DraftKings raises 2020 revenue guidance
SBTech platform migration on track for Q3 2021 as operator hails increased customer acquisition efforts
DraftKings has increased its 2020 full-year revenue guidance to up to $560m with an expected cash balance of $1.7bn.
The operator saw Q3 pro forma revenue climb 42% to $133m as monthly unique players (MUPs) averaged around one million during the quarter.
DraftKings CEO Jason Robins told analysts the upgraded revenue forecast was based on positive Q3 results and a significant increase in customer acquisition.
He also estimated the firm’s forecast for 2021 would likely be $750m to $850m, up from its initial forecast of $700m, which it reported in its IPO prospectus earlier in the year.
Robins said DraftKings had not accounted for potential revenue from new states like Illinois and Tennessee which were launched towards the end of the quarter.
Losses for the quarter came in at $347.8m, up from $161.4m in Q2.
Although the operator spent a record $203m on marketing in the three-month period, Robins said spend per MUP was down slightly.
Robins said: “I don’t necessarily think we are being that much more aggressive than competitors. I think we’re just being smarter in where we choose to push and where we don’t, and as we get more data, we should get better at that.
“I think a lot of [our performance] comes from having very strong analytics and discipline around using that data to make determinations around where we invest and where we don’t,” Robins added.
The operator’s migration onto its SBTech sportsbook platform is on target for Q3 2021. Robins said the operator may enter key states like Michigan and Virginia on its existing Kambi platform next year, depending on whether they launch prior to Q3.
“We still feel good about committing to that timeline,” said Robins. “There might be an opportunity to accelerate it and it really depends on the timing of those [states launching]. If they launch early in the year as expected I suspect we will utilize Kambi, if they launch later we go in on the SBTech platform.”
On November 11, competing operator Flutter Entertainment reported it expected its US business, made up of FanDuel, Fox Bet and PokerStars, to generate over $1.1bn in GGR for 2020.
Like DraftKings, the revised guidance also reflected a higher-than-expected rate of customer acquisition.
UK analysts Regulus Partners said in a note this afternoon: “DK is a very solid leader in US online gambling, with only one credible rival in terms of current market share. DK’s opex and post fundraise resources are likely to cement this leadership into the medium-term.
“If the US online market grows the way bulls hope, then this is the cement of solid foundations.
“If, however, per capita online spend is being misread, state online gaming adoption is slow and product-led competition increases, then that cement is just there for the weight.”