DraftKings ‘positioned for sustained success’ after Q1 revenue uptick

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DraftKings believes it is “positioned for sustained success” following the first quarter of 2023 in which the company was able to produce revenue growth.

As a result, the operator is increasing the midpoint of its 2023 revenue and adjusted EBITDA guidance.

Publishing its Q1 financial report, DraftKings declared revenue of $770m, an 84 per cent increase year-over-year (Q1 2022: $417m) thanks to “efficient acquisition of new customers, product innovation driving higher hold percentage, decreased promotional intensity in more mature states and continued healthy customer retention”.

Monthly unique players for the operator increased to an average of 2.8 million, a 39 per cent uptick YoY due to a “strong unique player retention and acquisition across DraftKings’ sportsbook and igaming products” and an expansion of products across all segments in new jurisdictions.

The average revenue per MUP was up by 35 per cent YoY to $92 following an “improvement in the Company’s structural sportsbook hold rate and reduced promotional intensity”.

Profitability is still the ultimate goal for DraftKings, as the company continues to make a loss from operations, recording a loss of $390m (2022: $516m loss) and a net loss of $397m (2022: $468m net loss).

DraftKings adjusted EBITDA for the quarter finished at a $222m loss (2022: $290m loss).

Nevertheless, Co-Founder and CEO Jason Robins is optimistic that the company will be able to keep operating efficiently and is positioned for sustainable growth.

“DraftKings’ first quarter performance – 84 per cent year-over-year revenue growth and share gains underpinned by a relentless focus on operational efficiency – demonstrates that this is a company positioned for sustained success,” commented Robins. 

“We delivered highly successful online sportsbook launches in Ohio and our home state of Massachusetts and continued to create meaningful product differentiation driven by in-house innovations. We acquired customers faster and more efficiently and, importantly, saw healthy retention across cohorts.

“Looking at the remainder of 2023, I am confident DraftKings is well-positioned to achieve profitability on an adjusted EBITDA basis in the near term and deliver long-term value for our shareholders.”

DraftKings’ sportsbook is now live with mobile sports betting in 21 US states following its launch in Massachusetts in March, while its igaming product is operational in five states. Both the firm’s sportsbook and igaming services are live in Ontario, Canada as well.

The company is also expecting to expand its mobile sports betting product into Kentucky and Puerto Rico, pending licensure and regulatory approvals.

Following a good quarter, DraftKings has increased the midpoint of its 2023 revenue and adjusted EBITDA guidance.

The company’s 2023 revenue guidance range has been raised to between $3.135bn and $3.235bn (previously $2.85bn to $3.05bn), correlating to a 40 to 44 per cent YoY growth.

Meanwhile, the adjusted EBITDA guidance has been improved to a range of a $290m loss to a $340m loss (previously a $350m loss to a $450m loss).

“Strong execution across the organisation is showing up in our results,” added CFO Jason Park

“Revenue grew at a healthy rate due to core drivers around customer acquisition, retention and monetisation, including decreased promotional intensity and higher structural hold. In addition, our efficiency efforts produced clear results as demonstrated by significant year-over-year increases in gross margin and adjusted EBITDA.

“Therefore, we are increasing the midpoint of our fiscal year 2023 revenue guidance to $3.185bn from $2.95bn and improving the midpoint of our fiscal year 2023 adjusted EBITDA guidance to ($315)m from ($400)m.”