DraftKings stock jumped as much as 9% in late trading Thursday after the sports betting company released first quarter revenue numbers that topped estimates. The company also increased its projections for the full fiscal year.
For the three months ending in March, DraftKings reported sales of $770 million, 9% higher than consensus estimates of about $705 million. The company reported losses per share of $0.87, roughly in line with estimates of $0.89. The stock (Nasdaq: DKNG) closed Thursday at $21.31 and rose to $23.25 in late trading shortly after the numbers were released.
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The jump continues a strong year for the Massachusetts-based company, which spent much of 2021 and 2022 riding the turbulence of the entire U.S. sports betting industry. DraftKings stock has nearly doubled (up 92%) so far this calendar year.
The company also raised its 2023 revenue guidance to a range of $3.1 billion-$3.2 billion, up from a range of $2.9 billion-$3.1 billion. That’s a closely watched part of the DraftKings business as investors wait for the company’s first profitable quarter. DraftKings has previously said it expects to be adjusted EBITDA positive in 2024, which would be a first since its founding in 2012.
The other half of the profitability calculation is the company’s expenses, which drew new scrutiny in the last few months regarding compensation and other costs accrued by DraftKings C-suite executives. As an example, a recent company filing detailed $969,000 in security costs and $975,000 in private airplane travel last year for CEO Jason Robins.
DraftKings’ marketing spend is another cost closely watched by investors. Most U.S. sportsbooks continue to run quarterly losses because of the high cost of customer acquisition and the launch of new states. For its part, DraftKings has historically been more aggressive than many of its peers regarding marketing—it was the only major sportsbook to increase its spending on digital ads surrounding the Super Bowl earlier this year, according to data from Eilers & Krejcik.
The company’s “sales and marketing” costs for the quarter were $389 million, up from $322 million in the first quarter of 2022. For reference, its “sales and marketing” costs in the fourth quarter, which includes the bulk of the NFL and college football seasons, was $345 million.
DraftKings’ quarterly reports also provide an update on the size of its customer base. The company had 2.8 million average monthly users in the quarter, up 40% from Q1 2022 (2.0 million) and 60% from Q1 2021 (1.5 million). Average revenue among those users was $92, up from $67 in Q1 2022.
These numbers—like most of the company’s year-over-year comparisons—should be taken with a grain of salt. As sports betting and iGaming moves state by state across the U.S., the size of DraftKings’ geographical footprint (and the maturity of each market) changes with each quarter.
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