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Earnings Extra: DraftKings shares dip

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Earnings Extra: DraftKings shares dip

DraftKings Q3 prompts share price fall, Super Group issues trading update +More

Earnings+More
Nov 4, 2022
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Earnings Extra: DraftKings shares dip

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Good afternoon. In this earnings extra:

  • The earnings statement from DraftKings could have been received better.

  • Super Group says it is planning to take full ownership of its sportsbook backend.

  • Century Casinos revenues drop ahead of Rocky Gap buyout completion.

I should have known better.


DraftKings disappoints

Revenues rose 136% YoY to $501.9m but adj. EBITDA losses of $264.2m were only trimmed by 15.4% as the path to profitability continues to be elusive. 

Bad reaction: DraftKings saw its share price suffer a mini-collapse in pre-market trading despite Q3 earnings showing B2C revenues rising 161% to $493m. But the forward guidance for Q422 and FY23 was deemed “disappointing” by analysts at Wells Fargo. 

😱At pixel time DraftKings shares were down over 17%

  • Analysts at Jefferies noted the bad reaction might be due to competitors “setting the bar high” earlier in the week.

  • Regulus Partners noted marketing as a percentage of revenue was still at 64%.

  • CEO Jason Robins told analysts DraftKings had achieved market share gains in the past quarter due to the “less aggressive” promotional environment.

  • “It’s night and day compared to last year,” he said before adding the environment for marketing partnerships had “improved dramatically”.

Guard rails: The midpoint of the forward guidance for 2023 EBITDA is $525m which is worse than forecast, albeit with the midpoint of 2023 revenue guidance of between $2.8bn-$3bn being bang on consensus.

  • Robins noted the Q4 guidance includes Kansas and the expected Mayland launch and the pre-launch costs of the upcoming Ohio debut on January 1.

  • He noted that 2023 guidance now included Ohio and Massachusetts launch costs. CFO Jason Park said the new launches next year would add ~5% to revenues but ~25% to adj. EBITDA losses.

  • Robins noted the inclusion of state launches “muddied the waters” on comparisons with previous guidance estimates

Don’t dream it’s over: He noted the company has “discontinued” putting additional cash into the California ballot effort. The (doomed) effort cost the company $16.5m in Q3. “We’re ready to pivot on a dime if we get a pleasant surprise, although that’s certainly not what we’re expecting,” he said.


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Find out more at sales@gig.com.


Super Group’s to-do list  

The company reiterated 2022 guidance for revenue and adj, EBITDA of between €1.15bn-€1.28bn and €200m-€215 million respectively.

Bite of the… apricot: The owner of the Betway and Spin brands added it was in discussions with its long-term sportsbook technology provider Apricot to acquire the group for a maximum consideration of €43m.  

  • When I say jump: The company acquired a majority stake in the UK-focused online casino operator Jumpman Gaming at the start of September. It said contributed €7m of net revenue in September and positive EBITDA for Q3. 

  • Super Group will report its Q3s on November 22.

Note: Text has been altered from the newsletter after the wrong info was included.


Earnings in brief

Century: Revenues fell 4% to $112.6m while adj. EBITDA drops by 15% to $28.1m. Recall, in August, Century agreed to buy the Rocky Gap casino from Golden Entertainment and VICI for $260m.


Newslines

Greenwood Gaming has pushed back the opening of the Pennsylvania satellite casino Parx Shippensburg to early next year due to construction delays, according to reports.

USAbility: The sports-betting and iGaming consultancy has appointed former William Hill US CEO Joe Asher to its advisory board and is also a shareholder.


What we’re waiting for


Calendar

  • Nov 7: Full House Resorts

  • Nov 8: IGT, Everi, AGS, Playtika

  • Nov 9: Flutter Entertainment, GiG, Light & Wonder, NeoGames

  • Nov 10: Genius Sports, Acroud, Endeavor


Contact

  • Scott Longley scott@clearconcisemedia.com

  • Jake Pollard jake@openmediaservices.com

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