DraftKings has lifted its forecast for 2024 after posting positive earnings as well as soaring revenue in the final quarter of 2023.
DraftKings expects to post its first full year of positive adjusted EBITDA in 2024, with earnings of up to $510m (£405.2m/€473.7m), compared to the previously stated $450m. Revenue for 2024 is now expected to be between $4.65bn and $4.90bn from the range of $4.50bn-$4.80bn. The forecast was published in its preliminary results for 2023 and Q4 results.
Significant operating efficiencies
In the year to 31 December 2023, DraftKings saw revenue rise 63% to $3.7bn. Loss from operations was $789.2m, compared to $1.5bn in 2022, while negative adjusted EBITDA was $151.0m. This was significantly less than last year’s $721.8m.
During the year, DraftKings saw cost of revenue grow by 57% to $2.3bn. However, sales and marketing was flat and general and administrative expenditure decreased by 20%.
“In 2023 we delivered on our commitments to generate outstanding revenue growth and drive significant operating efficiencies,” said Jason Park, DraftKings’ chief financial officer.
“Based on continued strong underlying fundamentals through the first six weeks of 2024 on top of excellent customer acquisition in the fourth quarter, we are raising the midpoint of our fiscal year 2024 revenue guidance range to $4.775 billion from $4.65 billion and the midpoint of our fiscal year 2024 adjusted EBITDA guidance range to $460 million from $400 million. We expect 2024 to mark our first full year of positive adjusted EBITDA, demonstrating clear progress toward the goals we presented at our November 2023 investor day.”
DraftKings finishes 2023 in the black
For the three months to 31 December 2023, DraftKings reported revenue of $1.2bn. This was up 44% compared to Q4 2022.
Loss from operations was $43.8m compared to $232.2m in Q4 2022. Adjusted EBITDA increased from a negative $49.9m to positive $151.0m. This encouraging end to the year came despite unfavourable sporting results.
The group said the lift in Q4 was driven by continued healthy customer engagement and efficient acquisition of new customers. Other factors included the expansion of the group’s sportsbook product offering into new jurisdictions and product innovation.
There was an increase to 3.5 million average monthly unique paying customers in the fourth quarter of 2023. This represented an rise of 37% compared to the fourth quarter of 2022.
DraftKings added that customer-friendly sport outcomes negatively impacted DraftKings’ revenue and adjusted EBITDA by approximately $175m and approximately $126m, respectively.
Q4 cost of revenue grew by 47% to $716.7m, however expenditure on sales and marketing fell by 16% to $290.8m.
Jason Robins, DraftKings’ chief executive and co-founder, said: “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.
“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.”
As it published its Q4 results, DraftKings announced it is to acquire lottery app Jackpocket for $750m (€696.7m/£596.0m) in a deal expected to generate up to $340m in additional revenue annually.
