DraftKings hosted its earnings call on Friday morning and its executives outlined how successful the company was over the first quarter of 2024.
The gaming giant generated just under $1.2 billion in revenue over the first three months of the year. Those numbers exceeded projections by so much that DraftKings executives had to adjust projections for the rest of the year.
DraftKings Ohio made its own impact on that first quarter bottom line through its sportsbook operations. Despite its success, DraftKings remains behind FanDuel Ohio in the race to be the most popular operator in the Ohio sports betting market.
DraftKings attributes Q1 2024 success to five pillars
DraftKings stated it generated $1.18 billion in revenue in the first quarter of 2024, a massive 53% jump from the previous year. That means DraftKings accumulated $405 million more in revenue than Q1 of 2023, when it gathered $770 million.
DraftKings executives outlined five pillars for the company’s sizable revenue spike in the first quarter of 2024:
- 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 outlined these improvements in his prewritten remarks 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.”
Despite success, DraftKings still struggles to catch FanDuel in Ohio
DraftKings Ohio contributed a significant amount of revenue to the company’s Q1 financial statement.
Overall, the DraftKings mobile sportsbook in Ohio accounted for 6.6% of the total company-wide revenue in the first quarter of 2024. It generated $78.5 million in revenue in the first three months of 2024 after taking $736.9 million of wagers.
Despite its success, DraftKings, which sits in second overall, still trails FanDuel as the most popular option in the Ohio sports betting market. That trend continued in the first quarter of 2024.
FanDuel Ohio, which offers both retail and mobile sportsbook options in the state, took $770.2 million in wagers as of the March Ohio sports betting report. That amounts to 4.3% more than DraftKings. That handle generated $108.2 million of revenue, drastically outpacing DraftKings by $29.7 million, or 27.4%.
There is still quite a bit of ground to make up in Ohio for DraftKings, but the company expects to continue growing over the remainder of the year. Gaining market share is never easy, but DraftKings has shown growth in too many areas to count it out as a possible top choice in the Ohio sports betting market.
DraftKings adjusts FY2024 projections after successful first quarter
The success in the first quarter of 2024 has forced to DraftKings executives to raise their expectations for the rest of the year. Chief Financial Officer Alan Ellingson discussed some of those new projections during the Q1 earnings call.
Ellingson said:
“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 change what is clearly working. Robins said as much during his prepared remarks.
Robins said:
“Looking ahead, we remain committed to maximizing shareholder value through continued innovation, operational excellence and disciplined capital allocation.”
