Prominent gaming outfit DraftKings reported a 30 per cent lift in net revenue during its first quarterly report as a public company despite the heavy impact of the Covid-19 pandemic on the sports industry, but the company’s financial totals missed analyst projections.
The Massachusetts-based company, which recently went public amid a three-way corporate merger, reported $88.5m in revenue for the quarter ended March 31, up by nearly a third from the same period in 2019, but below analyst expectations of about $98m.
Losses for the quarter also grew $68.7m, or 18 cents per share, more than the comparable loss of $29.6m, or 8 cents per share from the comparable period in 2019 and more than Wall Street projections of a loss of 13 cents per share.
But DraftKings executives are insistent there will be no long-term drag on the company despite most sports leagues remaining on hiatus due to the public health crisis, leaving less content on which to base betting and fantasy games. DraftKings recently went live in Colorado, its seventh US state to offer its betting products, and the company’s revenue was pacing 60 per cent ahead of 2019 before the widespread sports industry shutdown in mid-March.
DraftKings also recently received investor support from billionaire financier George Soros, and he now comprises a lengthy roster of prominent industry executives and bold-faced names to back the company.
“The DraftKings vision is unchanged,” said co-founder and chief executive Jason Robins in an earnings call. “Our goal is to build the best, most trusted, and customer-centric destination for skin-in-the-game fans.”
Robins said the company is continuing its push to go live with legal sports wagering in additional US states, and remains buttressed by $450m in cash on its balance sheet. He is also optimistic that a potentially large and unusual grouping of sports events due to Covid-19 reschedulings presents an opportunity for DraftKings, particularly as it relates to customer acquisition.
“Assuming there is overlap [in sports events], usually what we’ve seen is that when there is more popular sports going on, overall activity and overall revenue goes up,” he said. “That is something we see typically, for example, in Q4 when we have a lot of sporting activity going on, and I would expect we’ll see something similar.”