DraftKings reports $855M in revenue in Q4 2022, projects fiscal year revenue will fall between $2B and $3B this year

DraftKings 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

For the three months ended December 31, 2022, DraftKings reported revenue of $855 million, an increase of 81% compared to the same period in 2021. This was 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.

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

“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,” he added.

“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,” he concluded. 

Jason Park, DraftKings’ Chief Financial Officer, noted: “We executed very well in the fourth quarter and drove better than expected sportsbook hold due primarily to our investments in product innovation.” 

“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,” he said.

“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,” he forecasted.

In terms of growth in player retention, acquisition and engagement, indicators such as the Monthly Unique Players saw an increase to 2.6 million on average, representing a rise of 31% compared to Q4 in 2021

Average Revenue per MUP was $109 in Q4, representing a 42% increase compared to the same period in 2021. This increase was due to improvement in the company’s structural sportsbook hold rate and a continued mix shift into DraftKings’ Sportsbook and iGaming products. 

When it comes to 2023 revenue guidance and projections, the company is raising its fiscal year revenue to a range of $2.85 billion to $3.05 billion. The company’s updated 2023 growth of 27% to 36%.  

DraftKings is also improving its fiscal year 2023 Adjusted EBITDA guidance, as it now expects it to be between $350 million and $575 million. 

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.

Massachusetts and Puerto Rico have authorized mobile sports betting. 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.