Fantasy sports wagering giant DraftKings eagerly shared its good results from the third quarter — a 31% rise in monthly unique players (MUPs) and a 38% increase in average revenue from those players (ARMUPs) compared with a year earlier. (That’s MUPs and ARMUPs. What’s up?) All this without activity from the National Basketball Association and National Hockey League, which hadn’t yet started their regular seasons.
On the other hand, Boston-based DraftKings posted a wider loss and revenue that sharply missed Wall Street forecasts.
In an 8-K report with the Securities and Exchange Commission, DraftKings said its net loss was $545 million, or $1.35 per share, for the three months ended Sept. 30, compared with a net loss of $395.7 million, or $1.11 per share, a year earlier.
Revenue rose 61.3% to $213 million from $132 million, but fell short of the $238 million consensus forecast of analysts surveyed by Seeking Alpha.
DraftKings’ shares fell in regular trading Friday, dipping $1.06, or 2.37% to $43.62 on the Nasdaq. But the shares rebounded after hours, following the analysts-and-journalists conference call, gaining 10 cents, or 0.23%, to settle at $43.72.
During the conference call, DraftKings CEO Jason Robins said the rise in monthly unique players augurs well for 2022.
“Fundamental user acquisition, retention, and engagement trends are all tracking better than we had projected last quarter, which sets us up well for the rest of the year in 2022,” he said. “This is true across all of our products. In week one of the NFL season, we had more than two times the number of mobile sports betting paid actives than we had for NFL week one last year.”
Robins also shared two big highlights that fell just outside the third quarter. The Oct. 3 National Football League game between the Tampa Bay Buccaneers and New England Patriots, in which Bucs quarterback Tom Brady returned for the first time to his former stadium in Foxborough, Massachusetts, yielded DraftKings’ highest-ever daily fantasy sports revenue-day gross.
Also, Robins said, New Jersey online sportsbook handle for the Oct. 5 American League Wild Card playoff between the New York Yankees and Boston Red Sox provided DraftKings’ highest-ever Major League Baseball handle, topping the previous high by 12%.
Nevertheless, as Seeking Alpha’s Clark Schultz highlighted, Robins suggested DraftKings had been somewhat unlucky with third-quarter National Football League games.
“On a same-state basis, as well as adjusting for lower-than-expected hold primarily due to NFL game outcomes, revenue would have been $40 million higher than our guidance,” he said, later lamenting that upsets were fewer — through the 2021 NFL season’s seventh week, 71% of NFL primetime favorites and 57% of NFL primetime overs have won.
DraftKings also adjusted its full-year sales forecast midpoint to $1.26 billion, compared with the $1.29 billion analysts had forecast. This news didn’t surprise Roth Capital analyst Edward Engel, who said in a Tuesday investors note that DraftKings had seemed poised to miss its third-quarter revenue number and post “underwhelming” 2021 guidance.
During the conference call, Robins discussed why DraftKings ended October talks to acquire Britain’s Entain Plc., an MGM Resorts International partner. Reuters put the deal’s value at $22 billion and noted it would have given DraftKings access to Ladbrokes and Coral and the online bwin and partypoker brands.
“It was really more about our confidence in our current trajectory in the U.S., our desire to focus on the U.S.,” Robins said, “and, ultimately, the value that we felt like we would be shedding by pursuing that asset.”
Follow Matthew Crowley on Twitter @copyjockey.
