DraftKings raises revenue guidance in upbeat Q3 financial report

DraftKings Inc has posted its Q3 financial update for the three months ended September 30, 2020, reporting revenue ahead by 98% to $133m versus $67m year-on-year. 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.

Co-Founder, CEO and Chairman Jason Robins cited 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, as generating tremendous customer engagement during the quarter.

He commented: “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.”

The firm also told investors that it will raise its fiscal year 2020 pro forma revenue guidance from a range of $500m – $540m to a range of $540m – $560m, 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 it continues to operate in states in which it is currently live.

Revenue guidance for 2021 has also been revised to $750m – $850m, which equates to 45% year-over-year growth based on the mid-points of the company’s 2020 pro forma revenue guidance range and its 2021 revenue guidance range.

This range, the firm advised, is based on the same assumptions used for the its 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 again that it continues to operate in states in which it is live today.

In the report, investors were afforded an update on DraftKings’ activity across various states. During the third quarter, the firm launched mobile sports betting in Illinois and igaming in West Virginia.

It noted: “As a result of Illinois Governor JB 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 US 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.”

DraftKings went on to confirm that it is continuing 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.

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