When it comes to gambling, over a long enough time frame, the house always wins.
And that appears to be the case with daily fantasy sports contest and sports betting company DraftKings, which on Friday (May 3) reported that its revenue had grown 53% year-over-year in the first quarter of 2024.
“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,” said DraftKings Co-founder and Chief Executive Officer Jason D. Robins.
“We successfully launched our online sportsbook in Vermont and North Carolina with highly efficient customer acquisition … We continue to focus on driving product innovation and customer-centricity. Our platform and overall customer experience are rapidly improving, and as a result, we are achieving excellent customer retention and participation across sports and games,” Robins added on Friday’s investor call.
As a result, the company increased its fiscal year 2024 revenue guidance to $4.9 billion from $4.775 billion and the midpoint of its Adjusted EBITDA guidance to $500 million from $460, CFO Alan Ellingson said.
The CFO detailed improvements across key metrics, including customer acquisition, retention and engagement, which contributed to higher than expected handle in the first quarter. The company’s structural sportsbook hold percentage also exceeded expectations, reaching 9.8%, a significant increase from the previous year.
Overall, DraftKings reported a loss of 30 cents per share, improved from a loss of 87 cents per share the year prior. The company’s stock price, which is up over 20% for the year, remained relatively unchanged as of reporting.
Read more: DraftKings Looks to Hit Jackpot With Lottery Acquisition, Digital Innovation
Executives on Friday’s call stressed the company’s “unbelievably efficient” first quarter and noted that in April, DraftKings had a roughly 40% year-over-year decrease in customer acquisition costs (CAC).
“I think its just optimized performance and really strong growth in the total addressable market (TAM),” said CEO Robins. “Anytime we have multiple products in a market, it’s a huge boon to LTV. And, the cost is you already acquired the customer … once you’ve already acquired them, cross selling is an incredibly effective and a very fast payback means of increasing not only LTV, but also short-term gross profit as well.”
“The main funnel we’re seeing is really sports to iGaming. We try to cross sell between all of our products, and it doesn’t cost much more once you’ve acquired the customer onto the platform to get them to try new products,” he added.
DraftKings number of monthly unique players (MUPs) increased 23% to 3.4 million, while the average revenue per MUP rose 25% to $114. Against that backdrop, Robins also touched on the importance of responsible gaming, affirming DraftKings’ commitment to leading initiatives that promote a safe and enjoyable gaming environment.
Read more: Gig Economy and Gaming Push Instant Payments Forward
Additionally, he highlighted the company’s focus on proprietary technology solutions, including significant advancements in sportsbook offerings and the expansion of its iGaming portfolio with new, unique titles.
“We’re testing a variety of different use cases across the company, things that improve our product like rapid prototyping and sprint metric supporting and also initiatives that improve efficiency like code refactoring, code review and marketing asset creation,” Robins explained about the use of artificial intelligence (AI).
“And then obviously being customer centric, customer experience is the center of our AI initiatives, including using AI to help model and detect signs of problem gaming. So that we can properly flag things for our player intervention team to go and investigate. So lots of really good stuff there. And, I think we’re scratching the surface,” he added.
But there was little mention of payments and payouts during the call. Winning can provide an instant rush — and although eight in 10 gamers prefer immediate access to their winnings, less than half of gamers now have access to instant payouts.
That is one key takeaway from “Generation Instant: Gamers and Winnings,” a report PYMNTS Intelligence created in collaboration with Ingo Payments.
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