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CFO DraftKings revisits its financial model as the virus overturns the sports calendar

The pandemic has confused not only this year’s professional sports calendar, but also DraftKings’ financial model. Co., Ltd.

Force sports lottery companies to revise that forecast.

For example, the basketball, baseball, and hockey pro leagues have postponed the season when the coronavirus was first hit due to blockades and travel restrictions. Matches in other sports such as college and professional football have been canceled or postponed, resulting in the loss of billions of dollars in revenue to the industry. The events have been rescheduled in the last few months, but many of them are now on the same day as the other events.

For DraftKings, a Boston-based company that unveiled in April, changes to the sports calendar have made it difficult to predict revenue. They required the company’s finance team to create a new model for estimating consumer behavior, and as a feature of the rescheduled calendar, whether customers bet on multiple games at once, and I investigated how much I bet.

The company’s chief financial officer, Jason Park, said even seemingly small schedule changes, such as moving a football game on Sunday to Tuesday, are being considered in the quarterly financial model.

Park has assigned three different teams to tackle this issue, he said. One group focused on acquiring and retaining customers. The other is about sports calendars and customer engagement. The third focused on the company’s fantasy sports customers and a database of various macroeconomic factors.

According to Park, an important part of the puzzle was, for example, looking at the number of people who had previously bet on golf or soccer to understand a customer’s favorite sport. The company also said that a customer who made two $ 20 bets on golf and football last year would have the money to spend $ 40 if the two sports were played on the same day, or a $ 10 bet. I estimated people’s budget to see if they would do it twice. Said Park.

Jason Park, Chief Financial Officer of DraftKings.


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Draft Kings

DraftKings has also introduced a new sports crossover bet to entertain its customers. For example, one of the most popular bets is the longest drive hit by golfer Bryson DeChambeau, known for his powerful swings, to the total yards thrown by the National Football League quarterback in the November 15th match. It was whether to exceed. Answer: No. According to the company, Washington Football Team quarterback Alex Smith threw a 390-yard best career to DeChambeau’s 380 yards that Sunday.

When the team resumes play, DraftKings released guidance for 2020 in August, predicting annual revenues of $ 500 million to $ 540 million. The company then released guidance again last Friday, saying it expects $ 540 to $ 560 million this year, or up to 30% more than it was a year ago.

DraftKings, which hasn’t made a profit yet, said last week that its aggressive marketing, coupled with recent launches in Illinois and West Virginia following regulatory changes, helped the results. Monthly unique users for the quarter ended September 30 increased 64% to about 1 million, and revenue almost doubled to $ 132.8 million.

Ryan Sigdahl, an analyst at the investment firm Craig-Hallum Capital Group LLC, said the overlap of sporting events is likely to cause customers to spend more time and money on the site.

Still, increasing infections across the country pose a risk to DraftKings. Several college football games have been canceled in recent weeks, including the long-awaited showdown between the University of Alabama and Louisiana.

With the recent increase in new customers, Park is confident in the company’s forecasts, he said. The $ 750- $ 850 million revenue forecast for 2021 assumes that all planned events will take place as planned.

DraftKings will adjust forecasts and models depending on how the pandemic progresses, Park said. “There is some room for change in how the calendar changes, but whatever makes sense, the guidance scope needs to be revisited,” he said.

Write to Kristin Broughton at Kristin.Broughton@wsj.com

Copyright © 2020 DowJones & Company, Inc. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

On November 20, 2020, it appeared in print as “DraftKings revisits predictions as virus shake scheduling.”

CFO DraftKings revisits its financial model as the virus overturns the sports calendar

Source link CFO DraftKings revisits its financial model as the virus overturns the sports calendar

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