DraftKings Posts Impressive First Quarter Financial Results
On May 7, DraftKings released its first quarter financial results for 2021. As expected, most of the key numbers were impressive to say the least. As the second-biggest legal US sportsbook behind FanDuel in terms of total market share, the outlook for continued success heading into the remainder of the year remains extremely positive.
The overall growth of the legal sports betting industry in the US continues to expand at an accelerated pace. There are now 22 states plus the District of Columbia offering legal sports betting in some form. The main growth engine is online betting through the various mobile sportsbooks in the marketplace. There are currently 15 states offering online sports betting capabilities.
DraftKings reported revenue of $312 million for the first three months of the year ending March 31. This represents an increase of 253% as compared to the same three months last year. That revenue figure was $89 million.
Last year’s numbers were before the company went public in April of 2020. This was a result of a two-way merger with SBTech Limited and Diamond Eagle Acquisition Corp. as a special purpose acquisition company (SPAC).
Jason Robins is one of DraftKings co-founders and the current CEO and Chairman of the Board. His comments on this performance included:
“DraftKings is off to an outstanding start in 2021. We continued to make progress and remain on track with the migration to our own in-house proprietary sports betting engine, strengthened our content and technology capabilities with the acquisitions of VSiN and BlueRibbon Software, and invested in further differentiating our product offering with the upcoming rollout of social functionality in our DFS and mobile Sportsbook apps.”
The company’s Chief Financial Officer is Jason Park. He added that DraftKings has raised its overall revenue outlook for 2021 after outperforming many of the key financial measures in the first quarter. He pointed to strong customer retention and strategic corporate acquisitions as two important factors impacting the early results.
The quarterly report also stated that DraftKings engaged with an average of 1.5 million monthly unique paying customers in each of the first three months. Referred to as “monthly unique players (MUPs)”, these numbers represented an increase of 114% as compared to Q1 last year.
The average revenue per MUP was $61. This translates to an increase of 48% against the same timeframe in 2020.
In light of these results, DraftKings increased the company’s 2021 revenue guidance from $900 million to $1 billion up to $1.05 billion to $1.15 billion. Other factors effecting this increase were noted in the results.
The first was the overall effectiveness of the marketing spend. Also noted were well executed launches of mobile betting apps in Michigan and Virginia as new online markets for 2021. The company is also assuming that all remaining 2021 pro and college sports schedules will take place without any delays or interruptions.
DraftKings has established a business presence in 12 of the 15 states offering legal online sports betting. This group represents 25% of the total US population.
Along with online sports betting, there is also a mobile app for iGaming which represents casino games such as slots, video poker and select table games. This product is up and running in four different states including New Jersey and Pennsylvania as the two biggest market for legal online casino gambling. These four states represent 10% of the US population.
Revenue projections could be further enhanced as more states launch legal sports betting within their borders. States such as Arizona and Maryland are shooting for a September start to coincide with the new football season.
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