DraftKings beat Wall Street estimates for revenue when it reported its quarterly financial results on Friday. That helped the major sports betting operator’s stock jump nearly 6.5 percent to $61.53 in trading later that day. That was despite posting losses of $266.4 million for the fourth quarter of 2020.
For the quarter that ended on Dec. 31, the Boston-based gaming technology company reported revenues of $322.2 million. That beat analysts’ predictions by about $90 million. For the year, DraftKings reported total revenue of $614.5 million. On the quarterly report call with analysts Friday, CEO Jason Robins said annual revenues exceeded the midpoint of its guidance by $95 million.
These results were due to overperformance in our core business as well as multiple assumptions on external factors that broke our way such as the sports calendar, the extension of mobile registration in Illinois, and better than expected hold percentage in online sportsbook,” Robins said.
The calendar included the NBA Finals, which were pushed back four months because of the COVID-19 pandemic, along with an expanded MLB playoff format and regular season college and pro football. That helped drive the average monthly user total to 1.5 million for the final three months of the year, up about 450,000 from the same quarter in 2019. Expansions into such states as Illinois and Tennessee in 2020 helped DraftKings grow that number.
Not only did DraftKings get more customers, it saw them bet more, too. Average revenue per customer rose from $42 in the third quarter of 2019 to $65 last quarter.
Execs Project up to $1B in 2021 Revenue
Thanks in part to the momentum DraftKings built in the fourth quarter, executives announced Friday they had revised the company’s projections for 2021.
CFO Jason Park said revenue estimates for the year now range between $900 million and $1 billion. That’s up from the $750 million to $850 million executives shared on the third-quarter call. Besides the strong fourth quarter, Park noted the recent launches in Michigan and Virginia as well as an assumption that the major US professional and college sports seasons will be played to their normal conclusion also factored in the decision.
Michigan went live with mobile sports betting and iGaming in late January, with nine other operators opening simultaneously. Robins said DraftKings received 25 percent of sports betting handle and gross revenue over the first 10 days there. It also claimed a 24 percent share of online casino gross revenues.
Another positive trend the company’s seeing is growth in legacy states. For example, after Iowa let its in-person registration requirement sunset on Jan. 1, Robins said it only took until 3 pm on Jan. 5 for the company to surpass its app registrations for 2020.
The company also reported that its New Jersey business, in its second full year of operation, is a profit generator. DraftKings offers both sports betting and iGaming there.
DraftKings is available in 12 of the 15 US jurisdictions that offer mobile sports betting. That gives the company access to a quarter of the country’s population, Robins said. The company also offers iGaming in four states, which makes up 10 percent of the US population.
DraftKings to Switch Platforms This Year
More than a year ago, DraftKings announced it would merge with sports betting platform provider SBTech as part of its transition to a publicly traded company. With SBTech in house, the company announced it would transition away from its current Kambi-based platform.
Robins told analysts that the transition will take by the end of the third quarter.
The company has been running a pilot in Ireland, Robins said, for the sole purpose of getting DraftKings staff familiar with the new user interface.
“The next step we’ll be doing is we’re going to choose a state in the US to do a launch in and make sure everything’s working and work out any kinks,” he said. “And at that point, we’ll be comfortable rolling it out to the rest of the country.”
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