DraftKings 1st-Quarter 2021 Revenue Exceeds Expectations
Online gambling company DraftKings pointed to better-than-expected revenue increases in the year’s first quarter and raised its guidance for the full year in an earnings conference call on Friday. At the same time, net losses for the company are still in the hundreds of millions of dollars.
DraftKings revenues for the quarter ending March 31 were $312 million, which was an increase of 253% from $89 million in the same quarter in 2020. Some consensus forecasts had put the revenue projections between $230 million and $240 million.
DraftKings co-founder and CEO Jason Robins cited two factors for the favorable Q1 revenue results: The temporary continuation of online customer registration in Illinois and higher than usual hold percentage in sports betting (Robins declined to reveal the specific hold percentage).
In both cases — the Illinois online registration, which has ended (customers will have to sign up in-person for now), and the elevated hold percentage — are factors that can’t be counted on in future quarters, Robins noted.
“DraftKings is off to an outstanding start in 2021,” Robins said in a prepared statement. “We continued to make progress and remain on track with the migration to our own in-house proprietary sports betting engine, strengthened our content and technology capabilities with the acquisitions of VSiN and BlueRibbon Software, and invested in further differentiating our product offering with the upcoming rollout of social functionality in our DFS and mobile Sportsbook apps.”
The “in-house sports betting engine” (SBTech) could be ready by the end of the third quarter.
Robins Raves About Social Engagement Potential
Robins was particularly enthusiastic about the social engagement functionality that’s planned for the sportsbook and DFS apps where customers can interact with each other, and in the process, that experience makes the DK platforms stickier.
In taking questions during the earnings conference call, Robins said: “The idea is to allow some user-generated content, but … the bigger picture is to allow people to connect specifically around the experience they’re having on DraftKings.
"A lot of the requests we get from people — How do I better see what my friends are betting on and what are they playing? How do I better interact if I like a bet my friend makes and let them know? How do I understand what my friends are playing so I can play contests against them on (DraftKings’) private leagues product? Lots of requests we’ve gotten, and we’re trying to facilitate those interactions.”
DraftKings 2021 Revenue Guidance Raised
Meanwhile, on the balance sheet, the net losses continued at DraftKings. For the quarter, it was $346.3 million, or a loss of 36 cents a share (but that was favorable compared to a forecasted loss of 42 cents a share). In the fourth quarter of 2020, the loss was 24 cents a share.
Losses aside, the revenue guidance for the whole of 2021 was raised. DraftKings entered the year projecting revenues of $900 million-$1 billion, and the range for 2021 has been lifted to $1.05 billion-$1.15 billion.
Another favorable metric is average revenue per what DraftKings call an “MUP” (monthly unique players). That number was $61 per MUP and that was a 48% increase from $41 per MUP in the 2020 fourth quarter. Additionally, the average monthly unique players jumped to 1.54 million in the first quarter in 2021 from 720,000 in the fourth quarter in 2020.
So far in 2021, DraftKings launched online sports wagering in two new states, Michigan (where there’s also DK iGaming) and Virginia. For the remainder of 2021, there’s no certainty of another state launching online sports betting, but Maryland has a fair shot at getting its retail sportsbooks going in the third or fourth quarter.
DraftKings Making Acquisitions
Recently, DraftKings has been active in increasing its content position, notably with its purchase of Vegas Sports and Information Network (VSiN, pronounced vee-sin), the sports wagering broadcast group put together by members of the Musburger family with veteran broadcaster Brent Musburger as the face of that effort.
"There’s a ton of synergy between media content and what our core products offer,” Robins said of the current trend of gambling and content companies combining. “We all know that there is a demand for content that is driven by our products and, in turn, content drives demand for the gaming product.
“Secondly, we have a good track record in launching new product lines and being able to monetize our customer base as well as utilizing them to acquire a broader customer base. We’ve done that with multiple products now. We think between our data science capabilities and other analytics that we employ that we’re going to be really effective at targeting the right content to the right customers at the right time and also using what we see as consumption of content to better target gaming offers.
"That’s really the crux of this strategy.”
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