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DraftKings Reports 37% Increase In Its Customer Base In Q4 2023

Written By Derek Helling on February 16, 2024
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Online gambling companies in the United States have one clear objective that has proven mostly elusive to this point — turning a profit. While there is no easy path to bringing in more revenue than the company needs to operate, it is certainly not easy for such entities; some are making headway toward that goal.

DraftKings shared its earnings for the final quarter and entire year of 2023, highlighting increased revenues and lower operating losses. The company’s leadership pointed to several reasons for those improvements, including an uptick in regular customers.

DraftKings shares updated financials for Q4, full year of 2023

According to DraftKings’ latest earnings release, revenue for the final quarter of 2023 came to $1.2 billion, up 44% from the same period in 2022. For the full year, revenue came to $3.6 billion. That’s an increase of 38.9% year-over-year.

While those improvements look great, there’s more to the story. DraftKings still ran into the red in both periods. For the fourth quarter, operational losses came to $43.8 million; for the entire year, the same reached $789.2 million. Again, context is necessary to put those statistics into perspective.

The loss for the fourth quarter of 2023 was a mere 18.4% of what it was for the same period in 2022. Additionally, for the full year, the operational loss amounted to 52.5% of what it had in 2022.

Behind those improvements were two simple factors: DraftKings grew its customer base, and existing customers used its online gambling platforms more frequently in 2023.

DraftKings points to increases in user metrics

During Friday’s earnings call, DraftKings CEO Jason Robins explained how the company improved on its bottom line in 2023.

“DraftKings ended 2023 with excellent performance across customer acquisition, retention and engagement, as well as structural sportsbook hold percentage despite the worst stretch of sport outcomes we have seen as a public company in the fourth quarter,” Robins said.

The statistics Robins referred to support that narrative. For example, DraftKings’ monthly unique player count sat at 3.5 million at the end of the fourth quarter, improving 37% over the comparable period in 2022.

Furthermore, DraftKings says its average revenue from those users grew by 6% during the final quarter of 2023 to $116. Behind those increases, according to Robins, was a good year outside of the fourth quarter for the sportsbook and customer acquisition performance for DraftKings’ real-money online casino products.

For the current quarter and the rest of the year, DraftKings will likely lean on those same aspects of its business to move further toward profitability. There are some obvious opportunities and some more tentative chances.

Expansions of DraftKings’ business ahead

One of the simplest customer acquisition methods for DraftKings is an expansion of reach for its products. Along those lines, DraftKings has recently acquired lottery ticket courier service and online casino operator Jackpocket.

Additionally, DraftKings intends to take its online sportsbook live in North Carolina in March, pending regulatory approval. Outside of that, however, there are no obvious expansion opportunities ahead. There are other possible strategies.

DraftKings has been among the most aggressive online gambling companies in the US regarding acquisitions. However, Robins was tight-lipped about whether more of that will be in the future for the company this year.

Robins also dismissed notions that DraftKings would move to become a sort of “one-stop shop” for entertainment purposes by seeking to acquire live sports broadcasting rights. Rather he suggested that improvements in existing products would be more of a focus.

At the same time, Robins did not rule out possibly taking Jackpocket’s courier service into new markets. He spoke about Jackpocket as a customer acquisition tool with a lower barrier because of the widespread legality of lottery tickets in most of the US.

Net profitability might not be ahead for DraftKings in 2024, but the momentum seems to be carrying the company in that direction. At this time, the company’s bottom line is still vulnerable to volatility in sports betting and customer acquisition largely reliant on US jurisdictions expanding legal online gambling.

Nonetheless, DraftKings could be getting closer to the point where it has enough regularly depositing customers to break even. The numbers released at this time next year will show whether that is the case.

Photo by PlayUSA
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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