(Bloomberg) -- DraftKings Inc. climbed after raising its full-year revenue forecast. The company continues to sign up new bettors despite decades-high US inflation squeezing consumers’ budgets.
DraftKings now sees revenue for the year in the range of $2.08 billion to $2.18 billion, up from $2.055 billion to $2.175 billion, the company said Friday. The guidance now includes Golden Nugget Online Gaming Inc., which the company bought in May, as well as new markets like Ontario, Canada.
DraftKings is competing with FanDuel, a division of Irish bookmaker Flutter Entertainment Plc, and other sportsbooks to sign up bettors as more states legalize online sports gambling. The companies have lost hundreds of millions of dollars as they’ve poured money into advertising and promotional offers. A series of forecast boosts for DraftKings suggests the strategy may be paying off.
“Customer engagement remains strong, and we continue to see no perceivable impact from broader macroeconomic pressures,” DraftKings Chief Executive Officer Jason Robins said in a statement.
The shares rose 11% at 9:47 a.m. in New York. The stock had fallen 40% so far this year through Thursday’s close, compared with a 13% drop in the S&P 500.
Revenue in the second quarter rose to $466 million, a 57% increase from the year-earlier period. That beat the average of analysts’ expectations at $438 million.
DraftKings has 1.5 million monthly unique paying customers, up 30% from a year ago. That missed analysts’ expectations of 1.7 million, according to estimates compiled by Bloomberg, but DraftKings said its bettors are spending more money.
Its average monthly revenue per player rose to $103 in the quarter, up from $80 a year earlier. The company has introduced more parlays -- when bettors can combine multiple wagers into a single bet. Sportsbooks are focused on promoting such riskier bets because they are more profitable.
DraftKings also forecast a narrower loss for the year, in terms of earnings before interest, taxes, depreciation and amortization.
Robins said on an earnings call with analysts that the company is continuing to “optimize” its marketing spending by shifting more from local into national advertising.
A souring economy could threaten the growth of sports betting if consumers start to cut their entertainment spending. In June, several states, including Pennsylvania and New Jersey, saw year-over-year declines in gross gaming revenue, according to Stephen Glagola, an analyst at Cowen & Co.
(Updates with CEO comment in 10th paragraph.)
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