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FanDuel releases four key metrics on their investor page:
A few other important metrics emerge from those four:
The big question: is one-day fantasy sports displaying growth rates commensurate with a market expected to grow into the billions by decade’s end?
A clear bright spot for FanDuel in 2014: growth in paid active players per quarter.
Critically, FanDuel put up big percentage gains here even when the absolute numbers involved got larger:
The chart for revenue growth looks relatively similar:
(The predictable (and increasingly severe) dips are due to the fact that DFS activity is heavily concentrated around the NFL season.)
FanDuel’s total revenues for 2014 came in at ~$57mm – actually a bit below the $60mm FanDuel projected.
Note that the company offered the $60mm projection for 2014 in the fall of 2014.
The miss could be read as suggesting that, for all of the staggering stats, the fourth quarter was actually something of a disappointment for FanDuel.
But in any case, the growth is there and it’s obvious.
One chart that doesn’t fit in with the theme of unrestrained growth: average revenue per user.
There, FanDuel saw a rare decline, shaving off about 5% year over year, or roughly $2 per active paying user.
That continues a trend from 3Q14, where FanDuel suffered a nearly 15% drop year-over-year.
And that drop took place in the context of an increasing effective rake (or “hold”):
So even as FanDuel’s rake has effectively increased, the amount they’re making per paying user has decreased.
But the decline in revenue per user can also be read as a positive – at least for now:
The y/y decline in entry fees per paid active on FD isn't a bad thing, likely indicates higher number of casual players, which is a good.
— Adam Krejcik (@akrejcik) January 13, 2015
That’s true – but only to a point. Eilers’ forecasts for the industry require some upward movement (quite a bit for the bull case) in player values to achieve.
The important thing to note for both active user and revenue growth is that we’re not talking about a purely organic – or necessarily a sustainable – phenomenon here.
The FanDuel investor page now estimates FanDuel’s DFS market share to be 80%.
The company does not articulate their methodology for determining market share.
Previous iterations of the page (retrieved on July 3rd, 2014) estimated the company’s market share at 65%. In a presentation given by the company, FanDuel’s market share in December 2013 was pegged at 75%.
Unlike FanDuel, DraftKings does not publicly release much in the way of financial information.
FanDuel booked a hair over $57mm total in 2014 revenue. Based on that metric, the market share split starts to look more like 65/35.
Based on paid active users as reported by both companies for Q4, the split looks closer to 75/25.