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DraftKings CEO Jason Robins reacts to Q1 Earnings

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Draft Kings CEO and co-founder Jason Robins joined Yahoo Finance to discuss his company's first quarter earnings and where the industry is headed post-pandemic.

Video Transcript

ADAM SHAPIRO: One of the big parts of the reopening of the US economy is the reopening of professional sports. Let's bring into the stream Jason Robins. He is the CEO and co-founder of DraftKings.

And your earnings report today, it was better than a lot of people expected. And your guidance, this was a big thing. The 2021 revenue guidance now a range of $1.05 billion to $1.15 billion. And that's up from what it had been and would reflect growth year-over-year of about 63%.

And I never try to understand how retail investors operate, but they're beating you up right now. The stock is off about 6%. Yet this was pretty optimistic, what you're reporting.

JASON ROBINS: Well, we thought it was a great release. We beat estimates across the board for virtually every metric, from revenue to [INAUDIBLE] to earnings per share, adjusted earnings per share. And we also raised guidance by about 16% from where we had it prior to this release.

So we're really excited about the results. The business has a ton of momentum right now. And we're looking forward to a great rest of the year.

SEANA SMITH: Jason, you mentioned the fact that the business has a ton of momentum. Any concern that you might lose some of that momentum as people venture outside their homes, as the economy reopens and maybe people aren't stuck inside and betting as much as they were 6 or 12 months ago?

JASON ROBINS: That's something we've talked about. So far, we've seen really nothing to suggest that that's occurring. But it's certainly something that we're keeping our eye on. And hard to say. We're in uncharted waters right now. And I don't think anybody really knows how the overall return to normalcy, whatever that looks like, will go and how that will affect the various businesses that may have seen tailwinds from it.

But we're being cautious in that regard and not assuming that everything will continue to be as strong as it has been. That said, we're seeing nothing in the data to suggest any slowdown. In fact, in Q1 was as much continued momentum as we saw in the back half of last year. And really, we see nothing to suggest that there's anything going on that would cause any sort of headwinds. I know it's still pretty early in the vaccination process, though, so we'll keep an eye on it as that plays out.

ADAM SHAPIRO: Describe to us what it's going to look like with professional sports coming back, for instance, the NFL, when I can have at home an interactive experience watching a game, but I can also be in real time betting on what might happen in the very short term of just one play.

JASON ROBINS: I think you just described it well. It's a very interactive experience we're creating. People are going to be able to bet on the games, but also on what happens next, the in-game betting. I think that'll be fun to do whether you're at home or at the stadium. Really, as long as you're watching the activity on the field, then it's going to be great to be able to play alongside it.

And really, we're seeing that trend across all content. Gone are the days where passive consumption of content is the norm. People want to interactively consume content, whether that's playing games like the fantasy games or bets that DraftKings offer, whether that's tweeting or text messaging with your friends while you're watching a sporting event or other program. We're really seeing content become more and more interactive. And I think that's a trend that's only going to continue.

SEANA SMITH: And speaking of that, you've recently reached a deal with the NFL, one of the league's sports betting partners. When you talk about the in-game betting, what's the opportunity there, do you think, to attract new users?

JASON ROBINS: Well, I think a lot of people find it maybe easier to say I'm not sure what's going to happen in this game, but I have a gut instinct of what's going to happen on the next play. And I think it in some ways seems more casual. It can also appeal to people who are more engaged and they're into it and they're watching every play.

So I think it spans the spectrum of appeal. And I think being able to bet on things that are more discrete actions in a game, like a football game, also extends interest in something when maybe the actual end score, the winner is already known. So if you, for example, have a 30-point blowout in the fourth quarter, maybe it's not that interesting anymore to be betting or even watching to see what the outcome of the game will be. But if you have to bet on the next play or the next drive, then you're fully engaged.

ADAM SHAPIRO: They used to say content is king. And I still think at least coming from old media that that is the case. But you made a bet. You've invested, you purchased an ESPN radio program. And will there be more content coming out of DraftKings? Is this an avenue of revenue going forward for you?

JASON ROBINS: Well, it used to be an ESPN radio program. It's actually part of a new company now called Meadowlark, the "Dan Le Batard Podcast" I think is what you're referring to. I do think content is king. We actually refer to content both in terms of the games in the media, but also the content that we put on our product, which is in our world the types of bets and fantasy games that people can make.

That's something I think that is true always in any sort of entertainment product. If you have great content that engages and excites people, you're going to have a great business and you're going to have a lot of loyal customers. So we really focus on trying to do that from the full 360 perspective, starting, of course, with our core business, the games, the fantasy games, the bets, but then also things like shoulder programming and other types of content that both further engages the customer and also enhances and enriches the experience.

SEANA SMITH: Jason, right now we're seeing more and more states legalize sports gambling. What do you think the growth looks like? Or what's the opportunity for growth there over the next couple of years? Are we still in those early stages that we've talked about before?

JASON ROBINS: Absolutely. We did an investor day a couple of months ago. And what we're looking at from the data we see is if there were full 100% legalization of mobile sports betting and igaming, north of a $60 billion market opportunity. So we are still very early days.

And that, obviously, you may not see 100% of the US population get legal sports betting or igaming. So that's another thing that people have to predict and speculate on as they think about the ultimate size of the market in the US. But it's obviously a tremendously big opportunity any way you slice it. And we are very early on in the development of that.

ADAM SHAPIRO: Jason Robins is the co-founder and CEO of DraftKings. We wish you all the best.