DraftKings Beats Expectations for Sports Betting Revenue in 2024 Q1 Earnings

DraftKings has released its first quarter earnings report, which brings mostly positive news for one of the top sports betting sites in the U.S. market. The report covers a three-month period that included major events like the Super Bowl and March Madness.

Despite facing tough competition from other top sports betting apps, the Boston-based provider continued to thrive during the two major American sporting events. DraftKings reported high revenues in its Q1 earnings released on Thursday.

The company highlighted its successful customer engagement, effective acquisition of new customers, expansion of the Underscoreg product offering into new markets, increased sportsbook hold percentage, and enhanced promotional reinvestment for Underscoreg and iGaming as contributing factors to the positive financial results in the Q1 report.

In March, the introduction of North Carolina sports betting brought DraftKings’ sports betting platform to 25 states, reaching almost half of the U.S. population. It comes as no shock that this market leader has quickly become one of the top-performing sports betting apps in North Carolina within its first month of launch.

The iGaming product is accessible in five states, with DraftKings’ sportsbook and online casino also being available in Ontario, which comprises approximately 40% of Canada’s population.

Takeaways from DraftKings Q1 report

DraftKings is projected to be profitable this year, marking the first time since its inception that the company will achieve profitability, according to the Quarter 1 report.

DraftKings reported a revenue of $1.18 billion in the first quarter of 2024, showing a 53% year-over-year improvement from the same period in 2023, which was an increase of $405 million.

The company’s adjusted EBITDA, widely regarded as a more accurate indicator of overall performance, improved significantly from a year-over-year quarterly loss of $220 million to a $22 million profit in the first quarter.

DraftKings CEO Jason Robins praised the company’s strong performance in the first quarter of 2024, citing impressive revenue growth and a streamlined fixed cost structure that will help drive improved Adjusted EBITDA. Moving forward, DraftKings is focused on maximizing shareholder value through ongoing innovation, operational efficiency, and careful capital allocation.

DraftKings’ shares have exceeded the gaming sector by around 22% in performance this year, as stated by Jordan Bende, an analyst at JMP Securities.

More numbers from Q1 report

During the first quarter of 2024, DraftKings experienced a noticeable increase in Monthly Unique Players (MUP) compared to the previous year. The company registered an average of 3.4 million unique paying customers per month from January to March, representing a 23% growth compared to the same period in 2023.

During that time frame, the average revenue generated by its players increased to $114, representing a 25% rise compared to the previous year. The higher overall hold rate and the expansion of the parlay industry, known for boosting win rates at our top sportsbooks, also played a significant role in DraftKings’ successful three-month period.

DraftKings increased its full year guidance to a range of $4.8 billion to $5 billion, up from the previous range of $4.65 billion to $4.90 billion, due to improved profits, reduced promotional spend, higher hold rate, and growth in the parlay market. This represents a yearly growth rate of 31% to 36%, according to the report.

DraftKings increased its Fiscal Year 2024 Adjusted EBITDA guidance in the first quarter earnings release, raising the range from $410 million to $510 million to $460 million to $540 million following the positive report.

The DraftKings Q1 report showed a loss of $110 million in cash, the only negative number in an otherwise positive quarter where the company generated over $1.1 billion in total revenue.