DAVY VIEW

DraftKings reported Q3 revenue up 39% year-on-year (yoy) to $1.095bn, driven by online sports book gross gaming revenue (GGR) growth of 39% and iGaming GGR growth of 26% yoy. The aEBITDA loss in the quarter was $59m. Both revenue and EBITDA were broadly in line with consensus expectations. The group has downgraded its FY24 revenue and aEBITDA guidance by $250m and $120m respectively, owing to unfavourable NFL results in early Q4. Initial state data and other operator updates had flagged weak hold in October, so this update should not come as an undue surprise, albeit the quantum of the impact is bigger than anticipated. We view negative and positive sporting results as one off in nature and there is the potential for some recovery in the last few weeks of the year. On the more positive side, DraftKings reiterated its FY25 EBITDA target, which indicates that the growth story remains intact.