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US – Draftkings gears up for survival of the fittest after strong second quarter

By - 17 August 2020

For the three months ended June 30, 2020, DraftKings reported GAAP revenue of $71m compared to $57m during the same period in 2019. On a pro forma basis, including the effect of the Company’s business combination with SBTech (Global) Limited and Diamond Eagle Acquisition Corp. as if it had been completed on January 1, 2019, revenue would have been $75m in the second quarter of 2020, compared to $83m during the same period in 2019. DraftKings ended the second quarter of 2020 with over $1.2bn in cash and no debt on its balance sheet.

“We believe that the best product will ultimately win with the American consumer,” said Jason Robins, DraftKings Co-Founder, CEO and Chairman of the Board. “As a technology first organisation, we will continue to focus on bringing new and innovative products to market that strengthen our engagement with customers and maintain our competitive differentiation.”

As a result of a successful follow-on equity offering in June and the exercise of public warrants following DraftKings’ call for redemption, DraftKings added over $800m to its balance sheet and ended the second quarter with over $1.2bn in cash and no debt. The Company is well positioned to continue to deliver on its key priorities, which include entering new states at the earliest opportunity, investing in product and technology to create new offerings for American sports and American sports fans, and acquiring and retaining customers.

In the second quarter, while several major sports leagues including the NBA, MLB and the NHL remained on hiatus due to COVID-19, the Company worked creatively to engage fans with new fantasy sports and betting products for NASCAR, golf, UFC, and European soccer. As sporting events began to resume, the Company saw increased engagement with its sports-based product offerings, which contributed to sequential monthly revenue improvement during the second quarter. This positive momentum has accelerated with the return of MLB, the NBA, WNBA, the NHL, and MLS.

The company is introducing fiscal year 2020 pro forma revenue guidance of $500m to $540m which equates to year-over-year pro forma revenue growth of 22 per cent to 37 per cent in the second half of 2020. This guidance assumes that the professional sports calendar remains as currently contemplated and that DraftKings operates in the states in which it is currently live. DraftKings at this time does not anticipate an impact to its long-term plans due to COVID-19.

In the second quarter of 2020, DraftKings launched sports betting in Colorado and iGaming in Pennsylvania. Since the close of the second quarter, DraftKings has launched sports betting in Illinois and iGaming in West Virginia. DraftKings is working to enter Virginia and Tennessee for sports betting and Michigan for sports betting and iGaming; all three states have passed legislation.

Caption: Jason Robins, DraftKings Co-Founder

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