DraftKings (DK) shares rallied late Thursday after the sports betting operator posted superior revenue and a lower-than-expected loss for the fourth quarter.
The company reported an adjusted EBITDA loss of $49.9 million. Wall Street has predicted sportsbooks will lose more than double that amount.
DraftKings lost $0.53 per share for the quarter versus Street estimates of $0.59. DraftKings has also improved its forecasts for adjusted EBITDA for the full year of 2023. The company now expects losses in the $350 to $450 million range. Initially, DraftKings directed an adjusted EBITDA loss of $475-575 million in 2023. Positive EBITDA will be reached in 2024, according to the press release.
“I am very pleased with how we ended 2022, with continued revenue growth and a strong focus on cost management,” DraftKings CEO and co-founder Jason Robins said in a statement. announcement.
Here are the key numbers from the DraftKings report, compared with analyst estimates compiled by Bloomberg:
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Q4 revenue: 855 million USD vs. 798.64 million USD expected
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Q4 adjusted EPS: -$0.53 vs -$0.59 expected
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4Q Adjusted EBITDA: -49.9 million USD vs -112.35 million USD expected
The revenue numbers represent an 81% year-over-year increase in 2021 and deliver a profitable month in October when adjusted for launches in Maryland and Ohio, according to the company’s press release.
Increased legalization of sports gambling has helped fuel that growth for DraftKings, which currently operates in 21 states for retail or online betting. With California no longer online in 2023, DraftKings 2023 profits will be all the more focused as the cost-effective operator opens in a major state.
“They have pretty good prospects for state launches this year, so that will allow them to better leverage their ad spend,” said Oppenheimer CEO Equity Research for Internet consumer Jed Kelly told Yahoo Finance Live before the earnings release.
He added that “if you can start to show they’re leveraging their ad spend, you can also see people working on land become more rational, which is a positive thing.” So I think you’re going to see more rationalization in the model — or in the industry. And then you really start to see the advertising leverage and it can go down year by year. I think that’s a positive thing. poles for stocks.”
DraftKings is set to host an investor call at 8:30 a.m. ET on Friday morning.
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Josh is a reporter and producer for Yahoo Finance.
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