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What happened
Shares of DraftKings (NASDAQ: DKNG) plummeted 28% on Friday after the daily fantasy sports and gaming leader said its pace of expansion could decelerate markedly in the year ahead.
So what
DraftKings’ revenue soared 136% year over year to $502 million. The rollout of the company’s Sportsbook and iGaming products in newly legalized markets helped to fuel the gains.
DraftKings’ monthly unique paying users increased to 1.6 million, up 22% from the prior-year period. Yet that was below Wall Street’s estimates, which called for two million payers. It was also a marked deceleration from the 30% paying user growth DraftKings experienced in the second quarter.
Still, DraftKings’ average revenue per monthly paying user surged 114% year over year to $100, due in part to higher revenue generated from wagers on NFL games.
“Our team continued to drive top-line growth through highly effective customer engagement and compelling product and technology enhancements while remaining focused on our path to profitability,” CEO Jason Robins said in a press release.
That profitability, however, might be further away than investors would like. DraftKings generated a net loss of over $450 million in the third quarter, compared to $545 million in the year-ago period.
Now what
DraftKings lifted its full-year revenue forecast to between $2.16 billion and $2.19 billion in fiscal 2022, up from a prior projection of $2.08 billion to $2.18 billion. That would represent growth of 67% to 69%.
Additionally, management now expects an EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $800 million to $780 million, compared to its previous guidance of a loss of $835 million to $765 million. Yet DraftKings’ guidance calls for revenue growth to slow to 33% in fiscal 2023. It also projected an adjusted EBITDA loss of as much as $575 million next year.
Still, chief financial officer Jason Park said DraftKings remains on track to reach its profitability goals by the end of fiscal 2023. “Throughout 2022, we’ve struck the right balance between delivering differentiated top-line growth and driving operating efficiencies,” Park said. “We continue to be confident that we will achieve positive adjusted EBITDA in the fourth quarter of 2023 based on the visibility we have into expected state launches.”
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