The self proclaimed leader in daily fantasy sports, FanDuel is projecting annual revenue in 2014 of $40 million. This is coming from a completion of $5.3 million in revenue for Q1 and a projected total of $6.5 million for the unfinished Q2.
Since 2011, the company has seen phenomenal growth in player activity, entry fee collection, prize winning distributions and revenue in the growing daily fantasy sport market. Daily fantasy differs from the traditional season-long leagues in that the time scales to participate in daily games have been condensed into shorter time periods. This is to facilitate churn and turnover of games and matches well with the cadence of the game provider to provide financial payouts for winners and encourages more games played.
Revenue
Since 2011, FanDuel has seen growing revenue from $135k in Q1 to over $5.3 million in Q1 of 2014. Revenue is based on the money that is generated by the charge of entry fees for players to participate in daily games on FanDuel minus the amount that is paid out to winning players. FanDuel's revenue represent that difference.
FanDuel has seen revenue increase year over year. There are periods of decline because of seasonality. The dip from Q4 of 2013 to Q1 of 2014 is probably due to the fact that FanDuel takes in a large amount from the king of fantasy sports, fantasy football of the NFL in the 4th quarter. It can also be noted that Q4 of 2013, FanDuel hit an all time high of $7.4 million in revenue.
Payout percentages have roughly remained the same in each quarter at around 90%. Payout percentage takes the amount that is paid out to winners and then divides that by the entry fees that FanDuel collects. This most recent completed quarter, Q1 of 2014, has the company payout ratio at 91.4%.
Entry Fees Total
Along with revenue, another measurement of success is the activity of the site based on the amount of money that can be taken in from entry fees. This represent the top line of their financial numbers. Just taking a snapshot of Q1 of each year, the graph represents the year over year growth from the entry fees. For this past quarter, FanDuel took $62.7 million and represents approximately 300% growth from 2013 and an almost 4600% growth from 2011.
Revenue per Paid Actives Users
As mentioned earlier, the company does suffer from seasonality mainly because the main revenue driver is from the very popular fantasy football.
Related: Fantasy Football season causes jump in web traffic according to comScore
However, looking at the amount of paid actives users that is driving revenue reveals how the company manages that seasonality. The fluctuation of revenue per actives users would imply that while revenues are lowest in Q1 and Q2 periods, the company is doing an efficiency job of translating that to revenue.
Summary
The daily fantasy market is still a growing one, however because of the success that FanDuel is having more and more companies are entering the market to grab a slice of the pie. FanDuel itself is engaged in heavy competition with companies such as DraftKings in the battle for daily fantasy supremacy. FanDuel does appear to have a leg up on the early competition in the daily fantasy market. The company claims 65% of the market share and does have health history of funding that has resulted in $18 million in raised funds. What is not revealed in FanDuel's number is the cost of doing business. This would include the operational costs for running the daily games as well as the growing marketing costs FanDuel incurs for staying ahead of other up and coming daily game providers.
Related: FanDuel vs DraftKings
FanDuel Financial Information
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| Source: FanDuel |
