DraftKings revenue jumps 47% in Q4 2021 despite increased losses

DraftKings revenue rose by 47% year on year during the final three months of 2021 to $473m, according to the US sports betting heavyweight’s latest financial report.

Detailing its financial results for Q4, the Nasdaq-listed firm continued its trend of reporting multi-million-dollar losses, with Q4 operational losses increasing to $368.7m from a prior Q4 2020 figure of $268.3m.

Pro forma costs inclusive of sales and marketing, product and technology, and general administrative costs amounted to $588.8m during Q4 2021.

Company adjusted EBITDA losses increased to $127.9m from a prior Q4 2020 loss of just $87.8m.

DraftKings revealed a 32% year-on-year increase in monthly unique players (MUP) within its B2C segment, with average revenue per MUP rising 19% over the same period to $77.

“Our ARPMUP benefitted from continued mix shift into our sportsbook and igaming product offerings and cross-selling our customers into more products,” DraftKings said.

DraftKings share price slumped by 16% in pre-trading on the Nasdaq stock exchange wiping more than $1.44bn off the firm’s market capitalization.

In line with previous revisions to its figures, DraftKings has increased its fiscal year 2022 revenue guidance, this time to between $1.85bn and $2bn, which would equate to annual growth of between 43% and 54% compared to previous figures.

To augment its financial reporting, DraftKings has introduced adjusted EBITDA guidance figures into its fiscal year 2022 projections, suggesting its 2022 adjusted EBITDA losses would amount to between $825m and $925m.

These figures are reflective of mobile sports betting launches in New York and Louisiana. DraftKings has also said it expects to be contribution profit positive for 2022 in all states where it is currently live.

This contribution positive contribution, DraftKings expects, will increase its adjusted EBITDA figure back into positivity by the fourth quarter of 2023.

“DraftKings’ strong fourth quarter performance exceeded our expectations on the top and bottom line,” DraftKings CEO and chairman Jason Robins said.

“Our excellent quarter capped off a year in which five of our states were contribution profit positive, further demonstrating the effectiveness of our state playbook and supporting our positive view of the industry’s TAM.

“We enter 2022 positioned to grow our market share, further optimize our user experience, and continue to strengthen our multi-product suite of offerings,” Robins added.

Following successful launches in New York and Louisiana, DraftKings is now live with mobile sports betting in 17 states that collectively represent approximately 36% of the US population.

DraftKings is also live with igaming in five states, representing approximately 11% of the US population.

The US sportsbook operator has singled out Maryland, Ohio, and Puerto Rico as potential areas of expansion for the business during the next year.

Delivering its assessment of DraftKings Q4 2021 results Regulus Partners questioned whether DraftKings growth trajectory would be ultimately hamstrung by a shrinking number of states legalizing sports betting.

“The big medium-term driver of scale is likely to be whether other markets of sufficient latent size legislate in a way to drive operating leverage,” Regulus said in a note.

“Ontario is a clear positive, but it will be interesting to see how DK fares in a less US-centric market where global operators such as bet365 and Super Group have a very strong existing presence, and where OLG has the benefit of incumbency (while also being digitally competent).

Regulus continued: “The irony of such a rapid rollout of online betting across US states is that there are now relatively few left which will move the dial, unless more states adopt igaming.

“A fair wind so far has justified DK spending large sums of money on growing a powerful but not dominant US market presence. As comps become tougher and competition increases, the answer cannot be to spend more money, in our view,” Regulus added.