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.