DraftKings rose slightly Friday after paring its premarket following its mixed Q4 report late Thursday and $750 million acquisition of a top lottery app.
DraftKings reported adjusted earnings of 29 cents per share, improving from a loss of 14 cents per share last year. Revenue growth slowed for the second quarter in a row, increasing 43% to a record $1.23 billion. GAAP earnings came out to a loss of 10 cents per share, improving from a loss of 53 cents per share last year, but still missing forecasts of 8 cents per share.
FactSet expected DraftKings to report Q4 adjusted earnings of 22 cents per share on 45% revenue growth to $1.24 billion.
DraftKings reported a 37% jump in its Monthly Unique Players (MUPs) to an average 3.5 million paying customers, which DraftKings says reflects strong customer acquisition and retention as its sportsbook and iGaming products expand to additional jurisdictions. The average revenue per MUP rose 6% for the quarter to $116, but it was offset by customer-friendly sport outcomes. Average revenue per MUP would have increased 22% when adjusting for customer wins.
The Boston-based betting company now offers live mobile sports betting in 24 states, representing 46% of the U.S. population. Its iGaming offerings are live in five states that represent 11% of the U.S. population.
DraftKings hoisted its 2024 revenue outlook on results, expecting $4.65 billion to $4.9 billion, representing 27% to 34% growth. It previously guided full-year revenue between $4.5 billion to $4.8 billion. DraftKings also raised its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance between $410 million and $510 million for the year, up from its previous range of $350 million to $450 million.
FactSet analysts expect a full-year loss of 29 cents per share on $4.67 billion in revenue.
Lottery Acquisition
DraftKings also announced it will acquire Jackpocket, the leading lottery app in the U.S., for $750 million. About 55% of that will be in cash and the rest will be DraftKings stock. The company does not require an additional capital raise for the purchase, which is expected to close in the second half of 2024, pending regulatory approvals.
DraftKings expects the transaction to drive $260 million-$340 million in incremental revenue in fiscal 2026, growing to $350 million-$450 million in incremental revenue by fiscal 2028.
Gambling Expansion, Barstool Sports Partnership
The Boston-based company on Jan. 11 launched its online sportsbook in Vermont, marking the 26th state in which DraftKings operates, in addition to Ontario, Canada. Meanwhile, DraftKings announced an agreement with NASCAR in early January, which will allow the gaming company to operate in North Carolina starting March 11.
The Tar Heel State is scheduled to start legal sports betting on March 11, just in time for NCAA March Madness, following approval last June. A number of rival sportsbooks are set to roll out, including BetMGM, Flutter Entertainment-owned FanDuel, Caesars, Bet365 and Fanatics.
Elsewhere, DraftKings and sports and pop culture media company Barstool Sports announced a multi-year sports betting partnership following the Super Bowl.
Financial terms were not disclosed but prior reports from Sportico indicated the deal would encompass a traditional marketing partnership in which Barstool promotes DraftKings odds. Barstool would benefit from customers referred to the sportsbook. But Barstool declined to lend its brand to a sportsbook or betting app, a venue or platform where people can wager on sports.
The previous reports indicated DraftKings would pay Barstool in the "low eight figures per year." However, Barstool was unable to finalize a betting deal until after the Super Bowl due to a lockup as part of its recent separation from Penn Entertainment.
Last summer, Disney-owned ESPN partnered with Penn on a gambling sportsbook. As part of that deal, Penn rebranded its Barstool Sportsbook as ESPN Bet and will use ESPN Bet exclusively. Penn agreed to pay ESPN $1.5 billion cash over 10 years, plus $500 million in warrants to buy PENN stock. In return, it will get exclusive rights to the ESPN Bet trademark in the U.S. for the next 10 years. ESPN Bet launched on Nov. 14.
DraftKings Stock
DKNG stock ticked up 0.3% Friday after tumbling more than 6% premarket. The stock gained 1.3% during Thursday trade. Shares are extended above a buy zone after clearing a 38.97 entry for a double-bottom base in late January.
DraftKings rallied more than 26% so far this year.
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