Draftkings Inc Q1 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas Allen - Morgan Stanley - Analyst : Hey, good morning, guys. So Jason Robins, in your prepared remarks, you talked a little bit about how this year it is likely we are going to have a lot of overlap in the sports calendar. Can you just talk a little bit about how you think that is going to affect your MUP and your ARPU? And kind of how you acquire customers this year versus a typical year?

Question: Thomas Allen - Morgan Stanley - Analyst : Okay. And then in terms of the business that is going on right now, so the strong online gaming business as well as the more unique businesses like Korean baseball and the eSports, I mean, what are you seeing in those customers? Like, how different are they than your legacy customers? And on the iGaming piece, how much of that business is legacy customers versus new customers? Thanks.

Question: Thomas Allen - Morgan Stanley - Analyst : Okay. Then just final question on SBTech. Transaction closed a little less than a month ago. But any surprises so far? Anything positive or negative that you have seen in the past month? Thanks.

Question: Thomas Allen - Morgan Stanley - Analyst : Great, thank you.

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : Great. Thanks, guys, for taken my questions and congrats on completing the merger. First off, just on iGaming, you mentioned an acceleration there. Any way you can break that down kind of between new users playing versus the legacy users that are playing more? And then secondly, what you seeing in April and thus far in May?

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : Just what trends -- so we've seen New Jersey data for April, but what trends are you seeing thus far in May? Have those continued, accelerated, just directionally? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 15, 2020 / 12:30PM, DKNG.OQ - Q1 2020 Draftkings Inc Earnings Call

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : iGaming specifically.

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : And then switching over to marketing, so lack of major sports right now, but also we've seen CPMs, Google, Facebook costs temporarily reduced here. So anything you can say about user acquisition in terms of number of new users as well as any metrics? I realize early, but on CAC, LTV, or payback periods or however you want to think about it?

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : And then last one for me and then I will turn it over to someone else. So in the nontraditional categories, you talked about eSports, pop culture, virtual sports, etc. Are there any one that jumps out that people are really enthused about and you are seeing more volume from? And then also, how do you think about those categories, the nontraditional sports categories over the next several years? Thanks.

Question: Ryan Sigdahl - Craig-Hallum Capital Group - Analyst : Great. Thanks guys and good luck.

Question: Michael Graham - Canaccord Genuity - Analyst : Good morning and thank you. My first question is just on the product roadmap. And can you talk about as you start to leverage SBTech's technology into sort of a live or in-play betting, when does that start to happen? And can you talk about the order of magnitude opportunity in terms of increasing the pricing or sort of the effective revenue yield on those bets?

Question: Michael Graham - Canaccord Genuity - Analyst : Okay, thanks. And then on your relationships for OSB with the in-state license casino operators, can you just comment on how long those agreements typically last? And do you think as you gain scale, is there opportunity to achieve some leverage there over time? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 15, 2020 / 12:30PM, DKNG.OQ - Q1 2020 Draftkings Inc Earnings Call

Question: Michael Graham - Canaccord Genuity - Analyst : Okay, thanks. And then last one for me. Just in thinking about the opportunity to acquire new players, one of the clear areas is sort of the illegal shadow market: offshore sites and that sort of thing. And the major difference from the players' perspective might be taxation. Can you just talk about how you think about that? And how do you react to that or address that with incentives or just how does that issue shape your strategy? Thanks a lot.

Question: Michael Graham - Canaccord Genuity - Analyst : On winnings.

Question: Michael Graham - Canaccord Genuity - Analyst : Okay, thank you. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 15, 2020 / 12:30PM, DKNG.OQ - Q1 2020 Draftkings Inc Earnings Call

Question: Greg Gibas - Northland Securities, Inc. - Analyst : Thanks for taking my questions. First, can you talk about maybe any early success you are seeing cross-selling your DFS users to the new products that kind of just went online this past month in Colorado and Pennsylvania, just opening up for iGaming? And may be how has early betting been in these states?

Question: Greg Gibas - Northland Securities, Inc. - Analyst : Okay, that's good to hear. And then can you maybe discuss a little bit of your proactive marketing measures that you have taken maybe to generate some interest on new users in the platform with not many live sporting events going on?

Question: Greg Gibas - Northland Securities, Inc. - Analyst : Got it. That's helpful. And last one for me, and sorry if I missed this, too, but did you comment or at least kind of quantify the impact that you are seeing on payer activity in April and May as it kind of compares to the second half of margin anyway? Just with respect to unique payers or average spend per player?

Question: Greg Gibas - Northland Securities, Inc. - Analyst : Okay, sure. Thanks, guys.

Question: Joe Stauff - Susquehanna Financial Group / SIG - Analyst : Thank you very much. Good morning, everyone. I wanted to ask maybe a longer-term question just on the existing DFS business. And I guess an expectation of growth, say, over the next couple years is for that business to grow revenue low-single digits. I was wondering if you can give us maybe a little bit more perspective in terms of the development of that market. Is it likely to be more user-driven? Is it likely to be more frequency of play? How do you guys think about the growth of that market in particular, given your 60% market share?

Question: Joe Stauff - Susquehanna Financial Group / SIG - Analyst : Okay. And as it relates to some of the states and trying to expect or trying to anticipate exactly some of the larger states in particular that you had mentioned earlier in the call, I guess can you give us an update in general about maybe the interaction between your legis -- or your regulatory team in the states and all the things that need to be done in order to be able to launch and go through the compliance process with the states. Has that largely -- I would imagine to a certain extent that has been largely disrupted. Or what is the status of that? And I'm talking about obviously with Tennessee and Michigan and so forth, trying to anticipate obviously when they would allow you guys or give you the greenlight to launch.

Question: Joe Stauff - Susquehanna Financial Group / SIG - Analyst : Okay. And just finally, one clarification. On your OSB category, can you just remind us with respect to how much or how much exposure you have to the European soccer leagues, in particular the Premier League, which may or may not start up sometime in June? I was just curious about that?

Question: Joe Stauff - Susquehanna Financial Group / SIG - Analyst : Thanks very much.

Question: Jack Kelly - Oppenheimer & Co. - Analyst : Great, thanks for taking my question. Just back to the live betting, I guess with the lack of sports and less velocity on your systems, I mean, have you been able to accelerate anything on your product roadmap in regards to live betting? And then as the leagues start to need more revenue with lack of fan attendance, does this open up opportunities for more partnership opportunities to help them generate more revenue or make up lost revenue from fans not attending? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MAY 15, 2020 / 12:30PM, DKNG.OQ - Q1 2020 Draftkings Inc Earnings Call

Question: Jack Kelly - Oppenheimer & Co. - Analyst : Working closer with the leagues on just trying to help them generate more revenue in game wagering with lack of attendance.

Question: Jack Kelly - Oppenheimer & Co. - Analyst : And then just one more question for me. I know it is still hard to make predictions what is going to happen, but it does seem that the NBA might permanently push their start of the season to Christmas. Any thoughts on that and how that could impact financial performance?

Question: Jack Kelly - Oppenheimer & Co. - Analyst : Thank you.