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DraftKings revenue up 27.1% in H1 as net loss widens


Sports betting and daily fantasy giant DraftKings reported a 27.1% year-on-year rise in revenue for the first half of 2020, though the business’ net loss widened to $230.1m for the period. 

Revenue for the six months to 30 June came to $159.5m, of which $139.1m came from online gaming (comprising sports betting, online casino and daily fantasy sports), up 14.6%. 

Gaming software, comprising the legacy SBTech business, contributed a further $15.0m, while DraftKings recorded a further $5.4m in other revenue. While the operator did not explain this ‘other’ segment, it classed it as B2C revenue suggesting it may be a contribution from retail betting.

DraftKings said B2C operations had been performing strongly prior to March 11, with revenue up over 60% before the novel coronavirus (Covid-19) crisis shut down land-based gambling venues and suspended sporting events. 

“The outbreak of Covid-19 had an immediate and significant adverse impact on this performance, though we expect our business and results of operations to improve as traditional sports seasons and sporting events resume,” DraftKings noted. 

The bulk of first half revenue was generated in the US, which accounted for $147.4m – or 92.4% – of the total, a 20.5% improvement on H1 2019 figures. International markets’ contribution rose significantly year-on-year, albeit from a low base, to $12.1m.

Adjusted loss before interest, tax, depreciation and amortisation amounted to $107.0m for the period.

Costs for the half year rose significantly, with cost of revenue – payment processing fees, product taxes, platform costs, revenue share agreements and data feed services – more than doubled to $90.7m. 

Sales and marketing expenditure rose 50.2% to $99.9m, and technology costs grew to $48.6m, while general and administrative expenses soared to $146.8m. This resulted in DraftKings’ operating loss for the period widening to $226.6m, compared to $58.7m in the prior year. 

It then recorded an additional $2.9m in interest expenses, for a pre-tax loss of $229.5m. After $332,000 in income taxes, and a $285,000 loss from equity investments was factored in, DraftKings net loss almost tripled to $230.1m. 

For the second quarter of 2020 – which saw DraftKings complete its merger with SBTech and list on the New York’s Nasdaq Stock Exchange – revenue was up 23.5% to $70.9m. However, had the merger been finalized from January 1, rather than 24 April, a full quarter’s contribution from SBTech would have brought the Q2 total to $75.0m. 

SBTech’s $15.0m contribution did help the operator avoid a year-on-year decline in revenue for the second quarter, with online gaming revenue down 1.3% to $55.4m for the three months to 30 June. Other revenue amounted to $568,000 in Q2. 

DraftKings’ EBITDA loss for the quarter came to $57.5m.

Again, DraftKings reported a significant hike in costs, with cost of revenue jumping 165.4% to $47.3m. Sales and marketing costs grew to $46.2m, while product and technology spend rose to $30.5m. After $107.3m in general and administrative expenses, operating loss for the quarter grew to $160.4m. 

After $588,000 in interest expenses, $323,000 in income taxes and a $82,000 equity investment loss, the operator’s second quarter net loss grew to $161.4m.