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DraftKings exceeded expectations in Q1 2024, despite headwinds related to sporting outcomes throughout the quarter.

Topline numbers

DraftKings reported $1.18bn in revenue for the three-month period ending 31 March, a 53% increase from Q1 2023.

The business’ adjusted EBITDA also increased to $22.4m, compared to the $221.6m loss reported last year.

The operator said the growth was driven by healthy consumer engagement, efficient acquisition of new customers and new market launches.

DraftKings’ net loss also narrowed to $142.6m, compared to $397.1m in the prior-year period.

The results came despite the impact of headwinds to sporting outcomes throughout the quarter, according to analysts at JMP Securities.

DraftKings also highlighted the role of a higher structural hold percentage and increased promotional spending across OSB and iGaming.

JMP said: “The scale of the overall company benefited results, including the large product offering smoothing out gaming margins during the Super Bowl, protecting it from downside and unfavourable results, unlike its comps.”

The positive results led to the business raising the mid-point of its full-year 2024 revenue guidance to $4.9bn, up from $4.78bn.

The business also raised its EBITDA guidance to $500m, compared to the previous projection of $460m.

In terms of non-financial metrics, the business reported a year-on-year 23% increase in monthly unique payers (MUP) to 3.4 million.

This resulted from strong player acquisition and retention across its products, as well as expansion into new jurisdictions, said DraftKings.

Average revenue per MUP stood at $114, representing 25% increase compared to Q1 2024.

The company highlighted the impact of an increase in its structural hold percentage and increased promotional investment.

JMP added: Development of technology and more efficient data are supporting higher expected gaming margins, leading to high flow-through improvements to the business model.”

Plans for 2024

During the firm’s Q1 earnings call, CEO Jason Robins outlined the company’s strategic thinking for the year ahead.

The company will aim to continue to foster an entrepreneurial culture and develop the next crop of leaders to drive growth, he said.

Robins also said the company is looking at ways to optimise its capital structure, and as such is exploring ways to maximise returns to shareholders.

The business announced the $750m acquisition of lottery ticket app Jackpocket in February to improve cross sell opportunities.

Going forward, the CEO said the company will aim to be “super disciplined” on the M&A front and does not intend to go on a buying spree.

Robins also predicted iGaming legislative efforts would prove more successful in the coming years driven by pressure on state budgets.

DraftKings’ parlay product was highlighted as one area where improvements could be made on the sports betting side, with progressive parlays a relatively new phenomenon.

JMP has previously emphasised the impact improved same-game parlay implementation could have on improving sports betting margins for major operators.

Robins said: “In the past, we’ve been able to drive growth and gain share while simultaneously becoming more efficient.

“But importantly, we do not take any of our recent success for granted. We have the right team in place and are working hard to maintain our edge.”

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