DraftKings reported revenue of $466 million for Q2 2022, an increase of 56.4% compared to $298 million in the same period last year. Adjusted EBTIDA was a loss of $118 million, $72 million better than expected. Revenue and adjusted EBITDA both outperformed midpoints on guidance ranges provided in the Q1 earnings call on May 6, 2022.
Because of this, the company has raised its fiscal year guidance for revenue to a range of $2.08 billion to $2.18 billion, up from $2.05 billion to $2.175 billion. Additionally, DraftKings updated guidance for adjusted EBITDA loss, moving the range to $765 million to $835 million, down from $810 million to $910 million.
The improved guidance comes from several factors. First, the company has been able to optimize marketing spend by limiting the number of ads except for strategic times during the year. Second, customer use of promos has decreased each year in established states. Third, the company has shifted some expenses to different quarters. And last, the company was able to find efficiencies that allowed $40 million in savings on top of the $50 million in savings from Q1.
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The adjusted guidance accounts for states that are currently live. DraftKings has its eyes on emerging sports betting markets Massachusetts, Ohio, Maryland, and Kansas, while California voters have an opportunity to legalize sports betting in November. The company would expect additional EBITDA losses if these states go live in 2022. Even with the potential for more losses, the company is looking for positive cash flow this year and EBITDA losses to peak in 2022 for online sports betting.
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This is helping the company feel comfortable going into a potential recession. Additionally, the company has seen high customer retention and engagement despite inflation spiking to 9.1% in June of this year. During the earnings call, leadership explained that according to internal research, gaming (across brick and mortar, lottery, and online gaming) is expected to be resilient to macroeconomic conditions.
Plans for Football Season and Tech
DraftKings is focusing on optimizing ahead of football season. One major element of the football season this year will be increasing parlay options for bettors.
The parlay improvements include parlay insurance and enhanced same-game parlays. Customers will have the opportunity to combine multiple same-game parlays.
DraftKings is also focusing on its NFT marketplace. This year, the company announced that it would be expanding the gamification of NFTs for customers.
Reignmakers Football, announced in May of this year, allows bettors to purchase exclusive NFTs of their favorite football players and use them to build fantasy teams. Customers will be able to use their fantasy teams to compete with other customers throughout the season. DraftKings will reward players with $1 million in prizes and cash at the end of the season.
Additionally, the company is further optimizing the gamified NFT experience, incorporating it into the social aspects of its app.
The company also is working towards integrating Golden Nugget, which was acquired in 2021. The goal is to take advantage of the iCasino market by moving Golden Nugget’s existing games onto the DraftKings platform by the second half of 2023.