Rovell: 9 Things We Learned from DraftKings’ Public Filing
Denise Truscello/Getty Images for DraftKings.
DraftKings is one step closer to becoming a publicly listed company.
The Security and Exchange Commission (SEC) has approved DraftKings’ registrations statement, and shareholders will hold an April 23 vote on approving the combining of DraftKings and SB Tech. The company that is putting the merger together, Diamond Eagle Acquisition Corp., will then give way to the new DraftKings company, which is expected to begin trading on the NASDAQ at the end of this month.
As part of the prospectus filed by the three companies to complete the transaction — which is worth $2.7 billion — there were several interesting pieces of information revealed as DraftKings transitions from being a private company to going public.
1. The deal values DraftKings as being worth $2.05 billion and SB Tech at $650 million.
2. In 2018, DraftKings had an average of 600,886 unique players each month. Those customers spent $31 per month ($226 million). In 2019, DraftKings those monthly averages ballooned to 684,103 unique players and $39 in revenue per user ($323.4 million).
3. We knew that DraftKings was not yet profitable, but, for the first time, we saw the exact numbers. DraftKings had a net loss of $143 million last year. That is close to the net losses of the previous two years, combined ($151 million).
4. Over the five-year period from 2017 to 2021, DraftKings projects a compound annual growth rate (CAGR) of more than 31%, which would make it one of the fastest growing businesses in the US.
5. DraftKings lists an economic downturn, lack of disposable income and Covid-19 affecting the sports schedule, among its material risks to its business future.
6. Last month, DraftKings drew down on a $44.5 million credit facility because of the uncertainty surrounding Covid-19, but says it doesn’t have immediate need to use that money. If sports returns, even with no crowds, DraftKings says it expects business to resume close to previous levels.
7. In its first 12 months in New Jersey (August 2018 to July 2019), which includes a year of legalized sports betting and seven months of iGaming, the money that DraftKings made in New Jersey accounted for roughly 30% of the company’s overall revenue.
8. DraftKings spent $185 million in marketing in 2019.
9. As required, DraftKings keeps a reserve separate from its operational budget to pay off winners. That fund, as of the end of 2019, had $144 million in it.