“We are acquiring more customers faster in recent states, relative to what we saw in New Jersey,” said DraftKings CFO Jason Park.

It expects five more to be contribution positive this year. Like several of its leading competitors, it is acquiring customers at far faster rates in recently opened states, capitalizing on a now fine-tuned marketing playbook. DraftKings said five of its states were contribution positive last year, meaning they made more money from existing customers than they spent to retain or replace them. If that continues to hold true, DraftKings could see an accelerated path to profitability. Because DraftKings spends far less to retain them than it did to attract them, those cohorts deliver increasingly large gross margins: 35% in Year 1, 45% in Year 2 and 50% in Year 3. This time, it came backed by three years of supporting data.Īmong the more eye-opening reveals: That 83% of DraftKings signups remain through their first year, 88% of those stay through a second and 96% of those are still betting on the site after three years. It's the same argument that DraftKings and its competitors have been making since they began down this road to expensive, state-by-state rollouts. Having seen its stock pounded by an investment community that suddenly turned skeptical about its path to profitability, DraftKings slowly and clinically laid out how it sees the business progressing, with valuable customers acquired at relatively high costs over the last three years remaining active and loyal, delivering revenue that eventually exceeds what it cost to attract them. DraftKings could see an accelerated path to profitabilityĭuring an Investor Day presentation Thursday, DraftKings went into painstaking detail on how analysts can model the business using an ”annual cohort methodology” to estimate future revenue, gross profit and contribution profit. We’ll wait while you top off your coffee. Lots of good stuff in here culled from eight earnings calls and yesterday’s DraftKings Investor Day presentation.

It’s the close of Q4 and H2 earnings seasons for the gambling companies, which means it’s time for - yes, you guessed it - a “SPECIAL GIANT-SIZED DOUBLE ISSUE” of the SBJ Betting newsletter.

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