DraftKings anticipates heralding its inaugural year of positive adjusted EBITDA in 2024, projecting earnings to soar as high as $510 million, a notable increase from previous estimates of $450 million. With their sights set on a watershed fiscal year, DraftKings envisions revenues to inject between $4.65 billion and $4.9 billion into their financial streams, marking an upshift from the previous projection range of $4.50 billion to $4.80 billion. These elevated forecasts were disclosed within the company’s preliminary summaries for the year 2023 and the fiscal outcomes for the fourth quarter.
As 2023 drew to a close, DraftKings observed a dramatic 63% surge in revenue, climbing to $3.7 billion. This advancement was welcomed alongside a lessened operational loss of $789.2 million, especially when contrasted with the $1.5 billion dent recorded in 2022. The company’s adjusted EBITDA also shifted terrain, minimizing the deficit to $151 million, which was remarkably lower than the preceding year’s shortfall of $721.8 million.
In a detailed annual snapshot, the costs tied to revenue blossomed by 57%, reaching $2.3 billion. However, not all expenses grew; sales and marketing expenditures remained consistent, while general and administrative costs experienced a 20% retreat.
Jason Park, the Chief Financial Officer at DraftKings, commented with pride on the company’s 2023 trajectory, highlighting their commitment to generating dynamic revenue growth and implementing operational efficiencies with gusto. Park disclosed that, buoyed by robust foundational performances in the initial phase of 2024 and robust customer acquisitions in the prior quarter, DraftKings is edging up its 2024 revenue guidance to a median of $4.775 billion and its adjusted EBITDA forecast to $460 million. The outlook for 2024 is particularly optimistic, earmarked to be the milestone year of positive adjusted EBITDA, epitomizing strides towards goals pronounced during the Investor Day hosted in November of 2023.
The final quarter of 2023 was promising for DraftKings as they reported revenues of $1.2 billion, a 44% increment from the same period in the preceding year. Operational losses were contracted to $43.8 million from a hefty $232.2 million in the final quarter of the previous year, while adjusted EBITDA rose from a deficit of $49.9 million to a gain of $151 million. These remarkable year-end figures were achieved in spite of less-than-ideal outcomes from sporting events.
DraftKings’ impetus in Q4 emanated from unwavering customer engagement and a strategic approach towards new customer acquisitions. Additional growth drivers included the extension of sportsbook offerings into fresh jurisdictions and a dedication to product innovation. The fourth quarter heralded an average monthly unique payer count of 3.5 million, marking an uptick of 37% when juxtaposed with the same period the year before.
Yet, it wasn’t all smooth sailing; the company highlighted that congenial sporting results for customers unfavorably impacted DraftKings’ revenues and adjusted EBITDA by roughly $175 million and $126 million, respectively.
The Q4 financial canvas showed that the cost of revenue climbed by 47%, totaling $716.7 million, while sales and marketing expenses were trimmed by 16%, landing at $290.8 million.
Forging ahead, Jason Robins, DraftKings’ CEO and co-founder, accentuated the company’s outstanding customer acquisition, retention, and engagement numbers, as well as a robust sportsbook hold percentage, despite facing the harshest sequence of sporting outcomes since their emergence as a publicly-traded entity. His forward-looking statement sets a tone of disciplined execution, customer focus, and a pledge to perpetuate their competitive differentiation via their product roadmap.
Simultaneous to its Q4 revelations, DraftKings broadcasted its acquisition plans for the lottery app Jackpocket. This $750 million deal is anticipated to funnel an additional $340 million in annual revenue, marking yet another strategic play by DraftKings to not only enhance their portfolio but also to solidify their fiscal ambitions for the coming year.
