DraftKings Inc achieved favourable adjusted EBITDA results for the second quarter disclosing a revenue of US $875 million. The forecast for adjusted EBITDA for Q4 this year is expected to fall in the range of US $150 million to US 175 million.

Revenue stood at $875 million

To summarise the key points for Q2:

• EBITDA profitability recorded following the lead of other US operators.
• Revenue stood at $875 million, marking an 87.8 percent increase from US $466 million in the previous year.
• Growth was attributed to factors such as customer retention, efficient customer acquisition, product innovation and a revised strategty for promotional efforts.
• A reduced loss from operations at US $69 million, down from US $308.9 million and a net loss of US $77.3 million compared to US $217.1 million in the previous year.
• Significant improvement from the adjusted EBITDA loss of $118.1 million in Q2 2022.
• Monthly unique players increased by 44 percent to 2.1 million on average, contributing to the positive results.
• Average revenue per month from unique players grew by 33 percent to US $137.
• Following these positive results, DraftKings adjusted its 2023 revenue guidance.

CEO and co-founder Jason Robins (pictured above) expressed satisfaction with the company’s performance highlighting revenue growth and operational efficiency.”We want to thank you for your continued support of DraftKings.We will continue to focus on driving attractive financial results and look forward to providing our next update when we release our third quarter results and during our 2023 Investor Day on 14 November,” he said. Furthermore, CFO Jason Park highlighted strong cost control, predicting continued positive adjusted EBITDA in Q4 2023 and beyond, as well as funding for expansion into new states.

Highlights of second quarter

For the second quarter ending 30 June 2023, DraftKings reported revenues of an impressive $875 million, which is an increase of 88 percent in contrast to US $466 million reported in the same quarter year-on-year. This remarkable upswing is attributed primarily to sustained customer retention and engagement strategies, proficient new customer acquisition techniques, focussed product innovation and promotional efficacy.

Commenting on the company’s achievements, DraftKings’ CEO and Co-Founder Jason Robins, said that the second quarter witnessed remarkable performance by the company. He added “Our revenue growth, showcasing a commendable year-on-year esclation, enabled us to capture additional GGR (Gross Gaming Revenue) share in a resourceful manner while upholding operational efficiency.” He explained that the company’s achievement of a positive Adjusted EBITDA during this quarter surpassed the company’s projections, solidifying the company’s trajectory towards achieving positive Adjusted EBITDA once again in the fourth quarter of 2023. Robins asserted “We’re enthusiastic about the novel product attributes and enhanced functionalities introduced in anticipation of the forthcoming football season. Moreover, our upcoming online sportsbook launch in Kentucky, contingent upon regulatory approvals, holds promise for yet another triumphant venture”.

Launch of sportsbook in Kentucky

CFO Jason Parkn spoke about the company’s strategic approach.”Our strategic equilibrium in acquiring new customers while concurrently optimizing the retention and monetization of our existing player base. This underscores our effective product innovation, judicious promotions and improved bet mix.” The exceptional performance, Park said, coupled with fixed costs that recorded a modest mid-single-digit year-on-year growth in the second quarter, precipitated a pivotal transition to positive Adjusted EBITDA. “We anticipate this trend to recur in the fourth quarter and prevail throughout the entirety of 2024.” As a result of this positive trajectory, DraftKings has revised its fiscal year 2023 revenue guidance midpoint, elevating it to US $3.5 billion from the initial estimate of US $3.185 billion.

Sustained Momentum in Customer Growth

Expansion in customer retention, acquisition and engagement was strong in the second quarter. There was a rise in the number of Monthly Unique Payers reaching an average of 2.1 million unique sportsbook and iGaming paying customers per month during this period. This is an impressive 44 percent surge in comparison to the second quarter of 2022. The increase is derived from unique payers from sportsbook and iGaming offerings, along with a strategic expansion of these products into new legal jurisdictions. The average revenue per Monthy Unique Payer reached US $137 in the second quarter of 2023. This figure represents an increase of 33 percent when compared YoY. This increase is primarily attributed to enhancements in the sportsbook hold rate which optimised the company’s betting products. There was a reduction in expenditure on promotions.

Projections are impressive

DraftKings’ forward-looking stance remains optimistic. Although initial projections indicated revenue of US $3.15 billion to US $3.235 billion, a growth of approximately 54 percent to 58 percent is anticipated with an escalated forecast that signify revenues of US $3.135 billion to US $3.235 billion.

The surge in projections also reports the company’s fiscal year 2023 Adjusted EBITDA guidance, an indicator of operational profitability which ranges from US $190 million to US $220 million. In contrast to the prior projection which spanned from US activity was US $290 million to US $340 million, declared by the company in May this year.

The company anticipates a robust figures of US $150 million to US $175 million in terms of Adjusted EBITDA during thre fourth quarter 2023, coupled with an impressive estimated revenue of US $1.2 billion.

Revenue and Adjusted EBITDA projections for the fiscal year 2023 encapsulate the entirety of the company’s operational jurisdictions, including those currently live, as well as pending launches in Kentucky and Puerto Rico, both scheduled within the guided timeframe. This rollout in the new jurisdictions underscores DraftKings’ concerted efforts to widen its reach and consolidate its presence in the evolving landscape of the US gaming industry.

Expansive reach of Sports Betting and iGaming products

Sports betting and iGaming have continued to evolve, firmly positioning the company in these significant verticals. Sports betting operations have been established in at least 21 states in the US which reflects 44 percent of the US population. The company’s iGaming vertical is live in five states. This covers 11 percent of the total US population and affirms the company’s dominance in the market.

DraftKings has also extended its offerings to Ontario in Canada, where both its Sportsbook and iGaming have been rolled out to a receptive audience of around 40 percent of the adult population.

Looking ahead, DraftKings is poised to extend its reach even further to jurisdictions such as Kentucky, North Carolina, Vermont, and Puerto Rico where the green light for mobile sports betting operations has been given. This market collectively constitutes an additional 6 percent of the U.S. population. The company’s sports book launch for Kentucky set for the end of September this year alongside North Carolina, Vermont and Puerto Rico pending the award of a licence will solidify the company’s dominance in the market.

The company’s iGaming expansion is well positioned in regulated US markets. As of this year an impressive total of 12 states, collectively accounting for 24 percent of the US adult population, have regulated mobile sports betting. In addition five states representing 14 percent of the US adult population have introduced iGaming legislation.

Way forward – innovation and US expansion

Once again DraftKings Inc.emerges as a dynamic digital sports entertainment and gaming powerhouse, with offerings encompassing daily fantasy, regulated gaming and digital media. Founded in 2012 by Jason Robins, Matt Kalish, and Paul Liberman, the Boston-based company stands alone as a US-based integrated sports betting operator.

The company’s flagship is DraftKings Sportsbook and it presently operates mobile and/or retail sports betting platforms across 23 states, in addition to Ontario, Canada. The financial results demonstrate DraftKings multi-faceted approach.

DraftKings’ is also the official betting partner of a number of premium sports leagues that include NFL, NHL, PGA TOUR, UFC and NASCAR, while also holding the distinction of being an official sports betting partner of the NBA and a recognized gaming operator of MLB.

The DraftKings Marketplace launched in 2021 caters to a broad audience and presents curated NFT releases facilitating secondary-market transactions. The company’s influence does not stop at gaming. DraftKings also owns and operates the Vegas Sports Information Network (VSiN), a versatile broadcast and content venture.

DraftKings Inc. (DKNG) is trading at $31.71 (+0.25 percent).