DKNG Introduces Fiscal Year 2024 Revenue Guidance of $4.5 Billion to $4.8 Billion and Fiscal Year 2024 Adjusted EBITDA Guidance of $350 Million to $450 Million
DraftKings Inc. (DKNG) announced its third quarter 2023 financial results. The Company also posted a third quarter 2023 business update and an earnings presentation on the Investor Relations section of its website at investors.draftkings.com.
Third Quarter 2023 Highlights
For the three months ended September 30, 2023, DraftKings reported revenue of $790 million, an increase of $288 million, or 57%, compared to $502 million during the same period in 2022 driven primarily by continued healthy customer engagement, efficient acquisition of new customers, the expansion of the Company’s Sportsbook product offering into new jurisdictions, product innovation leading to increased parlay mix and thus higher hold percentage, and improved promotional reinvestment for Sportsbook and iGaming.
“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,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “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 and look forward to additional launches in Maine and in North Carolina, pending licensure and regulatory approvals. We expect to generate approximately $200 million of positive Adjusted EBITDA in the fourth quarter of 2023 based on the midpoint of our updated fiscal year 2023 guidance and look forward to sharing our multi-year outlook at our Investor Day on November 14th.”
“DraftKings continues to acquire customers in an efficient manner, sustain customer engagement, improve its sportsbook structural hold and promotional reinvestment for Sportsbook and iGaming, and demonstrate fixed cost discipline,” said Jason Park, DraftKings’ Chief Financial Officer. “As a result of our outstanding performance in the third quarter, we are raising the midpoint of our fiscal year 2023 revenue guidance to $3.695 billion from $3.5 billion and improving the midpoint of our fiscal year 2023 Adjusted EBITDA guidance to ($105) million from ($205) million. We are poised for a rapid increase in Adjusted EBITDA as we anticipate strong revenue growth coupled with a scaled fixed cost structure will continue. These trends provide for a long runway of margin improvement. Our fiscal year 2024 guidance at the midpoints of $4.65 billion in revenue and positive $400 million of Adjusted EBITDA implies incremental year-over-year revenue growth of almost $1 billion and an increase in Adjusted EBITDA of more than $500 million.”
Continued Healthy Growth in Customer Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”) increased to 2.3 million average monthly unique paying customers in the third quarter of 2023, representing an increase of 40% compared to the third quarter of 2022. This increase reflects strong unique payer retention and acquisition across DraftKings’ Sportsbook and iGaming products as well as the expansion of its Sportsbook product into new jurisdictions.
- Average Revenue per MUP (“ARPMUP”) was $114 in the third quarter of 2023, representing a 14% increase compared to the same period in 2022. This increase was primarily due to an increase in the Company’s structural sportsbook hold rate and improved promotional reinvestment for Sportsbook and iGaming.
- Detailed financial data and other information for the third quarter of 2023 is available in the financial statements set forth below under the caption “Financial Results.”
DKNG Raising 2023 Revenue Guidance and Improving 2023 Adjusted EBITDA Guidance; Introducing 2024 Revenue and Adjusted EBITDA Guidance
- DraftKings is raising its fiscal year 2023 revenue guidance to a range of $3.67 billion to $3.72 billion from the range of $3.46 billion to $3.54 billion, which the Company previously announced on August 3, 2023. The Company’s updated 2023 revenue guidance range equates to year-over-year growth of 64% to 66%.
- DraftKings is also improving its fiscal year 2023 Adjusted EBITDA guidance. The Company now expects fiscal year 2023 Adjusted EBITDA of between ($95) million and ($115) million compared to its prior fiscal year 2023 Adjusted EBITDA guidance of between ($190) million and ($220) million, which the Company previously announced on August 3, 2023.
- DraftKings is introducing a fiscal year 2024 revenue guidance range of $4.50 billion to $4.80 billion, which equates to more than 25% year-over-year growth based on the midpoints of the Company’s fiscal year 2023 revenue guidance and the Company’s fiscal year 2024 revenue guidance.
- DraftKings is also introducing fiscal year 2024 Adjusted EBITDA guidance of between $350 million and $450 million.
- The Company’s revenue and Adjusted EBITDA guidance for fiscal years 2023 and 2024 includes all of its existing jurisdictions as well as mobile sports betting in Maine, Puerto Rico, Vermont, and North Carolina. Maine, Puerto Rico and North Carolina are pending launch. Vermont has authorized mobile sports betting and is running an RFP process for which DraftKings has submitted a bid. These states collectively represent approximately 5% of the U.S. population, and all state launches are pending market access, licensure, regulatory approvals, and contractual approvals where applicable.
Mobile Sports Betting and iGaming Footprint
- Following the launch of its Sportsbook product in Kentucky on September 28, 2023, DraftKings is live with mobile sports betting in 22 states that collectively represent approximately 45% of the U.S. population.
- DKNG is also live with iGaming in 5 states, representing approximately 11% of the U.S. population.
- DKNG is live with its Sportsbook and iGaming products in Ontario, Canada, which represents approximately 40% of Canada’s population.
- DKNG announced it has reached an agreement in principle with the Passamaquoddy Tribe paving the way for the launch of its Sportsbook product in Maine. DraftKings expects to launch its Sportsbook product in Puerto Rico and North Carolina after securing market access. Vermont has authorized mobile sports betting and is in the process of running an RFP process for which DraftKings has submitted a bid. All state launches are pending market access, licensure, regulatory approvals, and contractual approvals where applicable.
- In 2023, 12 states that collectively represent approximately 24% of the U.S. population have either introduced legislation to legalize mobile sports betting or introduced bills that may result in sports wagering referendums during an upcoming election. In addition, 5 states that collectively represent approximately 14% of the U.S. population have either introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.
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