DraftKings stock ticked higher Friday morning after a strong set of Q2 results and increased revenue guidance.
DraftKings pro-forma revenues climbed 297% year-on-year to $298 million.
The operator said some of the uptick was down to the sparse sports schedule in Q2 2020. However, it was also driven by a strong core business.
Strong metrics for DraftKings
DraftKings raised its FY 2021 revenue guidance by around 10% to $1.21-$1.29 billion.
The increase reflected the strong quarter and strong metrics in customer retention and acquisition, DraftKings said.
Revenue per monthly user was up 28%, per the Q2 report.
Cash burn continues
DraftKings did, however, post an operating loss of $325.5 million.
That compared to $153 million for the same period in 2020 and $325 million in Q1 2021.
DraftKings spent $171 million on marketing during the quarter, but retained a healthy $2.6 billion cash on hand at the end of June. The prime marketing season leading into NFL betting could drive that spend higher this quarter.
What execs said about DraftKings results
“DraftKings had a particularly strong second quarter of 2021,” said CEO Jason Robins.
“We maintained our impressive financial performance while also advancing into new areas, such as media and NFTs. We believe these expansion opportunities will enable us to further grow our customer base and generate additional revenues through cross-selling to our existing players”
Focus on product amid transition
DraftKings has now completed its migration to the SBTech platform in 11 of 12 states.
Only Virginia is left to switch over. That migration should be completed by the end of Q3, the company said.
“We have made significant progress in product and technology,” Robins said. “We continue to believe the winners in this space will have relentless a focus on creating the best product for consumers.”
Bump to hold upcoming?
In that vein, the operator launched same-game parlays last week, with the product coming via Betgenius and Sportcast.
Robins said same-game parlays could potentially boost hold and therefore revenue in the coming months.
However he added: “We’re not trying to maximize hold at this point. The market is in its early stages and are more focused on getting people onto the platform.”
That said, an operator-friendly hold rate added around $40 million to DK revenues in H1.
Other key takeaways from DraftKings results:
- The social features announced last quarter are seeing “great adoption,” but it is too soon to share actual metrics, Robins said.
- Robins expects iGaming legislation to follow sports betting, particularly as existing iGaming states post strong results and tax takes.
- Robins sees potential for international expansion. “We are looking to do that organically or inorganically,” he added.
- Canada sports betting is a “meaningful opportunity” for DraftKings. However, Robins warned that the company’s market share would be lower than in the US, due to established gray-market firms entering the legal market.
DraftKings stock was last up 2% to $51.50.