DraftKings’ CEO: ‘we want to be in the same conversation with companies like Amazon’

DraftKings Inc (NASDAQ: DKNG) blamed higher cost of revenue as it reported widened loss and lower-than-expected revenue for its fiscal third quarter on Friday. Shares opened 5.0% down but recovered entirely in a few hours.

Highlights from CEO Robins’ interview on CNBC’s ‘Squawk on the Street’

DraftKings spent 49.3% more on marketing that also weighed on Q3 results, but CEO Jason Robins says it was justified. On CNBC’s “Squawk on the Street”, he said:

We’re at the very early innings of the industry. Most of the U.S. is yet to legalise. TAM could be over $60 billion on full legalisation. So, I think at this stage, it totally makes sense to invest in bringing on new customers and growing the top-line.

In the long run, Robins confirmed, he wants to expand the product line and turn DraftKings into a global tech company that’s “in the same conversation with companies like Amazon”. The U.S. firm was in pursuit of buying Entain plc to expand its global footprint but recently withdrew from the $22 billion deal.

Key takeaways from DraftKings’ quarterly earnings report

DraftKings said it lost $545 million ($1.35 per share) in Q3 versus the year-ago figure of $395.7 million ($1.11 per share). It generated $212.82 million in revenue; a year-over-year growth of 60.2%.

According to FactSet, experts had forecast a per-share loss of $1.09 on a higher $236.9 million in revenue.

Cost of revenue was up 76.8%. DraftKings also spent 49.3% more on marketing that further weighed on Q3 results. Other notable figures include a 31% increase in monthly unique payers (MUPs) and a 38% climb in the average revenue per MUP.

For fiscal 2021, DraftKings revised its revenue guidance from $1.21 billion to $1.29 billion, to $1.24 billion to $1.28 billion, as per the earnings press release. In comparison, analysts are calling for $1.29 billion in full-year revenue.