SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : DraftKings, Inc. / Online Gambling
DKNG 16.21-3.0%1:16 PM EDT

 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
Recommended by:
John Carragher
From: Glenn Petersen3/2/2021 6:18:47 AM
1 Recommendation   of 250
 
DRAFTKINGS STOCK STEADY ON IMPROVED REVENUE GUIDANCE DESPITE MASSIVE Q4 LOSSES

POSTED ON FEBRUARY 26, 2021
BY BRAD ALLEN
Legal Sports Report

DraftKings stock climbed 4% on Friday following a strong Q4 earnings report and upgraded outlook for 2021.

The company posted Q4 revenue of $332 million, up 98% on a pro-forma basis and ahead of analyst estimates.

CEO Jason Robins said the revenue beat was driven by:

-- Good hold rates, especially on NFL

-- More college sports than initially projected

-- Remote registration in Ilinois

-- A strong launch in Tennessee, where the market saw over $300 million in handle in its first two months

-- People stuck at home with more time and money for betting

New guidance affects DraftKings stock

As a result, DraftKings raised its FY21 revenue outlook from $750-850 million to $900 million – $1 billion.

Robins said the improved outlook reflected “the outperformance of our core business and newly launched states that were not included in our previous guidance.”

There was also growth in existing states, with New Jersey handle up 103% year-on-year. DK said it was profitable in New Jersey in its second full year of operation there.

Elsewhere, monthly unique players increased 44% to 1.5 million, while average revenue per player increased 55% to $65.

Big costs for DraftKings

However, the growth came at a high cost. Net loss for the quarter was $266 million. Adjusted EBITDA was negative $88 million.

Much of the difference between the two numbers was driven by stock compensation during the quarter, which was $149 million.

As for costs, sales and marketing spend ramped up year-on-year to $192 million. However, it was down slightly on a sequential basis from $203 million in Q3. That’s because of the marketing ramp-up around NFL betting at the end of Q3.

The operator declined to share an EBITA outlook for 2021, based on the variance in new state launches. Investors remained largely unfazed by the company’s sizable spend, as DraftKings stock opened Friday at $60 and sat art $59.50 as of publication.

What next for DK?

Going forward, the company said the migration to its in-house SBTech platform should be complete by the end of Q3 2021. That will give it greater control over product development and boost margins, Robins said.

Other key takeaways:

DraftKings said it was the largest iGaming operator in the US by GGR in Q4

DraftKings registered more customers in Iowa in five days via mobile registration than through the entirety of 2020.

The company will host an investor day on March 9.

What do investors think?

Gaming investor Jason Ader played down the losses, saying the company was right to pursue growth while the sector was still early-stage.

“I’m not saying its a value stock, obviously it’s trading on a very high multiple,” Ader said. “But from a business perspective, they are executing at a very high level.”

He said DraftKings would be smart to make the most of its lofty valuation and issue equity to make an acquisition.

“Their stock is good currency right now and they should use that to strengthen their business,” Ader said.

Story Link
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext