DraftKings Inc - Class A
Q4 2023 Earnings
Market Reaction
S&P 500 over the same 30 days: +4.20%.
Did DKNG Beat Earnings? Q4 2023 Results
DraftKings delivered a sharp earnings beat in Q4 2023, posting adjusted EPS of $0.29 against a consensus estimate of $0.08, a 262.50% positive surprise, even as revenue of $1.23 billion came in fractionally shy of the $1.24 billion estimate. The quarter's underlying strength was striking given that customer-friendly sport outcomes in the final two weeks of November alone cost the company roughly $175.00 million in revenue, a headwind management described as the worst stretch of sport outcomes since going public. Strip that out, and the 43.9% year-over-year revenue gain looks even more compelling. Adjusted EBITDA swung to positive $151.02 million from negative $49.93 million a year ago, while monthly unique payers grew 37% to 3.5 million. Looking ahead, DraftKings raised its FY2024 revenue guidance to a range of $4.65 billion to $4.90 billion and lifted its Adjusted EBITDA outlook to $410.00 million to $510.00 million, with management citing strong early-2024 trends and a pending $750.00 million acquisition of digital lottery app Jackpocket as key growth catalysts.
- Monthly Unique Payers increased 37% YoY to 3.5 million average in Q4 2023
- Average Revenue per MUP increased 6% YoY to $116 (22% adjusted for unfavorable sport outcomes)
- Continued healthy customer engagement and efficient customer acquisition
- Expansion of Sportsbook product into new jurisdictions
- Higher structural sportsbook hold percentage driven by increased parlay mix
- Customer-friendly sport outcomes in late November negatively impacted Q4 revenue by ~$175M and Adjusted EBITDA by ~$126M
“DraftKings ended 2023 with excellent performance across customer acquisition, retention and engagement as well as structural sportsbook hold percentage despite the worst stretch of sport outcomes we have seen as a public company in the fourth quarter.”
DraftKings CEO, on the earnings call
Forward Guidance & Outlook
DraftKings raised its FY2024 revenue guidance to a range of $4.65 billion to $4.90 billion (midpoint $4.775 billion), up from the prior range of $4.50 billion to $4.80 billion, representing 27% to 34% year-over-year growth. FY2024 Adjusted EBITDA guidance was also raised to $410 million to $510 million (midpoint $460 million), up from the prior $350 million to $450 million range. The updated guidance includes existing jurisdictions plus mobile sports betting in Puerto Rico and North Carolina (representing ~4% of U.S. population), with the North Carolina Sportsbook launch expected on March 11, 2024. The guidance excludes the estimated impact of the proposed Jackpocket acquisition. The Jackpocket deal is expected to generate $260 million to $340 million of incremental revenue and $60 million to $100 million of incremental Adjusted EBITDA in FY2026, and $350 million to $450 million of incremental revenue and $100 million to $150 million of incremental Adjusted EBITDA in FY2028.
DKNG YoY Financials
DKNG Revenue by Segment
Figures from SEC filings and company reports. Not investment advice.