What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2025-11-07 · 122 added, 194 removed, 165 unchanged (66% of the section changed)

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• 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 develop and market new offerings, including prediction markets;

• our ability to effectively compete in the global sports and gaming and emerging prediction markets industries;

• our ability to successfully acquire and integrate new operations;

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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, 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;

• 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 related to tariffs, import/export or trade restrictions, volatile inflation and interest rates, on our liquidity, operations and personnel;

• significant competition and competitive pressures from other companies worldwide in the industries in which we operate, including in the emerging prediction markets industry;

• our ability to raise financing in the future;

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New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects.

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.

We are a digital sports and gaming company.

We provide users with online and retail sports betting (together, “Sportsbook”), online casino (“iGaming”), daily fantasy sports (“Fantasy”), digital lottery courier (“Lottery”), prediction markets (“Prediction Markets”) and other offerings.

Our mission is to make life more exciting by responsibly creating the world’s favorite real-money games, betting experiences and event contracts trading.

We accomplish this by creating an environment where our users can find enjoyment and fulfillment through Sportsbook, iGaming, Fantasy, Lottery and Prediction Markets, as well as our other offerings.

We are also highly focused on our responsibility as a steward of 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;

For example, we have invested in our offerings and technology in order to continuously launch new offering 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 make significant investments in sales and marketing and incentives to grow and retain our paid user base, including personalized 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 offering 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 offerings, (b) launch our offerings in new jurisdictions, (c) create replicable and predictable jurisdiction-level unit economics in Sportsbook and iGaming and (d) expand our offerings.

When we launch our Sportsbook and iGaming offerings in a new jurisdiction, we invest heavily in customer acquisition, user retention and cross-selling until the new jurisdiction provides a critical mass of users engaged across our offerings.

Our current technology is highly scalable with relatively minimal incremental spend required to launch our 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 offering 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.

Our path to increase profitability on an annual basis is based on the acceleration of positive contribution profit growth driven by increased revenue and gross profit generation from ongoing efficient customer acquisition, strong user retention, improved monetization from frequency and higher net revenue margin, as well as scale benefits from investments in our 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”.

adult population that has access to our 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(amounts in thousands, except per share amounts) 2026 2025

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167,852 102,630

Basic and Diluted Earnings (Loss) Per Share (0.52) (0.60) (0.27) (0.78)

Adjusted Earnings (Loss) Per Share (2)

(0.26) (0.17) 0.27 0.09

Basic Earnings (Loss) Per Share 0.04 (0.07)

Diluted Earnings (Loss) Per Share 0.03 (0.07)

Adjusted Diluted Earnings (Loss) Per Share (2)

(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.

(2) Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure.

(2) Adjusted Diluted Earnings (Loss) Per Share is a non-GAAP financial measure.

Revenue increased by $237.3 million in the three months ended March 31, 2026 , compared to the three months ended March 31, 2025 , primarily due to the strong performance of our Sportsbook and iGaming offerings as a result of continued healthy user engagement, efficient acquisition of new customers and higher net revenue margin.

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.

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, Fantasy, Lottery, Prediction Markets 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 and nine months ended September 30, 2024 and 2025:

MUPs is a key indicator of the scale of our 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 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 offerings to appeal to a wider audience.

The charts below present our average MUPs for the three months ended March 31, 2025 and 2026:

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 and nine months ended September 30, 2024 and 2025:

MUPs increased 1.5% in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

MUPs increased 0.4 million or 11.8% in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily reflecting strong unique payer retention and acquisition across our Sportsbook and iGaming product offer ings, and the impact of the Jackpocket Transaction.

Exc luding the impact of the Jackpocket Transaction, MUPs in creased by 0.2 million or 7.4% in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

ARPMUP increased by $3 or 3.0% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to increased revenue in iGaming as well as structural improvement in our Sportsbook hold percentage, partially offset by customer-friendly sports outcomes .

ARPMUP increased $9 or 8.1% f or the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to increased handle and improvement in our Sportsbook hold percentage.

Excluding the impact of the Jackpocket Transaction, ARPMUP in creased by $14 or 11.8% in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

We define and calculate ARPMUP as the average monthly revenue 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 offerings.

The charts below present our ARPMUP for the three months ended March 31, 2025 and 2026:

MUPs decreased 3.6% in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily reflecting lower MUPs from Lottery as a result of exiting Texas in 2025.

Exc luding the impact of our Lottery offering, MUPs in creased by 0.1 million or 2.1% in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to unique payer retention and acquisition across our Sportsbook and iGaming offerings.

ARPMUP increased by $23 or 21.3% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to improvement in our Sportsbook Net Revenue Margin.

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.

We define Sportsbook Handle as the total amount of settled customer wagers on our Sportsbook offering.

Sportsbook Handle provides useful information to investors and management as it is a key indicator of volume and customer engagement on our Sportsbook 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 offering 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.

The chart below presents our Sportsbook Handle, Sportsbook Net Revenue Margin, and revenue disaggregation for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(amounts in thousands) 2025 2024 $ Change % Change

Sportsbook Handle $ 11,402,405 $ 10,365,068 $ 1,037,337 10.0 %

Sportsbook Revenue 596,119 656,920 (60,801) (9.3) %

Sportsbook Net Revenue Margin 5.2% 6.3% N/A N/A

Sportsbook Revenue $ 596,119 $ 656,920 $ (60,801) (9.3) %

iGaming Revenue 451,300 361,460 89,840 24.9 %

Other Revenue 96,600 77,110 19,490 25.3 %

Total Revenue $ 1,144,019 $ 1,095,490 $ 48,529 4.4 %

Nine Months Ended September 30,

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 offering and promotional reinvestment.

The chart below presents our Sportsbook Handle, Sportsbook Net Revenue Margin, and revenue disaggregation for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(amounts in thousands) 2026 2025 $ Change % Change

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Total Revenue $ 1,646,076 $ 1,408,806 $ 237,270 16.8 %

Sportsbook Handle increased by $1.0 billion, or 10.0%, to $11.4 billion in the three months ended September 30, 2025, from $10.4 billion in the three months ended September 30, 2024, reflecting strong customer acquisition and continued strength in existing user engagement.

Sportsbook Handle increased by $3.6 billion, or 10.9%, to $36.8 billion in the nine months ended September 30, 2025, from $33.2 billion in the nine months ended September 30, 2024, primarily due to an increase in MUPs .

Sportsbook Net Revenue Margin decreased by 1.1 percentage points, to 5.2% in the three months ended September 30, 2025, from 6.3% in the three months ended September 30, 2024, primarily driven by customer-friendly sports outcomes.

Sportsbook Net Revenue Margin increased by 0.4 percentage points, to 6.7% in the nine months ended September 30, 2025, from 6.3% in the nine months ended September 30, 2024, primarily driven by higher structural hold percentage and improved promotional reinvestment, partially offset by customer-friendly sports outcomes in the first and third quarters.

iGaming revenue increased $89.8 million , or 24.9% , to $451.3 million in the three months ended September 30, 2025, from $361.5 million in the three months ended September 30, 2024, and increased by $222.4 million, or 20.6%, to $1,304.4 million in the nine months ended September 30, 2025, from $1,082.0 million in the nine months ended September 30, 2024.

The increase is primarily due to an increase in iGaming customers.

Other revenue increased $19.5 million, or 25.3% , to $96.6 million in the three months ended September 30, 2025, from $77.1 million in the three months ended September 30, 2024, primarily due to interest income on customer deposits.

Other revenue increased $69.9 million, or 32.5%, to $285.0 million in the nine months ended September 30, 2025, from $215.1 million in the nine months ended September 30, 2024, primarily due to interest income on customer deposits and revenue from our digital lottery courier product offering.

Sportsbook Handle increased by $0.2 billion, or 1.5%, to $14.1 billion in the three months ended March 31, 2026, from $13.9 billion in the three months ended March 31, 2025, reflecting continued customer acquisition and strength in existing user engagement.

Sportsbook Net Revenue Margin increased by 1.4 percentage points, to 7.8% in the three months ended March 31, 2026, from 6.4% in the three months ended March 31, 2025, primarily driven by an increase in hold percentage and improved promotional reinvestment.

iGaming revenue increased $37.8 million , or 8.9% , to $461.3 million in the three months ended March 31, 2026, from $423.5 million in the three months ended March 31, 2025.

The increase is primarily due to improved promotional reinvestment.

Other revenue decreased $13.5 million, or 13.0% , to $89.9 million in the three months ended March 31, 2026, from $103.4 million in the three months ended March 31, 2025, primarily due to a reduction in Fantasy entry fees and lower Lottery revenue following our exit from the Texas market.

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.

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.

This Report includes Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S.

We believe Adjusted EBITDA and Adjusted Diluted 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

substitutes for any U.S.

Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share are not intended to be substitutes for any U.S.

GAAP financial measure.

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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;

We define and calculate Adjusted Diluted Earnings (Loss) Per Share as diluted earnings (loss) per share attributable to common stockholders adjusted for the impact of amortization of acquired intangible assets;

discrete tax benefits attributed to acquisitions;

stock-based compensation;

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and the tax impact of adjusting items, 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 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).

We include non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make decisions regarding the allocation of capital and new investments.

Adjusted EBITDA and Adjusted Diluted Earnings (Loss) Per Share exclude certain expenses that are required in accordance with U.S.

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 September 30, Nine Months Ended September 30,

The table below presents our net income (loss), which is the most directly comparable financial measure calculated in accordance with U.S.

GAAP, reconciled to Adjusted EBITDA for the periods indicated:

Three Months Ended March 31,

(amounts in thousands) 2026 2025

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71,661 70,116

Interest expense (income), net 19,573 (8,328) 14,513 (36,280)

Income tax provision (benefit) (12,065) (1,287) (5,875) (75,208)

Interest (income) expense, net 5,739 (4,395)

Income tax (benefit) provision 6,369 (5,600)

Stock-based compensation (2)

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Transaction-related costs (3)

6,860 840 6,860 24,333

Litigation, settlement, and related costs (4)

— 20,448 — 40,572

Advocacy and other related legal expenses (5)

— 6,018 — 6,303

(Gain) loss on remeasurement of warrant liabilities (4,233) (21) (877) 8,282

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

(18,379) 40,010 (42,626) 20,223

Loss (gain) on remeasurement of warrant liabilities — (2,495)

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

Adjusted EBITDA $ 167,852 $ 102,630

(1) The amounts include the amortization of acquired intangible assets of $33.9 million and $55.5 million for the three months ended September 30, 2025 and 2024, respectively, and $113.0 million and $121.2 million for the nine months ended September 30, 2025 and 2024, respectively.

(1) The amounts include the amortization of acquired intangible assets of $37.6 million and $42.7 million for the three months ended March 31, 2026 and 2025, respectively.

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

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(4) Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our ordinary-course 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

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.

(5) Reflects non-recurring and non-ordinary course costs relating to advocacy efforts primarily in pursuit of legalization of DraftKings offerings.

For the three months ended March 31, 2026, this spend primarily relates to legislative efforts for legalizing iGaming, supporting a ballot measure for legalizing Sportsbook, and other advocacy activities related to certain states.

Advocacy and legal expenses incurred in the ordinary course of business have not been adjusted in this measure.

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

For the three and nine months ended September 30, 2024, this amount also includes $27.8 million in expense related to the discontinuance of our Reignmakers product offering, $7.5 million in expenses related to the termination of a market access agreement, and a $5.8 million loss on the sale of Vegas Sports Information Network, LLC.

For the nine month period ended September 30, 2024, these costs are offset by $20.9 million related to gaming tax credits as a result of audits and appeals related to prior periods.

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 U.S.

Adjusted Diluted Earnings (Loss) Per Share

The table below presents the Company’s Adjusted Diluted Earnings (Loss) Per Share reconciled to its diluted earnings (loss) per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with U.S.

GAAP, for the periods indicated:

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

Basic earnings (loss) per share attributable to common stockholders $ (0.52) $ (0.60) $ (0.27) $ (0.78)

Three Months Ended March 31,

Diluted earnings (loss) per share attributable to common stockholders $ 0.03 $ (0.07)

Adjusted for:

Amortization of acquired intangible assets (1)

0.07 0.11 0.23 0.25

Discrete tax benefit attributed to the acquisition of Jackpocket Inc.

Stock-based compensation (2)

0.15 0.18 0.48 0.57

Transaction-related costs (3)

0.01 0.00 0.01 0.05

Litigation, settlement, and related costs (4)

— 0.04 — 0.08

Advocacy and other related legal expenses (5)

— 0.01 — 0.01

(Gain) loss on remeasurement of warrant liabilities (0.01) 0.00 0.00 0.02

Loss (gain) on remeasurement of warrant liabilities — (0.01)

Other non-recurring and non-operating costs (income) (0.04) —

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(0.05) (0.05)

Adjusted Earnings (Loss) Per Share* $ (0.26) $ (0.17) $ 0.27 $ 0.09

Adjusted Diluted Earnings (Loss) Per Share* $ 0.20 $ 0.12

_____________

* Weighted average number of shares used to calculate Adjusted Earnings (Loss) Per Share for the three months ended September 30, 2025 and 2024 was 496.6 million and 486.2 million, respectively, and 495.5 million and 480.0 million for the nine months ended September 30, 2025 and 2024, respectively;

* Weighted average diluted number of shares used to calculate Adjusted Diluted Earnings (Loss) Per Share for the three months ended March 31, 2026 and 2025 was 510.6 million and 493.3 million, respectively;

totals may not add due to rounding.

(2) The Company recorded a discrete income tax benefit of $75.8 million during the second quarter of 2024 which was attributable to non-recurring partial releases of the Company's U.S.

valuation allowance as a result of the purchase accounting for Jackpocket.

(1) The amounts include the amortization of acquired intangible assets of $37.6 million and $42.7 million for the three months ended March 31, 2026 and 2025, respectively.

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

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

(6) 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.

(7) Beginning in the first quarter of 2025, the Company began applying an estimated non-GAAP effective tax rate, which is 23% as of the third quarter of 2025.

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.

(5) Reflects non-recurring and non-ordinary course costs relating to advocacy efforts primarily in pursuit of legalization of DraftKings offerings.

Advocacy and legal expenses incurred in the ordinary course of business have not been adjusted in this measure.

(6) Beginning in the first quarter of 2025, the Company began applying an estimated non-GAAP effective tax rate, which was 23% in 2025 and is 25% as of the first quarter of 2026.

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.

Results of Operations

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 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 September 30,

(amounts in thousands, except percentages) 2025 2024 $ Change % Change

Revenue $ 1,144,019 $ 1,095,490 $ 48,529 4.4 %

Cost of revenue 784,079 742,434 41,645 5.6 %

Sales and marketing 360,370 339,943 20,427 6.0 %

Product and technology 114,680 103,581 11,099 10.7 %

General and administrative 156,780 208,126 (51,346) (24.7) %

Income (loss) from operations (271,890) (298,594) 26,704 8.9 %

Interest income (expense), net (19,573) 8,328 (27,901) (335.0) %

Gain (loss) on remeasurement of warrant liabilities 4,233 21 4,212 n.m.

Other gain (loss), net 16,720 (4,620) 21,340 n.m.

Income (loss) before income tax and equity method investments (270,510) (294,865) 24,355 8.3 %

Income tax provision (benefit) (12,065) (1,287) (10,778) 837.5 %

(Gain) loss from equity method investments (1,657) 110 (1,767) n.m.

Net income (loss) attributable to common stockholders $ (256,788) $ (293,688) $ 36,900 12.6 %

= not meaningful

Revenue increased by $48.5 million, or 4.4%, to $1,144.0 million in the three months ended September 30, 2025, from $1,095.5 million in the three months ended September 30, 2024.

The increase was primarily attributable to our iGaming product offering, which increased $89.8 million , or 24.9% , due to increased handle and improved promotional reinvestment, offset by our Sportsbook offering which decreased $60.8 million, or 9.3%, primarily due to customer-friendly sports outcomes.

Cost of Revenue .

Cost of revenue increased $41.6 million , or 5.6% , to $784.1 million in the three months ended September 30, 2025 , from $742.4 million in the three months ended September 30, 2024 .

The increase was primarily due to our revenue growth and a resulting increase in our variable expenses, such as gaming taxes and payment processing fees, which increased $58.4 million and $5.1 million, respectively.

These increases were partially offset by a decrease in amortization of intangible assets of $24.1 million.

Cost of revenue as a percentage of revenue increased by 0.8 percentage points to 68.5% in the three months ended September 30, 2025 , as compared to 67.8% in the three months ended September 30, 2024 , primarily attributable to higher gaming tax rates in certain states.

Sales and Marketing.

Sales and marketing expense increased $20.4 million, or 6.0%, to $360.4 million in the three months ended September 30, 2025, from $339.9 million in the three months ended September 30, 2024, primarily attributable to higher external marketing costs.

Product and Technology.

Product and technology expense increased $11.1 million, or 10.7%, to $114.7 million in the three months ended September 30, 2025, from $103.6 million in the three months ended September 30, 2024, due to increased headcount in our product and engineering departments.

General and Administrative.

General and administrative expense decreased by $51.3 million, or 24.7%, to $156.8 million in the three months ended September 30, 2025, from $208.1 million in the three months ended September 30, 2024.

The decrease was primarily driven by higher expenses recognized in the prior year, including $27.8 million related to the discontinuance of our Reignmakers product offering, lower stock-based compensation expense of $10.8 million, and reduced non-ordinary course litigation, settlement, and related costs of $20.4 million.

Interest Income (Expense), net.

We recorded net interest expense of $19.6 million in the three months ended September 30, 2025, compared to $8.3 million of net interest income in the three months ended September 30, 2024.

This fluctuation was due to the inclusion of interest income on customer deposits in revenue rather than in interest income, as well as increased interest expense from the Term B Loan, which was entered into in the first quarter of 2025.

Gain (Loss) on Remeasurement of Warrant Liabilities.

We recorded a gain of $4.2 million on remeasurement of warrant liabilities in the three months ended September 30, 2025, compared to a nominal gain in the three months ended September 30, 2024, due to changes in the underlying share price of our Class A common stock.

Other Gain (Loss), net .

We recorded a net gain of $16.7 million in the three months ended September 30, 2025, as compared to a net loss of $4.6 million in the three months ended September 30, 2024.

The gain was primarily attributable to the revaluation of contingent consideration for the three months ended September 30, 2025.

Income Tax Provision (Benefit).

We recorded an income tax benefit of $12.1 million in the three months ended September 30, 2025 , as compared to an income tax benefit of $1.3 million in the three months ended September 30, 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 $36.9 million to a net loss of $256.8 million in the three months ended September 30, 2025, as compared to a net loss of $293.7 million in the three months ended September 30, 2024, for the reasons discussed above.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

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,

Three Months Ended March 31,

(amounts in thousands, except percentages) 2026 2025 $ Change % Change

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Income (loss) from operations 5,847 (46,331) 52,178 112.6 %

Interest income (expense), net (14,513) 36,280 (50,793) (140.0) %

Interest income (expense), net (5,739) 4,395 (10,134) n.m.

Gain (loss) on remeasurement of warrant liabilities — 2,495 (2,495) n.m.

Other gain (loss), net 22,814 22 22,792 n.m.

Income (loss) before income tax and equity method investments (140,012) (447,623) 307,611 68.7 %

Income tax provision (benefit) (5,875) (75,208) 69,333 (92.2) %

Income (loss) before income tax and equity method investments 22,922 (39,419) 62,341 n.m.

Income tax provision (benefit) 6,369 (5,600) 11,969 n.m.

(Gain) loss from equity method investments (4,517) 45 (4,562) n.m.

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Revenue increased by $690.4 million, or 20.5%, to $4,065.3 million in the nine months ended September 30, 2025, from $3,374.9 million in the nine months ended September 30, 2024.

The increase was primarily attributable to our Sportsbook and iGaming product offerings, which increased $620.5 million , or 19.6% , to $3,780.4 million in the nine months ended September 30, 2025 , from $3,159.9 million in the nine months ended September 30, 2024 , due to MUPs and ARPMUPs increasing by 11.8% and 8.1%, respectively, as compared to the nine months ended September 30, 2024.

The increase in MUPs was primarily due to strong player retention and acquisition across our Sportsbook and iGaming product offerings.

The increase in ARPMUP was primarily due to higher Sportsbook hold percentage and improved promotional reinvestment, partially offset by customer-friendly sports outcomes in the first and third quarters of 2025.

Revenue increased by $237.3 million, or 16.8%, to $1,646.1 million in the three months ended March 31, 2026, from $1,408.8 million in the three months ended March 31, 2025.

The increase was primarily attributable to our Sportsbook offering, which increased $212.9 million , or 24.1% , due to an increase in Sportsbook Net Revenue Margin to 7.8% from 6.4%.

Our iGaming offering also increased $37.8 million, or 8.9%, due to improved promotional reinvestment.

The increase in revenue was partially offset by our other offerings which decreased $13.5 million, or 13.0%, primarily due to a decline in Fantasy entries and lower Lottery revenue following our exit from Texas in 2025.

Cost of Revenue .

Cost of revenue increased $366.5 million , or 17.3% , to $2,482.4 million in the nine months ended September 30, 2025 , from $2,115.9 million in the nine months ended September 30, 2024 .

The increase was due to revenue

growth and a resulting increase in our variable expenses, primarily gaming taxes and payment processing fees, which increased $282.3 million and $54.9 million, respectively.

Cost of revenue as a percentage of revenue decreased by 1.6 percentage points to 61.1% in the nine months ended September 30, 2025 , as compared to 62.7% in the nine months ended September 30, 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 higher gaming tax rate in certain states, including Illinois.

Cost of revenue increased $105.6 million , or 12.5% , to $949.4 million in the three months ended March 31, 2026 , from $843.8 million in the three months ended March 31, 2025 .

The increase was primarily due to our revenue growth and a resulting increase in our variable expenses, such as gaming taxes and platform fees, which increased $86.1 million and $14.4 million, respectively.

Cost of revenue as a percentage of revenue decreased by 2.2 percentage points to 57.7% in the three months ended March 31, 2026 , as compared to 59.9% in the three months ended March 31, 2025 , primarily attributable to economies of scale as a result of higher Sportsbook Net Revenue Margin.

Sales and Marketing.

Sales and marketing expense increased $40.9 million, or 4.6%, to $937.2 million in the nine months ended September 30, 2025, from $896.3 million in the nine months ended September 30, 2024.

The increase was primarily attributable to higher external marketing costs.

Sales and marketing expense increased $58.1 million, or 16.9%, to $401.7 million in the three months ended March 31, 2026, from $343.7 million in the three months ended March 31, 2025, primarily attributable to higher external marketing costs, including increased customer acquisition costs in connection with recent state launches in Missouri and Arkansas and the recent launch of our Prediction Markets offering.

Product and Technology.

Product and technology expense increased $41.3 million, or 14.5%, to $326.4 million in the nine months ended September 30, 2025, from $285.1 million in the nine months ended September 30, 2024, due to increased headcount in our product and engineering departments.

Product and technology expense increased $19.9 million, or 19.3%, to $123.2 million in the three months ended March 31, 2026, from $103.3 million in the three months ended March 31, 2025, due to increased compensation, including stock-based compensation, for employees in our product and engineering departments.

General and Administrative.

General and administrative expense decreased $60.6 million, or 11.1%, to $486.9 million in the nine months ended September 30, 2025, from $547.5 million in the nine months ended September 30, 2024.

The decrease was primarily driven by the non-recurrence of higher expenses recognized in the prior year, including $27.8 million related to the discontinuance of our Reignmakers product offering, a $40.6 million reduction in non-ordinary course litigation, settlement, and related costs, and a $17.5 million reduction in transaction-related costs.

General and administrative expense increased by $1.5 million, or 0.9%, to $165.9 million in the three months ended March 31, 2026, from $164.4 million in the three months ended March 31, 2025.

The increase was primarily driven by a $26.4 million increase in advocacy and other related legal expenses recognized in the three months ended March 31, 2026, partially offset by lower stock-based compensation expense of $22.5 million.

Interest Income (Expense), net.

We recorded net interest expense of $14.5 million in the nine months ended September 30, 2025, compared to $36.3 million of net interest income in the nine months ended September 30, 2024, due to fluctuations in cash balances and interest rates during the respective periods, the inclusion of interest income on customer deposits in revenue rather than in interest income, and increased interest expense from the Term B Loan, which was entered into in the first quarter of 2025.

We recorded net interest expense of $5.7 million in the three months ended March 31, 2026, compared to $4.4 million of net interest income in the three months ended March 31, 2025.

This fluctuation was

primarily due to increased interest expense as a result of the Term B Loan that was entered into in March 2025 and the inclusion of interest income on customer deposits in revenue in the three months ended March 31, 2026 rather than in interest income in the three months ended March 31, 2025.

Gain (Loss) on Remeasurement of Warrant Liabilities.

We recorded a gain of $0.9 million on remeasurement of warrant liabilities in the nine months ended September 30, 2025, compared to a loss of $8.3 million in the nine months ended September 30, 2024, due to changes in the underlying share price of our Class A common stock.

As all warrants were exercised or expired as of December 31, 2025, there was no remeasurement of warrant liabilities in the three months ended March 31, 2026, compared to a $2.5 million gain in the three months ended March 31, 2025.

Other Gain (Loss), net .

We recorded a $41.2 million gain in the nine months ended September 30, 2025, as compared to a loss of $5.8 million in the nine months ended September 30, 2024.

The gain was primarily attributable to the revaluation of contingent consideration.

We recorded a net gain of $22.8 million in the three months ended March 31, 2026, as compared to a nominal gain in the three months ended March 31, 2025.

The gain was primarily attributable to the revaluation of contingent consideration for the three months ended March 31, 2026.

Income Tax Provision (Benefit).

We recorded an income tax benefit of $5.9 million in the nine months ended September 30, 2025 , as compared to an income tax benefit of $75.2 million in the nine months ended September 30, 2024 .

We recorded an income tax expense of $6.4 million in the three months ended March 31, 2026 , as compared to an income tax benefit of $5.6 million in the three months ended March 31, 2025 .

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Net Income (Loss).

Net loss decreased by $239.7 million to a net loss of $132.7 million in the nine months ended September 30, 2025, as compared to a net loss of $372.4 million in the nine months ended September 30, 2024, for the reasons discussed above.

Net income increased by $54.9 million to $21.1 million in the three months ended March 31, 2026, as compared to a net loss of $33.9 million in the three months ended March 31, 2025, for the reasons discussed above.

Liquidity and Capital Resources

We had $1,228.3 million in cash and cash equivalents as of September 30, 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 had $999.4 million in cash and cash equivalents as of March 31, 2026 (excluding restricted cash and cash reserved for users, which we segregate on behalf of our paid users for all jurisdictions and 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.

Convertible Debt.

In March 2021, we issued zero-coupon convertible senior notes in an aggregate principal amount of $1,265.0 million (the “Convertible Notes”).

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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”).

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 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 condensed consolidated balance sheets.

As of September 30, 2025, the Convertible Notes, net of issuance costs, balance was $1,258.4 million.

Revolving Credit Facility.

As of March 31, 2026, the Convertible Notes, net of issuance costs, balance was $1,259.8 million.

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 September 30, 2025, $10.0 million in letters of credit were issued under the Revolving Credit Facility, with $490.0 million available for borrowing.

As of March 31, 2026, $11.9 million in letters of credit were issued under the Revolving Credit Facility, with $488.1 million available for borrowing.

Term B 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”).

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The Term B Loan bears 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 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 September 30, 2025, there was $597.0 million in aggregate principal amount of Term B Loan outstanding.

As of March 31, 2026, there was $594.0 million in 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 September 30, 2025, these purchase obligations were $2.1 billion, with $0.2 billion payable in the remainder of 2025.

This includes $1.3 billion of expected contractual obligations over the next five years as part of multi-year content integration agreements signed with three media distribution counterparties in the three month period ended September 30, 2025.

As of March 31, 2026, these purchase obligations were $2.1 billion, with $0.4 billion payable in the remainder of 2026.

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.

We repurchased 1.6 million shares for $71.2 million during the three months ended September 30, 2025 and 8.2 million shares and $314.0 million for the nine months ended September 30, 2025.

As of September 30, 2025, we have purchased 9.3 million shares of Class A common stock for $362.0 million since the inception of the stock repurchase program.

On November 6, 2025, our Board of Directors approved a $1.0 billion increase to our existing stock repurchase authorization, which brings the aggregate share repurchase authorization to $2.0 billion of our Class A common stock.

We repurchased 3.3 million shares and 3.7 million shares for $98.6 million and $142.3 million during the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026, we have purchased 20.4 million shares of Class A common stock for $718.2 million since the inception of the stock repurchase program.

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

Nine Months Ended September 30,

Three Months Ended March 31,

(amounts in thousands) 2026 2025

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Operating Activities .

Net cash provided by operating activities in the nine months ended September 30, 2025 was $342.4 million, compared to $92.6 million provided by operating activities in the nine months ended September 30, 2024, primarily from an improvement in net income (loss), net of non-cash items , of $223.9 million for reasons discussed in Results of Operations above, in addition to $25.9 million of cash provided from changes in operating assets and liabilities, primarily related to timing of player activity, impacting receivables reserved for users and liabilities to users, as well as timing of vendor payments.

Net cash used in operating activities in the three months ended March 31, 2026 was $48.4 million, compared to $119.0 million in the three months ended March 31, 2025, primarily from an improvement in net income (loss), net of non-cash items , of $15.6 million for reasons discussed in Results of Operations above, in addition to $55.0 million less of cash used from changes in operating assets and liabilities, primarily related to timing of player activity, impacting liabilities to users, as well as timing of vendor payments.

Investing Activities.

Net cash used in investing activities during the nine months ended September 30, 2025 decreased by $372.1 million to $116.1 million, compared to $488.2 million in the nine months ended September 30, 2024, primarily due to a decrease of $392.5 million in cash paid for acquisitions, net of cash acquired, and a decrease of $10.5 million in cash paid for

gaming market access and licenses, offset by an increase of $22.4 million in cash paid for internally developed software costs, an increase of $3.2 million in cash paid for purchases of property plant and equipment, and an increase of $5.3 million in cash paid for other investing activities .

Net cash used in investing activities during the three months ended March 31, 2026 increased by $9.2 million to $48.2 million, compared to $39.0 million in the three months ended March 31, 2025, primarily due to an increase of $5.8 million in cash paid for internally developed software costs and an increase of $4.4 million in cash paid for purchases of property plant and equipment .

Financing Activities.

Net cash provided by financing activities during the nine months ended September 30, 2025 increased by $223.1 million to $151.7 million, compared to $71.4 million used in the nine months ended September 30, 2024, primarily driven by $588.1 million of cash received from borrowing under the Term B Facility, partially offset by $314.0 million in treasury stock purchases under the Stock Repurchase Program, and an increase of $55.3 million in cash paid for purchases of treasury stock for RSU withhol ding.

Net cash used in financing activities during the three months ended March 31, 2026 was $121.1 million compared to $372.8 million net cash provided by financing activities in the three months ended March 31, 2025, primarily driven by a reduction of $588.1 million of cash received from borrowing under the Term B Facility, partially offset by a reduction of $43.6 million in treasury stock purchases under the Stock Repurchase Program, and a reduction of $50.0 million in cash paid for purchases of treasury stock for RSU withhol ding.

Commitments and Contingencies

Refer to “Note 13 — Commitments and Contingencies” of our unaudited condensed consolidated financial statements included elsewhere in this Report for a summary of our commitments and contingencies as of September 30, 2025.

Critical Accounting Estimates

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Actual results could differ materially from these estimates.

During the nine months ended September 30, 2025, there were no changes to the critical accounting estimates discussed in the 2024 Annual Report.

During the three months ended March 31, 2026, there were no changes to the critical accounting estimates discussed in the 2025 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, 2025.

There have been no significant changes in our exposure to market risk during the three months ended March 31, 2026.

Refer to Item 7A.

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Item 2. Management’s Discussion and Analysis