Those cheers from the now-full sports stadium stands? Could be trackers of DraftKings’ revenue. With the sports calendar back to normal and sports betting legislation advancing, fantasy sports betting giant DraftKings raised its full-year revenue guidance for the third straight quarter.
The guidance boost from a range of $1.05-$1.15 billion to $1.21-$1.29 billion had analysts watching. (More on that shortly). Although DraftKings’ second-quarter loss shrank, the per-share loss missed Wall Street forecasts even as revenue rose.
In a 10-Q statement Friday with the Securities and Exchange Commission, Boston-based DraftKings said its net loss was $305,526, or 76 cents per share, for the three months ended June 30, compared with a net loss of $524.8 million, or $1.80 per share, a year earlier.
The latest result was larger than the 58 cents-per-share consensus forecast of analysts surveyed by Seeking Alpha.
DraftKings’ adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, improved to a negative $305.5 million from a negative $524.8 million.
As in past quarters, revenue zoomed ahead, climbing 320% to $298 million from $70.9 million, well past the $247.2 million forecast of Seeking Alpha-polled analysts.
Second-quarter monthly unique players in DraftKings’ business-to-consumer segment increased 281% year to year. Average revenue per monthly unique players was $80 in the second quarter of 2021, up 26% from a year earlier.
“While year-over-year comparisons were obviously impacted by COVID, our results were very strong relative to our expectation,” DraftKings’ Chief Executive Officer Jason Robins said in a conference call with analysts and journalists Friday. “At this stage, we’re not seeing any signs of the economies reopening impacting demand for our mobile-product offerings. We continue to acquire customers efficiently with tech at or below our target.”
As in previous quarters, Robins cited advancing sports betting legalization as a positive for DraftKings. He said 25 state legislatures have introduced legislation to legalize mobile sports betting this year. Furthermore, he said, Wyoming, Arizona, New York, Maryland, Louisiana, and Connecticut authorized mobile sports wagering this year, representing 13% of the U.S. population and raising the percentage of the U.S. population with legalized mobile sports betting to 39%.
Robins also mentioned an expanded daily fantasy sports and sports betting relationship with Major League Baseball, which will have DraftKings’ brand be visible on digital odds displays and virtual signs. On Friday, the Chicago Tribune reported that the Chicago Cubs received the Commission on Chicago Landmarks’ okay to build a proposed two-story sportsbook adjacent to Wrigley Field.
Morgan Stanley, which rates the stock “buy” with a $60 price target, in a note on Seeking Alpha cited DraftKings’ tech migration and same-game parlays launch as positives.
Analyst David Katz of Jefferies, which also rates the stock “buy” with a $75 price target, said he expected the narrowing of DraftKings’ quarterly loss to drive the company’s shares higher. “The quarter continues to demonstrate better than expected execution and broadening areas of growth for the future,” Katz said.
The SEC filing revealed that the agency subpoenaed DraftKings July 9 seeking documents concerning short-seller Hindenburg Research’s allegations over money laundering and “black-market gaming.”
DraftKings said it is cooperating with the SEC’s inquiry and that it didn’t think the proceeding’s outcome will adversely affect company financials. As MarketWatch reported, Hindenberg said June 15 that SBTech, part of the three-way merger that took DraftKings public in April 2020, had a record of operating in black markets.
DraftKings shares rose $1.11, or 2.20%, Friday to close at $51.59 on the Nasdaq. The stock price has risen 15% in 2021.
Follow Matthew Crowley on Twitter @copyjockey
