DraftKings plummets lowering 2024 guidance. It’s not always the home that wins. Shares of the online sportsbook operator fell after the business lowered its 2024 earnings and revenue expectations, citing good fortune by clients in the current quarter. This is evidenced by DraftKings’ (NASDAQ: DKNG) after-hours decline.
Following the announcement that it now projects 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) of $240 million and $280 million on revenue of $4.85 billion to $4.95 “due to the impact of customer-friendly sport outcomes early in the fourth quarter,” DraftKings saw a 5.71% decline in extended trading at the time of writing.
These figures fall short of the operator’s August sales prediction of $5.05 billion to $5.25 billion and EBITDA guidance of $340 million to $420 million. The revised revenue forecast calls for a 32% to 35% increase in revenue year over year.
FanDuel parent company Flutter Entertainment (NYSE: FLUT) had a nearly 3% decline in stock as a result of the decreased 2024 projection, even though DraftKings’ stock strongly recovered from its after-hours lows.
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Since DraftKings usually raises guidance when it releases earnings, investors were probably taken aback by the company’s reduction of its 2024 EBITDA and sales outlooks. With its recently published 2025 revenue outlook, it partially fulfilled its end of the agreement.
“Based on the midpoints of the Company’s updated fiscal year 2024 revenue guidance range and the Company’s fiscal year 2025 revenue guidance range, DraftKings is introducing a fiscal year 2025 revenue guidance range of $6.2 billion to $6.6 billion, which equates to approximately 31% year-over-year growth,” the press release stated.
According to the operator, its August forecast of $900 million to $1 billion in 2025 EBITDA is still on track. Missouri, whose voters approved a comparable ballot issue on Tuesday, may contribute to that prediction by allowing online sports betting to launch sometime next year.
“DraftKings expects to launch its Sportsbook product in Missouri pending market access, licensure, regulatory approvals, and contractual approvals where applicable,” commented the company.
DraftKings’ third-quarter results were strong, with revenue rising 39% to $1.09 billion from the same period last year, probably boosted by the start of the football season in September. MUPs (monthly unique players) increased by 56%.
The fact that DraftKings’ MUPs growth was 27% when Jackpocket was excluded indicates that the $750 million online lottery provider’s announcement earlier this year is paying off. Nonetheless, the average Jackpocket client spends less than the average DraftKings bettor, which caused the average revenue per MUP (ARPMUP) to drop by 10% during the September quarter.
“The decrease was primarily due to lower ARPMUP for Jackpocket customers, when compared to customers of DraftKings’ existing product offerings prior to the acquisition, partially offset by improvement in the Company’s structural Sportsbook hold percentage and improved promotional reinvestment for Sportsbook and iGaming. Excluding the impact of the acquisition of Jackpocket, ARPMUP increased approximately 8% compared to the third quarter of 2023,” mentioned DraftKings.
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