DraftKings : Q3 2025 Earnings Letter 110625 230PM

FT

Business Update

Third Quarter 2025

To Our Shareholders:

This is the most bullish I have ever felt about the future of DraftKings. That may sound surprising given we are revising our fiscal year 2025 guidance ranges today, however, underlying growth in our business is accelerating. We are also increasingly advantaged through new exclusive marketing agreements with ESPN and NBCUniversal as well as our leading product offerings continuing to improve. Finally, we are launching DraftKings Predictions in the coming months1, which we view as a significant incremental opportunity. Overall, I believe that our long-term financial potential has never been brighter.

The progress we've made over the last few years has been outstanding. In 2022, we reported a little more than $2 billion of revenue and an Adjusted EBITDA2 loss of more than $700 million. In 2025, only 3 years later, we expect to generate $5.9 billion to $6.1 billion of revenue and $450 million to $550 million of positive Adjusted EBITDA. Our Sportsbook Net Revenue Margin is on track to increase by more than 400 basis points over the last 4 years, more than 100 basis points per year on average, as our parlay handle mix and efficiency of promotions all continue to improve. We are achieving this expansion while also maintaining very high customer retention rates. In fact, retention of NFL week 1 customers is up over 300 basis points in the last four NFL weeks compared to the same weeks a year ago. Recent product enhancements are driving strong customer engagement. NFL handle has grown 13% season-to-date and NBA handle has grown 19% season-to-date, an acceleration compared to the growth we were seeing in recent quarters. That acceleration has continued to build in the first month of the fourth quarter, as our total Sportsbook Handle increased 17% year-over-year in October. Parlay handle mix continues to surge, with year-over-year gains of 800 bps for NFL season-to-date and 1,000 bps for NBA season-to-date. iGaming has been similarly strong, with third quarter net revenue growth accelerating to 25% year-over-over, the fastest growth we've experienced since the first quarter of 2024.

We are even more excited about our future. Our new exclusive marketing agreements with ESPN and NBCUniversal provide us deeper brand affinity and broader reach, including unmatched NBA access. In fact, early indicators suggest our NBA share is significantly higher than it was at this point last year. Our top-rated Sportsbook experience continues to set the standard for speed, depth, and breadth and will soon launch Spanish language functionality that will meet the demands for a growing audience ahead of the World Cup in 2026. In iGaming, we're developing innovative slot and jackpot content and recently brought in a new leader to solidify and grow our position.

The next point I would like to touch on is sport outcomes. We have made significant progress growing our Sportsbook hold percentage and Sportsbook Net Revenue Margin in recent years, primarily due to our parlay handle mix increasing, while also experiencing short-term positive and negative sport outcome variances. It's important to understand that, over the course of most sports seasons, this variance typically evens out and should not be overly significant. However, because sports seasons do not align with fiscal quarters, there will be certain periods when outcomes positively and negatively impact reported financial results. For example, in the second quarter of 2025, sportsbook-friendly outcomes positively impacted our revenue by roughly $100 million, driving record performance

‌1 The Company expects to launch DraftKings Predictions in the coming months, pending licensure.

‌2 Non-GAAP financial measure. Please refer to the end of this document for the definition of such non-GAAP financial measure. A reconciliation of 2022 Adjusted EBITDA to its most directly comparable GAAP financial measure is included in DraftKings' Annual Report on Form 10-K filed with the Securities Exchange Commission on February 17, 2023.

for revenue, Adjusted EBITDA, and Adjusted EBITDA Margin3. Conversely, in September and October, customer-friendly sport outcomes impacted our revenue by more than $300 million, as just a handful of NFL games had a pronounced effect. We may continue to see heightened variance around major events such as the Super Bowl, March Madness, and the World Cup in 2026. Any time a large share of handle is concentrated on a small number of outcomes, variance increases, especially as we continue to drive a bet mix with higher expected value. Over the long-term, however, sport outcomes do not affect the underlying earnings power of our business. But there will be periods where we can meaningfully outperform or underperform our expectations based on these variances.

I'd also like to touch on the recent rise of Predictions. We have experienced numerous waves of competition in recent years, mostly from well capitalized companies that have built or acquired strong sports betting product offerings, and those have had minimal impact on DraftKings' revenue trajectory. By comparison, Predictions is structurally limited, lacking the depth and breadth of a sports betting offering. There are also numerous data points from around the globe that validate that Predictions, in sports, is relatively small and largely incremental relative to traditional sports betting.

In actuality, we see Predictions as a significant incremental opportunity. We are excited about our pending launch of DraftKings Predictions and its potential to expand our total addressable market. In the coming months, we expect DraftKings Predictions to enter many states with sport event contracts, unlocking a new customer base and revenue stream. Nearly half the country's population remains without access to legal online sports betting, but there are several other companies offering federally regulated Predictions in all 50 states. As growth in Predictions continues, this may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation.

To close out my thoughts on Predictions, I would leave you all with three key takeaways:

• We will pursue this opportunity, we will compete, and we will win. For the same reasons that we have been successful competing in the sports betting industry, we expect to succeed here. Our capabilities are superior when it comes to customer acquisition, product development, regulatory compliance, responsible engagement, and the many other critical factors it will take to win in the space. Our database will be a strong competitive advantage. Add in our new agreements with ESPN and NBCUniversal, and DraftKings will have an even stronger presence across the sports landscape in the years ahead.

• We will be thoughtful in how we launch DraftKings Predictions and do so in a way that is respectful of other stakeholders. As such, we plan to focus on the states where we do not offer Sportsbook, which also is where we believe the vast majority of the financial opportunity exists.

• We will be measured in our investment level, understanding that gross profit payback periods need to be shorter relative to our more established product lines, where we have more predictability around what customers we acquire will be worth over time.

Finally, I want to touch on our share repurchase program. We have bought back 9.3 million shares since the inception of this program, and we are pleased to announce that our board has authorized increasing our repurchase program

‌3 Non-GAAP financial measure. Please refer to the end of this document for the definition of such non-GAAP financial measure and, if applicable, a reconciliation of such non-GAAP measure to its most directly comparable GAAP financial measure.

from $1 billion to $2 billion. We anticipate being active with share repurchases over the next quarter and expect to continue returning capital to our shareholders as Free Cash Flow4 ramps up over the coming years.

Thank you all for your support. We promise to continue working relentlessly to create meaningful value for you in 2026 and beyond.

Sincerely,

Jason D. Robins

Chief Executive Officer and Co-founder

‌4 Non-GAAP financial measure. Please refer to the end of this document for the definition of such non-GAAP financial measure and, if applicable, a reconciliation of such non-GAAP measure to its most directly comparable GAAP financial measure.

Webcast and Conference Call Details

As previously announced, DraftKings will host a conference call and audio webcast tomorrow, Friday, November 7, 2025, from 8:30 a.m. to 9:15 a.m. ET, during which management will discuss the Company's results and provide commentary on business performance. A question-and-answer session will follow the prepared remarks.

To listen to the audio webcast and live question and answer session, please visit DraftKings' investor relations website at investors.draftkings.com. A live audio webcast of the earnings conference call will be available on the Company's website at investors.draftkings.com, along with a copy of this third quarter 2025 business update, our earnings press release, the Company's Quarterly Report on Form 10-Q, and a slide presentation. The audio webcast will be available on the Company's investor relations website until 11:59 p.m. ET on December 31, 2025.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements about the Company and its industry that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this document, including statements regarding guidance, DraftKings' future results of operations or financial condition, strategic plans and focus, user growth and engagement, product initiatives, and the objectives and expectations of management for future operations (including launches in new jurisdictions and the expected timing thereof), are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "confident," "contemplate," "continue," "could," "estimate," "expect," "forecast," "going to," "intend," "may," "plan," "poised," "potential," "predict," "project," "propose," "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions, or by statements of vision, strategy or outlook. DraftKings cautions you that the foregoing may not include all of the forward-looking statements made in this document.

You should not rely on forward-looking statements as predictions of future events. DraftKings has based the forward-looking statements contained in this document primarily on its current expectations and projections about future events and trends, including the current macroeconomic environment, that it believes may affect its business, financial condition, results of operations, and prospects. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside DraftKings' control and that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include, but are not limited to, DraftKings' ability to manage growth; DraftKings' ability to execute its business plan and meet its projections; potential litigation involving DraftKings; changes in applicable laws or regulations, particularly with respect to gaming; general economic and market conditions impacting demand for DraftKings' products and services; economic and market conditions in the media, entertainment, gaming, and software industries in the markets in which DraftKings operates; market and global conditions and economic factors, 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, rising interest rates, and instability in the banking system, on DraftKings' liquidity, operations and personnel, as well as the risks, uncertainties, and other factors described in "Risk Factors" in DraftKings' filings with the Securities and Exchange Commission (the "SEC"), which are available on the SEC's website at https://www.sec.gov. Additional information will be made available in other filings that DraftKings makes from time to time with the SEC. The forward-looking statements contained herein are based on management's current expectations and beliefs and speak only as of the date hereof, and DraftKings makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations, except as required by law.

DRAFTKINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value)
	September 30, 2025
	(Unaudited)		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$ 1,228,275		$ 788,287
Restricted cash	4,593		16,499
Cash reserved for users	475,319		525,407
Receivables reserved for users	55,917		62,542
Accounts receivable	65,555		57,839
Prepaid expenses and other current assets	115,370		83,187
Total current assets	1,945,029		1,533,761
Property and equipment, net	52,091		50,550
Intangible assets, net	861,041		933,121
Goodwill	1,555,116		1,555,116
Operating lease right-of-use assets	66,103		74,917
Equity method investments	19,388		13,200
Deposits and other non-current assets	125,467		123,060
Total assets	$ 4,624,235		$ 4,283,725
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable and accrued expenses	$ 711,386		$ 661,245
Liabilities to users	1,022,352		979,453
Operating lease liabilities, current portion	11,464		10,993
Other current liabilities	31,130		3,300
Total current liabilities	1,776,332		1,654,991
Convertible notes, net of issuance costs	1,258,424		1,256,429
Term B Loan, net of issuance costs	577,522		-
Operating lease liabilities	59,181		67,660
Warrant liabilities	7,367		22,033
Long-term income tax liabilities	88,043		76,375
Other long-term liabilities	125,080		195,611
Total liabilities	$ 3,891,949		$ 3,273,099
Stockholders' equity:
Class A common stock, $0.0001 par value; 900,000 shares authorized as of September 30, 2025 and
December 31, 2024; 523,310 and 504,722 shares issued and 496,503 and 489,071 outstanding as of	$	48	$	48
Class B common stock, $0.0001 par value; 900,000 shares authorized as of September 30, 2025 and December 31, 2024; 393,014 shares issued and outstanding as of September 30, 2025 and December 31,	39		39
Treasury stock, at cost; 26,807 and 15,651 shares as of September 30, 2025 and December 31, 2024,	(1,010,579)		(563,146)
respectively
Additional paid-in capital	8,280,234		7,978,425
Accumulated deficit	(6,573,944)		(6,441,228)
Accumulated other comprehensive income	36,488		36,488
Total stockholders' equity	$ 732,286		$ 1,010,626
Total liabilities and stockholders' equity	$ 4,624,235		$ 4,283,725

DRAFTKINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024

Revenue	$ 1,144,019	$ 1,095,490	$ 4,065,332	$ 3,374,927
Cost of revenue	784,079	742,434	2,482,441	2,115,917
Sales and marketing	360,370	339,943	937,237	896,318
Product and technology	114,680	103,581	326,357	285,051
General and administrative	156,780	208,126	486,874	547,461
Income (loss) from operations	(271,890)	(298,594)	(167,577) (469,820)
Other income (expense):
Interest income (expense), net	(19,573)	8,328	(14,513)	36,280
Gain (loss) on remeasurement of warrant liabilities	4,233	21	877	(8,282)
Other gain (loss), net	16,720	(4,620)	41,201	(5,801)
Income (loss) before income tax and equity method	(270,510)	(294,865)	(140,012)	(447,623)

Income tax provision (benefit)	(12,065)		(1,287)	(5,875)	(75,208)
(Gain) loss from equity method investments	(1,657)		110	(1,421)	19
Net income (loss) attributable to common stockholders	$ (256,788)		$ (293,688)	$ (132,716)	$ (372,434)
Earnings (loss) per share attributable to common stockholders:
Basic and diluted	$ (0.52)		$ (0.60)	$ (0.27)	$ (0.78)

DRAFTKINGS INC. NON-GAAP FINANCIAL MEASURES

(Unaudited)

(Amounts in thousands, except per share data)

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

	2025	2024	2025	2024
Adjusted EBITDA	$ (126,488)	$ (58,504)	$ 276,785	$ 91,853
Adjusted Earnings (Loss) Per Share	$ (0.26)	$ (0.17)	$ 0.27	$ 0.09

DRAFTKINGS INC. REVENUE DISAGGREGATION

(Unaudited)

(Amounts in thousands, except percentages)

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,
(amounts in thousands)		2025		2024		$ Change	% Change
Sportsbook Handle	$	36,757,637	$	33,159,506	$	3,598,131	10.9 %
Sportsbook Revenue		2,475,948		2,077,863		398,085	19.2 %
Sportsbook Net Revenue Margin		6.7%		6.3%		N/A	N/A

Sportsbook Revenue	$	2,475,948	$	2,077,863	$	398,085	19.2 %
iGaming Revenue		1,304,431		1,082,009		222,422	20.6 %
Other Revenue		284,953		215,055		69,898	32.5 %
Total Revenue	$	4,065,332	$	3,374,927	$	690,405	20.5 %

DRAFTKINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (Amounts in thousands)

Nine Months Ended September 30,

	2025	2024
Cash Flows from Operating Activities:
Net income (loss) attributable to common stockholders	$ (132,716)	$ (372,434)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	201,486	204,755
Non-cash interest (income) expense, net	1,658	27
Stock-based compensation	236,020	271,307
(Gain) loss on remeasurement of warrant liabilities	(877)	8,282
(Gain) loss from equity method investment	(1,421)	19
Loss on sale of Vegas Sports Information Network, LLC	-	5,817
Deferred income taxes	(3,521)	(80,604)
Other non-cash (gain) loss, net	(34,908)	4,632
Change in operating assets and liabilities, net of effect of acquisitions:
Receivables reserved for users	6,625	(30,955)
Accounts receivable	(17,673)	(13,792)
Prepaid expenses and other current assets	(31,722)	(20,704)
Deposits and other non-current assets	3,489	446
Accounts payable and accrued expenses	54,988	44,780
Liabilities to users	42,899	61,839
Long-term income tax liability	11,668	1,025
Other long-term liabilities	6,387	8,138
Net cash flows provided by (used in) operating activities	$ 342,382	$ 92,578
Cash Flows from Investing Activities:
Purchases of property and equipment	(11,396)	(8,148)
Cash paid for internally developed software costs	(93,432)	(71,059)
Cash paid for gaming market access and licenses	(4,343)	(14,820)
Cash paid for acquisitions, net of cash acquired	-	(392,501)
Other investing activities	(6,938)	(1,656)
Net cash flows provided by (used in) investing activities	$ (116,109)	$ (488,184)
Cash Flows from Financing Activities:
Proceeds from Term B Loan, net	588,116	-
Repayment of Term B Loan principal	(3,000)	-
Purchase of treasury stock for RSU withholding	(133,480)	(78,170)
Purchase of treasury stock under Stock Repurchase Program	(313,953)	-
Proceeds from exercise of stock options	9,231	6,798
Proceeds from shares issued under Employee Stock Purchase Plan	6,900	-
Other financing activities	(2,093)	-
Net cash flows provided by (used in) financing activities	$ 151,721	$ (71,372)
Net increase (decrease) in cash and cash equivalents, restricted cash, and cash reserved for users	377,994	(466,978)
Cash and cash equivalents, restricted cash, and cash reserved for users at the beginning of period	1,330,193	1,623,493
Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period	$ 1,708,187	$ 1,156,515
Disclosure of cash and cash equivalents, restricted cash, and cash reserved for users
Cash and cash equivalents	$ 1,228,275	$ 877,822
Restricted cash	4,593	13,807
Cash reserved for users	475,319	264,886
Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period	$ 1,708,187	$ 1,156,515
Supplemental Disclosure of Noncash Investing and Financing Activities:
Investing activities included in accounts payable and accrued expenses	$ 2,959	$ 1,788
Equity consideration issued in connection with acquisitions	$ -	$ 331,557
Decrease of warrant liabilities from cashless exercise of warrants	$ 13,790	$ 46,416
Shares issued for contingent consideration	$ 4,962	$ -
Stock-based compensation capitalized to internally developed software costs	$ 17,466	$ 13,461
Supplemental Disclosure of Cash Activities:
(Decrease) increase in cash reserved for users	$ (50,088)	$ (76,404)
Cash paid for interest	$ 18,630	$ -

Non-GAAP Financial Measures

This document includes Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share, and Free Cash Flow, which are non-GAAP financial measures that DraftKings uses to supplement its results presented in accordance with

U.S. generally accepted accounting principles ("GAAP"). The Company believes Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share, and Free Cash Flow are useful in evaluating its operating performance, similar to measures reported by its 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, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share, and Free Cash Flow are not intended to be substitutes for any GAAP financial measures, and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

DraftKings defines and calculates Adjusted EBITDA as net income (loss) before the impact of interest income or expense (net), income tax provision or benefit, and depreciation and amortization, and further adjusted for the following items: stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; and other non-recurring and non-operating costs or income, as described in the reconciliation below.

DraftKings defines and calculates Adjusted EBITDA Margin as Adjusted EBITDA divided by net revenue.

DraftKings defines and calculates Adjusted Earnings (Loss) Per Share as basic earnings (loss) per share attributable to common stockholders before the impact of amortization of acquired intangible assets; stock-based compensation; transaction-related costs; litigation, settlement and related costs; advocacy and other related legal expenses; gain or loss on remeasurement of warrant liabilities; other non-recurring and non-operating costs or income; and the tax impact of adjusting items, as described in the reconciliation below.

DraftKings defines and calculates Free Cash Flow as Adjusted EBITDA less investments into property and equipment and capitalized software, adjusted for sources or uses of cash from changes in net working capital and sources or uses of cash from net cash interest, and less corporate cash taxes paid.

DraftKings includes these non-GAAP financial measures because they are used by management to evaluate the Company's core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share, and Free Cash Flow exclude certain expenses that are required in accordance with 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 the Company's underlying business performance (for example, in the case of interest income and expense and litigation, settlement and related costs).

The unaudited table below presents the Company's Adjusted EBITDA reconciled to its net income (loss), which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:

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

(amounts in thousands)	2025	2024	2025	2024
Net income (loss)	$ (256,788)	$ (293,688)	$ (132,716)	$ (372,434)
Adjusted for:
Depreciation and amortization (1)	66,071	89,952	201,486	204,755
Interest expense (income), net	19,573	(8,328)	14,513	(36,280)
Income tax provision (benefit)	(12,065)	(1,287)	(5,875)	(75,208)
Stock-based compensation (2)	72,473	87,552	236,020	271,307
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 (6)	-	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
Adjusted EBITDA	$ (126,488)	$ (58,504)	$ 276,785	$ 91,853

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.

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

3. Includes capital markets advisory, consulting, accounting and legal expenses related to the evaluation, negotiation, and consummation of transactions and offerings that are under consideration, pending, or completed, as well as integration costs related to acquisitions.

4. Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to our 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 offerings. This adjustment excludes (i) costs relating to advocacy efforts and other legal expenses in jurisdictions where we do not operate that are incurred in the ordinary course of business and (ii) costs relating to advocacy efforts and other legal expenses incurred in jurisdictions where related legislation has been passed and we currently operate.

6. Primarily includes the change in fair value of certain 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 ("VSIN"). 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.

The unaudited table below presents the Company's Adjusted Earnings (Loss) Per Share reconciled to its basic earnings (loss) per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:

Three Months Ended 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)
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.(2)		-		-		-		(0.16)
Stock-based compensation (3)		0.15		0.18		0.48		0.57
Transaction-related costs (4)		0.01		0.00		0.01		0.05
Litigation, settlement, and related costs (5)		-		0.04		-		0.08
Advocacy and other related legal expenses (6)		-		0.01		-		0.01
(Gain) loss on remeasurement of warrant liabilities		(0.01)		0.00		0.00		0.02
Other non-recurring and non-operating costs (income)		(0.03)		0.08		(0.08)		0.04
Tax impact of adjusting items (7)		0.07		-		(0.09)		-
Adjusted Earnings (Loss) Per Share*	$	(0.26)	$	(0.17)	$	0.27	$	0.09

* 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; totals may not add due to rounding.

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.

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.

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

4. Includes capital markets advisory, consulting, accounting and legal expenses related to the evaluation, negotiation, and consummation of transactions and offerings that are under consideration, pending, or completed, as well as integration costs related to acquisitions.

5. 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. 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.

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.

Information reconciling forward-looking fiscal year 2025 Adjusted EBITDA guidance to its most directly comparable GAAP financial measure, as applicable, is unavailable to DraftKings without unreasonable effort due to, among other things, certain items required for such reconciliation being outside of DraftKings' control and/or not being able to be reasonably predicted. Preparation of such reconciliation would require a forward-looking balance sheet, statement of income, and statement of cash flow, prepared in accordance with GAAP, and such forward-looking financial statements are unavailable to the Company without unreasonable effort. DraftKings provides a range for its Adjusted EBITDA forecast that it believes will be achieved; however, the Company cannot provide any assurance that it can predict all of the components of the Adjusted EBITDA calculation. DraftKings provides a forecast for Adjusted EBITDA because it believes that Adjusted EBITDA, when viewed with DraftKings' results calculated in accordance with GAAP, provides useful information for the reasons noted above. However, Adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to net income (loss) or as an indicator of operating performance or liquidity.

About DraftKings

DraftKings Inc. is a digital sports entertainment and gaming company created to be the Ultimate Host and fuel the competitive spirit of sports fans with products that range across daily fantasy, regulated gaming, and digital media. Headquartered in Boston and launched in 2012 by Jason Robins, Matt Kalish and Paul Liberman, DraftKings is the only U.S.-based vertically integrated sports betting operator. DraftKings' mission is to make life more exciting by responsibly creating the world's favorite real-money games and betting experiences. DraftKings Sportsbook is live with mobile and/or retail sports betting operations pursuant to regulations in 28 states, Washington, D.C., and in Ontario, Canada. The Company operates iGaming pursuant to regulations in five states and in Ontario, Canada under its DraftKings brand and pursuant to regulations in four states under its Golden Nugget Online Gaming brand. DraftKings also owns Jackpocket, the leading digital lottery courier app in the United States. DraftKings' daily fantasy sports product is available in 44 states, the District of Columbia, and certain Canadian provinces. DraftKings is both an official sports betting and daily fantasy partner of the NFL, NHL, PGA TOUR, WNBA and UFC, as well as an official daily fantasy partner of NASCAR, an official sports betting partner of the NBA and an authorized gaming operator of MLB. In addition, DraftKings owns and operates DraftKings Network a multi-platform content ecosystem. DraftKings is committed to being a responsible steward of this new era in real-money gaming by developing and promoting educational information and tools to help all players enjoy our games responsibly.

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