DraftKings reported net revenue approaching $1.2 billion in the first quarter of 2024 in its recent Q1 earnings call.
The success in the first quarter was so dramatic that it led DraftKings to reevaluate and adjust its projections for the rest of the year.
DraftKings’ operations in the Illinois sports betting market helped boost the bottom line, and the state’s impact could grow much larger with its new Wrigley Field Sportsbook and the potential legalization of iGaming.
DraftKings Executives Noted Five Reasons for the Strong First Quarter
DraftKings stated it accumulated $1.18 billion in revenue in the first quarter of 2024, a 53% jump year over year. That equated to $405 million more in revenue than in 2023, when it made $770 million in the first quarter.
DraftKings executives outlined five reasons for the company’s sizable revenue spike:
- Continued healthy customer engagement.
- Efficient acquisition of new customers.
- Expansion of DraftKings Sportsbook into new markets.
- Higher structural hold percentage.
- Improved promotional reinvestment for sportsbook and iGaming.
DraftKings co-founder and Chief Executive Officer Jason Robins noted these improvements in his statement on first-quarter revenue growth.
“DraftKings’ performance in the first quarter of 2024 was outstanding, reflecting healthy revenue growth and a scaled fixed cost structure that positions us to drive rapidly improving adjusted EBITDA. We successfully launched our online sportsbook in Vermont and North Carolina with highly efficient customer acquisition.”
DraftKings’ first quarter success comes in stark relief to other operators that missed financial targets, citing poor weather and bad showings during the Super Bowl and March Madness.
DraftKings Illinois Could Grow With Wrigley Sportsbook License in Hand
DraftKings Illinois is one of the largest retail and online sportsbooks in the state.
That combination means DraftKings is always near the top of the popularity list among Illinois bettors, which helped push it to such an impressive first quarter.
In February, DraftKings Illinois took $394.7 million in wagers across retail and mobile settings, which dwarfed every other operator. The next most popular option was Midwest Gaming and Entertainment, which took $82.9 million in wagers.
DraftKings’ retail sports betting presence could grow even more now that it has received a permanent license for its Wrigley Field Sportsbook. The sportsbook at the famed ballpark opened early on a temporary license it obtained on March 7.
Illinois online casinos are illegal, but a bill to change that is still alive in the 2024 legislative session. Any iGaming legalization could also allow DraftKings to grow in Illinois.
DraftKings Raises Financial Projections After Q1 Success
The success in the first quarter of 2024 has led to DraftKings executives raising expectations for the rest of the year. Chief Financial Officer Alan Ellingson discussed some of those new projects during the earnings call.
“We are raising the midpoint of our fiscal year 2024 revenue guidance to $4.9 billion from $4.775 billion and the midpoint of our adjusted EBITDA guidance to $500 million from $460 million as a result of our excellent first-quarter results and improved outlook on customer acquisition and engagement for the rest of 2024. We expect adjusted EBITDA flow-through percentage to exceed 50% for fiscal year 2024 as we expand our gross margin and exert discipline on our cost structure, while simultaneously investing in promotions and marketing in accordance with our LTV (loan-to-value) to CAC (customer acquisition cost) targets.”
To hit those goals, DraftKings is relying on the same things that led to success in the first quarter. It seems DraftKings’ mindset is to not fix what isn’t broken. Robins said as much during his prepared remarks.
“Looking ahead, we remain committed to maximizing shareholder value through continued innovation, operational excellence and disciplined capital allocation,” he said.
