It appears as though DraftKings ($DKNG) is immune to inflation pressure on consumer demand, at least that’s what CEO Jason Robins had to say during the company’s first-quarter earnings call.
Speaking with Wall Street analysts on Friday, DraftKings announced its plans to raise its revenue guidance for 2022 while also beating analysts’ estimates.
The company reported Q1 sales of $417 million, beating estimates of $412 million. The Boston-based company also said it expects increased returns from its Golden Nugget Online Gaming acquisition.
Mid-day trading has shares of $DKNG sitting at $13.28 on May 6.
Wrapping up the Golden Nugget deal
DraftKings announced it had completed the Golden Nugget deal on May 5.
Last year, DraftKings announced a $1.56 billion all-stock offer for $GNOG. At the time, the stock was trading at $12. Unfortunately for investors, activity slowed on the equity of sports betting and online casino stocks, lowering the deal’s value.
Shares of $GNOG closed at $5.78 on May 4, the stock’s final trading day. The deal is now valued at roughly $365 million.
In a statement, DraftKings said:
“By deploying a multi-brand strategy and accessing Golden Nugget Online Gaming’s built-in iGaming-first customer, DraftKings expects to recognize increased returns on advertising spending and greater LTV to CAC ratios.”
For the time being, both DraftKings Casino and Golden Nugget Casino should continue to operate as separate entities. This means customers will not need to create new accounts. However, it’s possible DraftKings will use the Golden Nugget brand when entering new iGaming markets.
First-quarter earnings for DraftKings
- Revenue of $417 million, up 34% compared to the same period last year.
- B2C segment increased 44% to $404 million.
“DraftKings delivered significant growth across our key revenue and performance metrics,” said Jason Robins, DraftKings’ co-founder, chief executive officer, and chairman of the board.
“We are not seeing any impact from inflationary pressures on customer demand, and we continue to improve the user experience by adding breadth and depth to our DFS, mobile sports betting and iGaming products. We are also improving our efficiency in acquiring and retaining customers and have a strong pipeline of new jurisdictions to enter.”
The sports betting and online casino company also announced it is raising its FY 2022 revenue guidance range between $1.925 billion and $2.025 billion. The increased guidance range equates to year-over-year growth of 49% to 56%.
With the addition of $GNOG and the company’s upcoming launch in Ontario, DraftKings estimates an additional $130 million to $150 million in revenue.
DraftKings operates mobile sports betting in 17 states that collectively represent 36% of the US population. The company also operates iGaming in five states representing 11% of the US population.
The company also has market access deals in Maryland, Ohio, and Puerto Rico.