DraftKings sees significant YoY revenue growth and losses in 2021

DraftKings has reported what it described as ‘better than expected’ Q4 and 2021 financials, declaring significant YoY growth in both measuring periods.
Image source: DraftKings

DraftKings Inc has reported what it described as ‘better than expected’ fourth quarter and full-year 2021 financial results, declaring significant year-over-year growth in both measuring periods.

But while revenue improved YoY in both Q4 and over the full year, shareholders will be left feeling uncomfortable with growing net losses of $1.523bn in 2021 (2020: $1.231bn) as the firm continues to pay heavily to gain short-term revenue.

For Q4, ending December 31, 2021, DraftKings reported revenue of $473m, a 47% improvement on Q4 2020’s $322m. Q4 revenues also exceeded its previous guidance given during its Q3 earnings call by 8%.

The firm noted that its monthly unique payers (MUPs) for its B2C segment increased by 32% to 1.971 million (Q4 2020: 1.498 million). On average, 2 million MUP customers engaged with DraftKings during each month of the fourth quarter.

Its average revenue per MUP (ARPMUP) for Q4 was $77, a 19% increase on Q4 2020. DraftKings stated that its ARPMUP benefitted from continued mix shift into its sportsbook and igaming product offerings and cross-selling its customers into more products.

As for the full year, revenue grew by 101% to $1.296bn compared to 2020’s $614.5m. Following the market launches of New York and Louisiana in January, the company now has mobile sportsbooks live in 17 states and igaming in five.

DraftKings MUPs for 2021 came in at 1.494 million (2020: 883,000) with an ARPMUP of $67 (2020: $51). The firm credits the improvement to strong unique payer retention and acquisition across its product offerings, its expansion into new states, and the major sporting events not being affected by COVID-19 to the same degree as 2020.

“DraftKings’ strong fourth quarter performance exceeded our expectations on the top and bottom line,” said Jason Robins, Co-Founder, CEO, and Chairman of the Board.

“Our excellent quarter capped off a year in which five of our states were contribution profit positive, further demonstrating the effectiveness of our state playbook and supporting our positive view of the industry’s TAM. We enter 2022 positioned to grow our market share, further optimize our user experience and continue to strengthen our multi-product suite of offerings.”

DraftKings also noted that it expects to improve its profitability over time (excluding the impact of amortization of acquired intangibles) through cost synergies and new opportunities driven by its completed vertical integration of the technology and expertise of SBTech (Global) Limited which was acquired in April 2020.

Chief Financial Officer Jason Park stated: “We grew revenue 47% year-over-year to $473m in the fourth quarter despite lower-than-expected hold in October primarily due to NFL game outcomes.

“Our key performance indicators reflected excellent player retention, acquisition and cross-selling in the quarter, as Monthly Unique Payers increased by 32% and Average Revenue Per Monthly Unique Payer grew by 19%.”

As a result of the revenue growth in 2021, DraftKings is adjusting its revenue projections for 2022, taking into account the launch of mobile sports betting in New York and Louisiana in January. It has also introduced a 2022 guidance for adjusted EBITDA.

Park added: “We are increasing the midpoint of our 2022 revenue guidance to $1.93bn given new state launches and strong underlying performance trends and introducing guidance for adjusted EBITDA of negative $825m to $925m.”