DraftKings Hits 30% Increase in Revenue in Q1, 2020

Daily fantasy and real sports operator DraftKings published its Q1 2020 earnings report on Friday, May 15 encompassing the period through March 31. This is the first report the company releases after the absorption of SBTech, Europe-based sports betting technology supplier, and after DraftKings debuted on the Nasdaq Stock Exchange in April.

According to the report, DraftKings generated $88.5 million in revenue over the period, or up 30% year-over-year (YOY). The company didn’t go into detail as to how the revenue was shared between its main operations, including daily fantasy sports (DFS), professional sports, and online casino operations in New Jersey.

DraftKings saw an increase in operating costs as the company was pushing harder to secure new customer sign-ups in states where it operates. The company saw earnings loss amounting to $49.5 million with net loss reaching $68.7 million. In terms of losses, the company saw a worse Q1 compared to Q1 2019.

SBTech also experienced difficulties, seeing revenue go up by 3% to around €22.6 million but costs also pushing their way up. Earnings loss amounted to €851,000 over the period, the company reported. However, DraftKings remained positive as the company noted operational results prior to March 11, when the global shutdown of sports occurred, was solid.

Adapting to Sports Betting During the Lockdown

Since the pandemic struck, the company has sought to adapt, offering betting markets on previously minor competitions, such as Belarussian football and Russian table tennis. William Hill reported that the sportsbook was collecting around $100,000 a day on table tennis wagers placed on tennis in Las Vegas, Nevada.

DraftKings explained the slump in recent slump in results and missing targets by the fact that the pandemic wasn’t factored when it initially drew its forecasts. Better yet, the company said that the current pandemic would not cut into its outlook for 2021.

Recently, DraftKings CEO Jason Robins appeared in a brief CNN Business interview giving a moderate, but still positive outlook about the company’s chances to remain successful in the future. Mr. Robins cited the sportsbook’s liquidity and generally good financial standing as the reason behind his optimism.

He also said that DraftKings is toying with the idea of retaining some of the exotic markets that are currently popular and see if interest in those will remain intact after the lockdown is over.

Meanwhile, iGaming revenue also saw an increase in March. The company reported 23.4% stronger results amounting to $80 million in April. In New Jersey, Resorts Digital pushed revenue up by 125.8% or $16.1 million in total. Mr. Robinson also assured that DraftKings has done well in Pennsylvania and Colorado, launching an iGaming and sports betting product respectively.

DraftKings’ executive also noted that there were some 14 states currently looking to legalize sports betting, but also iGaming. Among those entering the scene soon were Illinois, Michigan, Tennessee, and Virginia, with Tennessee beating everyone else to the punch.

Customer Acquisition and Simulated Madden

Two interesting points to note in the current context is that DraftKings reported 720,000 monthly unique paying customers over the period. In terms of growth, this amounted to a 16.3% increase, and the average revenue per customer amounted to $41, or up 10.8% over the period.

Another highlight was the introduction of simulated Madden games, with DraftKings offering between 10 and 12 of these SIM games every day. Mr. Robins acknowledged that DraftKings might be looking into extending those races around the year. There just seems to be a crop of players, Mr. Robinson said, who can’t get enough of the NFL.