DraftKings shares surge on positive cash flow, spiking revenue in second quarter

August 6, 2023 5:34 PM
Photo: Shutterstock
  • Matthew Crowley, CDC Gaming Reports
August 6, 2023 5:34 PM
  • Matthew Crowley, CDC Gaming Reports

DraftKings shares spiked Friday after the sports-betting giant reported a slimmer loss, surging revenue, and positive adjusted cash flow for the second quarter. As it has for the past several quarters, DraftKings raised its annual-revenue guidance.

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In a statement, Boston-based DraftKings said its net loss was $77.3 million, or 17 cents per share, for the three months ended June 30, up from a net loss of $217.1 million, or 50 cents per share, a year earlier.

Adjusted earnings per share, which exclude one-time costs, were 14 cents per share, topping the 14-cent-per-share average loss analysts surveyed by Seeking Alpha had expected.

DraftKings stock surged 8.08% to $32.41 early Friday, before ending the day with a 5.84% increase, up $1.74 to $31.74. The stock price has more than doubled year to date.

Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that also excludes one-time costs was a positive $73 million, reversing a year-earlier $1188.1 cash flow loss.

Revenue surged 87.7% to $874.9 million from $466.2 million, topping the $762.8 million forecast of Seeking Alpha-polled analysts.

DraftKings is raising its fiscal-year 2023 revenue guidance to a range of $3.46 billion to $3.54 billion from $3.135 billion to $3.235 billion.

The company said it expects to generate $150 million to $175 million of adjusted EBITDA in the fourth quarter, when the National Football League, National Basketball Association, and National Hockey League seasons will all be underway.

DraftKings plans to start operating mobile sports betting in Kentucky, North Carolina, Vermont, and Puerto Rico, which recently authorized mobile sports betting. DraftKings already has mobile sports betting in 21 states and is live with internet gaming in five states.

“Our revenue-growth trajectory has been very strong, due to our continued focus on enhancing our products and improving our customer experience, which are driving excellent retention and rapidly improving monetization,” DraftKings Chief Executive Officer Jason Robins said in a conference call with analysts and journalists. “At the same time, we remain relentlessly focused on efficiency and our mantra of revenue growth and cost efficiency is now a core tenet of the organization.”

Also on the call, Chief Financial Officer Jason Park said Kentucky’s Horse Racing Commission set a Sept. 28 target launch date for online sports betting, which was sooner than expected. As a result, he said, DraftKings expects $20 million of additional 2023 revenue.

DraftKings’ average monthly unique payers increased to 2.1 million, up 44% from a year earlier. Average revenue per monthly unique payers was $137 in the second quarter, an increase of 33% from a year earlier.

As Benzinga reports, many analysts are positive on DraftKings. JMP Securities rates it “market outperform,” Susquehanna rates the stock “positive,” Morgan Stanley rates the stock “overweight,” and Needham rates it “buy.” Price targets range from $32 to $39.

JMP Securities analyst Jordan Bender told Benzinga, “The operational excellence, higher structural hold, and lucky outcomes had a direct positive impact on results.”