DraftKings Reveal Upbeat Q3 Financial Update

For the three months ended September 30, 2020, DraftKings Inc released its Q3 financial update, posting sales ahead by 98 percent to $133 million compared to $67 million year-on-year. Revenue increased 42 percent compared to the three months ended September 30, 2019, after giving pro forma effect to the business combination with SBTech (Global) Limited and Diamond Eagle Acquisition Corp, as if it had taken place on January 1, 2019.

The resumption of major sports such as the NBA, MLB and the NHL in the third quarter, as well as the start of the NFL season, were cited by Co-Founder, CEO and Chairman Jason Robins as generating considerable customer interest during the quarter.

He commented: “In addition to our year-over-year pro forma revenue growth of 42%, DraftKings recorded an increase in monthly unique payers of 64% to over 1 million, demonstrating the effectiveness of our data-driven sales and marketing approach.

“Our product offerings and scalable platform provide a distinctive and personalized experience for customers across the ten states where we operate mobile sports betting today, and we look forward to entering additional jurisdictions at the earliest opportunity.”

The company also told investors that it will increase its pro forma revenue outlook for fiscal year 2020 from a range of $500m-$540m to a range of $540m-$560m, which is equivalent to 25 percent to 30 percent year-over-year pro forma revenue growth in 2020, considering the effect of COVID-19 on the main sports calendar.

This advice assumes that all the sports calendars announced are retained by the end of the year and that they continue to function in the states in which they are currently living.

Revenue guidance for 2021 has also been updated to $750m-$850m, which corresponds to 45% growth year-over-year based on the mid-points of the 2020 pro forma revenue guidance range of the organisation and its 2021 revenue guidance range.

The business advised that this range is based on the same assumptions used for its 2020 guidance, in particular that all the announced professional and college sports calendars come to fruition, including the beginning of their 2020 to 2021 seasons, and again that it continues to operate in the countries in which it currently operates.

In the paper, investors were given an update on the activities of DraftKings across different states. The business launched mobile sports betting in Illinois during the third quarter and igaming in West Virginia.

It noted: “As a result of Illinois Governor JB Pritzker’s suspension of the in-person registration requirement, DraftKings was able to effectively acquire new Illinois customers to the platform as well as cross-sell from its existing product offerings. Illinois has quickly become the company’s fastest-growing state as well as one of its largest states in terms of handle.

“Following its successful launch in Tennessee, DraftKings is now live with mobile sports betting in 10 states, which is more than any other company in the industry. These 10 states together represent 20% of the US population, a position that DraftKings has achieved just two and a half years after the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992.”

DraftKings went on to report that it continues to consult with state authorities on laws and licencing for sports betting and igaming in Michigan and sports betting in Virginia and plans to begin at the earliest feasible opportunity in these states.