DraftKings, a leading sportsbook platform, has released its financial results for the first quarter of 2024, showcasing remarkable growth and strategic initiatives.
Financial Performance:
DraftKings witnessed a substantial increase in revenue, reaching $1.18 billion, marking a 53% year-on-year growth. Despite this significant revenue surge, the operating loss decreased substantially, from $389.8 million in the previous year to $138.8 million in Q1 2024. Notably, adjusted EBITDA turned positive at $22.4 million, showcasing a trend of improvement compared to previous quarters.
Expenditure Breakdown:
Cost of revenue rose by 36.1%, amounting to $710.1 million. However, there were reductions in sales and marketing costs, which declined to $340.7 million. Product and technology expenses remained relatively stable at $88.8 million, while general and admin expenditure increased slightly to $174.3 million.
User Metrics:
Monthly unique payers (MUPs) surged by 23% year-on-year, reaching 3.4 million, with an average spend per user of $114, reflecting a 25% increase. This growth can be attributed to DraftKings’ expanded presence in the US, with availability in 25 states and Ontario, Canada, reaching 49% of Americans and 40% of Canadians. Additionally, the iGaming platform, available in five states, now serves approximately 11% of Americans.
Stock Performance:
Despite the losses reported per share amounting to $0.30, compared to $0.87 in the previous year, DraftKings’ share price rose to $43.02, marking a 2.9% increase. This demonstrates investor confidence in the company’s trajectory.
Quarterly Activity Highlights:
During Q1 2024, DraftKings made strategic moves, including the acquisition of the digital lottery app Jackpocket for an estimated $750 million. Additionally, partnerships were formed with basketball icon LeBron James and the former Penn Entertainment subsidiary Barstool. However, the company also faced legal challenges, notably a case against former senior executive Michael Hermalyn, which concluded in DraftKings’ favor.
CEO and CFO Perspectives:
CEO and Co-Founder Jason Robins expressed satisfaction with DraftKings’ performance, highlighting robust revenue growth and an optimized cost structure. CFO Alan Ellingson announced an increase in revenue guidance for 2024 to $4.9 billion and projected an adjusted EBITDA flow-through percentage exceeding 50% for the fiscal year.
DraftKings’ Q1 2024 financial report signifies substantial growth, operational improvements, and strategic maneuvers. With an expanding user base, positive adjusted EBITDA, and strategic partnerships, DraftKings is well-positioned for continued success in the dynamic sports betting and iGaming landscape.