DraftKings (NASDAQ:DKNG) delivered better-than-expected Q1 financial results. Its top line registered strong growth. This was accompanied by a significant reduction in losses. Besides for solid financials, the online sports entertainment and gaming company’s management raised the full-year revenue guidance. These positives boosted investors’ sentiment, as evidenced by a 1.7% increase in DKNG stock in Thursday’s after-hours trading.
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DKNG’s leadership emphasized that the optimization of marketing strategies and the enhancement of product offerings have led to better-than-expected customer acquisition, retention, and engagement. Furthermore, the company remains committed to cost control measures across its operations, which is contributing to improvements in its bottom line.
DKNG – Q1 Performance
DraftKings reported revenue of $1.18 billion, up 53% year-over-year. Moreover, it exceeded Street’s forecast of $1.12 billion. The company attributed this growth to higher customer engagement, the addition of new customers, the expansion of its Sportsbook product into new markets, and enhanced promotional efforts for both Sportsbook and iGaming segments.
Looking at the company’s key metrics, its Monthly Unique Payers (MUPs) increased. At the same time, the company’s Average Revenue per MUP (ARPMUP) improved 25% year-over-year to $114.
The higher year-over-year sales, efficient customer acquisitions, and tight cost control measures led DKNG to significantly reduce its losses. The company posted an adjusted net loss of $0.03 per share compared to a loss of $0.51 in the prior year quarter. Moreover, it compares favorably to the Street’s forecast of a loss of $0.29 per share.
Outlook Adjusted Upward
DraftKings expects its top line to be between $4.8 billion and $5 billion in Fiscal 2024, up from its earlier guidance of $4.65 billion to $4.90 billion. The new outlook represents 31% to 36% year-over-year growth.
The company’s solid Q1 financials and improved outlook on customer acquisition and engagement for the remainder of the year prompted DKNG’s management to increase its revenue forecast.
The company expects its Fiscal 2024 adjusted EBITDA to be between $460 million and $540 million, up from its previous forecast of $410 million and $510 million.
What is the Future of DraftKings?
DKNG stock has gained over 96% in one year. Despite the notable increase, Wall Street analysts are upbeat about DraftKings’ prospects.
With 26 Buy and two Hold recommendations, DraftKings stock has a Strong Buy consensus rating. Analysts’ average price target on DKNG stock is $52.24, which implies 21.4% upside potential from current levels.
