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For the first time since the sportsbook operator went public at the height of the COVID-19 pandemic, DraftKings generated profit during the second quarter of 2023. The profitable quarter may allay investor concerns that the biggest operators in the sector lack the financial discipline to remain responsible after years of significant spending on marketing and promotions. The lucrative quarter was comparable to other online rivals including BetMGM, Caesars, and Rush Street Interactive, all of which recorded their first-ever profits during the three months that ended on June 30.
After the market closed on Thursday, DraftKings CEO Jason Robins announced the company’s earnings. He gushed that the results are a result of a constant pursuit of cost savings. The second quarter revenue for DraftKings came in at $874.9 million, exceeding analysts’ predictions of $762.3 million. Additionally, DraftKings reported adjusted EBITDA of $72.9 million for the quarter, a notable improvement from the negative $118.1 million in the same quarter last year.
According to a corporate presentation made public on Thursday, DraftKings anticipates producing “meaningfully positive” adjusted EBITDA for the entire year 2024. DraftKings increased its structural hold percentage from 7 percent to almost 10% during the second quarter by taking advantage of the industry-wide development of same-game parlays (SGPs). According to DraftKings CFO Jason Park, the higher-than-anticipated hold contributed $30 million to adjusted EBITDA.
DraftKings listed six “key value drivers” that support its contention that its expansion strategy is effective. In a business update sent to investors on Thursday, the company discussed the developments. According to the company’s letter, DraftKings increased the rate at which it added new consumers by 39 percent over the course of the quarter. Compared to the same period in 2022, DraftKings attracted a high percentage of new bettors while cutting customer acquisition costs by 16%.
Online sports betting (OSB) and iGaming market share have increased significantly, according to DraftKings, during the past 12 months. In the markets it serves, the company had a 35% OSB handle share at the end of the quarter, as well as a 32% OSB share in total gaming revenue. The improvements show an increase of 8 and 12 percent, respectively, from year to year. DraftKings attributes the improvement to the effects of national marketing, better customer retention measures, quick product and technological advancements, and more.
Regarding technological advancements, DraftKings is focusing on the beginning of the 2023 football season. DraftKings intends to roll out a number of product improvements that it believes will provide customers a “more engaged experience.” Among other improvements, DraftKings mentioned improved in-house same-game parlay possibilities, expanded cash-out market coverage, and quicker in-play bet settlement. Due to this, DraftKings boosted the midpoint of its full-year 2023 revenue projection by 10% to $3.5 billion.
According to DraftKings’ updated 2023 projection, the company expects negative adjusted EBITDA of $205 million. The forecast suggests that the business may face difficulties in the third quarter even with a good conclusion to 2023.
