DraftKings has released its Q2 2024 financial results revealing revenue of $1.1 billion, up by 26% year-on-year.
In an investors call, DraftKings CEO Jason Robbins cited continued healthy customer acquisition as the main driver of revenues:
“We very efficiently acquired many more new customers than we expected and saw continued healthy existing customer engagement in the second quarter. We will continue to capitalize on the healthy customer acquisition environment for the rest of 2024 which positions us to achieve $900 million to $1.0 billion of Adjusted EBITDA in 2025.”
Q2 2024 Report Highlights
- Q1 Revenue; $1.104 billion, up 26%
- Loss from operations; -$32.8 million, 53% decrease on losses reported in Q2 2023
- Adjusted EBITDA; $127.9 million
- Monthly Unique Payers (“MUPs”) increased to 3.1 million, up by 50%
- Average revenue per customer was $117, up by 15%
2024 Revenue Guidance Midpoint Raised to $5.15 Billion
DraftKings has revised its fiscal year 2024 revenue projection to between $5.05 billion and $5.25 billion, up from the previously stated range of $4.80 billion to $5 billion announced on May 2nd, 2024.
Alan Ellingson, DraftKings’ Chief Financial Officer said:
“We are very excited about DraftKings’ Free Cash Flow trajectory. In light of that, we are pleased to announce a $1.0 billion inaugural share repurchase authorization, which reflects our confidence in the Company’s attractive long-term outlook and healthy balance sheet.”
Customer Surcharge for High Tax States
In an precedented move, Robbins also dropped the news that the company would look to implement a customer surcharge for anyone based in states with high sports wagering tax rates.
He briefly stated:
“Additionally, we plan to implement a gaming tax surcharge in high tax states that have multiple mobile sports betting operators on January 1, 2025 which could drive Adjusted EBITDA upside on an annual basis.”
Earlier this year when asked about states increasing tax rates Robbins said:
“In the end, the cost has to get absorbed by the consumer if the government raises taxes. So there’s various levers to that. Also, we could lower external marketing, which I think will be partially just driven by the fact that if taxes go up, we’re going to have to create better margins.”
The surcharge will be introduced in January 2025 with it slated as being a ‘nominal charge for customers’. It will be rolled out in any state with a tax rate above 20%.
Illinois has recently passed a bill that sets out a new progressive tax structure that will see rates ranging from 20% to 40%. The rate charged depends on the sportsbook’s gross revenues. This will see the Prairie State included on the list.
The report state that the surcharge will be rolled out in New York, Pennsylvania, Illinois, and Vermont. However, despite news that it will be applicable in states with 20% or higher tax rates, there is no mention of Oregon. The company is the sole sports betting provider in Oregon with 51% of all revenues going to the state.
An experienced iGaming commentator and analyst based in New York City – Jenny reports on regulation and gambling industry news and events.
DraftKings, a popular online sports betting and daily fantasy sports platform, recently reported a 26% increase in revenues for the third quarter of 2021. The company’s total revenue reached $213 million, surpassing analysts’ expectations and demonstrating strong growth in the competitive sports betting market.
This impressive revenue growth can be attributed to several factors, including the return of major sports leagues following the disruptions caused by the COVID-19 pandemic, as well as DraftKings’ continued efforts to expand its customer base and improve its offerings.
However, alongside this positive news, DraftKings also announced a new customer tax surcharge that will be implemented in certain states where online sports betting is legal. This surcharge is intended to help offset the costs associated with complying with state regulations and taxes, which vary from state to state.
While some customers may be disappointed by the news of the surcharge, it is important to understand that operating in the highly regulated online sports betting industry comes with significant costs and challenges. DraftKings is committed to complying with all relevant regulations and ensuring a safe and secure betting environment for its customers.
Overall, DraftKings’ strong revenue growth and commitment to regulatory compliance demonstrate the company’s resilience and ability to adapt to the evolving landscape of online sports betting. As the industry continues to grow and evolve, DraftKings remains a key player in the market, poised for further success in the future.
