It’s football season, and that is good news for sports betting company DraftKings.
The gaming platform’s third quarter 2023 earnings results saw a 57% increase in year over year revenue, rising to $790 million.
“Our fantastic third-quarter results demonstrate the positive impact of our product and technology investments as well as excellent preparation and execution by our entire organization,” said Jason D. Robins, CEO and co-founder at Draft Kings, on Friday’s (Nov. 3) earnings call. “Our new and differentiated features and functionality have created an exceptional user experience that sustains engagement for our mobile sports betting and iGaming customers.”
The sports betting and iGaming platform also reported 2.3 million monthly unique payers in the third quarter, a 40% increase year over year. Average revenue per monthly unique payer increased 14% to $114.
“We’re very focused on the customer…and on maximizing the LTV (lifetime value),” said Robins, noting that continued maturity of the company’s customer base is helping bring promotion rates down.
But how is DraftKings bringing that focus on customer LTV to bear? By “acquiring customers efficiently, retaining and monetizing our existing customers through best-in-class products and leading customer service,” wrote Robins in his shareholder letter.
The company’s “investments in product and technology are paying off,” he added.
“Our customers have strong loyalty to DraftKings and are engaging with our products in a sustained manner. Our entire value proposition — focusing on the customer, offering the best product, and providing the most exciting betting markets and games — is resonating with our customer,” Robins said.
However, there was little mention on Friday’s call of some of the current innovations — including artificial intelligence and instant payments — whose impact on the sports betting space PYMNTS has been tracking.
As PYMNTS Intelligence found in the report “Generation Instant: Gaming and Winnings,” gaming companies are not fully capitalizing on the strong consumer demand for instant payouts, and as a result are missing out on the opportunity to enhance customer satisfaction and loyalty.
Riskier bets, with gamblers having more to win (or lose), may push consumer demand even harder towards receiving their sports betting winnings as soon as possible. And as illustrated in the PYMNTS collaboration with Ingo Money, “Disbursements Satisfaction Report 2023,” instant payments represent an increasingly compelling innovation.
Still, “product innovation and engineering is absolutely essential and has to be at the absolute forefront…I expect the pace of innovation to increase,” Robins told investors.
The CEO explained on the earnings call that, “the OSB (online sports betting) customer is very seasonal and event driven, while iGaming is the same all the time.”
“iGaming is a strong business with steady growth, there’s a ton of upside and we don’t have to re-acquire customers because a large percentage of our share comes from cross-selling,” he added.
That sentiment was echoed in an earlier conversation PYMNTS had with with prize-linked savings platform, Layup. The company’s CTO, Oisin Tiernan, told PYMNTS that “gameplay is really going to drive excitement for us, and excitement is what drives the behavior.”
DraftKings increased the midpoints of its revenue and Adjusted EBITDA guidance by $195 million and $100 million, respectively, for fiscal year 2023, as well as introduced a fiscal year 2024 revenue guidance range of $4.5 billion to $4.8 billion and a fiscal year 2024 Adjusted EBITDA guidance range of $350 million to $450 million.
The increased guidance comes as inflation is top of mind for increasingly embattled consumers, with PYMNTS Intelligence finding that nearly three quarters of millennials (73%) describe themselves as living paycheck to paycheck as rising rates and more continue eating away at their purchasing power.
Still, while nearly half of consumers (47%) across all age groups have traded down for at least one former favorite grocery product to save money — sports betting and online gambling may find itself immune from these behavioral shifts.
Additional data in “The Paycheck-to-Paycheck Report: The Nonessential Spending Deep Dive Edition” revealed that one in every five paycheck-to-paycheck consumer reports that at least one reason for their financial crunch can be attributed to their proclivity for nonessential spending.