Sports betting operator DraftKings Inc DKNG saw shares rise last week after reporting second quarter results that came in ahead of estimates from analysts. The company also raised guidance for the full fiscal year.
DraftKings CEO Jason Robins shared with Benzinga the highlights of the second quarter and what’s to come for one of the leaders in the sports betting sector.
What Happened: DraftKings beat revenue and earnings per share estimates in the second quarter. When asked about the standout aspects of the quarter, Robins explained that it wasn't limited to just one or two factors.
“I really think it was a collection of many different things we worked on,” Robins told Benzinga in an exclusive interview.
Robins said the ongoing migration to DraftKings’ proprietary technology platform has continued to pay off.
“It starts there, it starts with the product. I feel like we have the best product in the market now.”
DraftKings saw customer acquisition increase in the quarter, which came with lower customer acquisition costs, something Robins couldn’t help but highlight given its rarity in the industry.
“Usually when the customer acquisition numbers goes up, it means you spent more.”
Robins said DraftKings is optimizing its marketing mix, which is a never-ending journey.
“Across the board, great execution.”
Related Link: 5 Analysts On DraftKings Q2 Results: 'Operational Excellence,' 'Widening Its Competitive Gap,' Momentum To Continue
What’s Next: DraftKings saw adjusted EBTIDA positive in the second quarter and is guiding for profitability in the fourth quarter of 2023 and fiscal 2024.
Robins said that KPIs (key performance indicators) are trending in the right direction and the company feels great about the business.
“We know what we have planned for the fall,” Robins said.
Robins added that the company has proven that it’s important to have top-line growth and that tailwinds can go toward profitability.
“When you can drop that revenue at a very high flow through down to EBITDA, that becomes a very high combination.”
Robins also agreed with Roundhill Investments Chief Strategy Officer Dave Mazza, who joined Benzinga ahead of his interview, with the notion that the sports betting operators who are finding ways to drop revenue to the bottom line with high flow through will win out.
“That’s who’s going to emerge, that’s who’s going to win here, because that’s a sustainable model.”
The DraftKings CEO wasn’t worried about rivals or potential newcomers to the industry, adding that there’s been competition every year. Robins said that the launch of competitors also wouldn't affect the advertising spend of DraftKings.
“We base it on what our return is.”
He said DraftKings will host an investor day in November where the company will cover the outlook for fiscal 2024 and share more details on future projections beyond 2023.
Kentucky will launch sports betting in September, which is now factored into DraftKings full-year guidance. Robins also added that North Carolina could launch as early as January, but it could also be later on in 2024.
For that reason, DraftKings only adds state launches to guidance when there’s a clear line of site.
DKNG Price Action: DraftKings shares hit new 52-week highs of $34.49 during the intraday trading session Friday and closed the day up 6% to $31.74.
Photo via Shutterstock and TechCrunch on flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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