DraftKings Q4 Earnings Highlights: Revenue Beat, Guidance Raise, More States Legalize Sports Betting And More

Sports betting company DraftKings Inc DKNG reported fourth-quarter financial results after the market close Thursday. Here are the key highlights.

What Happened: DraftKings reported fourth-quarter revenue of $855 million, up 81% year-over-year. The revenue total comes in ahead of a Street estimate of $800.3 million, according to data from Benzinga Pro.

The company said its revenue and adjusted EBITDA both were higher than company estimates provided in November.

Customer retention and monetization in existing states along with the launch of sports betting and iGaming in additional states were cited as reasons for the growth.

DraftKings had 2.6 million average monthly unique paying customers in the fourth quarter, up 31% year-over-year. The average revenue per MUP was $109, up 42% year-over-year.

“I am very pleased with how we concluded 2022, with continued top-line growth and strong focus on expense management,” DraftKings CEO Jason Robins said.

The company ended the fourth quarter with mobile sports betting live in 20 states, representing 42% of the U.S. population. Recent launches include Maryland in November and Ohio in January.

DraftKings is live with iGaming in five states, representing 11% of the U.S population.

Related Link: Trading Strategies For DraftKings Stock Before And After Q4 Earnings

What’s Next: DraftKings raised its full year 2023 revenue guidance from a prior range of $2.8 billion to $3 billion to a new range of $2.85 billion to $3.05 billion. The Street estimate is $2.95 billion, according to Benzinga Pro.

The company sees an improvement on its prior 2023 adjusted EBITDA guidance. The new guidance calls for a loss of between $350 million and $450 million in 2023. Previous guidance was a loss of $475 million to a loss of $575 million.

DraftKing's guidance includes existing states and territories and the expected launches in 2023.

“Moving into 2023, we will continue to drive revenue growth and focus on expense management to accelerate our adjusted EBITDA growth. We have already taken several actions that resulted in an increase to our revenue guidance and significant improvement in our adjusted EBITDA guidance,” Robins said.

Chief Financial Officer Jason Park said strong customer retention and improved monetization coming from a decline in promotions helped the company's revenue and EBITDA estimates.

“Our fiscal year 2023 adjusted EBITDA guidance reflects a meaningful slowdown in the growth rate of our fixed costs as we continue to capture efficiency opportunities and optimize our organizational productivity,” Park said.

Massachusetts and Puerto Rico have legalized sports betting and are expected to launch soon.

DraftKings said 10 states that represent 19% of the U.S. population have introduced sports betting legislation or bills. Five states have introduced iGaming legislation or bills.

DKNG Price Action: DraftKings shares are up 6% to $19 in after-hours trading Thursday at the time of writing.

Related Link: Exclusive: Why DraftKings Is A Key Holding Of Ark Invest, Stands Out Ahead Of The Sports Betting Competition

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