DraftKings Scores Record Revenue, Raises 2023 Outlook

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DraftKings

reported stronger than expected revenue and raised its outlook for 2023. Its business is getting a boost as more states legalize sports gambling.

The gambling firm reported fourth quarter revenue of $855 million and a loss of 53 cents a share. Wall Street expected an adjusted loss of 46 cents a share on sales of $801 million, according to FactSet.

The surge in revenue compares with the $473 million reported in the fourth quarter of 2021. Average monthly payers in the fourth quarter rose 31%, to 2.6 million, representing player retention and the expansion of its Sportsbook and iGaming products into new jurisdictions.

For full year 2022, the company reported a loss per share of $3.16 on revenue of $2.24 billion, also beating expectations.

Shares of

DraftKings

(ticker: DKNG) rose 6.4% in after-hours trading and have risen 56% so far this year.

DraftKings raised its full year 2023 revenue guidance to a midpoint of $2.95 billion, from $2.9 billion, and said it expects to report a smaller loss than it forecast back in November.

“Moving into 2023, we will continue to drive revenue growth and focus on expense management to accelerate our adjusted Ebitda growth,” CEO Jason Robins said in a statement.

The company said it is now live with mobile sports betting in 20 states that collectively represent 42% of the U.S. population. Its online Sportsbook rolled out in Maryland in November and in Ohio in January.

Some analysts remain upbeat about the short-term, but less confident about the betting firm’s long-term goals.

Susquehanna analyst Joseph Stauff said before the earnings announcement that DraftKings would likely beat revenue estimates and post a narrower-than-expected per-share loss for the fourth quarter.

With the pro football season over, college basketball’s March Madness tournament is coming up. Stauff maintained his Positive rating and raised his price target on DraftKings stock to $24 from $19.

Stifel analyst Jeffrey Stantial also expected a fourth-quarter earnings beat. But he is concerned about the near-term risk to the company’s market share as DraftKings will face some competitors such as FanDuel, which is owned by Flutter Entertainment (

UK.FLTR

).

In addition, “profitability likely remains several quarters away,” he writes.

Stantial maintained his Hold rating on Tuesday and raised his price target on the stock to $17 from $15. DraftKings stock, however, could be worth more than $40 in the long term, he writes.

“We believe investors may need to move past a long list of potential headwinds to market share in 2023 before getting comfortable again with management’s long-term targets,” he added.

The company recently slashed its workforce by 3.5%.

Write to Emily Dattilo at [email protected]