Posted on: August 3, 2023, 04:01h.
Last updated on: August 3, 2023, 04:01h.
Shares of DraftKings (NASDAQ: DKNG) surge in after-hours trading session after the online sportsbook operator reports its first profitable quarter as a public company.
The Boston-based company reveals that its second quarter earnings per share were 14 cents, beating the expected loss of 14 cents. DraftKings also reports positive adjusted EBITDA in the June quarter, with revenue increasing by 88% to $875 million, surpassing analysts’ estimates.
DraftKings’ strong performance in the second quarter suggests that it will continue to excel throughout the rest of the year and beyond.
“The positive Adjusted EBITDA that we generated in the second quarter exceeded our guidance, and we are well on our way to achieving positive Adjusted EBITDA again in the fourth quarter of 2023 and for fiscal year 2024 and beyond,” said CEO and co-founder Jason Robins in a statement.
The press release does not provide commentary on the current quarter, which is typically slow for sportsbook operators due to the lack of college or professional football and only Major League Baseball (MLB) being in season.
DraftKings has a positive outlook for 2023
DraftKings raises its annual revenue forecast and anticipates being EBITDA positive in the fourth quarter.
The company increases its 2023 revenue guidance to a range of $3.46 billion to $3.54 billion, indicating a year-over-year growth of 54% to 58%.
For this year, DraftKings expects an EBITDA loss of $190 million to $220 million, which is lower than the previous forecast of a loss of $290 million to $340 million.
“In the fourth quarter of 2023, DraftKings expects to generate $150 million to $175 million of Adjusted EBITDA and nearly $1.2 billion of revenue,” added the gaming company.
The updated financial outlook includes all of the states in which DraftKings is currently live as well as Kentucky and Puerto Rico, which are expected to offer mobile sports betting before the end of 2023.
DraftKings sees an increase in revenue per client
While adding new clients through state launches is beneficial, generating more revenue per bettor is also crucial. DraftKings is succeeding in this area.
“Average revenue per monthly unique player (ARPMUP) was $137 in the second quarter of 2023, representing a 33% increase compared to the same period in 2022,” noted the company. “This increase was primarily due to improvement in the Company’s structural sportsbook hold rate and reduced promotional intensity.”
DraftKings offers mobile sports wagering in 21 states, covering 44% of the US population, and is live with iGaming in five states, representing 11% of the population.