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Shares of DraftKings Inc. rallied after hours on Thursday after the online sports-betting platform reported a surprise second-quarter profit and raised its full-year sales forecast, amid a nationwide expansion driven by U.S. state legalization.
DraftKings
DKNG,
bumped its full-year sales outlook higher, to $3.46 billion to $3.54 billion, from a range of $3.135 billion to $3.235 billion. The new forecast was above FactSet estimates for $3.28 billion.
“We are acquiring new customers efficiently while simultaneously retaining and monetizing our existing players through rapid product innovation, less promotions, and higher hold from better bet mix,” DraftKings Chief Financial Officer Jason Park said in a statement. “Our unit economics are outstanding with older states generating more than enough cash to fund investment in new states.”
Executives noted that Kentucky, North Carolina, Vermont and Puerto Rico have authorized mobile sports betting. The company said it expected to launch its sportsbook in Kentucky on Sept. 28.
For the second quarter, revenue jumped to $874.9 million, compared with $466.2 million in the prior-year quarter. Adjusted for amortization, stock-based compensation and other items, DraftKings reported a 14-cent per-share profit.
Analysts polled by FactSet expected DraftKings to report an adjusted per-share loss of 25 cents, on revenue of $765 million.
On a GAAP basis, the company reported a net loss of $77.3 million, or 17 cents a share, compared with $217.1 million, or 50 cents a share, in the same quarter last year.
Shares jumped 12.4% after hours on Thursday.
The stock has torn 170% higher this year. And while DraftKings benefits from increased sports-betting deregulation, it has also had to deal with increased competition —from Fanatics, which outbid DraftKings for PointsBet U.S., and online betting sites like FanDuel and Barstool Sportsbook.
“We are not observing a significant change to competitive trends, but peg Barstool and Bet365 as the two likely operators increasing marketing the most relative to last year into football,” Oppenheimer analysts said in a research note.
