Published on: November 7, 2024, 04:13h.
Last updated on: November 7, 2024, 04:13h.
The house doesn’t always win. DraftKings’ (NASDAQ: DKNG) after-hours decline illustrates this point as shares of the online sportsbook operator dropped following a reduction in its 2024 earnings and revenue guidance, attributing the change to favorable outcomes for clients in the current quarter.
In after-hours trading, DraftKings was down by 5.71% as of this moment after announcing a revised 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $240 million to $280 million and revenue of $4.85 billion to $4.95 billion “due to the impact of customer-friendly sport outcomes early in the fourth quarter.”
These figures fall below the previous EBITDA guidance of $340 million to $420 million and revenue projection of $5.05 billion to $5.25 billion revealed in August. The updated revenue guidance suggests a 32% to 35% year-over-year growth.
Despite a rebound in DraftKings’ stock from the after-hours dip, the lowered 2024 outlook had ripple effects across the sports wagering sector, causing FanDuel parent Flutter Entertainment (NYSE: FLUT) to drop nearly 3%.
DraftKings 2025 Outlook Appears Strong
The adjustment in DraftKings’ 2024 EBITDA and revenue forecasts likely surprised investors given the company’s history of raising guidance with earnings beats. However, it did partially fulfill expectations with its newly released 2025 revenue forecast.
DraftKings has introduced a fiscal year 2025 revenue guidance range of $6.2 billion to $6.6 billion, representing approximately 31% year-over-year growth based on midpoint values between the Company’s updated 2024 revenue guidance and the 2025 revenue outlook,” as stated in a press release.
The company maintains its 2025 EBITDA forecast of $900 million to $1 billion — a guidance it announced in August. This projection does not include potential contributions from Missouri, where online sports betting may launch next year following approval from voters earlier this week.
“DraftKings anticipates the launch of its Sportsbook product in Missouri pending regulatory approvals and other necessary steps,” the company added.
DraftKings Q3 Performance Shows Promise
Boosted by the start of football season in September, DraftKings’ Q3 results were robust with revenue rising 39% to $1.09 billion compared to the same period the previous year. Monthly unique players (MUPs) jumped by 56%.
The $750 million acquisition of online lottery provider Jackpocket earlier this year appears to be paying off, as excluding Jackpocket, DraftKings’ MUP growth was 27%. However, the average revenue per MUP (ARPMUP) dipped by 10% in the September quarter, mainly due to lower ARPMUP from Jackpocket customers compared to existing DraftKings users before the acquisition. This was partially offset by improvements in the company’s Sportsbook hold percentage and promotional reinvestment for Sportsbook and iGaming. Excluding Jackpocket, ARPMUP increased by around 8% from the third quarter of 2023,” DraftKings stated.