DraftKings Q4 2023 revenue increases 44% as operator falls short on EBITDA targets
Boston-headquarted operator sets new fiscal 2024 targets following “strong” start to 2024 as customer-friendly sports results in November have an impact on earnings
DraftKings has reported revenue of $1.2bn for the three months ending December 31, a 44% year-on-year (YOY) increase from the same period in 2022.
Management said the $376m increase in revenue from $855m was down to online sports betting being available in new jurisdictions as well as improved customer engagement and new players.
The firm’s sportsbook launched in Maine at the start of November and unveiled its progressive pick’em parlay feature in Connecticut, Iowa, Illinois, Oregon, Tennessee, and Wyoming a month later.
Monthly unique payers (MUPs) increased to 3.5 million, a 37% YOY rise, and was again down to customer retention across the sportsbook and igaming products.
However, the Boston-based operator missed the guidance for its quarterly adjusted EBITDA after a series of customer-friendly sports betting results took their toll.
Adjusted EBITDA landed at $151m, an improvement on the $49.9m loss in Q4 2022, but below the previously communicated guidance of between $187m and $207m.
The aforementioned customer-friendly sport outcomes in the final two weeks of November impacted revenue in Q4 by roughly $175m and adjusted EBITDA by approximately $126m.
Elsewhere, average revenue per monthly unique player (ARPMUP) stood at $116 in Q4, a 6% YoY jump. DraftKings attributed this rise to the sportsbook’s hold rate, which was offset by customer-friendly sport outcomes.
Without the customer-friendly results, DraftKings said ARPMUP in Q4 would have seen a 22% YoY increase.
Additionally, a rise in cost of revenue to $716.7m and a slight increase in product and tech costs to $88.2m saw total loss from operations for the quarter amount to $43.8m.
However, this represented a significant decrease from Q4 2022’s loss from operations of $232.2m.
Following the publication of the results, DraftKings has raised its full-year 2024 revenue and adjusted EBITDA guidance.
Revenue is now expected to land between $4.65bn and $4.9bn compared to a previous range of between $4.5bn and $4.8bn.
Adjusted EBITDA for the 12 months is expected to be between $410m and $510m against previous guidance of between $350m and $450m.
DraftKings said the upcoming launch of online sports betting in North Carolina next month would play a role in the increased expectations.
Jason Robins, DraftKings CEO and co-founder, highlighted customer retention and acquisition as key reasons for a successful Q4, while looking ahead to 2024.
Robins said: “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.
“Looking ahead to 2024 and beyond, our focus remains on disciplined execution against our core value drivers, an unwavering commitment to customer centricity, and fulfilling our product roadmap to consistently differentiate ourselves competitively.”
DraftKings has agreed a deal to acquire lottery courier Jackpocket for $750m which will be completed in H2 2024.