DraftKings Posts Record Q1 Revenue and Raises 2023 Guidance

DraftKings Inc. (Nasdaq: DKNG) released its Q1 2023 financial results on May 5, 2023, highlighting a revenue of $770 million. This figure marks an 84% increase compared to the same period in 2022, primarily driven by new customer acquisitions, innovative product offerings, healthy customer retention, and a reduced promotional intensity in more established states.

The Q1 financial results also revealed that Monthly Unique Payers (“MUPs”) increased to 2.8 million average monthly unique paying customers, reflecting a 39% YoY growth. The increase reflects the successful unique payer retention and acquisition across DraftKings’ Sportsbook and iGaming products, as well as the expansion of the company’s Sportsbook and iGaming products into new markets.

DraftKings’ Average Revenue per MUP (“ARPMUP”) was $92, representing a 35% YoY increase. The increase was due to the Company’s improved structural sportsbook hold rate and reduced promotional intensity.

DraftKings is raising its fiscal year 2023 revenue guidance to a range of $3.135 billion to $3.235 billion, a YoY growth of 40% to 44%. This is up from the previous revenue guidance range of $2.85 billion to $3.05 billion, which the Company had previously announced on February 16, 2023.

DraftKings is also improving its fiscal year 2023 Adjusted EBITDA guidance, expecting fiscal year 2023 Adjusted EBITDA of between ($290) million and ($340) million. This figure is an improvement from the previously announced guidance of between ($350) million and ($450) million, which the Company had also announced on February 16, 2023.

DraftKings is now live with mobile sports betting in 21 states, representing approximately 44% of the U.S. population. The Company recently launched its online Sportsbook product in Massachusetts on March 10, 2023.

DraftKings is also live with iGaming in 5 states, representing approximately 11% of the U.S. population.

DraftKings’ Sportsbook and iGaming products are now live in Ontario, Canada, which represents approximately 40% of Canada’s population.

Kentucky and Puerto Rico have authorized mobile sports betting and collectively represent approximately 2% of the U.S. population. DraftKings expects to launch its Sportsbook product in these jurisdictions following licensure and regulatory approvals.

Looking ahead, 12 states that represent approximately 24% of the U.S. population have introduced legislation to legalize mobile sports betting or introduced bills that may result in sports wagering referendums during an upcoming election. Additionally, 5 states that represent approximately 14% of the U.S. population have introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.

With the record-breaking Q1 results, DraftKings has proven its ability to grow its customer base, innovate its product offerings, and expand into new markets. The improved 2023 guidance indicates the Company’s optimism for future growth in the sports betting and iGaming industries.

“DraftKings’ first quarter performance – 84% year-over-year revenue growth and share gains underpinned by a relentless focus on operational efficiency – demonstrates that this is a company positioned for sustained success,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “We delivered highly successful online sportsbook launches in Ohio and our home state of Massachusetts and continued to create meaningful product differentiation driven by in-house innovations. We acquired customers faster and more efficiently and, importantly, saw healthy retention across cohorts. Looking at the remainder of 2023, I am confident DraftKings is well-positioned to achieve profitability on an Adjusted EBITDA basis in the near-term and deliver long-term value for our shareholders.”

“Strong execution across the organization is showing up in our results,” added Jason Park, DraftKings’ Chief Financial Officer. “Revenue grew at a healthy rate due to core drivers around customer acquisition, retention and monetization, including decreased promotional intensity and higher structural hold. In addition, our efficiency efforts produced clear results as demonstrated by significant year-over-year increases in gross margin and Adjusted EBITDA. Therefore, we are increasing the midpoint of our fiscal year 2023 revenue guidance to $3.185 billion from $2.95 billion and improving the midpoint of our fiscal year 2023 Adjusted EBITDA guidance to ($315) million from ($400) million.”

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