What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-03 · 59 added, 118 removed, 140 unchanged (56% of the section changed)

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The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Report”) and the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 16, 2024 (the "2023 Annual Report").

On May 5, 2022 (the “GNOG Closing Date”), DraftKings Inc.

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, 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.

In connection with the GNOG Transaction, DraftKings Inc.

became the going-forward public company and the direct parent company of both DraftKings Holdings Inc.

(formerly DraftKings Inc.), a Nevada corporation (“Old DraftKings”), and GNOG, and DraftKings Inc.

is the registrant filing this Report as the successor registrant for Old DraftKings.

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

(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 forward-looking statements depend upon events, risks and uncertainties that may be outside of our control.

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.

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.

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

Our historical results are not necessarily indicative of the results that may be expected for any events 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 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, as well as the potential impact of general economic conditions, including inflation and rising interest rates, 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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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 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.

We are continuing to increase our profits by utilizing the efficient customer acquisition that is enabled by the transition from local to regional to national advertising, maintaining strong customer retention, improving monetization from increased frequency of customer play and higher hold percentage, as well as scaling 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.

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

Three months ended September 30, Nine months ended September 30,

Three months ended March 31,

(amounts in thousands)

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(142,568) (397,148)

(283,103) (450,494) (757,521) (1,135,290)

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 $288.0 million and $1,049.2 million in the three and nine months ended September 30, 2023 compared to the three and nine months ended September 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 improved promotional reinvestment for Sportsbook and iGaming.

Revenue increased by $405.3 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, 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 our Sportsbook product offering in additional jurisdictions, and improved promotional reinvestment for Sportsbook and iGaming.

Key Performance Indicators

Monthly Unique Payers (“MUPs”).

We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, or other consumer product offerings via our technology.

We define MUPs as the number of unique paid users per month who had one or more real-money, paid engagements across one or more of our Sportsbook, iGaming, DFS, or Marketplace product offerings via our technology.

For reported periods longer than one month, we average the MUPs for the months in the reported period.

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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 charts below present our average MUPs for the three and nine months ended September 30, 2022 and 2023:

The chart below presents our average MUPs for the three months ended March 31, 2023 and 2024:

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 charts below present our ARPMUP for the three and nine months ended September 30, 2022 and 2023:

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

ARPMUP increased in the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to structural improvement in our Sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming.

The chart below presents our ARPMUP for the three months ended March 31, 2023 and 2024:

The increase in MUPs for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming product offerings, as well as the expansion of our Sportsbook product offering into new states, partially offset by a decline in DFS MUPs.

ARPMUP increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to structural improvement in our Sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming.

Non-GAAP Information

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GAAP, for the periods indicated:

Three months ended September 30, Nine months ended September 30,

Three months ended March 31,

(amounts in thousands) 2024 2023

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53,180 48,213

Interest income, net (13,750) (6,301) (37,635) (8,378)

Income tax provision (benefit) 1,291 3,177 3,310 (77,580)

Interest (income) expense, net (14,418) (11,140)

Income tax (benefit) provision (351) 1,368

Stock-based compensation (2)

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Transaction-related costs (3)

681 751 1,106 15,030

Litigation, settlement, and related costs (4)

3,891 1,390 10,590 5,786

Advocacy and other related legal expenses (5)

— 16,558 — 16,558

Loss (gain) on remeasurement of warrant liabilities 7,751 6,797 44,827 (20,199)

Loss on remeasurement of warrant liabilities 18,094 17,035

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

1,227 (8,216) 1,602 (37,046)

Adjusted EBITDA $ 22,390 $ (221,611)

(1) The amounts include the amortization of acquired intangible assets of $29.2 million and $29.8 million for the three months ended September 30, 2023 and 2022, respectively, and $88.0 million and $76.1 million for the nine months ended September 30, 2023 and 2022, respectively.

(1) The amounts include the amortization of acquired intangible assets of $29.3 million and $29.8 million for the three months ended March 31, 2024 and 2023, 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 proposed, pending or completed transactions and offerings, including costs relating to the GNOG Transaction for the three and nine months ended September 30, 2022.

(3) Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with transactions under consideration and pending or completed transactions and offerings, including costs relating to the Jackpocket transaction in 2024.

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

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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.

(6) Primarily includes the change in fair value of certain financial assets, as well as our equity method share of the investee’s losses and other costs relating to non-recurring and non-operating items.

Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the GNOG Closing Date of May 5, 2022.

(6) Primarily includes the change in fair value of certain financial assets, as well as our equity method share of investee’s losses and other costs relating to non-recurring and non-operating items.

Results of Operations

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

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

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 September 30,

Three months ended March 31,

(amounts in thousands, except percentages) 2024 2023 $ Change % Change

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Loss from operations (138,838) (389,785) 250,947 (64.4) %

Interest income 14,420 6,969 7,451 106.9 %

Interest expense (670) (668) (2) 0.3 %

(Loss) gain on remeasurement of warrant liabilities (7,751) (6,797) (954) 14.0 %

Other income (expense), net (1,217) 8,257 (9,474) (114.7) %

Loss before income tax provision and loss from equity method investment (281,804) (447,267) 165,463 37.0 %

Income tax provision (benefit) 1,291 3,177 1,886 59.4 %

Loss from equity method investment 8 50 42 84.0 %

Interest income (expense), net 14,418 11,140 3,278 29.4 %

Loss on remeasurement of warrant liabilities (18,094) (17,035) (1,059) 6.2 %

Other (loss) gain, net (735) 19 (754) (3,968.4) %

Loss before income tax (benefit) provision and (income) loss from equity method investment (143,249) (395,661) 252,412 (63.8) %

Income tax (benefit) provision (351) 1,368 (1,719) (125.7) %

(Income) loss from equity method investment (330) 119 (449) (377.3) %

Net Loss $ (142,568) $ (397,148) $ 254,580 (64.1) %

Revenue increased by $288.0 million, or 57.4%, to $790.0 million in the three months ended September 30, 2023, from $501.9 million in the three months ended September 30, 2022.

The increase was primarily attributable to our online gaming revenues, which increased $299.8 million, or 64.0%, to $768.3 million in the three months ended September 30, 2023, from $468.5 million in the three months ended September 30, 2022, due to MUPs increasing by 40.0% as compared to the three months ended September 30, 2022.

Revenue increased by $405.3 million, or 52.7%, to $1,175.0 million in the three months ended March 31, 2024, from $769.7 million in the three months ended March 31, 2023.

The increase was primarily attributable to our online gaming revenues, which increased $417.0 million, or 56.7%, to $1,152.2 million in the three months ended March 31, 2024, from $735.2 million in the three months ended March 31, 2023, due to MUPs increasing by 22.8% and ARPMUP increasing by 25.0% as compared to the three months ended March 31, 2023.

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 product offering into new jurisdictions.

Online gaming revenues also increased due to structural improvement in our Sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming, which contributed to ARPMUP growth of 14.0% compared to the three months ended September 30, 2022.

The increase in ARPMUP was due to structural improvement in our Sportsbook hold percentage and improved promotional reinvestment for our Sportsbook and iGaming product offering.

Cost of Revenue .

Cost of revenue increased $170.8 million, or 45.8%, to $543.5 million in the three months ended September 30, 2023, from $372.7 million in the three months ended September 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 Kentucky, Maryland, Massachusetts, and Ohio since September 30, 2022.

Cost of revenue increased $188.3 million, or 36.1%, to $710.1 million in the three months ended March 31, 2024, from $521.7 million in the three months ended March 31, 2023.

This increase was in part due to revenue growth from our expanded product and jurisdictional footprint, including the launch of our Sportsbook product offering in Ohio, Massachusetts, Kentucky, and Maine throughout 2023 as well as Vermont and North Carolina in 2024.

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 $124.6 million and $25.6 million, respectively.

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

Cost of revenue as a percentage of revenue decreased by 5.5% percentage points to 68.8% in the three months ended September 30, 2023, as compared to 74.3% in the three months ended September 30, 2022, reflecting, in part, structural improvement in our Sportsbook hold rate, 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 decreased $8.4 million, or 2.6%, to $313.3 million in the three months ended September 30, 2023, from $321.7 million in the three months ended September 30, 2022.

The decrease was primarily attributable to lower advertising costs, primarily related to a reduction in league and team partnerships of $5.3 million, as well as reduced stock-based compensation expense of $2.2 million.

Product and Technology.

Product and technology expense increased $12.7 million, or 16.7%, to $89.0 million in the three months ended September 30, 2023, from $76.3 million in the three months ended September 30, 2022.

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

General and Administrative.

General and administrative expense decreased $55.5 million, or 29.8%, to $130.8 million in the three months ended September 30, 2023, from $186.3 million in the three months ended September 30, 2022.

This decrease was primarily driven by a reduction in stock-based compensation expense of $44.9 million and a reduction in advocacy expense of $16.6 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 $7.8 million in the three months ended September 30, 2023, compared to a loss of $6.8 million in the three months ended September 30, 2022, due to changes in the underlying share price of our Class A common stock.

Other Income, Net .

We recorded a loss of $1.2 million in the three months ended September 30, 2023, as compared to income of $8.3 million in the three months ended September 30, 2022.

This change was primarily attributable to the receipt of income pursuant to a tax indemnity in the three months ended September 30, 2022.

Net loss decreased by $167.4 million to $283.1 million in the three months ended September 30, 2023, as compared to a net loss of $450.5 million in the three months ended September 30, 2022, for the reasons discussed above.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 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:

Nine months ended September 30,

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

Revenue $ 2,434,536 $ 1,385,328 $ 1,049,208 75.7 %

Cost of revenue 1,575,517 998,838 576,679 57.7 %

Sales and marketing 909,943 840,695 69,248 8.2 %

Product and technology 266,999 234,853 32,146 13.7 %

General and administrative 427,493 590,476 (162,983) (27.6) %

Loss from operations (745,416) (1,279,534) 534,118 41.7 %

Interest income 39,626 10,360 29,266 282.5 %

Interest expense (1,991) (1,982) (9) 0.5 %

(Loss) gain on remeasurement of warrant liabilities (44,827) 20,199 (65,026) (321.9) %

Other income, net (1,153) 40,566 (41,719) (102.8) %

Loss before income tax provision and loss from equity method investment (753,761) (1,210,391) 456,630 37.7 %

Income tax provision (benefit) 3,310 (77,580) (80,890) 104.3 %

Loss from equity method investment 450 2,479 2,029 81.8 %

Net loss $ (757,521) $ (1,135,290) $ 377,769 33.3 %

Revenue increased by $1,049.2 million, or 75.7%, to $2,434.5 million in the nine months ended September 30, 2023, from $1,385.3 million in the nine months ended September 30, 2022.

The increase was primarily attributable to our online gaming revenues, which increased $1,064.0 million, or 82.5%, to $2,353.3 million in the nine months ended September 30, 2023, from $1,289.3 million in the nine months ended September 30, 2022, primarily due to MUPs increasing by 40.9% as compared to the nine months ended September 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 improved promotional reinvestment, which contributed to ARPMUP growth of 25.8% compared to the nine months ended September 30, 2022.

Cost of Revenue .

Cost of revenue increased $576.7 million, or 57.7%, to $1,575.5 million in the nine months ended September 30, 2023, from $998.8 million in the nine months ended September 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 7.4% percentage points to 64.7% in the nine months ended September 30, 2023, as compared to 72.1% in the nine months ended September 30, 2022, reflecting, in part, structural improvement in our Sportsbook hold rate and improved 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 7.4 percentage points to 60.4% in the three months ended March 31, 2024, as compared to 67.8% in the three months ended March 31, 2023, reflecting, in part, structural improvement in our Sportsbook hold rate and improved promotional reinvestment for our Sportsbook and iGaming product offerings, 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 $69.2 million, or 8.2%, to $909.9 million in the nine months ended September 30, 2023, from $840.7 million in the nine months ended September 30, 2022.

The increase was primarily attributable to an increase of $51.5 million in advertising costs .

Sales and marketing expense decreased $48.4 million, or 12.4%, to $340.7 million in the three months ended March 31, 2024, from $389.1 million in the three months ended March 31, 2023.

The decrease was partially attributable to lower advertising costs of $22.5 million, as well as reduced stock-based compensation expense of $6.1 million.

Product and Technology.

Product and technology expense increased $32.1 million, or 13.7%, to $267.0 million in the nine months ended September 30, 2023, from $234.9 million in the nine months ended September 30, 2022.

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

Product and technology expense increased $0.7 million, or 0.8%, to $88.8 million in the three months ended March 31, 2024, from $88.1 million in the three months ended March 31, 2023.

General and Administrative.

General and administrative expense decreased $163.0 million, or 27.6%, to $427.5 million in the nine months ended September 30, 2023, from $590.5 million in the nine months ended September 30, 2022.

This decrease was primarily driven by a reduction in stock-based compensation expense of $153.7 million, a reduction in transaction-related costs of $14.0 million and a reduction in advocacy expense of $16.6 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 $44.8 million in the nine months ended September 30, 2023, compared to a gain of $20.2 million in the nine months ended September 30, 2022 due to changes in the underlying share price of our Class A common stock.

Other Income, Net .

We recorded a loss of $1.2 million in the nine months ended September 30, 2023, as compared to income of $40.6 million in the nine months ended September 30, 2022.

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

Net loss decreased by $377.8 million to $757.5 million in the nine months ended September 30, 2023, as compared to a net loss of $1,135.3 million in the nine months ended September 30, 2022, for the reasons discussed above.

General and administrative expense increased $13.8 million, or 8.6%, to $174.3 million in the three months ended March 31, 2024, from $160.5 million in the three months ended March 31, 2023.

This increase was

primarily driven by an increase in transaction-related costs of $4.9 million and an increase in non-core litigation costs of $6.8 million partially offset by a decrease in stock-based compensation expense of $7.2 million.

Interest Income (Expense), net.

We recorded net income interest of $14.4 million in the three months ended March 31, 2024, compared to $11.1 million in the three months ended March 31, 2023, due to fluctuations in cash balances and interest rates.

Loss on Remeasurement of Warrant Liabilities.

We recorded a loss on remeasurement of warrant liabilities of $18.1 million in the three months ended March 31, 2024, compared to a loss of $17.0 million in the three months ended March 31, 2023, due to changes in the underlying share price of our Class A common stock.

Other (Loss) Gain, net .

We recorded a loss of $0.7 million in the three months ended March 31, 2024, as compared to a gain of $0.0 million in the three months ended March 31, 2023.

Net loss decreased by $254.6 million to $142.6 million in the three months ended March 31, 2024, as compared to a net loss of $397.1 million in the three months ended March 31, 2023, for the reasons discussed above.

Liquidity and Capital Resources

We had $1.1 billion in cash and cash equivalents as of September 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 had $1.2 billion in cash and cash equivalents as of March 31, 2024 (excluding restricted cash and cash reserved for users, which we segregate 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 September 30, 2023, the Convertible Notes, net of issuance costs, balance was $1,253.1 million .

As of March 31, 2024, the Convertible Notes, net of issuance costs, balance was $1,254.4 million .

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

As of September 30, 2023, the Company had lease obli gations of $89.1 million, with $12.1 million payabl e within 12 months.

As of March 31, 2024, the Company had lease obli gations of $90.2 million, with $11.3 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 September 30, 2023, these purchase obligations were $1,485.7 million, with $126.7 million payable in the remainder of 2023.

As of March 31, 2024, these purchase obligations were $1,329.4 million, with $368.6 million payable in the remainder of 2024.

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

Nine months ended September 30,

Three months ended March 31,

(amounts in thousands) 2024 2023

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Net cash used in financing activities (30,642) (25,166)

Net decrease in cash and cash equivalents and restricted cash (191,245) (665,836)

Cash and cash equivalents and restricted cash at beginning of period 1,778,825 2,629,842

Cash and cash equivalents and restricted cash at end of period $ 1,587,580 $ 1,964,006

Net decrease in cash and cash equivalents, restricted cash, and cash reserved for users (140,236) (254,222)

Cash and cash equivalents, restricted cash, and cash reserved for users at beginning of period 1,623,493 1,778,825

Cash and cash equivalents, restricted cash, and cash reserved for users at end of period $ 1,483,257 $ 1,524,603

Operating Activities .

Net cash used in operating activities in the nine months ended September 30, 2023 improved $403.2 million to $73.8 million, compared to $477.1 million in the nine months ended September 30, 2022, mainly reflecting an improvement in net loss, net of non-cash items, of $419.9 million, slightly offset by changes in operating assets and liabilities.

Net cash used in operating activities in the three months ended March 31, 2024 improved $131.1 million to $70.4 million, compared to $201.5 million in the three months ended March 31, 2023, mainly reflecting an improvement in net loss, net of non-cash items, of $237.7 million, offset by changes in operating assets and liabilities.

Investing Activities.

Net cash used in investing activities during the nine months ended September 30, 2023 improved by $105.0 million to $66.9 million from $171.9 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, partially offset by an increase in cash paid for internally developed software.

Net cash used in investing activities during the three months ended March 31, 2024 increased by $11.6 million to $39.2 million from $27.6 million during the same period in 2023, mainly reflecting an increase in cash paid for acquisition of gaming licenses of $10.2 million.

Financing Activities.

Net cash used in financing activities during the nine months ended September 30, 2023 increased by $33.7 million to $50.5 million from $16.8 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 three months ended March 31, 2024 increased by $5.5 million to $30.6 million from $25.2 million during the same period in 2023, primarily reflecting increased cost of purchasing 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 September 30, 2023.

Refer to Note 11 of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments as of March 31, 2024.

Critical Accounting Estimates

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Actual results could differ materially from these estimates.

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

During the three months ended March 31, 2024, there were no changes to the critical accounting estimates discussed in the 2023 Annual Report.

Quantitative and Qualitative Disclosures About Market Risk

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

There have been no significant changes in our exposure to market risk during the three months ended March 31, 2024.

Refer to Item 7A.

1 unchanged sentence

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