DraftKings reports fourth quarter revenue of $855 million

DraftKings today announced its fourth quarter and fiscal year 2022 financial results. The Company also posted a letter to shareholders and an earnings presentation on the Investor Relations section of its website at investors.draftkings.com.

Fourth Quarter 2022 Highlights

For the three months ended December 31, 2022, DraftKings reported revenue of $855 million, an increase of 81% compared to $473 million during the same period in 2021 driven primarily by continued customer retention and monetization in existing states, the successful launches of its Sportsbook and iGaming products in additional jurisdictions, and structural sportsbook hold improvement.

Revenue and Adjusted EBITDA for the three months ended December 31, 2022 both outperformed the commentary previously provided by DraftKings on November 4, 2022.

“I am very pleased with how we concluded 2022, with continued top-line growth and strong focus on expense management,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.

“In the fourth quarter, we grew revenue by 81% versus last year and delivered positive Adjusted EBITDA in October and for the quarter when adjusting for our launch costs in Maryland and Ohio. Moving into 2023, we will continue to drive revenue growth and focus on expense management to accelerate our Adjusted EBITDA growth. We have already taken several actions that resulted in an increase to our revenue guidance and significant improvement in our Adjusted EBITDA guidance.”

“We executed very well in the fourth quarter and drove better than expected sportsbook hold due primarily to our investments in product innovation,” added Jason Park, DraftKings’ Chief Financial Officer. “We are also seeing strong customer retention and improved monetization as promotional intensity declines in our more mature states.

We are increasing the midpoint of our fiscal year 2023 revenue guidance to $2.95 billion from $2.9 billion and improving the midpoint of our fiscal year 2023 Adjusted EBITDA guidance from ($525) million to ($400) million. Our fiscal year 2023 Adjusted EBITDA guidance reflects a meaningful slowdown in the growth rate of our fixed costs as we continue to capture efficiency opportunities and optimize our organizational productivity.”

Continued Healthy Growth in Player Retention, Acquisition, and Engagement

Monthly Unique Payers (“MUPs”) increased to 2.6 million average monthly unique paying customers in the fourth quarter of 2022, representing an increase of 31% compared to the fourth quarter of 2021. This increase reflects strong unique payer retention and acquisition across DraftKings’ Sportsbook and iGaming products as well as the expansion of its Sportsbook and iGaming products into new jurisdictions.

Average Revenue per MUP (“ARPMUP”) was $109 in the fourth quarter of 2022, representing a 42% increase compared to the same period in 2021. This increase was primarily due to improvement in the Company’s structural sportsbook hold rate and a continued mix shift into DraftKings’ Sportsbook and iGaming products.

Detailed financial data and other information is available in the financial statements set forth below under the caption “Financial Results.”

Raising 2023 Revenue Guidance and Significantly Improving 2023 Adjusted EBITDA Guidance

DraftKings is raising its fiscal year 2023 revenue guidance to a range of $2.85 billion to $3.05 billion from the range of $2.8 billion to $3.0 billion, which was previously announced on November 4, 2022. The Company’s updated 2023 revenue guidance range equates to year-over-year growth of 27% to 36%.

DraftKings is also significantly improving its fiscal year 2023 Adjusted EBITDA guidance. The Company now expects fiscal year 2023 Adjusted EBITDA of between ($350) million and ($450) million compared to its prior fiscal year 2023 Adjusted EBITDA guidance of between ($475) million and ($575) million, which was previously announced on November 4, 2022.

The Company’s revenue and Adjusted EBITDA guidance for fiscal year 2023 includes all the existing jurisdictions in which it is live plus jurisdictions in which it expects to launch during the guided period, including Massachusetts and Puerto Rico.
DraftKings is live with mobile sports betting in 20 states that collectively represent approximately 42% of the U.S. population following the launch of its online Sportsbook product in Maryland on November 23, 2022 and in Ohio on January 1, 2023.

DraftKings is also live with iGaming in 5 states, representing approximately 11% of the U.S. population.

Expanded Mobile Sports Betting Footprint

DraftKings is live with its Sportsbook and iGaming products in Ontario, Canada, which launched on May 18, 2022. Ontario represents approximately 40% of Canada’s population.

Massachusetts and Puerto Rico have authorized mobile sports betting and collectively represent approximately 3% of the U.S. population. DraftKings expects to launch its Sportsbook product in these jurisdictions pending licensure and regulatory approvals. Notably, DraftKings was selected for a mobile sports wagering license and found preliminarily suitable in Massachusetts.

In 2023, 10 states that collectively represent approximately 19% of the U.S. population have either introduced legislation to legalize mobile sports betting or introduced bills that may result in sports wagering referendums during an upcoming election. In addition, 5 states that collectively represent approximately 14% of the U.S. population have either introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.