DraftKings (DKNG) Third Quarter Earnings

DKNG DraftKings

DraftKings (DKNG) reported today strong third-quarter earnings results and weaker-than-expected forward guidance that disappointed investors.

DraftKings announced a third-quarter net loss of $450.5 million, or $1 per share. Wall Street analyst’s consensus for DKNG was for a loss of $1.04 per share. In the third quarter (Q3) of 2021, the company lost $545 million.

DraftKings revenues rose 136% to $502 million in Q3, up from $213 million in the same quarter the previous year. Analysts’ expectations were for revenue of $439.

Monthly unique paying customers (MUPS) rose 22% to 1.6 million, from 1.3 million the previous year. The figure disappointed analysts that were looking for 2 million unique paying customers.

In September, Monthly unique paying customers (MUPS) grew 27% (YOY) to 2.7 million, September is the strongest period of the year for MUPS due to the start of the NFL season.

The Average revenue per monthly unique payer (ARPMUP) for DraftKings, doubled on a yearly basis to $100.

In Q3, favourable sports outcomes contributed approximately $70 million of revenue.

DraftKings Guidance

DraftKings now expects full-year 2022 revenues of between $2.16 billion and $2.19 billion, which is improved from the previous guidance for revenues between $2.08 billion and $2.18 billion analysts expectations estimate revenues of $2.14 billion. The gross margin rate for the full year 2022, is expected to be almost 40% and to improve in 2023 into the low to mid 40%.

For 2023 the company forecast $2.80 billion to $3.00 billion in revenue, while Wall Street expectations are for $2.83 billion.

DraftKings expect that the fourth quarter of 2023 will be the first quarter with positive adjusted EBITDA.

Here comes the bad news: The company forecasts 2023, adjusted EBITDA loss to be between $475 to $575 million, which is much higher than the analysts’ expectation that has been looking for a loss of $426 million.

DraftKings Price

DraftKings stock has the worst day in its history today as it is trading 26.74% lower at $11.48. DKNG stock has a 52-week trading range between $9.77 and $45.97. The DKNG market capitalization now stands at $13.19 billion.

DraftKings has lost 58% of its value since the start of 2022 and has lost 73% in the last 12 months.

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