, partially offset by a change in revenue mix from our more mature DFS product offering to our Sportsbook and iGaming product offerings, which in general, produce revenue at a higher cost per revenue dollar relative to our more mature DFS product offering.

Sales and Marketing.

Sales and marketing expense increased $67.7 million, or 21.1%, to $389.1 million in the three months ended March 31, 2023, from $321.5 million in the three months ended March 31, 2022.

The increase was primarily attributable to an increase of $42.2 million from activities to acquire and retain players in new jurisdictions that we operate in, such as marketing costs, including advertising and the development of marketing campaigns.

Sales and marketing expense increased $77.6 million, or 15.0%, to $596.6 million in the six months ended June 30, 2023, from $519.0 million in the six months ended June 30, 2022.

The increase was primarily attributable to an increase of $57.8 million from activities related to acquiring and retaining players, such as advertising and the development of marketing campaign s.

Product and Technology.

Product and technology expense increased $6.7 million, or 8.3%, to $88.1 million in the three months ended March 31, 2023, from $81.4 million in the three months ended March 31, 2022.

Product and technology expense increased $19.4 million, or 12.3%, to $178.0 million in the six months ended June 30, 2023, from $158.6 million in the six months ended June 30, 2022.

The increase primarily reflects additions to our product operations and engineering headcount.

General and Administrative.

General and administrative expense decreased $56.1 million, or 25.9%, to $160.5 million in the three months ended March 31, 2023, from $216.6 million in the three months ended March 31, 2022.

This decrease was primarily driven by a reduction in stock-based compensation expense of $66.3 million, partially offset by an increase in cash-based compensation expense due to an increase in headcount.

General and administrative expense decreased $107.5 million, or 26.6%, to $296.7 million in the six months ended June 30, 2023, from $404.2 million in the six months ended June 30, 2022.

This decrease was primarily driven by a reduction in stock-based compensation expense of $108.8 million and a reduction in transaction-related costs of $13.9 million, partially offset by an increase in cash-based compensation expense due to an increase in headcount.

(Loss) Gain on Remeasurement of Warrant Liabilities.

We recorded a loss on remeasurement of warrant liabilities of $17.0 million in the three months ended March 31, 2023, compared to a gain of $12.7 million in the three months ended March 31, 2022 primarily due to changes in the underlying share price of our Class A common stock.

We recorded a loss on remeasurement of warrant liabilities of $37.1 million in the six months ended June 30, 2023, compared to a gain of $27.0 million in the six months ended June 30, 2022 primarily due to changes in the underlying share price of our Class A common stock.

Other Income, Net .

We had de minimis other income in the three months ended March 31, 2023, as compared to $37.9 million in the three months ended March 31, 2022.

This decrease was primarily attributable to a change in the fair value of certain financial assets.

Net loss decreased by $70.5 million to $397.1 million in the three months ended March 31, 2023, as compared to a net loss of $467.7 million in the three months ended March 31, 2022, for the reasons discussed above.

We recorded a de minimis amount of other income, net in the six months ended June 30, 2023, as compared to $32.3 million in the six months ended June 30, 2022.

This decrease was primarily attributable to a change in the fair value of certain financial assets recorded in the six months ended June 30, 2022.

Net loss decreased by $210.4 million to $474.4 million in the six months ended June 30, 2023, as compared to a net loss of $684.8 million in the six months ended June 30, 2022, for the reasons discussed above.

Liquidity and Capital Resources

We had $1.1 billion in cash and cash equivalents as of March 31, 2023 (excluding player cash, which we segregate from our operating cash balances on behalf of our paid users for all jurisdictions and product offerings).

We had $1.1 billion in cash and cash equivalents as of June 30, 2023 (excluding player cash, which we segregate from our operating cash balances on behalf of our paid users for all jurisdictions and product offerings).

We believe our cash on hand is sufficient to meet our current working capital and capital expenditure requirements for a period of at least twelve months.

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The net cost of $124.0 million incurred to enter into the Capped Call Transactions was recorded as a reduction to additional paid-in capital on the Company’s consolidated balance sheet.

As of March 31, 2023, the Convertible Notes, net of issuance costs, balance was $1,251.8 million .

As of June 30, 2023, the Convertible Notes, net of issuance costs, balance was $1,252.4 million .

We have lease arrangements for certain corporate office facilities, data centers, and motor vehicles.

As of March 31, 2023, the Company had lease obli gations of $70.4 million, with $4.0 million payabl e within 12 months.

As of June 30, 2023, the Company had lease obli gations of $67.7 million, with $3.3 million payabl e within 12 months.

Other Purchase Obligations .

We have certain non-cancelable contracts with vendors, licensors and others requiring us to make future cash payments.

As of March 31, 2023, these purchase obligations were $1,616.5 million, with $326.8 million payable in the remainder of 2023.

As of June 30, 2023, these purchase obligations were $1,577.4 million, with $235.2 million payable in the remainder of 2023.

The following table summarizes our cash flows for the periods indicated:

Three months ended March 31,

Six months ended June 30,

(amounts in thousands) 2023 2022

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Operating Activities .

Net cash used in operating activities in the three months ended March 31, 2023 decreased $155.2 million to $201.5 million, compared to $356.7 million in the three months ended March 31, 2022, mainly reflecting an improved net loss, net of non-cash items, of $81.5 million, as well as a cash in-flow from changes in operating assets and liabilities of $13.1 million compared to an outflow of $60.7 million in the three months ended March 31, 2022, primarily due to improved collection of accounts receivable and timing of payments.

Net cash used in operating activities in the six months ended June 30, 2023 decreased $310.1 million to $219.2 million, compared to $529.3 million in the six months ended June 30, 2022, mainly reflecting an improvement in net loss, net of non-cash items, of $284.3 million, as well as a cash outflow from changes in operating assets and liabilities of $83.7 million compared to an outflow of $106.9 million in the six months ended June 30, 2022, primarily due to improved collection of accounts receivable and timing of payments.

Investing Activities.

Net cash used in investing activities during the three months ended March 31, 2023 increased by $4.5 million to $27.6 million from $23.1 million during the same period in 2022, mainly reflecting an increase in cash paid for internally developed software costs.

Net cash used in investing activities during the six months ended June 30, 2023 decreased by $120.5 million to $27.0 million from $147.5 million during the same period in 2022, mainly reflecting $24.4 million of proceeds from the sale of marketable equity securities and other financial assets in 2023 and a reduction of $96.5 million from cash paid for acquisitions, net of cash acquired, related to the GNOG Transaction in 2022.

Financing Activities.

Net cash used in financing activities during the three months ended March 31, 2023 increased by $12.9 million to $25.2 million from $12.3 million during the same period in 2022, primarily reflecting purchases of treasury stock related to the satisfaction of withholding taxes due upon the vesting of restricted stock units.

Net cash used in financing activities during the six months ended June 30, 2023 increased by $25.3 million to $37.8 million from $12.5 million during the same period in 2022, primarily reflecting purchases of treasury stock related to the satisfaction of withholding taxes due upon the vesting of restricted stock units.

Commitments and Contingencies

Refer to Note 12 of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments as of March 31, 2023.

Refer to Note 12 of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments as of June 30, 2023.

Critical Accounting Estimates

Our financial statements have been prepared in accordance with U.S.

Our consolidated financial statements have been prepared in accordance with U.S.

Our discussion and analysis of the financial condition and results of operations are based on these financial statements.

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Actual results could differ materially from these estimates.

During the three months ended March 31, 2023, there were no changes to the critical accounting estimates discussed in the 2022 Annual Report.

During the six months ended June 30, 2023, there were no changes to the critical accounting estimates discussed in the 2022 Annual Report.

Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in our exposure to market risk during the three months ended March 31, 2023.

There have been no significant changes in our exposure to market risk during the six months ended June 30, 2023.

Refer to Item 7A.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis