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Draftkings reported a surge in revenue in the third quarter, solidifying its place at the top of the sports betting industry as it becomes more cutthroat.
The sports betting company reported a 57% annual increase in revenue to $790 million, surpassing analysts’ expectations of $695.5. After strong results in the first and second quarters, DraftKings has continued to improve by increasing their 2023 revenue guidance by $195 million midpoint, monthly unique users by 40% and revenue per user by 14%, compared to the third quarter in 2022. DraftKings earnings per share plunged to $0.61 per share from $1.00 year over year and fell below analysts’ expectations of $0.67 per share. The company also reported a net loss of $282.1 million, compared to $450.5 million last year in the same period.
Analyst expectations were modest compared to DraftKings robust results in the third-quarter results. DraftKings’ strong performance was fueled by new player acquisitions, acquiring customers from the competition and expanding its sportsbook products to mobile sports betting and iGaming customers. As the sports betting industry continues to become more competitive, DraftKings remains one of the top companies contributing to a multi-billion industry.
“DraftKings continues to gain share in a competitive market due to a strong user experience on its platform,” said Dan Wasiolek, a senior analyst at Morningstar, in a statement.” The quarter results and 2023 guidance was strong on both the top and bottom line.”
DraftKings surpassed Fanduel and now is the top market leader in the online sports betting and iGaming industry, according to a report from Eilers & Krejcik Gaming in August.
But recently, Fanduel released its third-quarter results and the company revenue increased by 20% year over year to $820 million in the U.S. Though the Flutter entertainment-owned company gained revenue, it did not meet the expectations of Wall Street and the company shares plummeted after the earnings report was released.
In a recent note to clients, Piper Sandler analyst Matt Farrell said that he expects Draftkings will continue to grow and predicts that revenue can go up by as much as 60%.
“The company is executing very well, as can be seen by its market share gains over the last several quarters,” said Farrell.
DraftKings is expanding its mobile sports betting platform to more states— this is contributing to the increase in new customers and revenue.
“Another major driver of the profitability improvement has been older states seeing strong contribution profit growth and newer states reaching contribution profitability faster than in the past,” said Farrell.
DraftKings recently went live with its mobile sports betting app in Kentucky on Sept.18. DraftKings plans to go live with its product in Maine, Puerto Rico and North Carolina pending market access, licensure and regulatory and contractual approvals.
As of now, DraftKings has launched its sportsbook in 22 states and iGaming platform in five states. The sports betting company is live with its sportsbook and iGaming products in Ontario, Canada, representing 40% of Canada’s population.
DraftKings released its earnings after the market closed; the next day, the stock was up 11.6% and closed at $34.04 from $30.48. The stock is up 198.54% year to date, outperforming the Nasdaq and its competitors, Flutter Entertainment and MGM Internationals, over the year.
