DraftKings (DKNG) to Report Q2 Earnings: What's in Store?

DraftKings DKNG is set to report second-quarter 2021 results on Aug 6.

The Zacks Consensus Estimate for revenues stands at $240.8 million, indicating an increase of 239.5% from the year-ago period.

Moreover, the consensus mark for the bottom line is pegged at a loss of 61 cents per share, unchanged over the past 30 days.

Let’s see how things have shaped prior to this announcement for this Zacks Rank #5 (Strong Sell) company.

DraftKings Inc. Price and EPS Surprise

DraftKings Inc. Price and EPS Surprise

DraftKings Inc. price-eps-surprise | DraftKings Inc. Quote

Factors to Consider

DraftKings’ second-quarter results are expected to reflect strong demand for sports betting, and strengthened content and technology capabilities with the acquisitions of VSiN and BlueRibbon Software.

The acquisition is expected to have enabled DraftKings — which is live with mobile and/or retail sports betting in 14 states — to further build out content capabilities, augment VSiN’s ability to broaden its audience and expand legal sports betting in the United States.

Resurgence in sporting events and the return of major sports leagues are anticipated to have increased demand for mobile sports betting. Moreover, rising demand for online gambling on platforms such as online poker, casino games and lottery is likely to have fueled top-line growth.

Consistent strength in iGaming such as online Blackjack and Roulette is expected to have driven active user growth in the soon-to-be-reported quarter. This is expected to have improved its competitive prowess against the likes of Capcom and Boyd Gaming BYD.

DraftKings is live with online sports betting in 12 states that collectively represent 25% of the U.S. population. Moreover, it is live with iGaming in four states, representing approximately 10% of the U.S. population.

In first-quarter 2021, the company’s monthly unique payers for the B2C segment increased 114% year over year. On average, 1.5 million monthly unique paying customers engaged with DraftKings each month of the first quarter. The increase reflected strong unique payer retention and acquisition across daily fantasy sports (DFS), online sports betting (OSB) and iGaming. These positives are expected to have continued in the second quarter.

Moreover, a broad content portfolio owing to partnerships with major sports teams such as Major League Baseball, Chicago Cubs, New York Giants, Colorado Rockies, Philadelphia Eagles and Nashville Predators along with media companies like DISH Network DISH, ESPN and Turner Sports — a subsidiary of AT&T's T WarnerMedia — is likely to have aided customer wins in the June-end quarter.

DraftKings announced an agreement with DISH Network to bring DraftKings’ sportsbook and daily fantasy experiences directly to DISH customers nationwide, beginning with the first-of-its-kind and patent-pending DraftKings app integration on the DISH TV Hopper platform.

The agreement also provided for the subsequent launch of SLING TV’s new exclusive sports betting information channels in collaboration with DraftKings.

The return of Live Sports like Golf, European Soccer, NASCAR and UFC as well as Major League Baseball, the NBA and the NHL is likely to have continued spurring demand for the company’s sports betting products and in turn contributed to the top line.

In April, DraftKings beceme an Official Sports Betting Partner of the National Football League (NFL) and extended its current relationship with the League as the exclusive Official Daily Fantasy Partner.

Additionally, in the to-be-reported quarter, PGA TOUR and DraftKings announced that they will expand their existing commercial relationship to provide DraftKings market access for retail and mobile sports betting in Arizona.

Furthermore, DraftKings’ widening sports-betting presence across three more states in the United States expanded its addressable market. During the first quarter, DraftKings expanded mobile and online sports betting in Michigan and Virginia, which became the 11th and the 12th state in which DraftKings Sportsbook is available. This is anticipated to have benefited the company’s expansion plans in the to-be-reported quarter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Developments in Q2

During the second quarter, DraftKings acquired Blue Ribbon Software Ltd., a Tel Aviv-based leading global jackpot and gamification company that provides platform-agnostic, real-time gamification tools that allow fully customizable jackpot promotions.

DraftKings will now be able to enhance the customer experience by integrating BlueRibbon’s unique jackpot functionality, including personalized promotions and rewards tailored to the individual customer or jackpots that pay out across DraftKings’ various product offerings.

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