DraftKings’ after-hours tumble underscores that the house doesn’t always win. Shares of the online sportsbook operator took a hit after the company revised its 2024 earnings and revenue guidance downward, citing favorable outcomes for customers in the current quarter. A DraftKings billboard at Times Square in New York City marked the company’s slip late Thursday, following the announcement of adjusted expectations.
In extended trading, DraftKings shares dropped 5.71% after the company revealed it now anticipates 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) to range between $240 million and $280 million, with revenue expected to fall between $4.85 billion and $4.95 billion. These adjustments are attributed to “the impact of customer-friendly sport outcomes early in the fourth quarter.”
These revised estimates fall short of the EBITDA guidance of $340 million to $420 million and sales forecast of $5.05 billion to $5.25 billion that the operator had projected in August. The new revenue guidance, however, still implies a year-over-year growth of 32% to 35%.
Though DraftKings’ stock recovered somewhat from the after-hours plunge, the 2024 outlook reverberated through the sports wagering equity space, causing FanDuel parent company Flutter Entertainment to drop nearly 3%.
DraftKings’ decision to trim its 2024 EBITDA and revenue projections likely surprised investors, as the company traditionally raises its guidance when announcing earnings. Nevertheless, the company partially upheld its customary approach with its newly released 2025 revenue forecast.
DraftKings is introducing a fiscal year 2025 revenue guidance range of $6.2 billion to $6.6 billion, representing approximately 31% year-over-year growth based on the midpoints of the updated fiscal year 2024 revenue guidance range and the 2025 revenue guidance range. The operator affirmed its 2025 EBITDA expectations of $900 million to $1 billion, a forecast made in August. This estimate does not account for potential contributions from Missouri, where online sports betting may launch next year following voter approval of a related ballot measure.
“DraftKings expects to launch its Sportsbook product in Missouri pending market access, licensure, regulatory approvals, and contractual approvals where applicable,” the company stated.
The start of the football season in September seemingly bolstered DraftKings’ third-quarter results, with revenue climbing 39% to $1.09 billion from the same period last year. Monthly unique players (MUPs) surged 56%, indicating positive momentum from earlier this year’s $750 million acquisition of online lottery provider Jackpocket. Excluding Jackpocket, MUPs growth was 27%. However, the average Jackpocket customer spends less than a typical DraftKings bettor, resulting in a 10% decline in average revenue per MUP (ARPMUP) in the third quarter.
“The decrease was primarily due to lower ARPMUP for Jackpocket customers, when compared to customers of DraftKings’ existing product offerings prior to the acquisition, partially offset by improvement in the Company’s structural Sportsbook hold percentage and improved promotional reinvestment for Sportsbook and iGaming. Excluding the impact of the acquisition of Jackpocket, ARPMUP increased approximately 8% compared to the third quarter of 2023,” DraftKings explained.
