What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 147 added, 71 removed, 216 unchanged (50% of the section changed)

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

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

The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” “forecast,” “propose” and similar expressions or the negative of these words, or statements of vision, strategy or outlook, 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.

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

Website and Social Media Disclosure

We disclose information about the Company, our business and other matters using our investor relations website ( https://ir.aboutdraftkings.com ) and may, from time to time, use our DraftKingsNews X account (@DraftKingsNews) to disclose such information.

The information we post through these channels may be deemed material.

Accordingly, investors and the public should monitor these channels, in addition to our SEC filings, press releases and public conference calls and webcasts.

The contents of our investor relations website and our DraftKingsNews X account are not, however, a part of this Report.

Information contained on DraftKings’ website or connected thereto is provided for textual reference only and does not constitute part of, and is not incorporated by reference into, this Report.

We are a digital sports and gaming company.

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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.

When we launch our 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.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

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

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Adjusted Diluted Earnings (Loss) Per Share (2)

0.09 0.38 0.29 0.50

(1) Adjusted EBITDA is a non-GAAP financial measure.

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

Revenue increased by $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.

Revenue decreased by $69.3 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to lower revenue from our Sportsbook and Prediction Markets offerings (together, “Sports”), driven by customer-friendly sports outcomes and increased promotional reinvestment associated with new customer acquisition on our Sports offering.

Revenue increased by $168.0 million in the six months ended June 30, 2026 , compared to the six months ended June 30, 2025 , primarily due to the strong performance of our Sports and iGaming offerings as a result of continued healthy user engagement and efficient acquisition of new customers.

Key Performance Indicators

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

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

The charts below present our average MUPs for the three and six months ended June 30, 2025 and 2026:

Average Revenue per MUP (“ARPMUP”).

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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 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 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,

The charts below present our ARPMUP for the three and six months ended June 30, 2025 and 2026:

MUPs increased 0.3 million, or 9.1%, and 0.1 million, or 2.6%, in the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, primarily due to unique payer retention and new customer acquisition on our Sportsbook offering, primarily related to engagement on the NBA Finals and FIFA World Cup, and on our Prediction Markets offering, which launched in December 2025.

ARPMUP de creased by $19, or 12.6%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to customer-friendly sports outcomes and new customer promotions impacting revenue on our Sportsbook and Prediction Markets offerings.

ARPMUP increased $4, or 3%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to a higher percentage of customers engaging with multiple offerings resulting in higher revenue per customer.

Sports Consumer Volume.

We define Sports Consumer Volume as the total amount of settled customer wagers or trades on our Sportsbook and Prediction Markets offerings.

Sports Consumer Volume excludes the volume from market makers on our

Prediction Markets offering.

Sports Consumer Volume provides useful information to investors and management as it is a key indicator of customer engagement that is not impacted by variability of sports outcomes and provides important insight into underlying growth trends.

We do not utilize volume information to track performance of our iGaming offering because iGaming is generally not subject to the same variability in outcomes.

Sports Net Revenue Margin.

We define Sports Net Revenue Margin as Sports revenue as a percentage of Sports Consumer Volume.

Sports revenue includes revenue from our Sportsbook and Prediction Markets offerings.

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 Sports offering and promotional reinvestment.

The tables below presents our Sports Consumer Volume, Sports Net Revenue Margin, and revenue disaggregation for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

(amounts in thousands) 2026 2025 $ Change % Change

Sportsbook Handle $ 14,083,061 $ 13,880,391 $ 202,670 1.5 %

Sportsbook Revenue 1,094,874 881,957 212,917 24.1 %

Sportsbook Net Revenue Margin 7.8% 6.4% N/A N/A

Sportsbook Revenue $ 1,094,874 $ 881,957 $ 212,917 24.1 %

Sports Consumer Volume $ 13,140,417 $ 11,474,841 $ 1,665,576 14.5 %

Sports Revenue 891,883 997,872 (105,989) (10.6) %

Sports Net Revenue Margin 6.8% 8.7% N/A N/A

Sports Revenue $ 891,883 $ 997,872 $ (105,989) (10.6) %

iGaming Revenue 461,930 429,660 32,270 7.5 %

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Total Revenue $ 1,443,235 $ 1,512,507 $ (69,272) (4.6) %

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.

Six Months Ended June 30,

(amounts in thousands) 2026 2025 $ Change % Change

Sports Consumer Volume $ 27,342,115 $ 25,355,232 $ 1,986,883 7.8 %

Sports Revenue 1,986,436 1,879,829 106,607 5.7 %

Sports Net Revenue Margin 7.3% 7.4 % N/A N/A

Sports Revenue $ 1,986,436 $ 1,879,829 $ 106,607 5.7 %

iGaming Revenue 923,230 853,131 70,099 8.2 %

Other Revenue 179,645 188,353 (8,708) (4.6) %

Total Revenue $ 3,089,311 $ 2,921,313 $ 167,998 5.8 %

Sports Consumer Volume increased by $1.7 billion, or 14.5%, to $13.1 billion in the three months ended June 30, 2026, from $11.5 billion in the three months ended June 30, 2025, and increased by $2.0 billion, or 7.8%, to $27.3 billion in the six months ended June 30, 2026, from $25.4 billion in the six months ended June 30, 2025.

These increases are primarily due to an increase in MUPs due to unique payer retention and acquisition on our Sportsbook offering, primarily related to engagement on the NBA Finals and FIFA World Cup as well as new customer acquisition on our Prediction Markets offering, which launched in December 2025.

Sports Net Revenue Margin decreased by 1.9 percentage points, to 6.8% in the three months ended June 30, 2026, from 8.7% in the three months ended June 30, 2025, primarily due to customer-friendly sports outcomes and higher promotions associated with new customers on our Sportsbook offering and Prediction Markets offering.

Sports Net Revenue Margin remained consistent at 7.3% in the six months ended June 30, 2026, compared to 7.4% in the six months ended June 30, 2025 primarily driven by a higher hold percentage on our Sportsbook offering, offset by higher promotions related to customer acquisition.

iGaming revenue increased $32.3 million , or 7.5% , to $461.9 million in the three months ended June 30, 2026, from $429.7 million in the three months ended June 30, 2025, and increased by $70.1 million, or 8.2%, to $923.2 million in the six months ended June 30, 2026, from $853.1 million in the six months ended June 30, 2025.

The increase is primarily due to improved promotional reinvestment and an increase in MUPs for the iGaming offering.

Other revenue increased $4.4 million, or 5.2% , to $89.4 million in the three months ended June 30, 2026, from $85.0 million in the three months ended June 30, 2025, primarily due to the increased revenues from the new Keno offering within the Lottery offering.

Other revenue decreased $8.7 million, or 4.6%, to $179.6 million in the six months ended June 30, 2026, from $188.4 million in the six months ended June 30, 2025, primarily due to a reduction in Fantasy entry fees and lower Lottery revenue following our exit from the Texas market.

Non-GAAP Information

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and the tax impact of adjusting items, as described in the reconciliation below.

The weighted-average shares outstanding used in the calculation of diluted earnings (loss) per share are the GAAP weighted-average diluted shares reported in the consolidated financial statements and are not adjusted.

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).

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 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

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GAAP, reconciled to Adjusted EBITDA for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(amounts in thousands) 2026 2025 2026 2025

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Advocacy and other related legal expenses (5)

19,875 — 46,238 —

Loss (gain) on remeasurement of warrant liabilities — 5,851 — 3,356

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

(6,201) (24,268) (34,765) (24,247)

Adjusted EBITDA $ 114,597 $ 300,644 $ 282,450 $ 403,273

(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.

(1) The amounts include the amortization of acquired intangible assets of $37.6 million and $36.4 million for the three months ended June 30, 2026 and 2025, respectively, and $75.1 million and $79.1 million for the six months ended June 30, 2026 and 2025, respectively.

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

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(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.

For the three and six months ended June 30, 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.

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GAAP, for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Diluted earnings (loss) per share attributable to common stockholders $ (0.14) $ 0.30 $ (0.09) $ 0.23

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Amortization of acquired intangible assets (1)

0.08 0.07 0.15 0.15

Stock-based compensation (2)

0.17 0.16 0.30 0.31

Transaction-related costs (3)

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Advocacy and other related legal expenses (5)

0.04 — 0.09 —

Loss (gain) on remeasurement of warrant liabilities — 0.00 — 0.00

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_____________

* 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;

* Weighted average diluted number of shares used to calculate Adjusted Diluted Earnings (Loss) Per Share for the three months ended June 30, 2026 and 2025 was 496.1 million and 529.5 million, respectively, and for the six months ended June 30, 2026 and 2025 was 495.2 million and 529.6 million, respectively;

totals may not add due to rounding.

(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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(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.

(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 28% as of the second 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 March 31, 2026 Compared to the Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

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

Three Months Ended March 31,

Three Months Ended June 30,

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

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= not meaningful

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%.

Revenue decreased by $69.3 million, or 4.6%, to $1,443.2 million in the three months ended June 30, 2026, from $1,512.5 million in the three months ended June 30, 2025.

The decrease was primarily attributable to our Sports revenue, which decreased $106.0 million, or 10.6%, due to a reduction in our Sports Net Revenue Margin of 1.9 percentage points primarily due to customer-friendly sports outcomes and higher promotions associated with new customers on our Sportsbook and Prediction Markets offerings.

The decrease was partially offset by our iGaming offering, which increased $32.3 million, or 7.5%, due to improved promotional reinvestment.

Cost of Revenue .

Cost of revenue increased $37.2 million , or 4.4% , to $891.8 million in the three months ended June 30, 2026 , from $854.6 million in the three months ended June 30, 2025 .

The increase was primarily due to an increase in our variable expenses, such as gaming taxes and payment processing fees, which increased $17.7 million and $4.1 million, respectively.

The remaining increase was primarily attributable to an increase in amortization of intangible assets of $14.5 million.

Cost of revenue as a percentage of revenue increased by 5.3 percentage points to 61.8% in the three months ended June 30, 2026 , as compared to 56.5% in the three months ended June 30, 2025 , primarily attributable to an increase in gaming taxes due to tax rate increases in certain states.

Sales and Marketing.

Sales and marketing expense increased $89.3 million, or 38.3%, to $322.5 million in the three months ended June 30, 2026, from $233.2 million in the three months ended June 30, 2025, primarily due to higher external marketing costs, including increased customer acquisition costs associated with the FIFA World Cup, the NBA Playoffs, and the launch of our Super App and Prediction Markets offering.

Product and Technology.

Product and technology expense increased $19.2 million, or 17.7%, to $127.6 million in the three months ended June 30, 2026, from $108.4 million in the three months ended June 30, 2025, primarily due to higher software and licensing costs and increased employee compensation, including stock-based compensation, in our product and engineering departments.

General and Administrative.

General and administrative expense increased by $3.7 million, or 2.3%, to $169.4 million in the three months ended June 30, 2026, from $165.7 million in the three months ended June 30, 2025.

The increase was primarily driven by a $19.9 million increase in advocacy and other related legal expenses recognized in the three months ended June 30, 2026, partially offset by lower stock-based compensation expense of $9.5 million.

Interest Income (Expense), net.

We recorded net interest expense of $7.4 million in the three months ended June 30, 2026, compared to $0.7 million of net interest income in the three months ended June 30, 2025.

This fluctuation was primarily due to decreased interest income as a result of the inclusion of interest income on customer deposits in revenue in the three months ended June 30, 2026 rather than in interest income in the three months ended June 30, 2025.

Gain (Loss) on Remeasurement of Warrant Liabilities.

As all warrants were exercised or expired as of December 31, 2025, there was no remeasurement of warrant liabilities in the three months ended June 30, 2026, compared to a $5.9 million loss in the three months ended June 30, 2025.

Other Gain (Loss), net .

We recorded a net gain of $3.8 million in the three months ended June 30, 2026, as compared to a $24.5 million gain in the three months ended June 30, 2025.

The decrease was primarily attributable to larger gains on the revaluation of contingent consideration for the three months ended June 30, 2025 compared to the three months ended June 30, 2026.

Income Tax Provision (Benefit).

We recorded an income tax benefit of $1.8 million in the three months ended June 30, 2026 , as compared to an income tax expense of $11.8 million in the three months ended June 30, 2025 .

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 income decreased by $225.5 million to a net loss of $67.6 million in the three months ended June 30, 2026, as compared to a net income of $157.9 million in the three months ended June 30, 2025, for the reasons discussed above.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Six Months Ended June 30,

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

Revenue $ 3,089,311 $ 2,921,313 $ 167,998 5.8 %

Cost of revenue 1,841,167 1,698,362 142,805 8.4 %

Sales and marketing 724,270 576,867 147,403 25.6 %

Product and technology 250,825 211,677 39,148 18.5 %

General and administrative 335,376 330,094 5,282 1.6 %

Income (loss) from operations (62,327) 104,313 (166,640) (159.7) %

Interest income (expense), net (13,173) 5,060 (18,233) n.m.

Gain (loss) on remeasurement of warrant liabilities — (3,356) 3,356 n.m.

Other gain (loss), net 26,564 24,481 2,083 n.m.

Income (loss) before income tax and equity method investments (48,936) 130,498 (179,434) n.m.

Income tax provision (benefit) 4,572 6,190 (1,618) n.m.

(Gain) loss from equity method investments (6,968) 236 (7,204) n.m.

Net income (loss) attributable to common stockholders $ (46,540) $ 124,072 $ (170,612) (137.5) %

Revenue increased by $168.0 million, or 5.8%, to $3,089.3 million in the six months ended June 30, 2026, from $2,921.3 million in the six months ended June 30, 2025.

The increase was primarily attributable to our Sports revenue, which increased $106.6 million, or 5.7%, due to higher Sports Consumer Volume, primarily driven by an increase in MUPs due to unique payer retention and acquisition on our Sportsbook offering as well as new customer acquisition on our Prediction Markets offering, which launched in December 2025.

Our iGaming offering also increased $70.1 million, or 8.2%, 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 $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.

Cost of revenue increased $142.8 million , or 8.4% , to $1,841.2 million in the six months ended June 30, 2026 , from $1,698.4 million in the six months ended June 30, 2025 .

T he increase was primarily due to an increase in our variable expenses, such as gaming taxes and platform costs, which increased $103.8 million and $17.8 million, respectively.

The remaining increase was primarily attributable to an increase in amortization of intangible assets of $15.4 million.

Cost of revenue as a percentage of revenue increased by 1.5 percentage points to 59.6% in the six months ended June 30, 2026 , as compared to 58.1% in the six months ended June 30, 2025 , primarily attributable to an increase in promotional reinvestment around new customer acquisition for our Sportsbook and Prediction Markets offerings.

Sales and Marketing.

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.

Sales and marketing expense increased $147.4 million, or 25.6%, to $724.3 million in the six months ended June 30, 2026, from $576.9 million in the six months ended June 30, 2025, primarily due to higher external marketing costs, including increased customer acquisition costs associated with the Super Bowl, FIFA World Cup, the NBA Playoffs, the recent launches in Missouri and Arkansas, and the recent launch of our Prediction Markets offering.

Product and Technology.

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.

Product and technology expense increased $39.1 million, or 18.5%, to $250.8 million in the six months ended June 30, 2026, from $211.7 million in the six months ended June 30, 2025, due to increased compensation, including stock-based compensation, for employees in our product and engineering departments.

General and Administrative.

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.

General and administrative expense increased by $5.3 million, or 1.6%, to $335.4 million in the six months ended June 30, 2026, from $330.1 million in the six months ended June 30, 2025.

The increase was primarily driven by a $46.2 million increase in advocacy and other related legal expenses, partially offset by a $38.0 million decrease in compensation expense, of which $32.0 million related to stock-based compensation.

Interest Income (Expense), net.

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.

We recorded net interest expense of $13.2 million in the six months ended June 30, 2026, compared to $5.1 million of net interest income in the six months ended June 30, 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 six months ended June 30, 2026 rather than in interest income in the six months ended June 30, 2025.

Gain (Loss) on Remeasurement of Warrant Liabilities.

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.

As all warrants were exercised or expired as of December 31, 2025, there was no remeasurement of warrant liabilities in the six months ended June 30, 2026, compared to a $3.4 million loss in the six months ended June 30, 2025.

Other Gain (Loss), net .

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.

We recorded a net gain of $26.6 million in the six months ended June 30, 2026, as compared to a $24.5 million gain in the six months ended June 30, 2025.

The increase was primarily attributable to larger gains on the revaluation of contingent consideration for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Income Tax Provision (Benefit).

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 .

We recorded an income tax expense of $4.6 million in the six months ended June 30, 2026 , as compared to an income tax expense of $6.2 million in the six months ended June 30, 2025 .

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Net Income (Loss).

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.

Net income decreased by $170.6 million to a net loss of $46.5 million in the six months ended June 30, 2026, as compared to a net income of $124.1 million in the six months ended June 30, 2025, for the reasons discussed above.

Liquidity and Capital Resources

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 had $983.9 million in cash and cash equivalents as of June 30, 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.

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

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

As of June 30, 2026, the Convertible Notes, net of issuance costs, balance was $1,260.4 million.

Credit Facility.

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

As of June 30, 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 .

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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 March 31, 2026, there was $594.0 million in aggregate principal amount of Term B Loan outstanding.

As of June 30, 2026, there was $592.5 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 March 31, 2026, these purchase obligations were $2.1 billion, with $0.4 billion payable in the remainder of 2026.

As of June 30, 2026, these purchase obligations were $2.0 billion, with $0.3 billion payable in the remainder of 2026.

Stock Repurchase Program.

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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.

We repurchased 2.3 million shares and 2.9 million shares for $55.6 million and $100.5 million during the three months ended June 30, 2026 and 2025.

We repurchased 5.5 million shares and 6.5 million shares for $154.2 million and $242.7 million during the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, we have purchased 22.7 million shares of Class A common stock for $773.8 million since the inception of the stock repurchase program.

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

Three Months Ended March 31,

Six Months Ended June 30,

(amounts in thousands) 2026 2025

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Operating Activities .

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.

Net cash provided by operating activities in the six months ended June 30, 2026 was $63.0 million, compared to $54.9 million in the six months ended June 30, 2025, primarily from a decline in net income (loss), net of non-cash items , of $189.0 million for reasons discussed in Results of Operations above, offset by $197.1 million decrease in 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 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 .

Net cash used in investing activities during the six months ended June 30, 2026 increased by $19.2 million to $93.4 million, compared to $74.3 million in the six months ended June 30, 2025, primarily due to an increase of $14.7 million in cash paid for internally developed software costs and an increase of $4.7 million in cash paid for purchases of property and equipment .

Financing Activities.

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.

Net cash used in financing activities during the six months ended June 30, 2026 was $186.6 million compared to $253.1 million net cash provided by financing activities in the six months ended June 30, 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

$88.5 million in treasury stock purchases under the Stock Repurchase Program, and a reduction of $58.4 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 March 31, 2026.

Critical Accounting Estimates

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Actual results could differ materially from these estimates.

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

During the six months ended June 30, 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 three months ended March 31, 2026.

There have been no significant changes in our exposure to market risk during the six months ended June 30, 2026.

Refer to Item 7A.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis