DraftKings posts 39% revenue growth but FY 2024 guidance falls after “customer-friendly sport outcomes”
Boston-based operator records topline growth, as well as rise in GGR for both sportsbook and igaming segments, but issues downward revisions for its 2024 revenue and adjusted EBITDA estimates
DraftKings has recorded $1.1bn (£848.8m) in Q3 revenue as bosses heralded the impacts of increased hold, improved promotional reinvestment and the expansion of its sportsbook.
The Boston-based operator’s topline figure for the three months ending 30 September represented a steep 39% year-on-year (YoY) climb when compared to the $790m generated in the same period last year.
Alongside the aforementioned factors, DraftKings also pointed to efficient new customer acquisition, “healthy engagement” with existing players as well as the purchase of lottery courier firm Jackpocket for $750m in February 2024.
The operator saw average monthly unique payers (MUPs) rise 55% YoY to 3.6 million while excluding the impact of the Jackpocket acquisition, MUPs still increased by around 27% against the corresponding period in 2023.
However, average revenue per monthly unique payer (ARPMUP) came in at $103 during the reporting period, marking a 10% slump YoY.
DraftKings bosses have attributed that decrease to lower ARPMUP for Jackpocket customers when compared to customers of DraftKings’ existing product offerings prior to the acquisition.
Removing the impact of Jackpocket, the operator saw ARPMUP increase by 8% YoY, with “improved promotional reinvestment for sportsbook and igaming” cited as a factor for that climb.
There was a notable decline in adjusted EBITDA at $58.5m in Q3 2024, $95m less than the $153.4m generated during the third quarter last year, while losses from operations rose by $12m to $298.6m.
As per a note to the operator’s shareholders, DraftKings’ sportsbook gross gaming revenue (GGR) saw a 39% YoY increase, while igaming GGR climbed 26% compared to Q3 2023.
Customer acquisition costs improved 20% YoY, though the specific figures were not disclosed.
Currently, DraftKings’ online sports betting offering is now live in 25 US states, plus Washington DC, giving the operator the potential to engage with around 49% of the nation’s population.
That figure could soon go up following the recent development in Missouri, which saw voters pass a ballot initiative to legalise online sports betting in the Show-Me state on 5 November.
DraftKings has already outlined plans to launch its sportsbook in Missouri “pending market access, licensure, regulatory approvals and contractual approvals, where applicable”.
The firm’s igaming offering is live in five states, which translates to 11% of the US population.
Reflecting on the operator’s performance in Q3, CEO and co-founder Jason Robins issued an optimistic statement: “DraftKings delivered strong performance in the third quarter with the return of NFL and college football,” he said.
“With major sports converging on the calendar, we are well-positioned to build on this momentum as we further enhance our top-ranked sportsbook app with additional live betting features and exciting new NBA markets.
“Our focus remains on driving sustainable revenue growth and profitability in 2025 and beyond.”
In response to the strong display, DraftKings has issued fiscal year 2025 revenue guidance that anticipates a midpoint of $6.4bn, which equates to 31% YoY growth compared to the updated midpoints of its fiscal year 2024 revenue guidance, despite not including the impact of a potential launch in Missouri.
Adjusted EBITDA guidance for fiscal year 2025, as announced on 1 August, is within the range of $900m to $1bn.
DraftKings has made a downward revision to both its 2024 revenue and adjusted EBITDA estimates, citing “customer-friendly sport outcomes” in the early exchanges of Q4 as the reason for the decline. Revised revenue midpoint is now expected to land at $4.95bn, down from between $5.05bn and $5.25bn.
Adjusted EBITDA for the fiscal year 2024 is now anticipated to amass a total between $240m and $280m, a notable fall from the previous guidance range of $340m to $420m announced on 1 August.
CEO Robins explained the downward revisions in his shareholders note, stating: “NFL outcomes were very customer-friendly early in the fourth quarter. Customer-friendly sport outcomes resulted in headwinds of $250m and $175m to our fiscal year 2024 revenue and adjusted EBITDA guidance, respectively.”
Following the results release, DraftKings share price slumped by just shy of 6% to $36.39 post-market close yesterday, Thursday 7 November.