DraftKings (DKNG) stock popped late Thursday after the sportsbook operator posted a revenue beat and narrower-than-expected loss for its fourth quarter.
The company reported an Adjusted EBITDA loss of $49.9 million. Wall Street had expected the sportsbook to lose more than double that amount.
Earnings came in at $0.53 per share versus Street estimates of $0.59. DraftKings also projected positive Adjusted EBITDA for 2024, along with a narrower-than-expected Adjusted EBITDA loss in 2023.
“I am very pleased with how we concluded 2022, with continued top-line growth and strong focus on expense management,” DraftKings CEO and Co-founder Jason Robins said in a release. “In the fourth quarter, we grew revenue by 81% versus last year and delivered positive Adjusted EBITDA in October and for the quarter when adjusting for our launch costs in Maryland and Ohio.”
Here are key numbers from DraftKings’ report, as compared to analysts’ estimates compiled by Bloomberg:
Q4 revenue: $855 million vs. $798.64 million
Q4 Adjusted EPS: $0.53 vs. $0.59 expected
Q4 Adjusted EBITDA: $49.9 million vs. $112.35 million expected
The revenue number represents an increase of 81% over the same period in 2021 and drove a profitable month in October when adjusting for launches in Maryland and Ohio, according to the company release.
Increased sports gambling legalization helped drive that growth for DraftKings, which is now operational in 21 states for either retail or online betting. With California no longer coming online during 2023, DraftKings 2023 profitability will become even more focused as the operator saves on opening costs in a major state.
“They’ve got a pretty good outlook for state launches this year, so that should allow them to leverage their advertising spend better,” Oppenheimer Managing Director of Equity Research for Consumer Internet Jed Kelly told Yahoo Finance Live ahead of earnings.
He added that “if you can start to show they’re leveraging their advertising spend, you also have the land-based guys being more rational, which is a positive. So I think you see more rationalization in the model — or in the industry. And then you actually start to see advertising leverage and that it could be down year-over-year. I think that’s a positive for the stock.”
DraftKings is set to host an investor call at 8:30 a.m. ET on Friday morning.
Josh is a reporter and producer for Yahoo Finance.