DraftKings Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 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, 2024, as filed with the SEC on February 14, 2025 (the "2024 Annual Report"). Cautionary Statement Regarding Forward-Looking Statements This Report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 that reflect future plans, estimates, beliefs and expected performance. 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,” “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. Any statements contained herein that are not statements of historical fact may be forward-looking statements, such as: • factors relating to our business, operations and financial performance, including: • our ability to effectively compete in the global entertainment and gaming industries; • our ability to successfully acquire and integrate new operations; • our ability to obtain and maintain licenses with gaming authorities; • our inability to recognize deferred tax assets and tax loss carryforwards; • market and global conditions and economic factors beyond our control, as well as the potential impact of general economic conditions and the potential impact of new and existing laws, regulations, or policies, including those relating to tariffs, import/export, or trade restrictions, 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; • our ability to raise financing in the future; • the timing, amount or duration of the Company’s stock repurchase program; • our success in retaining or recruiting officers, key employees or directors; and • litigation and the ability to adequately protect our intellectual property rights. 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 2024 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. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any of these statements to reflect events or circumstances occurring after the date of this Report, except as required by applicable law. New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects. 33 Our Business We are a digital sports entertainment and gaming company. We provide users with online and retail sports betting (together, “Sportsbook”), online casino (“iGaming”) and daily fantasy sports (“DFS”) product offerings, as well as digital lottery courier, media, and other product offerings. Our mission is to make life more exciting by responsibly creating the world’s favorite real-money games and betting experiences. We accomplish this by creating an environment where our users can find enjoyment and fulfillment through Sportsbook, iGaming and DFS, as well as digital lottery courier, media, and other product offerings. We are also highly focused on our responsibility as a steward of this new era in real-money gaming. Our ethics guide our decision making, with respect to both the tradition and integrity of sports and our investments in regulatory compliance and consumer protection. We continue to make deliberate and substantial investments in support of our mission and long-term growth. For example, we have invested in our product offerings and technology in order to continuously launch new product innovations; improve marketing, merchandising, and operational efficiency through data science; and deliver a great user experience. We also make significant investments in sales and marketing and incentives to grow and retain our paid user base, including personalized cross-product offers and promotions, and promote brand awareness to attract the “skin-in-the-game” sports fan. Together, these investments have enabled us to create a leading product built on scalable technology, while attracting a user base that has resulted in the rapid growth of our business. Our priorities are to (a) continue to invest in our product offerings, (b) launch our product offerings in new jurisdictions, (c) create replicable and predictable jurisdiction-level unit economics in sports betting and iGaming and (d) expand our product offerings. When we launch our Sportsbook and iGaming product offerings in a new jurisdiction, we invest heavily in user acquisition, retention and cross-selling until the new jurisdiction provides a critical mass of users engaged across our product offerings. Our current technology is highly scalable with relatively minimal incremental spend required to launch our product offerings in new jurisdictions. We will continue to manage our fixed-cost base in conjunction with our market entry plans and focus our variable spend on marketing, user experience and support and regulatory compliance to become the product of choice for users and to maintain favorable relationships with regulators. We also expect to improve our profitability over time as our revenue and gross profit expand as jurisdictions 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 frequency 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”. Financial Highlights and Trends The following table sets forth a summary of our financial results for the periods indicated: Three Months Ended March 31, (amounts in thousands, except per share amounts) 2025 2024 Revenue $ 1,408,806 $ 1,174,996 Net Loss (33,864) (142,568) Adjusted EBITDA (1) 102,630 22,390 Basic and Diluted Loss Per Share (0.07) (0.30) Adjusted Earnings (Loss) Per Share (2) 0.12 0.03 (1) Adjusted EBITDA is a non-GAAP financial measure. 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. GAAP. 34 (2) Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure. 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. GAAP. Revenue increased by $233.8 million in the three months ended March 31, 2025 compared to the three months ended March 31, 2024 as a result of continued healthy customer engagement, efficient acquisition of new customers, the expansion of the Company’s Sportsbook product offering into new jurisdictions, higher structural Sportsbook hold percentage, improved promotional reinvestment for Sportsbook, and the impact of our acquisition of Jackpocket Inc. (“Jackpocket”), which was completed on May 22, 2024 (the “Jackpocket Transaction”). 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, digital lottery courier or other offerings via our technology. For reported periods longer than one month, we average the MUPs for the months in the reported period. Although the number of unique paid users includes those users that have participated in a real-money, paid engagement using only promotional incentives (which has not been a material number of users to date), which are fungible with other funds deposited into their wallets on our technology, it does not include users who have made a deposit but have not yet had a real-money, paid engagement. MUPs is a key indicator of the scale of our online gaming user base and awareness of our brand. We believe that year-over-year growth in MUPs is also generally indicative of the long-term revenue growth potential of our online gaming product offerings, although MUPs in individual periods may be less indicative of our longer-term expectations. 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 months ended March 31, 2024 and 2025: Average Revenue per MUP (“ARPMUP”). We define and calculate ARPMUP as the average monthly revenue, excluding revenue from gaming software services, for a reporting period, divided by the average number of MUPs for the same period. 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 months ended March 31, 2024 and 2025: 35 The increase in MUPs for the three months ended March 31, 2025, compared to the same periods in 2024, primarily reflects strong unique payer retention and acquisition across our Sportsbook and iGaming product offerings and the impact of the Jackpocket Transaction. Excluding the impact of the Jackpocket Transaction, MUPs increased 0.4 million or 10.8% to 3.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. ARPMUP decreased in the three months ended March 31, 2025, compared to the same periods in 2024 , primarily due to lower ARPMUP for Jackpocket customers, compared to DraftKings’ other product offerings, which was partially offset by structural improvement in our Sportsbook hold percentage and improved promotional reinvestment for Sportsbook. Excluding the impact of the Jackpocket Transaction, ARPMUP increased $8, or 6.8% to $122.1 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 . Sportsbook Handle. We define Sportsbook Handle as the total amount of settled customer wagers on our Sportsbook product offering. Sportsbook Handle provides useful information to investors and management as it is a key indicator of volume and customer engagement on our Sportsbook product offering that is not impacted by variability of sport outcomes and provides important insight into underlying growth trends. We do not utilize handle information to track performance of our iGaming products because iGaming is generally not subject to the same variability in outcomes. Sportsbook Net Revenue Margin. We define Sportsbook Net Revenue Margin as Sportsbook revenue as a percentage of Sportsbook Handle. This provides useful information to investors and management as it is a key indicator in measuring the combined impact of our overall margin on our Sportsbook product offering and promotional reinvestment. 36 The chart below presents our Sportsbook Handle, Sportsbook Net Revenue Margin, and revenue disaggregation for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, (amounts in thousands) 2025 2024 $ Change % Change Sportsbook Handle $ 13,880,391 $ 12,001,424 $ 1,878,967 15.7 % Sportsbook Revenue 881,957 734,055 147,902 20.1 % Sportsbook Net Revenue Margin 6.4% 6.1% N/A N/A Sportsbook Revenue 881,957 734,055 147,902 20.1 % iGaming Revenue 423,471 369,997 53,474 14.5 % Other Revenue 103,378 70,944 32,434 45.7 % Total Revenue $ 1,408,806 $ 1,174,996 $ 233,810 19.9 % Sportsbook Handle increased by $1,879.0 million, or 16%, to $13,880.4 million in the three months ended March 31, 2025, from $12,001.4 million in the three months ended March 31, 2024. The increase is primarily due to MUPs increasing in 2025 as compared to 2024. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook product offering. Sportsbook Net Revenue Margin increased by 0.3 percentage points, to 6.4% in the three months ended March 31, 2025, from 6.1% in the three months ended March 31, 2024. The increase is primarily due to structural improvement in our Sportsbook hold percentage and improved promotional reinvestment. iGaming revenue increased $53.5 million , or 14.5% , to $423.5 million in the three months ended March 31, 2025, from $370.0 million in the three months ended March 31, 2024. The increase is primarily due to an increase in MUPs for the product offering. Other revenue increased $32.4 million, or 46% , to $103.4 million in the three months ended March 31, 2025, from $70.9 million in the three months ended March 31, 2024. The increase is primarily due to the inclusion of revenue from Jackpocket. We consummated the Jackpocket Transaction on May 22, 2024. Non-GAAP Information This Report includes Adjusted EBITDA and Adjusted Earnings (Loss) Per Share, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe Adjusted EBITDA and Adjusted Earnings (Loss) Per Share are useful in evaluating our operating performance, similar to measures reported by our publicly-listed U.S. competitors, and regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted EBITDA and Adjusted Earnings (Loss) Per Share are not intended to be a substitute for any U.S. GAAP financial measure. As calculated, they may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income and expense, income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below. We define and calculate Adjusted Earnings (Loss) Per Share as basic earnings (loss) per share attributable to common stockholders before the impact of amortization of acquired intangible assets; stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below. We include non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA and Adjusted Earnings (Loss) Per Share exclude certain expenses that are required in accordance with U.S. GAAP 37 because they are non-recurring items (for example, in the case of transaction-related costs and advocacy and other related legal expenses), non-cash expenditures (for example, in the case of amortization of acquired intangible assets, depreciation and amortization, remeasurement of warrant liabilities and stock-based compensation), or non-operating items which are not related to our underlying business performance (for example, in the case of interest income and expense and litigation, settlement and related costs). Adjusted EBITDA The table below presents our Adjusted EBITDA reconciled to our net income (loss), which is the most directly comparable financial measure calculated in accordance with U.S. GAAP, for the periods indicated: Three Months Ended March 31, (amounts in thousands) 2025 2024 Net loss $ (33,864) $ (142,568) Adjusted for: Depreciation and amortization (1) 70,116 53,180 Interest income (9,489) (15,067) Interest expense 5,094 649 Income tax provision (benefit) (5,600) (351) Stock-based compensation (2) 78,846 93,535 Transaction-related costs (3) — 4,908 Litigation, settlement, and related costs (4) — 9,320 Advocacy and other related legal expenses (5) — 285 (Gain) loss on remeasurement of warrant liabilities (2,495) 18,094 Other non-recurring costs and non-operating (income) costs (6) 22 405 Adjusted EBITDA $ 102,630 $ 22,390 (1) The amounts include the amortization of acquired intangible assets of $42.7 million and $29.3 million for the three months ended March 31, 2025 and 2024, 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 the evaluation, negotiation, and consummation of transactions and offerings that are under consideration, pending, or completed, as well as integration costs related to acquisitions. (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. 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 investee’s losses and other costs relating to non-recurring and non-operating items. 38 Adjusted Earnings (Loss) Per Share The table below presents the Company’s Adjusted Earnings (Loss) Per Share reconciled to its basic earnings (loss) per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated: Three Months Ended March 31, 2025 2024 Basic earnings (loss) per share attributable to common stockholders $ (0.07) $ (0.30) Adjusted for: Amortization of acquired intangible assets (1) 0.09 0.06 Stock-based compensation (2) 0.16 0.20 Transaction-related costs (3) — 0.01 Litigation, settlement, and related costs (4) — 0.02 Advocacy and other related legal expenses (5) — — (Gain) loss on remeasurement of warrant liabilities (0.01) 0.04 Other non-recurring and non-operating costs (income) — — Tax impact of adjusting items (6) (0.05) — Adjusted Earnings (Loss) Per Share* $ 0.12 $ 0.03 _____________ * Weighted average number of shares used to calculate Adjusted Earnings (Loss) Per Share for the three months ended March 31, 2025 and 2024 was 493.3 million and 474.2 million, respectively; totals may not add due to rounding. (1) The amounts include the amortization of acquired intangible assets of $42.7 million and $29.3 million for the three months ended March 31, 2025 and 2024, 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 the evaluation, negotiation, and consummation of transactions and offerings that are under consideration, pending, or completed, as well as integration costs related to acquisitions. (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. 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) Beginning in the first quarter of the 2025, the Company began applying an estimated non-GAAP effective tax rate of 25%. The non-GAAP effective tax rate reflects the non-GAAP tax provision commensurate with the Company’s level of non-GAAP profitability, which was determined after adjusting for the non-GAAP adjustments presented above and excluding the impact of changes in the valuation allowance. 39 Results of Operations Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024 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, (amounts in thousands, except percentages) 2025 2024 $ Change % Change Revenue $ 1,408,806 $ 1,174,996 $ 233,810 19.9 % Cost of revenue 843,803 710,069 133,734 18.8 % Sales and marketing 343,680 340,699 2,981 0.9 % Product and technology 103,260 88,815 14,445 16.3 % General and administrative 164,394 174,251 (9,857) (5.7) % Income (loss) from operations (46,331) (138,838) 92,507 (66.6) % Interest income 9,489 15,067 (5,578) (37.0) % Interest expense (5,094) (649) (4,445) 684.9 % Gain (loss) on remeasurement of warrant liabilities 2,495 (18,094) 20,589 (113.8) % Other gain (loss), net 22 (735) 757 (103.0) % Income (loss) before income tax and equity method investments (39,419) (143,249) 103,830 (72.5) % Income tax provision (benefit) (5,600) (351) (5,249) 1,495.4 % (Gain) loss from equity method investments 45 (330) 375 (113.6) % Net income (loss) attributable to common stockholders $ (33,864) $ (142,568) $ 108,704 (76.2) % Revenu e. Revenue increased by $233.8 million, or 19.9%, to $1,408.8 million in the three months ended March 31, 2025, from $1,175.0 million in the three months ended March 31, 2024. The increase was primarily attributable to our Sportsbook and iGaming product offerings, which increased $201.4 million , or 18.2% , to $1,305.4 million in the three months ended March 31, 2025 , from $1,104.1 million in the three months ended March 31, 2024 , due to MUPs increasing by 26.5% , partially offset by ARPMUP decreasing by 5.3% as compared to the three months ended March 31, 2024. The increase in MUPs was due to strong player retention and acquisition across our Sportsbook and iGaming product offerings, the expansion of our Sportsbook product offering into new jurisdictions and the Jackpocket Transaction. The decrease in ARPMUP was due to lower ARPMUP for Jackpocket customers compared to customers for DraftKings’ existing product offerings prior to the Jackpocket Transaction, partially offset by structural improvement in our Sportsbook hold percentage and improved promotional reinvestment for Sportsbook and iGaming. Cost of Revenue . Cost of revenue increased $133.7 million , or 18.8% , to $843.8 million in the three months ended March 31, 2025 , from $710.1 million in the three months ended March 31, 2024 . The increase was due primarily to revenue growth from our expanded product and jurisdictional footprint, including the launch of our Sportsbook product offering in North Carolina and Washington, D.C. in 2024. In particular, the cost of revenue increase was primarily attributable to an increase in our variable expenses, such as gaming taxes and payment processing fees, which increased $81.7 million and $29.1 million, respectively. The remaining increase was primarily attributable to an increase in our variable platform costs resulting from additional customer activity and an increase in amortization of intangible assets of $18.3 million. Cost of revenue as a percentage of revenue decreased by 0.5 percentage points to 59.9% in the three months ended March 31, 2025 , as compared to 60.4% in the three months ended March 31, 2024 , reflecting, in part, structural improvement in our Sportsbook hold rate, an improved Sportsbook Net Revenue Margin, and improved promotional reinvestment for our Sportsbook product offering, 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 DFS product offering. Sales and Marketing. Sales and marketing expense increased $3.0 million, or 0.9%, to $343.7 million in the three months ended March 31, 2025, from $340.7 million in the three months ended March 31, 2024. The increase was primarily attributable to higher stock-based compensation expense. Product and Technology. Product and technology expense increased $14.4 million, or 16.3%, to $103.3 million in the three months ended March 31, 2025, from $88.8 million in the three months ended March 31, 2024 due to increased headcount in our product and engineering departments. 40 General and Administrative. General and administrative expense decreased $9.9 million, or 5.7%, to $164.4 million in the three months ended March 31, 2025, from $174.3 million in the three months ended March 31, 2024. This decrease was primarily driven by a decrease in non-core litigation expense of $9.3 million. Interest Income. We recorded interest income of $9.5 million in the three months ended March 31, 2025, compared to $15.1 million in the three months ended March 31, 2024, due to fluctuations in cash balances and interest rates during the respective periods. Interest Expense. We recorded interest expense of $5.1 million in the three months ended March 31, 2025, compared to $0.6 million in the three months ended March 31, 2024, primarily due to interest incurred on the Term B Facility. Gain (Loss) on Remeasurement of Warrant Liabilities. We recorded a gain of $2.5 million on remeasurement of warrant liabilities in the three months ended March 31, 2025, compared to a loss of $18.1 million in the three months ended March 31, 2024, due to changes in the underlying share price of our Class A common stock. Other Gain (Loss), net . We recorded a nominal gain in the three months ended March 31, 2025, as compared to a loss of $0.7 million in the three months ended March 31, 2024. Income Tax Provision (Benefit). We recorded an income tax benefit of $5.6 million in the three months ended March 31, 2025 , as compared to an income tax benefit of $0.4 million in the three months ended March 31, 2024 . Although we have a cumulative three year loss position, based on our recent financial performance and our future projections, we could record a reversal of all, or a portion of the valuation allowance associated with U.S. deferred tax assets in future periods. However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time of the assessment. Net Income (Loss). Net loss decreased by $108.7 million to a net loss of $33.9 million in the three months ended March 31, 2025, as compared to a net loss of $142.6 million in the three months ended March 31, 2024, for the reasons discussed above. Liquidity and Capital Resources We had $1,119.7 million in cash and cash equivalents as of March 31, 2025 (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. We will continue to evaluate our long-term operating performance and cash needs and believe we are well positioned to continue to fund the operations of our business long-term. Debt. In March 2021, we issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million (the “Convertible Notes”). The Convertible Notes mature on March 15, 2028, subject to earlier conversion, redemption or repurchase. In connection with the pricing of the Convertible Notes and the exercise of the option to purchase additional Convertible Notes, we entered into privately negotiated capped call transactions (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to DraftKings Inc.’s Class A common stock upon any conversion of the Convertible Notes. 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, 2025, the Convertible Notes, net of issuance costs, balance was $1,257.1 million. Revolving Credit Facility. In November 2024, we and certain of our subsidiaries entered into a credit agreement (the “Credit Agreement”) with various financial institutions, as lenders, and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent, providing for a senior secured revolving credit facility of up to $500.0 million (the “Revolving Credit Facility”). The Revolving Credit Facility provides for revolving loans, swing line borrowings and letters of credit and has a maturity date of November 7, 2029. As of March 31, 2025, $10.0 million in letters of credit were issued under the Credit Agreement, with $490.0 million available for borrowing. Term Loan . In March 2025, we and certain of our subsidiaries entered into a first amendment to the Credit Agreement, which provides for a new class of incremental term loans under the Credit Agreement in an aggregate principal amount of $600.0 million (the “Term B Facility” and, such term loans, the “Term B Loan”). The Term B Facility requires principal payments in the amount of 1.00% per annum of the original aggregate principal amount of the Term B Loan payable in quarterly installments. Term B Loan bear interest at the Company’s election at either (i) in the case of Term SOFR Loans, Term SOFR plus an applicable margin of 1.75% per annum, or (ii) in the case of ABR Term Loans, ABR plus an applicable margin 41 of 0.75% per annum (with each of the capitalized terms used in clauses (i) and (ii) as defined in the Credit Agreement). As of March 31, 2025, there were $600.0 million aggregate principal amount of Term B Loan outstanding. 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, 2025, these purchase obligations were $839.9 million, with $317.8 million payable in the remainder of 2025. Stock Repurchase Program. On July 30, 2024, our Board of Directors authorized the repurchase of an aggregate of up to $1.0 billion of our Class A common stock through open market purchases, privately negotiated transactions or other transactions in accordance with applicable securities laws. The Company repurchased 3.7 million shares for $142.3 million during the three months ended March 31, 2025. As of March 31, 2025, we have purchased 4.8 million shares of Class A common stock since the inception of the stock repurchase program. Cash Flows The following table summarizes our cash flows for the periods indicated: Three Months Ended March 31, (amounts in thousands) 2025 2024 Net cash provided by (used in) operating activities $ (119,016) $ (70,395) Net cash provided by (used in) investing activities (39,019) (39,199) Net cash provided by (used in) financing activities 372,823 (30,642) Net increase (decrease) in cash and cash equivalents, restricted cash, and cash reserved for users 214,788 (140,236) Cash and cash equivalents, restricted cash, and cash reserved for users at beginning of period 1,330,193 1,623,493 Cash and cash equivalents, restricted cash, and cash reserved for users at end of period $ 1,544,981 $ 1,483,257 Operating Activities . Net cash used in operating activities in the three months ended March 31, 2025 was $119.0 million, compared to $70.4 million used in operating activities in the three months ended March 31, 2024, primarily from $141.7 million of cash used from changes in operating assets and liabilities from timing differences, offset by an improvement in net loss, net of non-cash items , of $93.1 million. Investing Activities. Net cash used in investing activities during the three months ended March 31, 2025 increased by $0.2 million to $39.0 million, compared to $39.2 million in the three months ended March 31, 2024, primarily due to a decrease of $10.0 million in cash paid for gaming licenses, offset by an increase of $8.6 million in cash paid for internally developed software costs . Financing Activities. Net cash provided by (used in) financing activities during the three months ended March 31, 2025 increased by $403.5 million to $372.8 million, compared to $30.6 million used in the three months ended March 31, 2024, primarily driven by $588.1 million of cash received from entering into the Term B Facility, partially offset by $142.3 million in treasury stock purchases under the Stock Repurchase Program, and an increase of $40.8 million of RSU withhol ding activity relating to tax obligations upon vesting of restricted stock units. Commitments and Contingencies Refer to Note 13 of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments as of March 31, 2025. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates. 42 During the three months ended March 31, 2025, there were no changes to the critical accounting estimates discussed in the 2024 Annual Report. Item 3. 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, 2025. Refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk in the 2024 Annual Report.