In its fourth-quarter earnings call on Friday, sports betting giant DraftKings said it expected a decline in its adjusted earnings before interest, taxes, and depreciation to be between $825 million and $925 million for 2022, even bigger than its 2021 adjusted loss of $676.1 million.
On the call, DraftKings wanted to celebrate big jumps in monthly unique players (up 32% from a year earlier to 2 million) and revenue (up 41% from a year earlier). But the Boston-based company’s reports of mounting costs, particularly for sales and marketing, along with a wider net loss, seemed to shake investors.
On Friday, DraftKings’ shares fell $4.77, or 21.62%, to close at $17.29 in regular trading on the Nasdaq. The shares rose 3 cents, or 0.17%, to settle at $17.32 after hours.
In a statement, DraftKings said its fourth-quarter net loss widened to $326.3 million, or 80 cents per share, from $242.7 million, or 69 per share, a year earlier. Analysts surveyed by Zacks Investors Service expected a loss of 82 cents per share.
Excluding nonrecurring items, the adjusted per-share loss widened to 35 cents from 24 cents.
Revenue jumped 47% to $473.3 million from $322.2 million, topping Zacks-polled analysts’ $448.4 million revenue forecast. However, sales and marketing costs also sustained an equivalent increase, rising 46% to $278 million from $192 million.
In the conference call with analysts and journalists, DraftKings CEO Jason Robins said customer acquisition in new states has been accelerating. Ten states are profit positive or on track to be so in 2022, he said.
Robins told CNBC’s “Squawk on the Street” that the company performed consistently.
“I think the model’s working and we’ll play the long game here,” he said. “I’m very confident that once the market settles down and rationality kicks back in, the metrics we’re putting out there will start to resonate.”
In the conference call, Robins said DraftKings on Jan. 8 launched mobile sports betting in New York, acquiring 100,000 first-time paid bettors in less than 24 hours, compared with 17 days for Arizona, 170 days for New Jersey, 312 days for Pennsylvania, and 344 days for Indiana.
Nevertheless, trouble may loom. Robins told CNN Business that Major League Baseball’s lockout could be problematic if it leads to a delayed start and shortened season. And MoffettNathanson’s Robert Fishman told The New York Times that DraftKings won’t have a positive cash flow until 2025 and won’t turn a profit until 2028.
Follow Matthew Crowley on Twitter @copyjockey.
