Expects to Generate $150 Million to $175 Million of Adjusted EBITDA in the Fourth Quarter of 2023
BOSTON, Aug. 03, 2023 (GLOBE NEWSWIRE) -- DraftKings Inc. ( DKNG) (“DraftKings” or the “Company”) today announced its second quarter 2023 financial results. The Company also posted a second quarter 2023 business update and an earnings presentation on the Investor Relations section of its website at investors.draftkings.com.
Second Quarter 2023 Highlights
For the three months ended June 30, 2023, DraftKings reported revenue of $875 million, an increase of 88% compared to $466 million during the same period in 2022 driven primarily by continued healthy customer retention and engagement, efficient acquisition of new customers, product innovation leading to increased parlay mix and thus higher hold percentage, and improved promotional intensity.
“DraftKings produced outstanding results for the second quarter of 2023. We grew revenue at an impressive year-over-year rate, captured additional GGR share in a cost-effective manner, and maintained our focus on operational efficiency,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder. “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. We are excited by the additional product features and functionality that we are introducing leading into football season and also look forward to another successful online sportsbook launch in Kentucky this fall pending licensure and regulatory approvals.”
“We are acquiring new customers efficiently while simultaneously retaining and monetizing our existing players through rapid product innovation, less promotions, and higher hold from better bet mix,” said Jason Park, DraftKings’ Chief Financial Officer. “Our unit economics are outstanding with older states generating more than enough cash to fund investment in new states. This performance, combined with fixed costs that grew at only a mid-single digit year-over-year percentage rate in the second quarter, resulted in an inflection to positive Adjusted EBITDA that we expect will occur again in the fourth quarter and for full year 2024. As a result, we are increasing the midpoint of our fiscal year 2023 revenue guidance to $3.5 billion from $3.185 billion and improving the midpoint of our fiscal year 2023 Adjusted EBITDA guidance to ($205) million from ($315) million.”
Continued Healthy Growth in Customer Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”) increased to 2.1 million average monthly unique paying customers in the second quarter of 2023, representing an increase of 44% compared to the second quarter of 2022. 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 $137 in the second quarter of 2023, representing a 33% increase compared to the same period in 2022. This increase was primarily due to improvement in the Company’s structural sportsbook hold rate and reduced promotional intensity.
- Detailed financial data and other information for the second quarter of 2023 is available in the financial statements set forth below under the caption “Financial Results.”
Raising 2023 Revenue Guidance and Improving 2023 Adjusted EBITDA Guidance
- DraftKings is raising its fiscal year 2023 revenue guidance to a range of $3.46 billion to $3.54 billion from the range of $3.135 billion to $3.235 billion, which the Company previously announced on May 4, 2023. The Company’s updated 2023 revenue guidance range equates to year-over-year growth of 54% to 58%.
- DraftKings is also improving its fiscal year 2023 Adjusted EBITDA guidance. The Company now expects fiscal year 2023 Adjusted EBITDA of between ($190) million and ($220) million compared to its prior fiscal year 2023 Adjusted EBITDA guidance of between ($290) million and ($340) million, which the Company previously announced on May 4, 2023.
- 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.
- The Company’s revenue and Adjusted EBITDA guidance for fiscal year 2023 includes all the existing jurisdictions in which it is live plus Kentucky and Puerto Rico, in which it expects to launch during the guided period.
Mobile Sports Betting and iGaming Footprint
- DraftKings is live with mobile sports betting in 21 states that collectively represent approximately 44% of the U.S. population.
- DraftKings is also live with iGaming in 5 states, representing approximately 11% of the U.S. population.
- DraftKings is live with its Sportsbook and iGaming products in Ontario, Canada, which represents approximately 40% of Canada’s population.
- Kentucky, North Carolina, Vermont, and Puerto Rico have authorized mobile sports betting and collectively represent approximately 6% of the U.S. population. DraftKings expects to launch its Sportsbook product in Kentucky on September 28, 2023, as well as in North Carolina, Vermont, and Puerto Rico, in each case pending licensure and regulatory approvals as well as securing market access in North Carolina and Vermont.
- In 2023, 12 states that collectively represent approximately 24% 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.
Webcast and Conference Call Details
As previously announced, DraftKings will host a conference call and audio webcast tomorrow, Friday, August 4, 2023, at 8:30 a.m. ET, during which management will discuss the Company’s results for the quarter and provide commentary on business performance. A question and answer session will follow the prepared remarks.
To listen to the audio webcast and live question and answer session, please visit DraftKings’ investor relations website at investors.draftkings.com. A live audio webcast of the earnings conference call will be available on the Company’s website at investors.draftkings.com, along with a copy of this press release, the Company’s Quarterly Report on Form 10-Q, a slide presentation and a second quarter 2023 business update. The audio webcast will be available on the Company’s investor relations website until 11:59 p.m. ET on September 30, 2023.
Financial Results
DraftKings’ second quarter 2023 financial results, as well as the financial results for the respective comparative period, are presented below:
| DRAFTKINGS INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (Amounts in thousands, except par value) | |||||||
| ​ | June 30, 2023 | ​ | |||||
| ​ | (Unaudited) | December 31, 2022 | |||||
| Assets | ​ | ||||||
| Current assets: | ​ | ||||||
| Cash and cash equivalents | $ | 1,113,715 | $ | 1,309,172 | |||
| Cash reserved for users | 381,097 | 469,653 | |||||
| Receivables reserved for users | 109,153 | 160,083 | |||||
| Accounts receivable | 32,401 | 51,097 | |||||
| Prepaid expenses and other current assets | 82,655 | 94,836 | |||||
| Total current assets | 1,719,021 | 2,084,841 | |||||
| Property and equipment, net | 59,934 | 60,102 | |||||
| Intangible assets, net | 734,633 | 776,934 | |||||
| Goodwill | 886,373 | 886,373 | |||||
| Operating lease right-of-use assets | 58,349 | 65,957 | |||||
| Equity method investment | 9,638 | 10,080 | |||||
| Deposits and other non-current assets | 138,316 | 155,865 | |||||
| Total assets | $ | 3,606,264 | $ | 4,040,152 | |||
| ​ | ​ | ​ | |||||
| Liabilities and Stockholders’ equity | ​ | ​ | |||||
| Current liabilities: | ​ | ​ | |||||
| Accounts payable and accrued expenses | $ | 436,265 | $ | 517,587 | |||
| Liabilities to users | 600,146 | 686,173 | |||||
| Operating lease liabilities, current portion | 3,305 | 4,253 | |||||
| Other current liabilities | 37,520 | 38,444 | |||||
| Total current liabilities | 1,077,236 | 1,246,457 | |||||
| Convertible notes, net of issuance costs | 1,252,420 | 1,251,103 | |||||
| Non-current operating lease liabilities | 64,418 | 69,332 | |||||
| Warrant liabilities | 46,286 | 10,680 | |||||
| Long-term income tax liability | 69,283 | 69,858 | |||||
| Other long-term liabilities | 78,130 | 70,029 | |||||
| Total liabilities | $ | 2,587,773 | $ | 2,717,459 | |||
| Commitments and contingent liabilities | |||||||
| ​ | ​ | ​ | |||||
| Stockholders' equity: | ​ | ​ | |||||
| Class A common stock, $0.0001 par value; 900,000 shares authorized as of June 30, 2023 and December 31, 2022; 473,933 and 459,265 shares issued and 463,257 and 450,575 outstanding as of June 30, 2023 and December 31, 2022, respectively | $ | 46 | $ | 45 | |||
| Class B common stock, $0.0001 par value; 900,000 shares authorized as of June 30, 2023 and December 31, 2022; 393,014 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 39 | 39 | |||||
| Treasury stock, at cost; 10,676 and 8,690 shares as of June 30, 2023 and December 31, 2022, respectively | (373,317 | ) | (332,133 | ) | |||
| Additional paid-in capital | 6,961,454 | 6,750,055 | |||||
| Accumulated deficit | (5,606,219 | ) | (5,131,801 | ) | |||
| Accumulated other comprehensive income | 36,488 | 36,488 | |||||
| Total stockholders’ equity | $ | 1,018,491 | $ | 1,322,693 | |||
| Total liabilities and stockholders’ equity | $ | 3,606,264 | $ | 4,040,152 | |||
​
| DRAFTKINGS INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (Amounts in thousands, except loss per share data) | |||||||||||||||
| ​ | Three months ended June 30, | Six months ended June 30, | |||||||||||||
| ​ | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Revenue | $ | 874,927 | $ | 466,185 | $ | 1,644,579 | $ | 883,390 | |||||||
| Cost of revenue | 510,323 | 312,767 | 1,032,063 | 626,146 | |||||||||||
| Sales and marketing | 207,487 | 197,529 | 596,620 | 518,981 | |||||||||||
| Product and technology | 89,906 | 77,202 | 177,994 | 158,554 | |||||||||||
| General and administrative | 136,256 | 187,609 | 296,732 | 404,215 | |||||||||||
| Loss from operations | (69,045 | ) | (308,922 | ) | (458,830 | ) | (824,506 | ) | |||||||
| Other income (expense): | ​ | ||||||||||||||
| Interest income | 13,411 | 2,590 | 25,206 | 3,391 | |||||||||||
| Interest expense | (666 | ) | (661 | ) | (1,321 | ) | (1,314 | ) | |||||||
| (Loss) gain on remeasurement of warrant liabilities | (20,041 | ) | 14,315 | (37,076 | ) | 26,996 | |||||||||
| Other income (expense), net | 45 | (5,573 | ) | 64 | 32,309 | ||||||||||
| Loss before income tax provision and loss from equity method investment | (76,296 | ) | (298,251 | ) | (471,957 | ) | (763,124 | ) | |||||||
| Income tax provision (benefit) | 651 | (81,226 | ) | 2,019 | (80,757 | ) | |||||||||
| Loss from equity method investment | 323 | 78 | 442 | 2,429 | |||||||||||
| Net loss attributable to common stockholders | $ | (77,270 | ) | $ | (217,103 | ) | $ | (474,418 | ) | $ | (684,796 | ) | |||
| ​ | ​ | ​ | |||||||||||||
| Loss per share attributable to common stockholders: | ​ | ||||||||||||||
| Basic and diluted | $ | (0.17 | ) | $ | (0.50 | ) | $ | (1.03 | ) | $ | (1.61 | ) | |||
| DRAFTKINGS INC. | ||||||||||||||
| NON-GAAP FINANCIAL MEASURES | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Amounts in thousands, except loss per share data) | ||||||||||||||
| ​ | Three months ended June 30, | Six months ended June 30, | ||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||
| Adjusted EBITDA | $ | 72,972 | $ | (118,134 | ) | $ | (148,639 | ) | $ | (407,643 | ) | |||
| Adju | ||||||||||||||
