DraftKings reported its first quarterly revenue report on Friday that exceeded the online sports betting company’s own expectations. For the first three months ended March 31, the Boston-based company reported revenue of $312 million, representing a 253% increase during the same period last year.

The forecasts had projected the revenue targets between $230 million and $240.

The better-than-expected outlook comes nearly a year after DraftKings went public following a business combination with SBTech and Dimond Eagle Acquisition Corp. in a SPAC merger in April 2020.

DraftKings’ co-founder, CEO and Chairman of the Board Jason Robins said the company is off to an outstanding start in 2021. “We continued to make progress and remain on track with the migration to our own in-house proprietary sports betting engine, strengthened our technological capabilities with the acquisitions of VSiN and BluRibbon Software.”

He added that the company has invested further in order to differentiae its product offering with the upcoming rollout of social functionality in DraftKings’ DFS and mobile sportsbook apps.

What Explains DraftKings’ Better-than-Expected Performance?

Robins cited two reasons for the favorable opening quarterly revenue results. First, the temporary continuation of online registration in Illinois, the third-largest sports betting market by handle as of now. Secondly, a higher than usual hold percentage in sports betting, though Robins did not reveal the specific hold percentage.

However, both factors can’t be counted on in future quarters, particularly Illinois has returned to in-person registration from April, Robins said.

The CEO said the “in-house sports betting engine (SBTech) could be operational by the end of the third quarter.

DraftKings Raised 2021 Revenue Guidance

Despite a favorable opening quarter, the company reported net losses of $343.3 million for the period, which is equivalent to a loss of 36 cents a share. Yet, even it was favorable compared to the projected loss of 42 cents a share. In the final quarter of 2020, the loss was 24 cents a share.

In addition, the giant operator raised its guidance for the full year on Friday. At the beginning of the year, DraftKings had projected revenue targets of $900 million-$1 billion. Now the range for the calendar year has been increased to $1.05 billion-$1.15 billion.

The increased guidance reflects the company’s quick launches in new markets (Michigan and Virginia), market spending, effective spending, and solid customer activation, what the company calls an “MUP”, or monthly unique players.

MUP Jumped in the First Quarter

DraftKings saw a sudden increase in monthly unique players, with a $61 per MUP, representing a 48% increase from 41% per MUP in the fourth quarter last year.

Also, the average monthly unique players swelled to 1.54 million in this year’s opening quarter from 720,000 in the fourth quarter in 2020.

This year, the Boston-based operator launched mobile sports betting in two new states, Michigan and Virginia. In Michigan, DraftKings also extended its iGaming offerings.

Revenue Guidance May Exceed Expectations, Again

It is too early to say how many more states may launch in the remainder of the year. However, Maryland is among the most likely candidates to go live in the third or fourth quarter.

As of now, DraftKings operates online sports betting in as many as 12 states, representing roughly 25% of the US population, the company said. The revenue guidance does not include the potential launches of mobile sports betting in New York, Arizona, and Wyoming before the end of 2021. The three states represent 8% of the US population.

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