However, in contrast to Q2 2023, when DraftKings achieved a positive EBITDA, the company reported an adjusted EBITDA loss of $153m in Q3.
Nonetheless, this loss represented a year-on-year improvement of $111m, and CEO and co-founder Jason Robins noted that both revenue and adjusted EBITDA exceeded DraftKings’ expectations.
Robins attributed the revenue increase to several factors, including strong customer engagement and acquisition, expansion into new regions, and product enhancements that boosted parlay mix and hold percentage, alongside improved reinvestment in promotions for both sportsbook and iGaming.
“The best product”
In a business update, Robins highlighted that thanks to strategic investments in product and technology, DraftKings has solidified its position as a market leader in the sports betting and iGaming industry.
“We believe we now have the best product in the industry and, most importantly, have a clear product roadmap to extend our product lead over the coming quarters and years,” he said.
He referenced recent reports that DraftKings has now overtaken FanDuel to become the US online gambling market leader by GGR.
Additionally, he emphasised that, based on both state gaming reports and its own data, DraftKings currently commands a 33% market share in US online sports betting and iGaming GGR.
DraftKings is currently live with mobile sports betting in 22 US states that collectively represent approximately 45% of the US population.
Additionally, the company offers iGaming in five states, which account for roughly 11% of the US population.
In Canada, DraftKings is live with its sportsbook and iGaming products in Ontario, which represents approximately 40% of Canada’s population.
Rapid customer acquisitionRobins also highlighted that in Q3 DraftKings has experienced rapid contribution profit growth in older states, driven by higher customer retention, increased handle per customer, improved promotional reinvestment, and better hold.
This has contributed to an expanding adjusted gross margin and a reduction in external marketing expenses, while improving customer acquisition costs.
“Newer states are turning contribution profit positive in a significantly faster timeframe because we are acquiring customers more rapidly after a state launches,” Robins added.
In Q3, DraftKings saw an increase in monthly unique players to an average of 2.3 million, up 40% on the prior-year period, while average revenue per monthly unique player was up by 14% to $114.
Robins also said that the company believes “the best is yet to come”.
“Over the past few years, we have built an organisation that is right-sized for the opportunity in front of us, and we expect low annual fixed cost growth from here and therefore a long runway of margin improvement,” he said.
Cost efficiency played a pivotal role in DraftKings’ positive adjusted EBITDA performance in Q2 2023.
Due to its strong Q3 performance, DraftKings has increased its revenue guidance for the fiscal year 2023.
The new range now stands at $3.67bn to $3.72bn, up from the previous range of $3.46bn to $3.54bn. This updated guidance would represent year-over-year growth of 64% to 66%.
Moreover, DraftKings expects to be able to shrink its adjusted EBITDA loss to a range of $95m to $115m. Previously, the company anticipated an adjusted EBITDA loss of $190m to $220m.
The operator also introduced revenue guidance for fiscal year 2024, set within the range of $4.5bn to $4.8bn.
This projection indicates over 25% year-on-year growth, based on the midpoint between the company’s fiscal year 2023 and fiscal year 2024 revenue guidance.
Additionally, DraftKings has provided adjusted EBITDA guidance for 2024, ranging from $350m to $450m.