DraftKings Inc. (Nasdaq: DKNG) (“DraftKings” or the “Company”)
today reported its financial results for the third quarter of 2020.
For the three months ended September 30, 2020, DraftKings reported
revenue of $133 million, an increase of 98% compared to $67 million
during the same period in 2019. After giving pro forma effect to
the business combination with SBTech (Global) Limited and Diamond
Eagle Acquisition Corp., as if it had occurred on January 1, 2019,
revenue grew 42% compared to the three months ended September 30,
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,
generated tremendous customer engagement,” said Jason Robins,
DraftKings’ co-founder, CEO and Chairman of the Board. “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.”
Return of Major Sports and Unique Sports Calendar Drive
Growth and Attractive Customer Acquisition
Opportunities
- Monthly Unique Payers (“MUPs”) for our B2C segment increased by
64% compared to the third quarter of 2019. On average, more than a
million monthly unique paying customers engaged with DraftKings
each month during the third quarter. This improvement reflected
continued growth of our core DFS product spurred by on-going
product innovation, strong engagement from existing Sportsbook and
iGaming players, and expansion of our player base in several new
states.
- Average Revenue Per Monthly Unique Payer (“ARPMUP”) for our B2C
segment was $34 due to limited sports activity in July and atypical
hold rates from NFL wagering through the third week of the season,
which was partially offset by increased engagement with our iGaming
product offering.
- GAAP sales and marketing expense increased to $203 million in
the three months ended September 30, 2020. The increase over the
third quarter of 2019 was primarily due to being live in seven more
states, including Illinois, for Week 1 of the NFL season this year
versus Week 1 of 2019. DraftKings experienced strong returns on its
marketing spend due in part to pent-up demand, the unique sports
calendar, and the stay-at-home nature of the COVID-19
pandemic.
Increasing 2020 Revenue Guidance and Introducing 2021
Revenue Guidance
- DraftKings is raising its fiscal year 2020 pro forma revenue
guidance from a range of $500 to $540 million to a range of $540 to
$560 million, which equates to year-over-year pro forma revenue
growth of 25% to 30% in 2020, despite COVID-19’s impact on the
major sports calendar. This guidance assumes that all announced
sports calendars are maintained through the end of the year and
that we continue to operate in states in which we are live
today.
- DraftKings is also introducing 2021 revenue guidance of $750
million to $850 million, which equates to 45% year-over-year growth
based on the mid-points of the Company’s 2020 pro forma revenue
guidance range and the Company’s 2021 revenue guidance range. This
range is based on the same assumptions used for the Company’s 2020
guidance, in particular that all professional and college sports
calendars that have been announced come to fruition, including the
commencement of their 2020 to 2021 seasons, and that we continue to
operate in states in which we are live today.
- Detailed financial data and other information is available in
DraftKings’ Quarterly Report on Form 10-Q, being filed today with
the Securities and Exchange Commission, as well as in a slide
presentation that can be accessed through the “Investors” section
of the Company’s website at investors.draftkings.com.
DraftKings Grows Its Nation-Leading Mobile Sports
Betting Footprint
During the third quarter, DraftKings launched mobile sports
betting in Illinois and iGaming in West Virginia.
- As a result of Illinois Governor J.B. 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 U.S. 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.
- The Company continues to work with state officials on
regulations and licensing in Michigan for sports betting and
iGaming and in Virginia for sports betting and expects to launch in
these states at the earliest practicable opportunity. Michigan and
Virginia together account for 6% of the U.S. population and have
already legalized these offerings.
- Maryland (with 67% voter approval), South Dakota (with 58%
voter approval) and 55 of 64 parishes in Louisiana (representing
approximately 97% of the state’s population) recently passed
referendums in favor of sports betting. These states together
account for 3.5% of the U.S. population.
- In addition, Ontario’s government recently presented its annual
budget, which included language that would modify the long-standing
statutory internet gaming framework in order to allow private
operators to join the province in offering sports betting and
iGaming products. Ontario’s population would make it the fifth
largest U.S. state by population. DraftKings has offered its DFS
product in Canada since 2012.
Commercial and Strategic Agreements
DraftKings announced several advantageous commercial and
strategic agreements in the quarter that are expected to provide
the Company with access to unique and valuable content,
intellectual property and marketing assets, including:
- an expansion of a multi-year content and marketing relationship
with the PGA TOUR to become the first Official Betting Operator of
the PGA TOUR.
- an exclusive multi-year extension to remain the Official Daily
Fantasy Sports Partner of Major League Baseball.
- an exclusive multi-year deal with the Chicago Cubs, making
DraftKings the Official Sports Betting Operator and Official Daily
Fantasy Partner of the Cubs, including a plan to pursue a
first-of-its-kind sportsbook at Wrigley Field.
- a multi-year agreement with ESPN to collaborate in a variety of
areas including becoming a co-exclusive sportsbook link-out
provider and exclusive daily fantasy sports link-out provider.
- an exclusive, multi-year agreement with the New York Giants,
making DraftKings the official sports betting, gaming & casino
and daily fantasy partner of the team.
- an agreement with the Colorado Rockies to be named both the
franchise’s Official Daily Sports Partner and the franchise’s first
Official Sports Betting Partner.
Product and Technology
DraftKings unveiled several technology enhancements and new
product features during the third quarter:
- launched standalone casino app in Pennsylvania and West
Virginia, offering users a more holistic product suite and dynamic
gaming experience in a DraftKings-created casino app.
- launched Best Ball, a new season-long DFS game variant,
featuring snake drafts. The streamlined draft format enables the
Company to engage with customers long before the traditional
pre-NFL period. DraftKings will launch Best Ball versions for
fantasy basketball and hockey in the near future.
- introduced several new DraftKings-created games for online
casino, including new versions of blackjack, roulette and
baccarat.
- made various improvements to the mobile and online Sportsbook
to further differentiate the customer experience including the
addition of dark mode and shifting of main navigation (online) to
the left rail.
Environmental-Social-Governance Initiatives
DraftKings had several notable ESG-related highlights during the
quarter, including:
- strengthened our corporate governance foundation by appointing
two new Board members, Jocelyn Moore and Valerie Mosley. The two
directors each bring unique skills, experiences and ideas, and will
play an important role in shaping the future of DraftKings and
helping us achieve our long-term goals.
- welcomed Michael Jordan as a special advisor to the Board.
Jordan will provide strategic and creative input to the Board on
brand strategy, product development, inclusion, equity and
belonging, marketing activities and other key initiatives.
- donated all of the Company’s daily fantasy sports revenue from
the NBA and WNBA games on August 28 and 29, totaling approximately
$340,000, to organizations promoting racial justice.
- announced Election Day as an official DraftKings company
holiday; employees at all DraftKings offices worldwide will now
receive their respective election day as a holiday.
- raised $20,000 through charity DFS contests in support of the
Company’s Tech for Heroes initiative, which provides recent and
returning veterans and their spouses with free, high-tech skills
training in areas like front end web development and
cybersecurity.
Webcast and Conference Call Details
DraftKings will host a conference call and audio webcast today
at 8:30 a.m. EDT, during which management will discuss the
Company’s third quarter results and provide commentary on business
performance. A question and answer session will follow the prepared
remarks.
The conference call may be accessed by dialing (833) 644-0686
for domestic callers or (918) 922-6762 for international callers.
Once connected with the operator, please provide the conference ID
of 2644858.
A live audio webcast of the earnings conference call may be
accessed on the Company’s website at investors.draftkings.com,
along with a copy of this press release, the Company’s Form 10-Q
filing, and a slide presentation. The audio webcast and
accompanying presentation will be available on the Company’s
investor relations website until 11:59 p.m. EDT on December 14,
2020.
About DraftKings
DraftKings Inc. (Nasdaq: DKNG) is a digital sports entertainment
and gaming company created to fuel the competitive spirits 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 is a multi-channel provider of sports
betting and gaming technologies, powering sports and gaming
entertainment for 50+ operators across more than 15 regulated U.S.
and global markets, including Arkansas and Oregon in the U.S.
DraftKings’ Sportsbook offers mobile and retail betting for major
U.S. and international sports and operates in the United States
pursuant to regulations in Colorado, Illinois, Indiana, Iowa,
Mississippi, New Hampshire, New Jersey, New York, Pennsylvania,
Tennessee and West Virginia. DraftKings’ daily fantasy sports
product is available in 8 countries internationally with 15
distinct sports categories. DraftKings is the official daily
fantasy partner of the NFL, MLB and the PGA TOUR as well as an
authorized gaming operator of the NBA and MLB and an official
betting operator of the PGA TOUR.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act, about us and
our industry that involve substantial risks and uncertainties. All
statements other than statements of historical facts contained in
this press release, including statements regarding guidance, our
future results of operations or financial condition, business
strategy and plans, user growth and engagement, product
initiatives, and objectives of management for future operations,
and the impact of COVID-19 on our business and the economy as a
whole, are forward-looking statements. In some cases, you can
identify forward-looking statements because they contain words such
as “anticipate,” “believe,” “contemplate,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “going to,” “intend,” “may,”
“plan,” “potential,” “predict,” “project,” “propose,” “should,”
“target,” “will,” or “would” or the negative of these words or
other similar terms or expressions. We caution you that the
foregoing may not include all of the forward-looking statements
made in this press release.
You should not rely on forward-looking statements as predictions
of future events. We have based the forward-looking statements
contained in this press release primarily on our current
expectations and projections about future events and trends,
including the ongoing COVID-19 pandemic that we believe may affect
our 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,
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 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, and in particular economic and market conditions in the
media / entertainment / gaming / software industry in the markets
in which DraftKings’ operates; the potential adverse effects of the
ongoing global coronavirus (COVID-19) pandemic on capital markets,
general economic conditions, unemployment and DraftKings’
liquidity, operations and personnel, as well as risks,
uncertainties, and other factors described in “Risk Factors” in our
filings with the SEC, which are available on the SEC’s website at
www.sec.gov. Additional information will be made available in other
filings that we make from time to time with the SEC. In addition,
any forward-looking statements contained in this press release are
based on assumptions that we believe to be reasonable as of this
date. We undertake no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
this press release or to reflect new information or the occurrence
of unanticipated events, including future developments related to
the COVID-19 pandemic, except as required by law.
Contacts
Media:Media@draftkings.com@DraftKingsNews
Investors:Investors@draftkings.com
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