DraftKings (DKNG) 8 Nov 24 2024 Q3 Earnings call transcript

DraftKings, a leading sports betting and iGaming company, recently held its third-quarter 2024 earnings call, highlighting significant growth and strategic initiatives that position the company for future success. The call, led by Chief Financial Officer Alan Ellingson and Co-Founder and CEO Jason Robins, provided insights into DraftKings' financial performance and outlook, as well as its plans for expanding its market presence.

Strong Q3 Performance and Financial Guidance

DraftKings reported a 39% year-over-year revenue growth in the third quarter, reaching $1.095 billion, with a $59 million adjusted EBITDA loss. The company's online Sportsbook and iGaming segments saw impressive growth, with online Sportsbook gross gaming revenue increasing by 39% and iGaming gross gaming revenue growing by 26%. New customer acquisition also improved, with a 14% year-over-year increase in newly-acquired online Sportsbook and iGaming customers.

Looking ahead, DraftKings reiterated its fiscal year 2025 adjusted EBITDA guidance range of $900 million to $1 billion and introduced a new revenue guidance range of $6.2 billion to $6.6 billion, representing a 31% year-over-year growth at the guidance midpoint. This optimistic outlook is fueled by the company's improving financial health, structural Sportsbook hold percentage, and strategic initiatives aimed at enhancing customer engagement and market expansion.

Strategic Initiatives and Market Expansion

One of DraftKings' key initiatives is the expansion of its Sportsbook product, which has seen significant improvement in the third quarter. The company has launched new NBA markets and expanded its in-house same-game parlay offering, positioning itself well for the upcoming NBA season and beyond. DraftKings also ranked first in the overall Sportsbook app category in a recent third-party report, underscoring its competitive edge in the market.

In addition, DraftKings is exploring opportunities in new markets, such as Missouri, which recently legalized online sports betting. The company expects to launch its Sportsbook product in the state pending regulatory approvals, marking a significant expansion of its market presence.

Addressing Challenges and Opportunities

The earnings call also touched upon challenges and opportunities facing the company. One notable challenge is the impact of customer-friendly sports outcomes on revenue and adjusted EBITDA, which pressured the company in the early part of the fourth quarter. However, DraftKings remains optimistic about its long-term prospects, citing its strong business fundamentals and strategic initiatives.

Investor and Analyst Questions

During the Q&A session, analysts and investors raised questions about customer acquisition, promotional strategies, and market expansion. DraftKings provided detailed responses, highlighting its focus on customer retention and monetization, as well as its strategic approach to market expansion and regulatory hurdles.

Conclusion

Overall, DraftKings' third-quarter earnings call painted a picture of a company with strong financial performance, strategic initiatives, and a positive outlook for the future. With a focus on expanding its market presence, enhancing its Sportsbook product, and optimizing its promotional strategies, DraftKings is well-positioned to capitalize on the growing iGaming and sports betting market. As the company navigates regulatory challenges and customer acquisition opportunities, investors and analysts will be closely watching its progress in the coming quarters.