Sports betting company DraftKings Inc DKNG reported fourth-quarter financial results after market close Thursday.
Here are the key highlights.
What Happened: DraftKings reported fourth-quarter revenue of $1.23 billion, which was up 44% year-over-year. The revenue total missed a Street consensus estimate of $1.24 billion according to data from Benzinga Pro.
The company cited healthy customer engagement, acquisition of new customers and new jurisdiction expansion as reasons for the revenue growth.
Earnings per share were 29 cents in the fourth quarter, which beat a Street consensus estimate of 8 cents per share.
"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 Jason Robins said.
The company said its quarter, primarily the final two weeks of November, were negatively impacted by "customer-friendly sport outcomes."
DraftKings ended the fourth quarter with 3.5 million average monthly unique paying (MUP) customers, which was up 37% year-over-year. The average revenue per MUP was $116 in the fourth quarter, which was up 6% year-over-year.
The company launched its sportsbook in Maine in November 2023 and in Vermont in January 2024. DraftKings is now live in 24 states that represent around 46% of the U.S. population. The company also has iGaming live in 5 states.
Jackpocket Acquisition: DraftKings also announced Thursday that it is acquiring lottery app company Jackpocket.
The company is acquiring Jackpocket for around $750 million, with 55% of the deal being paid for with cash on the balance sheet and 45% being paid for with common stock.
Jackpocket is a provider of digital lottery services in the U.S. DraftKings said the deal with help the company expand in the "massive U.S. lottery industry" and have higher lifetime value for its existing customers.
"We are very excited to enter the rapidly growing U.S. digital lottery vertical with our acquisition of Jackpocket," Robins said. "This transaction will create significant value for DraftKings not only by giving our customers another differentiated product to enjoy but also by improving our overall marketing efficiency."
DraftKings said the transaction will add $260 million to $340 million in revenue for fiscal 2026, without any additional state legalization. The deal will also add $60 million to $100 million in adjusted EBITDA for fiscal 2026. The deal will add $350 million to $450 million in revenue and $100 million to $150 million in adjusted EBITDA for fiscal 2028, the company said.
What's Next: DraftKings expects to launch online sports betting in North Carolina on March 11, 2024, adding another state to its operations.
The company also said seven additional states, which represent 11% of the U.S. population, have introduced legislation to legalize mobile sports betting or introduced a bill that could result in legalization becoming a 2024 election item.
DraftKings is raising its 2024 full year revenue guidance for 2024 to a range of $4.65 billion to $4.90 billion, versus a prior range of $4.50 to $4.80 billion. The new guidance represents year-over-year revenue growth of 27% to 34%.
The company is also increasing its 2024 adjusted EBITDA guidance to a new range of $410 million to $510 million, from a prior range of $350 million to $450 million.
The new guidance includes the launches in North Carolina and Puerto Rico, but does not include any impact of the acquisition of Jackpocket.
"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," Robins said.
DKNG Price Action: DraftKings shares are down 1% to $44.05 in after-hours trading Thursday versus a 52-week trading range of $15.69 to $44.95. The stock hit a new 52-week high earlier Thursday.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
