DraftKings raised its full-year revenue and earnings forecast after reporting growth during the second quarter and first half.
The operator attributed the second quarter’s success to continued customer retention and engagement, as well as new player acquisition. DraftKings was also able to reduce the net loss.
Based on these figures, the operator was confident of raising fiscal year guidance for the third consecutive quarter.
DraftKings has already raised expectations for the fiscal year in the first quarter of 2023 and the last quarter of last year.
DraftKings also took into account early launches in new markets when increasing its fiscal year guidance.
The operator expects to go live in Kentucky in September and in Puerto Rico before the end of the year.
DraftKings CEO Review
“DraftKings produced outstanding results in the second quarter of 2023,” said DraftKings co-founder and CEO Jason Robins.
“We grew revenue at an impressive rate year-over-year, cost-effectively captured additional stake in GGR and maintained our focus on operational efficiency.
The positive adjusted EBITDA we generated in the second quarter exceeded our expectations. We are on track to achieve a positive result in the fourth quarter, fiscal 2024 and beyond.
We are excited about the additional product features and functionality we are introducing ahead of the football season.
I also look forward to another successful launch of online sports betting in Kentucky this fall, pending licensing and regulatory approvals.”
DraftKings Q2 Revenue Jumps 88%
Looking at DraftKings’ Q2 performance, revenue for the three months to June 30 reached $874.9 million. This was 87.7% higher than the $466.2 million in the same period last year.
User acquisition efforts led to average monthly unique players (MUPs) jumping 44.0% year-over-year in Q2 to 2.1 million.
Average revenue per MUP was also up about 33% to $137 for the quarter.
The increase in income was accompanied by an increase in expenditure in almost all areas.
The main outflow was cost of revenue at $510.3 million, up 63.1% year-over-year.
Sales and marketing and product and technology expenses were also higher, but general and administrative expenses declined.
DraftKings’ Q2 operating loss was $69.0 million, but was significantly lower than the $308.9 million loss recorded at the same point in 2022.
The operator noted an additional $7.3 million in net finance costs, leaving a pre-tax loss of $76.3 million.
However, again, that was far less than $298.3 million last year.
Net loss reduced by $210 million in the first half
First-half adjustment and revenue for the six months to June 30 reached $1.64 billion, up 97.3% year-over-year.
Expenses made for similar reading, with all costs except general and administrative rising year on year.
Cost of revenue crossed the $1 billion mark to $1.03 billion, while sales and marketing spend was $596.6 million.
However, the increase in revenue meant that the operating loss was reduced from US$824.5 million to US$458.8 million.
Another $13.1 million in net finance costs meant the pre-tax loss was $472 million, again lower than the prior year.
DraftKings paid $2 million in taxes and took a loss of $442,000 on the equity method investment.
As such, net loss for the half was $474.4 million, down from $684.8 million in 2023.
Additionally, adjusted EBITDA was a loss of $148.6 million, an improvement from a loss of $407.6 million last year.
Higher expectations for the full year
Upgrading its full-year guidance, DraftKings said it now expects revenue to be between $3.46 billion and $3.54 billion.
That’s higher than the $3.14 billion to $3.24 billion range established after the first quarter and would put year-over-year growth between 54% and 58%.
Adjusted EBITDA loss is forecast to be $190 million to $220 million, compared to Q1 guidance of $290 million to $340 million.
Focusing on the fourth quarter, DraftKings said revenue is likely to reach nearly $1.2 billion and adjusted EBITDA between $150 million and $175 million.
The operator noted that the guidance includes all existing jurisdictions where it is live, plus Kentucky and Puerto Rico.
“We are efficiently acquiring new customers while retaining and monetizing our existing players through rapid product innovation, fewer promotions and greater retention from a better betting mix,” said DraftKings CFO Jason Park.
“Our unit economy is excellent, with older states generating more than enough money to fund investment in new states.”
“This performance combined with fixed costs that grew at an average single-digit percentage rate year-over-year in the second quarter. This resulted in an inflection in positive adjusted EBITDA that we expect to occur again in the fourth quarter and in the full year of 2024”, he concluded.
