DraftKings projects 2021 revenue could reach $1bn
Operator ups estimates as it records quarterly profit in New Jersey for the first time since launch in 2018, yet huge group losses mount
DraftKings has once again raised its revenue guidance for the 2021 financial year to up to $1bn from a prior estimate of $750m to $850m amid expected year on year growth of 55%.
DraftKings CEO Jason Robins said the 2021 guidance was increased in part on promising performance in Iowa, Michigan, Tennessee, and Virginia in the first few weeks of 2021.
DraftKings registered more customers via mobile registration in Iowa on January 1 than during the entirety of 2020 with in-person registration.
Michigan igaming revenue per customer was already 1.9x higher than New Jersey, despite only having launched on February 1.
Since launch, more than 70% of betting customers were also playing online casino games in the Wolverine State, and 75% of DraftKing’s igaming revenue came via in-house-built games.
Full-year 2020 revenue also increased on better-than-expected betting hold and in-person registration (IPR) requirements being scrapped in Illinois, as revealed by the Boston-based operator on a conference call.
Revenue reached $644m, with $526m attributed to its B2C business. Revenue grew 49% on the previous year, further driven by a Q4 annual revenue surge of 98%.
Robins said B2B revenue had come in lower than expected due to Covid-19 when traditional sports were canceled or postponed.
Pro forma net loss for the operator rose to $855m for the year, while pro forma EBITDA loss was just shy of $400m.
He told analysts that New Jersey had become profitable during 2020, more than two years after the operator launched in the Garden State. Handle grew 100% on the previous year.
Average revenue per user in Q4 was $64, up 55% on the previous year, while average unique players for the three-month period grew from 1.04 million in Q4 2019 to 1.5 million.
For the full year, average revenue per user was $51, up 31% YoY, and average unique players rose 29% to 883,000.
Marketing and sales for 2020 came in at $192m, although Robins estimates an increase next year.
The CEO reiterated the operator’s target for completing its SBTech platform integration by the end of Q3 2021, with the intention of then choosing one state to trial the technology in.
From there, the platform will be rolled out across all betting and igaming states where DraftKings is live.
In a note released this morning, Morgan Stanley analysts Thomas Allen and Ed Young forecasted 2021 revenue of approximately $889m for DraftKings, including around $10m from states that are not yet live.
“It is still very early in the year, stay-at-home benefits may dissipate as a vaccine is more widely disseminated, and management has a recent track record of setting more conservative guidance that it has outperformed,” the note said.
UK analyst firm Regulus Partners said: “Overall growth is therefore c. 25%, reflecting strong momentum in sports betting and online gaming in the US offset by far more mature DFS performance and a relatively more challenging global B2B environment.
“This is respectable but hardly stellar, especially given the theoretical secular adoption tailwinds,” Regulus added.