Key points:
- Revenue again broke the $1bn mark, up 39% year-on-year to $1.1bn
- DraftKings once again reported a net loss, this time up $12m year-on-year to $298.6m
- Net loss was driven by increased expenses across the board, especially in cost of revenue
DraftKings has released its financial results for the third quarter of 2024. In total, revenue came to $1.1bn, up 39% year-on-year, while adjusted EBITDA came up to negative $58.5m – a significant decrease from the minus $153.4m reported this time last year. However, net loss grew slightly, from $286.6m in Q3 2023 to $298.6m in Q3 2024.
Loss from operations breakdown
While revenue was up over $300m year-on-year, several factors contributed to DraftKings’ increased quarterly loss. Primarily, the sportsbook paid close to $200m more in cost of revenue this quarter, totalling $742.4m. In fact, across the board, expenses were up, with general and admin costs up 59.2% to $208.1m and product and technology costs up 16.4% to $103.6m. Sales and marketing costs, by comparison, were relatively stagnant, up 8.5% to $339.9m.
Player data
Looking at DraftKings' player data, monthly unique players (MUPs) were up 55%, coming to an average of 3.6 million players – roughly, the population total of Connecticut, according to a 2023 census. However, it should be noted that DraftKings’ acquisition of Jackpocket earlier this year played a significant part in this growth as, excluding Jackpocket, MUPs were only up 27%.
But, despite an increase in players, the average revenue per MUP was down 10% to $103. DraftKings pointed to the lower spend of Jackpocket customers – a digital lottery app – compared to traditional DraftKings players; something seen in figures excluding Jackpocket, where average revenue per MUP was up 8% year-on-year.
During the quarter
Concluding the three months ended 30 September 2024, DraftKings was live in 25 states and Washington DC, representing 49% of the US population. Its iGaming offering was available in five states (with a total of seven states offering legalised iGaming). Both products are also live in Ontario.
DraftKings also stated its intention to enter the sports betting market in Missouri following its legalisation. It also plans to launch in Puerto Rico following regulatory approval.
2024 fiscal year guidance
DraftKings has adjusted its 2024 fiscal year revenue guidance to $4.85bn – $4.95bn, down from previous guidance of $5.05bn – $5.25bn, and has adjusted its 2024 fiscal year adjusted EBITDA guidance to $240m – $280m, down from previous guidance of $340m – $420m.
DraftKings pointed to ‘the impact of customer-friendly sport outcomes early in the fourth quarter of 2024’ – the NFL season – as a reason for this decision. This makes sense, as not only were betting figures for this season up, with $35bn wagered through legal sportsbook’s this season according to the American Gaming Association as opposed to last season’s $26.7bn, but according to DraftKings, the number of customers who walked away with a win was also up.
Looking at DraftKings’ stock price in reaction to the reduced guidance, as of writing, pre-market stock prices sit at $36.90, a dip of over $3, or 5.3%, from the $38.98 trade price reported at end of trade on 7 November. It seems shareholders have reacted accordingly with the results, as the adjusted guidance reflects an average 4.9% drop in 2024 revenue.
2025 fiscal year guidance
Looking into the New Year, DraftKings has set its 2025 fiscal year revenue guidance at $6.2bn – $6.6bn, up 30.6% average from its 2024 guidance, and slightly below the year-on-year growth rate in revenue reported this quarter.
Comments
On the results, DraftKings’ CEO and Co-Founder Jason Robins said: “DraftKings delivered strong performance in the third quarter with the return of NFL and college football. With major sports converging on the calendar, we are well-positioned to build on this momentum as we further enhance our top-ranked sportsbook app with additional live betting features and exciting new NBA markets. Our focus remains on driving sustainable revenue growth and profitability in 2025 and beyond.”
CFO Alan Ellingson added: “We achieved healthy results across our core value drivers in the third quarter with efficient customer acquisition and promotional reinvestment as well as improvement in our structural sportsbook hold percentage. The midpoint of our inaugural fiscal year 2025 revenue guidance equates to 31% year-on-year growth, and we are well-positioned to deliver $900m to $1bn of adjusted EBITDA in 2025.”
Comparison
While primary competitor FanDuel has not released its Q3 results as of writing, looking at competitors Penn Interactive (ESPN Bet), Bally’s North America Interactive and Caesars Digital, DraftKings' increase in revenue but decrease in adjusted EBITDA seems to be in line with industry trends.
Penn Interactive saw its revenue increase 24.6% year-on-year to $244.6m, while its adjusted EBITDAR decreased by over $40m, from -$50.2m to -$90.9m.
Bally’s North America Interactive segment saw revenue up 54.5% year on year to $45.7m. Despite this, adjusted EBITDAR came out at a loss, totalling $11m.
The outlier, then, was Caesars Digital, which not only reported a positive adjusted EBITDA, but an increase in adjusted EBITDA. Revenue was up 40.9%, only just ahead of DraftKings, while adjusted EBITDA reached $52m, up sizably from the $2m adjusted EBITDA reported this time last year.
FanDuel, as part of Flutter Entertainment, will see its results released during the week beginning 11 November.
