7 May: DraftKings tight-lipped on SBTech migration +More
DraftKings, Century Casinos
Welcome to this (UK) afternoon edition, early morning Eastern newsletter covering DraftKings’ earnings statement and analyst call as well as the latest numbers from Century Casinos. This is in addition to our earlier newsletter looking at Penn, AGS, Golden Entertainment and the relevant comment from Fox.
DraftKings
The top line
Revenues rose fourfold to $312.3m while net losses from operations widened in lockstep to $324.8m from $66.1m in the prior year period. The net operational cash flow drain went from $50.8m to $77.8m. Sales and marketing expenses rose to %228.7m from $53.7m, a 325% YoY rise.
B2C revenues rose to $280.8m, B2B came in at $31.4m. Adjusted EBITDA for B2C stood at minus $141.4 while B2B was EBITDA positive at $2.1m.
Average monthly unique players rose to 1.54m, doubling on the Q120 number. Average revenue per monthly unique player rose 40% to $61. The company didn’t disclose the hold percentage nor the split between OSB and iGaming.
DraftKings now live in 12 states for OSB, four for iGaming.
Raising the roof: Having comfortably beaten expectations for the quarter, DraftKings also raised guidance for FY21 to between $1.05-1.15bn. This guidance is based on the current sporting calendar and on states which are live now, hence further upside could come from Maryland and Louisiana going live later this year. The Q1 revenue beat came off the back of the improvements in monthly uniques. The forecasts there had been 1.1m. “It’s prudent to assume that not every single quarter will be a blow out,” said CEO Jason Robins.
Coming up roses: Robins remained cagey on the move to the SBTech platform, slated for the end of the third quarter. He did say that all states would be live on the platform at that point and that they would be proceeding on a state-by-state basis. “We’re on track for the end of Q3 and maybe even a little bit earlier,” said Robins. However, he didn’t say whether there was a rollout order or which states would be first to launch, only suggesting that they were still doing a “tremendous” amount of testing and that “everything is going great so far.”
The New Jersey proxy: Robins said the experience in Michigan and Virginia in the first quarter suggests that New Jersey works as “reasonable and perhaps conservative proxy” for future US state openings. Pre- the “obviously disappointing” re-introduction of in-person registration in Illinois, Robins said the state was the largest OSB state by revenue. He said that Canada, also, represented a “meaningful opportunity.”
Social gambling: DraftKings said it is introducing functionality into its sports-betting and DFS apps that will allow users to chat, join contests, share bets, and follow/join each other’s bets. Robins said this was “leaning into the inherently social aspect of sports and sports-betting.” Asked whether this would involve user-generated content, Robins said the idea was to allow an element of this but with moderation.
Century Casinos
The top line
Net operating revenue was down 17% to $72.4m YoY, earnings from operations was up 126% to $8.2m YoY and net loss was $1.4m, a 97% fall YoY. Adjusted EBITDA rose 53% YoY to $14.8m, loss per share was $0.05. Estimated impact of closures on adjusted EBITDA would be at least $6.7m.
Covid closures impact: Century said its Canadian properties were still closed and this will continue to have an adverse effect on its results for the remainder of 2021. In Poland the group's casinos closed on March 20 and are expected to reopen this weekend, while its US casinos have been open since June 2020 but have varied their operations according to official health and safety guidelines.
Strong flow-through: Analysts at Macquarie said the $72.4m revenues were above consensus of $66.6m (+9%) and adjusted EBITDA of $14.8m (+53% YoY) was above the $12.6m forecast. “The 17% earnings beat was in the middle of the pack vs other regional gaming operators in the quarter. As a reminder, Canada assets were closed in 1Q and the casinos in Poland were closed for most of the quarter.”
Margins grew 20% during Q1 (vs. 14.7% in YoY) and in the US the group grow margins by 34%. Most impressive was that the “flow-through QoQ was 96%, and the highest in the regional space despite having Canada and Poland closed or partially closed “ in the first quarter.
Earnings calendar
10 May: Bally Corporation, Scientific Games, Inspired Entertainment, Full House Resorts, Wynn Resorts
11 May: Accel Entertainment, FuboTV
12 May: Better Collective, Raketech
13 May: Neogames, Rush Street Interactive
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