DraftKings Forecast Increased Revenue after Q3 Performance Boost
LISTEN TO THIS ARTICLE:DraftKings has updated its revenue and adjusted EBITDA outlook for the full year, following a period of strong growth in the third quarter. This is the third time this year that the company has adjusted its full-year projections upward. The third quarter saw an increase in revenue and adjusted EBITDA, alongside a decrease in net losses.
The third quarter brought several positive developments for DraftKings, notably the debut of its sportsbook offering in Kentucky. This move, occurring towards the quarter's end, means DraftKings now offers mobile sports betting in 22 states across the U.S.
Huge Rise in Monthly Player Numbers
The period also saw a significant 40% rise in monthly unique players (MUPs) to 2.3 million. According to the company, this is a testament to successful player retention and acquisition strategies in both sportsbook and iGaming and the expansion into new markets. Moreover, the average revenue per MUP went up by 14% to $114, which DraftKings attributes to a favorable sportsbook hold rate and better promotional reinvestment strategies.
These factors collectively spurred the revenue and earnings increase in Q3. Jason Robins, CEO and co-founder, highlighted that the results were a direct outcome of strategic investments in product and technology, as well as effective execution by the team.
Our fantastic third quarter results demonstrate the positive impact of our product and technology investments as well as excellent preparation and execution by our entire organization. Our new and differentiated features and functionality have created an exceptional user experience that sustains engagement for our mobile sports betting and iGaming customers. We also delivered another successful online sportsbook launch in Kentucky. In addition, we look forward to launches in Maine and in North Carolina, pending licensure and regulatory approvals.
Related: DraftKings Overtakes FanDuel in US Online Gambling Market
DraftKings Continues to Operate at a Loss
Despite a 57.4% rise in revenue during the third quarter, DraftKings still operated at a loss. Revenue climbed to $790 million, but the company refrained from providing a detailed revenue breakdown. However, it did share insights into its expenditures, with the cost of revenue surging by 129% to $372.7 million while managing to reduce sales and marketing expenses by 2.6% to $313.3 million. Other costs varied, with product and technology expenses growing by 16.6% and general and administrative costs decreasing by 29.8%.
Pre-tax losses were considerably less compared to the previous year, with a reported loss of $281.8 million, a marked improvement over the $447.3 million from last year's third quarter. The company's net loss was lower as well, at $283.1 million, down from $450.5 million, and the adjusted EBITDA loss also saw a reduction.
Year-to-date figures nearly reached $2.50 billion, with a 75.7% year-on-year revenue jump to $2.43 billion. Costs rose in all areas except for general and administrative expenses. Pre-tax losses showed improvement, and the net loss for the year-to-date was notably less than the previous year's figures.
Looking ahead, DraftKings has raised its full-year revenue forecast, with expectations now set between $3.67 billion and $3.72 billion. This is an increase from the $2.46 billion to $3.54 billion range projected in the second quarter. Adjusted EBITDA is also expected to be less negative than previously forecasted.
For the fiscal year 2024, the company's revenue could reach between $4.50 billion and $4.80 billion, with the midpoint of this range indicating a 25% increase over the midpoint of the 2023 projection. DraftKings is optimistic about becoming adjusted EBITDA-positive in 2024, with preliminary guidance suggesting figures between $350.0 million and $450.0 million.
Jason Park, the chief financial officer, underscored the company’s efficient customer acquisition and engagement, improvements in sportsbook operations, and disciplined fixed cost management. These factors have led to an upward revision of the fiscal year 2023 revenue and adjusted EBITDA guidance, paving the way for expected strong revenue growth and an increase in adjusted EBITDA.
More Finance News
RELATED TOPICS: Finance
Latest News
Most Read
Must Read
Interviews
Review this New Post
Leave a Comment
User Comments
Comments for DraftKings Forecast Increased Revenue after Q3 Performance Boost