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DraftKings (DKNG) to Report Q1 Earnings: What's in Store?

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DraftKings (DKNG - Free Report) is set to report first-quarter 2021 results on May 7.

The Zacks Consensus Estimate for revenues stands at $222.6 million, indicating an increase of 151.4% from the year-ago period.

Moreover, the consensus mark for loss of 50 cents per share has been unchanged over the past 30 days.

Let’s see how things have shaped prior to this announcement.

DraftKings Inc. Price and EPS Surprise

DraftKings Inc. Price and EPS Surprise

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

Factors to Consider

DraftKings’ first-quarter performance is likely to have benefited from pent-up demand for sports betting from the cancellation and postponement of major sports events due to the coronavirus crisis.

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

Additionally, persistent strength in iGaming such as online Blackjack and Roulette is expected to have driven active user growth, thereby aiding user acquisition in the soon-to-be-reported quarter. This also improved its competitive prowess against the likes of Capcom and Boyd Gaming (BYD - Free Report) .

In fourth-quarter 2020, the company’s monthly unique payers for the B2C segment increased 44% year over year. On an average, 1.5 million monthly unique paying customers engaged with DraftKings each month during the fourth quarter. The increase reflected strong unique payer retention and acquisition across daily fantasy sports (DFS), online sports betting and iGaming. These positives are expected to have persisted in the first 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 Disney’s (DIS - Free Report) ESPN and Turner Sports — a subsidiary of AT&T's (T - Free Report) WarnerMedia — is likely to have aided customer wins in the March-end quarter.

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 this Zacks Rank #3 (Hold) company’s sports betting products and in turn contributed to the top line.

In February, DraftKings and the National Football League (NFL) reached an agreement to expand their current DFS and content partnership to Canada, which was previously limited to the United States. This deal further deepened the relationship between the two organizations and enhanced the DFS fan experience in Canada through NFL’s Super Bowl season.

Additionally, in March, the company became UFC’s first-ever Official Sportsbook and Daily Fantasy Partner in the United States as well as Canada.

Moreover, the company became the official sports betting partner of The Drone Racing League in the to-be reported quarter.

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, marking the 11th and 12th state in which DraftKings Sportsbook is available. This is anticipated to have benefited the company’s expansion plans.

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

Key Developments in Q1

During the first quarter, DraftKings acquired Vegas Sports Information Network (VSiN), a multi-platform broadcast and content company delivering trusted sports betting news, analysis as well as data to U.S. sports bettors since 2017.

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, augmented VSiN’s ability to broaden its audience and expanded legal sports betting in the United States.

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