DraftKings Q3 2023: Revenue surges by 57% yet net loss persists
DraftKings has reported its financial performance for the third quarter of 2023, ending 30 September 2023.
The results show a rise in revenue, recording an impressive US$790 million, representing a remarkable 57 percent increase when compared to the corresponding period in 2022.
However, the financial picture is not without its complexities, as DraftKings continues to experience a net loss, albeit showing promising signs of improvement.
Revenue soars, yet net loss persists
The Q3 2023 financial results reveal DraftKings’ robust revenue, surging to US$790 million, a substantial upswing of 57 percent from the same period in 2022. This remarkable growth can be attributed to several factors. Customer engagement remains robust, coupled with an efficient strategy for acquiring new customers. Moreover, the expansion of DraftKings’ Sportsbook product into new jurisdictions, ongoing product innovation leading to an increased parlay mix and higher hold percentages, and enhanced promotional reinvestment for Sportsbook and iGaming, have all contributed to this impressive revenue surge.
While the revenue figures are undoubtedly encouraging, DraftKings still reported a net loss of US$283.1 million for Q3 2023. However, it’s worth noting that this represents a notable improvement when compared to Q3 2022 when the company posted a net loss of $450.5 million. These financials signify the inherent challenges and complexities within the dynamic gaming and sports betting landscape.
DraftKings Total GAAP operating expenses quarter-on-quarter 2022-2023 (Source: SiGMA)
Adjusted EBITDA and operating expenses
DraftKings reported an EBITDA figure of negative US$153.4 million for Q3 2023. This marked a significant drop from the previous quarter when the company posted a positive figure of US$72.9 million. However, it is essential to highlight that this figure indicates an improvement over Q3 2022 when DraftKings recorded a negative adjusted EBITDA of US$264.2 million.
DraftKings also reported an increase in total Generally Accepted Accounting Principles (GAAP) operating expenses year-on-year, climbing from US$957 million to US$1.08 billion. These expenses are part and parcel of the company’s growth and expansion efforts.
User engagement and expansion initiatives
During the third quarter, DraftKings reported a notable achievement with 2.3 million monthly players, reflecting a substantial 40 percent year-on-year increase. Furthermore, the average revenue per monthly unique player exhibited positive growth, with a 14 percent increase, amounting to US$114 within the same period.
DraftKings is also actively expanding its presence. The company recently entered the Kentucky market and has plans for additional launches in Maine and North Carolina, pending regulatory approvals. This expansion is indicative of DraftKings’ strategic vision and commitment to reaching a wider audience.
As of Q3 2023, DraftKings has a firm footing in 22 states with mobile sports betting, encompassing approximately 45 percent of the US population. Moreover, the company has ventured into iGaming in five states, representing roughly 11 percent of the US population. In addition, DraftKings has ventured north of the border, establishing a presence in Ontario, Canada, with both its Sportsbook and iGaming products. The Canadian market represents a substantial share, covering approximately 40 percent of the country’s population.
Future projections and financial guidance
Looking ahead, DraftKings has set ambitious expectations for the fiscal year 2024. The company anticipates a revenue range of US$4.5 billion to US$4.8 billion for the upcoming year. Simultaneously, the adjusted EBITDA guidance for fiscal year 2024 is projected to be in the range of US$350 million to US$450 million.
Jason Park, DraftKings’ Chief Financial Officer, (in photo above), expressed confidence in the company’s trajectory and performance, stating, “We are poised for a rapid increase in adjusted EBITDA as we anticipate strong revenue growth coupled with a scaled fixed cost structure will continue.”
These projections indicate a path to sustained growth and profitability for DraftKings, as it continues to assert itself as a leading player in the gaming and sports betting industry. The company’s ability to attract and engage customers efficiently, coupled with ongoing product innovations, has positioned DraftKings for an exciting future marked by significant financial milestones.
The gaming industry is undeniably dynamic, and DraftKings’ financial journey underscores the resilience and adaptability required to navigate this evolving landscape.
With ambitious expansion plans and a commitment to customer satisfaction, DraftKings will remain a major player in the sector.
