DraftKings Inc (DKNG, Financial), a leader in daily fantasy sports and online sports wagering, reported its second-quarter 2024 earnings, revealing a 26% increase in revenue to $1,104 million, surpassing the analyst estimate of $1,049.55 million. The company also announced a $1.0 billion share repurchase authorization and raised its 2024 revenue guidance midpoint to $5.15 billion.
Company Overview
Founded in 2012, DraftKings initially focused on daily fantasy sports. Following the 2018 Supreme Court ruling that allowed states to legalize online sports wagering, DraftKings expanded into online sports and casino gambling. The company now operates in 27 states and seven states for iGaming, with a significant presence in Canada. Additionally, DraftKings runs a non-fungible token marketplace and develops online gaming products.
Performance and Challenges
DraftKings reported a revenue increase of $230 million compared to the same period in 2023, driven by strong customer engagement, efficient new customer acquisition, and the expansion of its Sportsbook product into new jurisdictions. The acquisition of Jackpocket Inc. also contributed to this growth. However, the company faced challenges with a 15% decrease in Average Revenue per Monthly Unique Payer (ARPMUP) due to lower ARPMUP for Jackpocket customers and increased promotional investments.
Financial Achievements
The company’s financial achievements include a significant increase in Monthly Unique Payers (MUPs) to 3.1 million, a 50% rise compared to Q2 2023. Excluding the impact of the Jackpocket acquisition, MUPs would have increased by approximately 34%. These metrics are crucial as they reflect the company's ability to retain and attract customers, which is vital for sustained growth in the Travel & Leisure industry.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $1,104 million | $875 million |
| Cost of Revenue | $663 million | $510 million |
| Net Income (Loss) | $63.8 million | $(77.3) million |
| Adjusted EBITDA | $128 million | $73 million |
Balance Sheet and Cash Flow
DraftKings reported total assets of $4.22 billion as of June 30, 2024, up from $3.94 billion at the end of 2023. The company’s cash and cash equivalents stood at $815.88 million, with a total stockholders' equity of $1.30 billion. The company also reported a net decrease in cash and cash equivalents of $550 million for the six months ended June 30, 2024, primarily due to investments in acquisitions and capital expenditures.
Guidance and Strategic Moves
DraftKings raised its fiscal year 2024 revenue guidance to a range of $5.05 billion to $5.25 billion, reflecting a year-over-year growth of 38% to 43%. However, the company revised its 2024 Adjusted EBITDA guidance midpoint from $500 million to $380 million. The company continues to expect 2025 Adjusted EBITDA in the range of $900 million to $1.0 billion.
"We very efficiently acquired many more new customers than we expected and saw continued healthy existing customer engagement in the second quarter," said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.
"We are very excited about DraftKings’ Free Cash Flow trajectory," said Alan Ellingson, DraftKings’ Chief Financial Officer.
Conclusion
DraftKings Inc (DKNG, Financial) demonstrated robust revenue growth and strategic financial management in Q2 2024. While the company faces challenges in ARPMUP, its strong customer acquisition and retention metrics, along with strategic initiatives like the share repurchase program, position it well for future growth. Investors and stakeholders will be keenly watching how DraftKings navigates the evolving landscape of online sports wagering and iGaming.
Explore the complete 8-K earnings release (here) from DraftKings Inc for further details.
