Fourth Quarter 2023 Highlights
For the three months ended
“DraftKings ended 2023 with excellent performance across customer acquisition, retention and engagement as well as structural sportsbook hold percentage despite the worst stretch of sport outcomes we have seen as a public company in the fourth quarter,” said
“In 2023 we delivered on our commitments to generate outstanding revenue growth and drive significant operating efficiencies,” said
Continued Healthy Growth in Customer Retention, Acquisition, and Engagement
- Monthly Unique Payers (“MUPs”) increased to 3.5 million average monthly unique paying customers in the fourth quarter of 2023, representing an increase of 37% compared to the fourth quarter of 2022. This increase reflects strong customer acquisition and retention across DraftKings’ Sportsbook and iGaming products as well as the expansion of its Sportsbook product into new jurisdictions.
- Average Revenue per MUP (“ARPMUP”) was
$116 in the fourth quarter of 2023, representing a 6% increase compared to the same period in 2022. This increase was primarily due to an increase in the Company’s structural sportsbook hold rate, partially offset by customer-friendly sport outcomes. The increase in ARPMUP in the fourth quarter of 2023 would have been 22% when adjusting for customer-friendly sport outcomes. - Detailed financial data and other information for the fourth quarter of 2023 is available in the financial statements set forth below under the caption “Financial Results.”
Raising Fiscal Year 2024 Revenue and Adjusted EBITDA Guidance
DraftKings is raising its fiscal year 2024 revenue guidance to a range of$4.65 billion to$4.90 billion from the range of$4.50 billion to$4.80 billion , which the Company previously announced onNovember 2, 2023 . The Company’s updated 2024 revenue guidance range equates to year-over-year growth of 27% to 34%.DraftKings is also increasing its fiscal year 2024 Adjusted EBITDA guidance. The Company now expects fiscal year 2024 Adjusted EBITDA of between$410 million and$510 million compared to its prior fiscal year 2024 Adjusted EBITDA guidance of between$350 million and$450 million , which the Company previously announced onNovember 2, 2023 .- The Company’s revenue and Adjusted EBITDA guidance for fiscal year 2024 includes all of its existing jurisdictions as well as mobile sports betting in
Puerto Rico andNorth Carolina , which have authorized mobile sports betting and collectively represent approximately 4% of theU.S. population.DraftKings expects to launch its Sportsbook product inNorth Carolina onMarch 11, 2024 pending market access, licensure, regulatory approvals, and contractual approvals where applicable. - DraftKings’ revenue and Adjusted EBITDA guidance for fiscal year 2024 excludes the estimated impact of the Company’s proposed acquisition of Jackpocket, which
DraftKings will incorporate into its guidance following the close of the proposed acquisition.
Mobile Sports Betting and iGaming Footprint
- Following the launches of its Sportsbook product in
Maine onNovember 3, 2023 and inVermont onJanuary 11, 2024 ,DraftKings is live with mobile sports betting in 24 states that collectively represent approximately 46% of theU.S. population. DraftKings is also live with iGaming in 5 states, representing approximately 11% of theU.S. population.DraftKings is live with its Sportsbook and iGaming products inOntario, Canada , which represents approximately 40% of Canada’s population.North Carolina andPuerto Rico have authorized mobile sports betting and collectively represent approximately 4% of theU.S. population.DraftKings expects to launch its Sportsbook product inNorth Carolina onMarch 11, 2024 pending market access, licensure, regulatory approvals, and contractual approvals where applicable.- To date in 2024, 7 states that collectively represent approximately 11% of the
U.S. population have either introduced legislation to legalize mobile sports betting or introduced a bill that may result in a mobile sports betting referendum during an upcoming election. In addition, 5 states that collectively represent approximately 12% of theU.S. population have either introduced legislation to legalize iGaming or introduced a bill that may result in an iGaming referendum during an upcoming election.
Webcast and Conference Call Details
As previously announced,
To listen to the audio webcast and live question and answer session, please visit DraftKings’ investor relations website at investors.draftkings.com. A live audio webcast of the earnings conference call will be available on the Company’s website at investors.draftkings.com, along with a copy of this press release, the Company’s Annual Report on Form 10-K, an earnings presentation and a letter to shareholders. The audio webcast will be available on the Company’s investor relations website until
Financial Results
DraftKings’ fourth quarter and full-year 2023 financial results, as well as the financial results for their respective comparative periods, are presented below:
CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands, except par value) | |||||||
2023 | 2022 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,270,503 | $ | 1,309,172 | |||
Restricted cash | 11,700 | — | |||||
Cash reserved for users | 341,290 | 469,653 | |||||
Receivables reserved for users | 301,770 | 160,083 | |||||
Accounts receivables | 47,539 | 51,097 | |||||
Prepaid expenses and other current assets | 98,565 | 94,836 | |||||
Total current assets | 2,071,367 | 2,084,841 | |||||
Property and equipment, net | 60,695 | 60,102 | |||||
Intangible assets, net | 690,620 | 776,934 | |||||
886,373 | 886,373 | ||||||
Operating lease right-of-use assets | 93,985 | 65,957 | |||||
Equity method investments | 10,280 | 10,080 | |||||
Deposits and other non-current assets | 131,546 | 155,865 | |||||
Total assets | $ | 3,944,866 | $ | 4,040,152 | |||
Liabilities and Stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 639,599 | $ | 517,587 | |||
Liabilities to users | 851,898 | 686,173 | |||||
Operating lease liabilities, current portion | 11,499 | 4,253 | |||||
Other current liabilities | 46,624 | 38,444 | |||||
Total current liabilities | 1,549,620 | 1,246,457 | |||||
Convertible notes, net of issuance costs | 1,253,760 | 1,251,103 | |||||
Non-current operating lease liabilities | 80,827 | 69,332 | |||||
Warrant liabilities | 63,568 | 10,680 | |||||
Long-term income tax liabilities | 72,810 | 69,858 | |||||
Other long-term liabilities | 83,975 | 70,029 | |||||
Total liabilities | $ | 3,104,560 | $ | 2,717,459 | |||
Commitments and contingent liabilities (Note 7 and Note 15) | |||||||
Stockholders’ equity: | |||||||
Class A common stock, | $ | 46 | $ | 45 | |||
Class B common stock, | 39 | 39 | |||||
(412,182 | ) | (332,133 | ) | ||||
Additional paid-in capital | 7,149,858 | 6,750,055 | |||||
Accumulated deficit | (5,933,943 | ) | (5,131,801 | ) | |||
Accumulated other comprehensive income | 36,488 | 36,488 | |||||
Total stockholders’ equity | 840,306 | 1,322,693 | |||||
Total liabilities and stockholders’ equity | $ | 3,944,866 | $ | 4,040,152 |
Due to the timing of the consummation of the Company’s acquisition of
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except loss per share data) | |||||||||||||||
Three Months Ended | Year ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue | $ | 1,230,857 | $ | 855,133 | $ | 3,665,393 | $ | 2,240,461 | |||||||
Cost of revenue | 716,658 | 485,435 | 2,292,175 | 1,484,273 | |||||||||||
Sales and marketing | 290,775 | 345,282 | 1,200,718 | 1,185,977 | |||||||||||
Product and technology | 88,157 | 83,394 | 355,156 | 318,247 | |||||||||||
General and administrative | 179,076 | 173,244 | 606,569 | 763,720 | |||||||||||
Loss from operations | (43,809 | ) | (232,222 | ) | (789,225 | ) | (1,511,756 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest income | 18,792 | 10,992 | 58,418 | 21,353 | |||||||||||
Interest expense | (688 | ) | (668 | ) | (2,679 | ) | (2,651 | ) | |||||||
(Loss) gain on remeasurement of warrant liabilities | (12,716 | ) | 9,197 | (57,543 | ) | 29,396 | |||||||||
Other (loss) gain, net | 929 | (19,866 | ) | (224 | ) | 20,700 | |||||||||
Loss before income tax provision (benefit) and loss (income) from equity method investment | (37,492 | ) | (232,567 | ) | (791,253 | ) | (1,442,958 | ) | |||||||
Income tax (benefit) provision | 6,860 | 9,714 | 10,170 | (67,866 | ) | ||||||||||
Loss (income) from equity method investment | 269 | 416 | 719 | 2,895 | |||||||||||
Net loss attributable to common stockholders | $ | (44,621 | ) | $ | (242,697 | ) | $ | (802,142 | ) | $ | (1,377,987 | ) | |||
Loss per share attributable to common stockholders: | |||||||||||||||
Basic and diluted | $ | (0.10 | ) | $ | (0.53 | ) | $ | (1.73 | ) | $ | (3.16 | ) |
Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the closing date of
NON-GAAP FINANCIAL MEASURES (Unaudited) (Amounts in thousands, except earnings (loss) per share data) | |||||||||||||||
| Three Months Ended | Year ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Adjusted EBITDA | $ | 151,018 | $ | (49,927 | ) | $ | (151,035 | ) | $ | (721,781 | ) | ||||
Adjusted Earnings (Loss) Per Share* | $ | 0.29 | $ | (0.14 | ) | $ | (0.41 | ) | $ | (1.77 | ) |
Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the closing date of
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) | |||||||
Year ended | |||||||
2023 | 2022 | ||||||
Cash Flows from Operating Activities: | |||||||
Net loss attributable to common shareholders | $ | (802,142 | ) | $ | (1,377,987 | ) | |
Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||||
Depreciation and amortization | 201,920 | 169,252 | |||||
Non-cash interest expense, net | 386 | 870 | |||||
Stock-based compensation expense | 398,463 | 578,799 | |||||
Loss (gain) on remeasurement of warrant liabilities | 57,543 | (29,396 | ) | ||||
Loss (gain) from equity method investment | 719 | 2,895 | |||||
Loss (gain) on marketable equity securities and other financial assets, net | 75 | (10,999 | ) | ||||
Deferred income taxes | 5,849 | (73,407 | ) | ||||
Other expenses, net | 554 | (7,268 | ) | ||||
Change in operating assets and liabilities, net of effect of acquisitions: | |||||||
Receivables reserved for users | (141,687 | ) | (105,320 | ) | |||
Accounts receivables | 3,558 | 2,506 | |||||
Prepaid expenses and other current assets | 2,451 | (26,217 | ) | ||||
Deposits and other non-current assets | (19,355 | ) | (4,921 | ) | |||
Operating leases, net | 6,558 | 1,304 | |||||
Accounts payable and accrued expenses | 103,593 | 95,269 | |||||
Liabilities to users | 165,725 | 152,985 | |||||
Long-term income tax liability | 2,952 | (9,267 | ) | ||||
Other long-term liabilities | 11,087 | 15,383 | |||||
Net cash flows used in operating activities | (1,751 | ) | (625,519 | ) | |||
Cash Flows from Investing Activities: | |||||||
Purchases of property and equipment | (20,902 | ) | (32,402 | ) | |||
Cash paid for internally developed software costs | (80,378 | ) | (64,030 | ) | |||
Acquisition of gaming licenses | (12,105 | ) | (7,213 | ) | |||
Proceeds from (purchase of) marketable equity securities and other financial assets | 24,425 | — | |||||
Cash paid for acquisitions, net of cash acquired | — | (96,507 | ) | ||||
Other investing activities, net | (1,400 | ) | (8,614 | ) | |||
Net cash flows used in investing activities | (90,360 | ) | (208,766 | ) | |||
Cash Flow from Financing Activities: | |||||||
Proceeds from exercise of warrants | 288 | 44 | |||||
Purchase of treasury stock | (80,049 | ) | (25,519 | ) | |||
Proceeds from exercise of stock options | 16,540 | 8,743 | |||||
Net cash flows (used in) provided by financing activities | (63,221 | ) | (16,732 | ) | |||
Net decrease in cash and cash equivalents, restricted cash, and cash reserved for users | (155,332 | ) | (851,017 | ) | |||
Cash and cash equivalents, restricted cash, and cash reserved for users at the beginning of period | 1,778,825 | 2,629,842 | |||||
Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | 1,623,493 | $ | 1,778,825 | |||
Disclosure of cash and cash equivalents, restricted cash, and cash reserved for users | |||||||
Cash and cash equivalents | $ | 1,270,503 | $ | 1,309,172 | |||
Restricted cash | 11,700 | — | |||||
Cash reserved for users | 341,290 | 469,653 | |||||
Cash and cash equivalents, restricted cash, and cash reserved for users at the end of period | $ | 1,623,493 | $ | 1,778,825 | |||
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||||||
Investing activities included in accounts payable and accrued expenses | 569 | 9,155 | |||||
Equity consideration issued for acquisitions | — | 460,128 | |||||
Decrease in warrant liabilities from cashless exercise of warrants | 4,654 | — | |||||
Supplemental Disclosure of Cash Activities: | |||||||
(Decrease) increase in cash reserved for users | (128,363 | ) | (7,297 | ) | |||
Cash paid for interest | — | — | |||||
Cash paid for income taxes, net of refunds | 8,341 | 10,366 |
Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the closing date of
Non-GAAP Financial Measures
This press release includes Adjusted EBITDA and Adjusted Earnings (Loss) Per Share, which are non-GAAP financial measures that
The unaudited table below presents the Company’s Adjusted EBITDA reconciled to its net loss, which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:
| Three Months Ended | Year ended | |||||||||||||
(amounts in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net Loss | $ | (44,621 | ) | $ | (242,697 | ) | $ | (802,142 | ) | $ | (1,377,987 | ) | |||
Adjusted for: | |||||||||||||||
Depreciation and amortization (1) | 55,198 | 48,623 | 201,920 | 169,252 | |||||||||||
Interest (income) expense, net | (18,104 | ) | (10,324 | ) | (55,739 | ) | (18,702 | ) | |||||||
Income tax (benefit) provision | 6,860 | 9,714 | 10,170 | (67,866 | ) | ||||||||||
Stock-based compensation (2) | 113,517 | 130,161 | 398,463 | 578,799 | |||||||||||
Transaction-related costs (3) | 1,954 | 2,285 | 3,060 | 17,315 | |||||||||||
Litigation, settlement, and related costs (4) | 23,910 | 1,224 | 34,500 | 7,010 | |||||||||||
Advocacy and other related legal expenses (5) | — | — | — | 16,558 | |||||||||||
Loss (gain) on remeasurement of warrant liabilities | 12,716 | (9,197 | ) | 57,543 | (29,396 | ) | |||||||||
Other non-recurring, special project and non-operating (income) costs (6) | (412 | ) | 20,284 | 1,190 | (16,764 | ) | |||||||||
Adjusted EBITDA | $ | 151,018 | $ | (49,927 | ) | $ | (151,035 | ) | $ | (721,781 | ) |
Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the closing date of
____________________________________ | ||
(1) | The amounts include the amortization of acquired intangible assets of | |
(2) | Reflects stock-based compensation expenses resulting from the issuance of awards under incentive plans. | |
(3) | Includes capital markets advisory, consulting, accounting and legal expenses related to evaluation, negotiation and integration costs incurred in connection with proposed, pending or completed transactions and offerings, including costs related to the GNOG Transaction. | |
(4) | Primarily includes external legal costs related to litigation and litigation settlement costs deemed unrelated to DraftKings’ core business operations. | |
(5) | Reflects non-recurring and non-ordinary course costs relating to advocacy efforts and other legal expenses in jurisdictions where | |
(6) | Primarily includes the change in fair value of certain financial assets, as well as the Company’s equity method share of the investee’s losses and other costs relating to non-recurring and non-operating items. | |
The unaudited table below presents the Company’s Adjusted Earnings (Loss) Per Share reconciled to its basic loss per share attributable to common stockholders, which is the most directly comparable financial measure calculated in accordance with GAAP, for the periods indicated:
| Three Months Ended | Year ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Basic loss per share attributable to common stockholders | $ | (0.10 | ) | $ | (0.54 | ) | $ | (1.73 | ) | $ | (3.16 | ) | |||
Adjusted for: | |||||||||||||||
Amortization of acquired intangible assets | 0.06 | 0.06 | 0.25 | 0.24 | |||||||||||
Discrete tax provision (benefit) attributed to the GNOG acquisition | — | 0.02 | — | (0.16 | ) | ||||||||||
Stock-based compensation (1) | 0.24 | 0.29 | 0.86 | 1.33 | |||||||||||
Transaction-related costs (2) | — | — | 0.01 | 0.03 | |||||||||||
Litigation, settlement, and related costs (3) | 0.05 | 0.01 | 0.07 | 0.02 | |||||||||||
Advocacy and other related legal expenses (4) | — | — | — | 0.04 | |||||||||||
Loss (gain) on remeasurement of warrant liabilities | 0.03 | (0.02 | ) | 0.12 | (0.07 | ) | |||||||||
Other non-recurring costs and non-operating (income) costs (5) | — | 0.04 | — | (0.04 | ) | ||||||||||
Adjusted Earnings (Loss) Per Share* | $ | 0.29 | $ | (0.14 | ) | $ | (0.41 | ) | $ | (1.77 | ) |
Due to the timing of the consummation of the GNOG Transaction, the above periods, to the extent applicable, exclude GNOG’s operations prior to the closing date of
____________________________________ | ||
* | Weighted average number of shares used to calculate Adjusted Earnings (Loss) Per Share for the fourth quarter and year ending | |
(1) | Reflects stock-based compensation expenses per share resulting from the issuance of awards under incentive plans. | |
(2) | Reflects capital markets advisory, consulting, accounting and legal expenses per share related to evaluation, negotiation and integration costs incurred in connection with proposed, pending or completed transactions and offerings, including costs relating to DraftKings’ acquisition of | |
(3) | Primarily reflects external legal costs related to litigation and litigation settlement costs, in each case per share, deemed unrelated to DraftKings’ core business. | |
(4) | Reflects non-recurring and non-ordinary course costs per share relating to advocacy efforts and other legal expenses in jurisdictions where | |
(5) | Primarily includes the change in fair value of certain financial assets, as well as the Company’s equity method share of the investee’s losses and other costs relating to non-recurring and non-operating items, in each case per share. | |
Information reconciling forward-looking fiscal year 2024 Adjusted EBITDA to its most directly comparable GAAP financial measure, net income (loss), is unavailable to
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements about the Company, Jackpocket and their respective industries that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release, including statements regarding guidance, DraftKings’ and Jackpocket’s consummation of the proposed transaction and future results of operations or financial condition, strategic plans and focus, user growth and engagement, product initiatives, and the objectives and expectations of management for future operations (including launches in new jurisdictions and the expected timing thereof), are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “confident,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “going to,” “intend,” “may,” “plan,” “poised,” “potential,” “predict,” “project,” “propose,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions.
You should not rely on forward-looking statements as predictions of future events.
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