Inflation? What inflation?
Even if higher gasoline and grocery prices are squeezing budgets, DraftKings’ executives said Americans’ interest in sports wagering remains robust. The company had the second-quarter results to prove it.
The Boston-based sports-betting giant, which raised eyebrows by projecting annual earnings of $1 billion for 2021, raised its annual revenue forecast to $2 billion for 2022. The company also narrowed its loss, lifted its revenue, and topped Wall Street forecasts for both figures.
DraftKings’ stock surged 11% in early trading Friday before settling 9.78% higher on the news, up $1.60 to close at $17.96 in regular trading on the Nasdaq Stock Market. The share price shrank slightly after hours Friday, dipping 12 cents, or 0.67%, to settle at $17.84.
In a statement, DraftKings said its net loss was $217.1 million, or 50 cents a share, for the three months ended June 30, compared with a loss of $305.5 million, or 76 cents a share, a year earlier. The latest per-share result topped the 75 cents-per-share loss average forecast of analysts surveyed by FactSet.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that excludes one-time costs, was a loss of $118.1 million, compared with a loss of $95.3 million a year earlier.
Revenue rose 56.6% to $466.2 million from $297.6 million and topped the $438.6 million consensus forecast of FactSet-polled analysts.
DraftKings’ raised its full-year-revenue range for 2022 from between $2.055 billion and $2.175 billion to $2.0 billion and $2.18 billion.
In a conference call with analysts and journalists, DraftKings Chief Executive Officer Jason Robins said his company’s customers are playing more frequently than expected.
“Our parlay-bet mix increased by 1,700 basis points in the quarter compared to Q2 of 2021,” he said. “I really love how we’re merchandising our same-game parlays, which I think have great personality.”
During the conference call, Chief Financial Officer Jason Park said DraftKings is preparing to possibly offer online sports betting in Maryland, Ohio, Puerto Rico, and Kansas, which would bring its sports-betting offerings up to 20 states, one territory, and 44% of the U.S. population. Adding online sports betting in California would bring an extra 12% of the population, Robins said; the state will vote on a measure to allow it in November.
Robins told The Wall Street Journal in May that his company had 2 million monthly customers, up 29% from a year ago, even as prices rose.
“We’re not seeing any impact from inflationary pressures on customer demand,” Robins told the Journal.
And the upcoming NFL season will boost demand, Robins said. DraftKings said it expects about $1 billion in online sportsbook handle on National Football League games in the third quarter, although it’s limited to only three weeks of regular-season games. Robins said his company has already released look-ahead lines for all 272 games in the NFL season.
Robins said on the conference call that revenue per unique payer was a record $103 in the quarter, up 30% from a year earlier. He told Yahoo Finance that the DraftKings’ market is largely small-dollar bettors who wager $5 to $6 dollars on a given game.
“It’s a great bang for your buck,” he said. “They get hours of enjoyment and it tends to be something that’s quite sticky during periods of any macroeconomic condition.”
Follow Matthew Crowley on Twitter @copyjockey
