DraftKings Posts Q3 2024 Reports, Revenues Up Substantially, But Still No Profits

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The reports are in for 2023, and leading U.S. online gambling operator DraftKings has yet to make a yearly profit. Or indeed, a quarterly one.

The Massachusetts-based operator made a $43 million loss in Q4 2023. That is compared to a $232 million loss in Q4 2022.

There was some speculation that Q4 2023 may have been the company’s first profitable quarter. But that will now have to wait until 2024.

It did make money based on Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) at $151 million in the green, which is the first time it has done so. That’s compared to a $49.9 million EBITDA loss in Q4 2022.

So, things remain on an upward swing – just not quite enough for overall profitability in a quarter yet.

The news comes in a week where SEC filings revealed DraftKings executives, including CEO Jason Robins, have sold more than $100 million in stock since December 2023.

DraftKings’ stock fell some 3% on Thursday, February 15, on the announcement of its earning report.

Details of the Report

Overall, DraftKings reported solid revenue growth across the last quarter of 2023. However, it narrowly missed revenue targets set by investors and financial analysts.

Revenues rose 43.9% to $1.23 billion, which was 0.7% off of the $1.24 billion average of Wall Street expectations.

For the full year of 2023, revenues were up a cool 63% year-on-year to $3.7 billion. It did make a significant loss of $789 million for the year, but that is compared to an even bigger $1.5 billion operating loss in 2022.

The 2023 revenue rise was driven by an increased DraftKings customer base of some 3.5 million average monthly players. That included customers from several new state launches, including its home state of Massachusetts, as well as sports betting in Kentucky, Ohio, Vermont, and Maine.

Overall, it had 37% more customers than in Q4 2022.

However, this increased customer base came with more promo bets and more chances for bettors to squeeze its sportsbook operations.

Over the year, heavily backed underdog wins cost the operator. The Las Vegas Golden Knights’ upset Stanley Cup victory in the NHL and the Denver Nuggets run to the NBA Championship title were two standouts.

In total, DraftKings said unfavorable sports betting results accounted for a $175 million loss on the balance sheet throughout the year.

“In 2023, we delivered on our commitments to generate outstanding revenue growth and drive significant operating efficiencies,” said Jason Park, DraftKings’ chief financial officer.

2024 Goals

The operator also upped its financial expectations for 2024, including projected EBITDA of $400 million to $460 million at the end of the year.

“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,” Park said.

That path to profitability for DraftKings will include a scaling down of marketing operations nationally, and entry into more new markets. Marketing expenditure fell by 16% in Q4 to $290 million.

In March, it will launch for North Carolina sports betting when that market opens, and it recently announced its move into the U.S. lottery space with a $750 million acquisition of market-leading lottery courier service Jackpocket.

It also just spent an undeclared sum on a marketing partnership with Massachusetts-born media company Barstool Sports, which is reportedly upwards of $10 million a year.

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