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DraftKings cannot yet wear the crown of becoming a profitable online gambling company. However, it looks like it’s a few steps closer to ascending to that throne. The most recent financial report from DraftKings, documenting its third-quarter earnings, bears some good news.
The company grew its revenue and shrunk its net loss compared to the same time period in 2022. While that seems a simple path to profitability, replicating that improvement isn’t necessarily an easy and linear task.
DraftKings gives shareholders update on Q3 2023
In what’s becoming a general trend among most companies heavily engaged in online gambling in the United States, net losses shrunk for DraftKings during the third quarter of 2023. A big part of the reason for that situation is more revenue.
According to DraftKings’ news release about its third quarter numbers, revenue grew 57% year-over-year during Q3 2023 to $789.9 million. That translated to a net loss of $283.1 million, which is 37.2% lower than the net loss from Q3 2022.
While some companies like Rush Street Interactive touted a significant reduction in their marketing spend as a reason for an improved bottom line, DraftKings can make no such claim. DraftKings’ marketing spend for Q3 2023 was 97.4% of the same amount in Q3 2022.
Rather, DraftKings attributes its decline in its net loss to customer acquisition and expansion. DraftKings states that its current monthly unique player count is 2.3 million on average. That represents a 40% increase from Q3 2022.
Part of the reason for that increase was simple expansion into new markets. That included Kentucky and Ohio since Q3 2022. DraftKings can count on some of that moving forward. However, replicating its growth won’t be that simple.
DraftKings’ challenges in replicating Q3 growth
DraftKings is likely to have some new customers in the near term. It has launched its online sportsbook in Maine and is a likely contender for a similar opportunity in North Carolina. Outside of perhaps Vermont, those are the expansion prospects in the near future.
Some of the states representing its current markets might legalize real-money online casino play soon. Those opportunities are further out and much less firm right now, though. DraftKings’ most immediate opportunities to continue to work toward profitability could be internal.
Compared to the number of new customers it acquired, DraftKings’ ability to glean more value out of existing customers over the past year was small. DraftKings says its average revenue per monthly unique player grew by 14% year-over-year in Q3 2023.
Increasing that metric could be something DraftKings puts more emphasis on. It’s also possible that DraftKings may cut expenses going forward. It’s still one of the biggest spenders when it comes to marketing in the US online gambling industry.
If DraftKings hasn’t followed the trend of cutting back in that regard yet, doing so may not be a plan of action now either. DraftKings’ plan to take the crown of actually showing a profit might truly center on being the best and biggest brand.
