DAVY VIEW

DraftKings’ (DKNG) Q2 results are better than expected, with its revenue and adjusted EBITDA result both surpassing expectations. While it does not split out its performance by product, it appears to be driven by its performance in online casino – a more important driver of activity in Q2 given the seasonally quieter sports betting period. The ‘beat’, alongside a modestly better outlook for H2, results in an upgrade to FY21 revenue guidance – on first glance, we will increase our current year revenue estimates by c.7.5%. Importantly, the migration to its own technology is now substantially complete. Its resulting ability to improve its sports betting product offering will be a key driver of customer retention going forward and therefore also its long-term profit prospects.