DraftKings Focused on Becoming More Efficient, CEO Says

Jason, you know, obviously good numbers here. The market likes it. But do you think you're going to be profitable by the fourth quarter of this year? Oh, absolutely. I think we're expecting over 100 million in adjustability but done the fourth quarter of this year. So really feel good about the trajectory of the business and are on really great track to have Q4 be a big quarter for us. A big quarter. And I think a lot of people sort of looking at this idea here of sort of what drives the growth going forward here, Jason.

I mean, this is a business that I think, to a certain degree, was kind of out in front. You know, it was kind of early, I think, to the big sort of shift to more of these gaming platforms here. And a lot of people sort of want to know, is this growth story one of additional users or is it maybe trying to monetize a user base that you already have? I think it's all the above. We're really in a very infancy stage of the industry. There's still tons of new users coming in. States are passing legislation and new markets are opening up. And you're finding customers that are adopting new sports, new products, and growing their spend with us too.

So if you look at it, we've had very consistent growth both in our monthly users and in our average revenue per user. And we expect that to continue. We have Massachusetts opening up. Hopefully in March, that'll be another big growth spurt for us. So lots of great stuff on the horizon. What about M&A, Jason? Do you see yourself entertaining another large deal after the environment has frankly changed? Obviously right now, we're very focused on our internal operations, on becoming more efficient, on finding ways to cut costs, finding ways to grow revenue. That's been a huge plus for us that we really, as the environment has transitioned, really it's afforded us the opportunity to look internally and spend a lot of time asking ourselves, how can we be more efficient? How can we be more cost effective? So that's been the theme for the last year, and I expect that to continue through 23.

Jason, talk to us a little bit about partnerships. One thing that struck me was, I think it was a couple of weeks ago, I happened to notice at one of your competitors, I think it was Fanatics, I actually had set up a whole sports book operation in one of the main NFL stadiums down in Washington. And I'm curious, are these types of deals necessary, I guess, to continue to sort of capture market share, and I guess keep people tethered to your specific brand? Well, we have a handful of retail sports books across the country. I think they serve a great purpose. We're building a really big one at Wrigley Field, another one at the site of the TPC Scottsdale, the WM Phoenix Open. So they do have a place, I think, that it really depends on the deal. If there's a good deal to be done that we feel is going to be a profitable one for the company, is cost efficient, I think that's something we pursue.

We're mostly focused online. That's obviously the vast majority of our business. But there is a place for retail where it makes sense. But is there, what's the value in some of those partnerships, whether it's retail sports book operations for some of these things, or really also the idea of aligning yourselves with certain sports leagues? There's been a lot of discussion here about what the next move might be out of ESPN, of course, the dominant player in live sports, and what the role that a draft king's or a fanatics or a fan duel might actually have in that ecosystem. Well, on the first point, right now, the relationship I mentioned with the Cubs, we're building a Wrigley Field with the PGA, TPC Scottsdale, those, you're right, do have the benefits of aligning ourselves with key partners as well. And again, it depends on the partner. We have partners that have been very productive deals for us, and we have others that aren't working as well.

And right now, we're going through, and we're making sure that we're being as focused on cost efficiency across every part of our business, including that one. But certainly with the right partner, the right location, it makes sense. The objective of it is to make money. We're not building these for some other purpose. It's not like we think that it's a money loser, and it's going to make up for online share or something like that. We expect all of these to make money. So that's really the goal.

And as far as media partners go, you mentioned ESPN. We have a great relationship with them. We've had a deal with them for a few years now. I think they've been a partner that we've always had conversations with and tried to figure out ways that we could do more together. And I think that it depends on the situation. Has anything changed, Jason? I'm sorry? Has anything changed in that relationship since the return of Bob Iger? No. I think that Jimmy Pitaro runs ESPN.

Is that a vision? And that's largely been his. And I think that Bob Iger obviously has a lot on his plate. And I'm sure that ESPN is very important to him. I'm sure that betting is very important to him. But nothing that we've seen has changed. And I'm sure he has a lot of other things he's focused on right now. Jason, you mentioned cost efficiency a couple of times now.

Does that mean head count reductions by any means? Well, we just did have one about a month ago. So that was something that we really, you know, those are always tough. It was part of a larger reorganization of some of our areas of the business. I think that was something that ultimately, while it was difficult, was the right choice for the business. And while I don't currently expect any additional head count reductions, we have meaningfully reduced the compensation budget this year by cutting back a lot of planned new hires. So that's something that I think is the obvious next lever that we could pull. And right now, we're just looking up and down the P&L to try to figure out where we could be more efficient.

And the good news is the entire team's rally behind it. They get it. And it's really been a collective effort to find all sorts of areas of optimization.

Bloomberg