DraftKings announced today its financial results for the three months ended December 31 and full-year 2021 report posting 47% quarterly growth year-over-year with Q4 revenue of $473 million, yet markets reacted by ditching its stock.
Revenue Exceeding Expectations
Revenue generated by DraftKings in the final three months of 2021 beat the market consensus of $439 million as analysts were predicting growth of 36%. The fourth quarter 2021 revenue exceeded the guidance issued by DraftKings during its third quarter earnings conference call by 8%.
“DraftKings’ strong fourth quarter performance exceeded our expectations on the top and bottom line.”
Jason Robins, Co-Founder, Chief Executive Officer and Chairman of the Board, DraftKings
Revenue for the full year ended December 31, 2021 posted a triple-digit increase year-over-year after giving pro forma effect to the three-way merger with SBTech and Diamond Eagle Acquisition Corp which was completed in April 2020.
“Our excellent quarter capped off a year in which five of our states were Contribution Profit positive, further demonstrating the effectiveness of our state playbook and supporting our positive view of the industry’s TAM.”
Jason Robins, Co-Founder, Chief Executive Officer and Chairman of the Board, DraftKings
DraftKings reported the number of monthly unique payers for its B2C segment increased in the fourth quarter with 32% year-over-year as its monthly average reached 2 million unique paying customers during the three months. The increase is due to strong retention and acquisition across sportsbook and iGaming products and the expansion into new states.
The Boston-based gaming operator reported average revenue per paying customer was $77 in the quarter, up 19% on the fourth quarter in 2020. The result was achieved mainly through continued mix shift into sportsbook and online casino products and cross-selling into other products.
Upgraded Revenue and EBITDA Guidance
Based on the latest results, DraftKings increased its fiscal year 2022 revenue guidance from the $1.7 billion-$1.9 billion range to $1.85 billion- $2.0 billion range to reflect an expectation of a 54% increase in growth year-over-year. On the EBITDA front, DraftKings is expecting in 2022 adjusted EBITDA loss between $825 million and $925 million.
DraftKings, which is currently live with mobile sports betting in 17 states, New York and Louisiana being the latest, and live with iGaming in 5 states, expects to generate positive adjusted EBITDA in Q4 2023, based on the current trends of legalization, 7%-9% in mobile sports betting and 3%-4% in iGaming annually.
The release of the earnings report forced investors into selling mode and DraftKings stock gapped down on market open to $19 per share, having closed just above $22 the day before, sending the share price in the area where it was in January before a memo released by Morgan Stanley influenced investors into buying the stock.