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DraftKings posted a $143 million net loss for the 2019 financial year despite a 43% rise in annual revenues.
According to filings posted Thursday, 2019 revenues came in at $323 million, but the company’s net loss almost doubled year-on-year from $76 million to $142 million.
The higher net loss was primarily because of continued platform development and launches in three new states, DraftKings said. The company now has six office locations across three countries, including its 105,000-square-foot HQ in Boston.
DraftKings did not specify when it expected to reach profitability but said it depended on the pace of sports betting legalization – the quicker, the better.
That’s because the company’s technology is “highly scalable,” with relatively low incremental spend to launch into new states,” DraftKings said. Meanwhile, costs like marketing benefit from that national scale.
However, that path to profitability faces new challenges in 2020. At the time of writing, major sports like the NBA, NHL, MLB, ATP, and MLS have all frozen for several weeks due to coronavirus concerns. The NCAA canceled March Madness as well.
The share price of planned parent company Diamond Eagle is down 18% in the last 24 hours. The company said its planned IPO via a combination with Diamond Eagle and SBTech to become a public company was still on track and expected to close in Q2 this year.
One analyst told LSR on background: “Obviously DraftKings is well-positioned from a strategic aspect, but their growth is contingent on market conditions outside of their control. The only way they will be able to fund continued growth is with financing … either tapping into debt markets or through their IPO.”
DraftKings said in a statement to LSR it would come out the other side of the cancellations in as strong a position as ever:
In the coming weeks, DraftKings will continue to offer our full suite of products—daily fantasy sports, sports betting and iGaming—to our millions of players. While there might be changes in the sports calendar, which may have an impact on our business, there won’t be any changes to DraftKings’ commitment to deliver the most engaging and innovative experience for our loyal customers.
When games resume in the sports and leagues impacted by COVID-19, DraftKings will be right where we’ve always been–in the middle of the action with our millions of players.
Elsewhere, DraftKings reported 684,000 monthly unique paid users (MPUs) in 2019, up nearly 14% from 2018. Average revenue per user also climbed from $31 to $39 as the company added sportsbook and casino to its DFS offering.
How much those numbers grow in 2020, however, might be out of the company’s control.