Draftkings Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Maybe to set the stage, you had an Analyst Day or Investor Day about 1.5 years ago where you laid out some long-term targets. Perhaps walk us through what some of those targets are and as we think about how the past 1.5 years have actually evolved your thinking.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : And on that whole piece, I guess, can you help contextualize that? How much of that is the product itself, your trading and risk management, versus the type of bets that players are making?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : So now let's turn to the year ahead, 2025. You've given some targets. Maybe lay those out for folks in the room and on the line. What are the building blocks to get to those targets?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : So to dig into one of those, starting with handle, basically the top of the funnel there, there's been a lot of concern that in the fourth quarter, handle growth decelerated. I guess, how do you get comfortable that trends will either reaccelerate to hit your numbers? Or do we just need to see it flat line to hit the numbers? And what is the interplay between handle and hold rate? I imagine there's got to be some kind of back and forth between them.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Makes sense.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : That's helpful. One of the other things you mentioned was that this past year, you were surprised a little bit by the customer acquisition even in existing states. I guess, how are you seeing existing versus new state customer acquisitions so far this year? And then also, I'm curious to hear how retention has actually evolved over the past couple of years.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Retention.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : You mentioned that some of the levers that you have to pull to drive handle growth -- and really, I would say it's probably -- player engagement broadly is product. What are some of the major initiatives that you have underway to improve the product in the year ahead?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : On the live-betting side, what are the financial implications of that? Does that end up just being purely additive, or does it bring a new player in? And is it generally a higher hold rate, lower hold rate?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : I'm sorry, you said 50%?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : And overseas, that's much higher?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : I guess, on that point, have you seen any big differences in mix for live betting so far by US sports standards across the different sports?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : And this could be a product question, but it could also just be broadly for the company and the industry, but the industry analyzes processes and changes data real time, billions of data points real time, which I think would argue for uses of artificial intelligence in different ways. I guess, what are your thoughts on the best use cases? And where are you spending time to try to figure out how to implement AI in the business?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Another question that I think has probably come up with investors, certainly in your meetings from talking to some of the folks in your team, that I want to hear your thoughts on is just prediction markets, which I guess you could argue might be a product opportunity. But I'm curious how you think about it from opportunity or risk. How do you think about prediction markets?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Great. Maybe turning to the balance sheet, I referenced that you have a buyback authorization. How are you thinking about the right capital structure for the business now that you're generating more steady free cash flow? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 8:20PM, DKNG.OQ - Draftkings Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Always good to know your cost of capital. So you mentioned two things: one that you could accelerate the buyback, but also you could have dry powder for M&A. On the M&A front, what's the criteria of things that you're looking at? You've done the Jackpocket deal. You've done Simplebet. What makes sense? What do you still have, third-party relationships with -- or places that you haven't been able to build in-house?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : And on the deals you've done so far, Jackpocket and Simplebet as an example, I guess, what have been some of the learnings? How do you feel like those have been integrated relative to your expectations?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : I guess maybe changing gears a little bit to the regulatory and tax backdrop, there's been a lot of noise about tax increases but also some legislative changes and proposals. Maybe help us level set. If you take all those puts and takes together, do you think we're generally still favorable from a legislative standpoint and taxation standpoint? And then maybe if you can just talk to some of the biggest (technical difficulty)

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Maybe sticking with iGaming but moving away from the legislative path, what has been the key differentiating factor for you in iGaming? And what are some of the new product evolutions that you're thinking about in the year ahead since you touched on sports betting? But obviously, there's a big part of the business as well.

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Maybe a follow up on that. I guess, how does the iGaming customer compare and contrast to a sports-betting customer? And as you've seen the market evolve, are you getting more kind of iGaming first now versus sports betting cross-selling over?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : And we're just about out of time, but I don't want to let you off the hook without getting at least one margin question in. So in the year ahead, I guess, are there any major things to call out in terms of either marketing or SG&A that would impact flow-through from that top-line growth relative to a normal year? What's the framework to think about longer term and how we march from here to there?

Question: Stephen Grambling - Morgan Stanley & Co. LLC - Analyst : Well, we're out of time, but please join me in thanking Jason Robins and DraftKings for all the insights today.