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Shares of DraftKings (NASDAQ: DKNG) saw a 7% increase during after-hours trading on Thursday. This surge came after the stock already posted a gain of 6.43% during regular trading hours and after the gaming company raised its guidance for 2023. In conjunction with its third-quarter earnings report, DraftKings informed investors that it now expects to report a loss for 2023. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are projected to be $105 million on revenue of $3.695 billion. This is an improvement from previous estimates that predicted an EBITDA loss of $205 million on sales of $3.5 billion.
DraftKings has consistently improved its financial outlook throughout 2023. Earlier this year, the sportsbook operator raised the midpoint of its 2023 sales forecast to $3.185 billion from $2.95 billion. It also estimated that the midpoint of its expected EBITDA loss for this year would be $315 million, up from $400 million. These improved forecasts can be attributed to enhanced operating efficiencies.
According to Jason Park, DraftKings’ chief financial officer, the company continues to acquire customers efficiently, maintain customer engagement, improve its sportsbook structural hold and promotional reinvestment for Sportsbook and iGaming, and demonstrate fixed cost discipline.
The introduction of online sports wagering in Kentucky in September has had a positive impact on DraftKings’ performance in the third quarter. Maine and North Carolina could also contribute to growth in the current quarter and beyond.
To continue impressing investors, DraftKings unveiled its 2024 EBITDA and revenue guidance. The company expects a positive EBITDA of $350 million to $450 million on sales of $4.5 billion to $4.8 billion in 2024. This suggests that DraftKings could be profitable on an EBITDA basis for most, if not all, of 2024 while surpassing previous revenue records.
The company also anticipates being EBITDA positive in the current quarter, with a projection of $200 million.
As investors focus on the ability of online sportsbook operators to attract and retain customers without excessive promotional spending, DraftKings is demonstrating its efficiencies. Monthly unique players increased to an average of 2.3 million paying customers in the third quarter, with an average revenue per customer of $114. This represents a 14% increase compared to the same period in 2022, driven by the company’s improved sportsbook hold rate and enhanced promotional reinvestment for Sportsbook and iGaming.