DraftKings (DKNG 4.96%) reported fourth-quarter and fiscal-year 2021 results on Friday, Feb. 18. Its figures highlighted another year of accelerating revenue growth.
The mobile sportsbook, iGaming, and daily fantasy sports provider is gaining momentum as more states legalize these activities.
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Another year of excellent growth for DraftKings
For the quarter ended Dec. 31, DraftKings generated $473.3 million in revenue. That was up from the $322.2 million it earned in the same quarter the year prior. The fourth quarter ending Dec. 31 is typically the company's most lucrative. That's when the fan favorite National Football League is in full steam.
For the 12 months ended Dec. 31, DraftKings reported $1.296 billion in revenue. It was more than double the $614 million it generated in the 12 months of 2020. That's the company's third consecutive year of accelerating revenue growth. DraftKings grew overall revenue by 17.9% in 2018, 42.9% in 2019, 90% in 2020, and 111% in 2021.
The growth is driven by an increasing appetite from state legislatures to legalize mobile gaming and increasing popularity in existing states of operation. During the fourth quarter, DraftKings launched in two additional states for mobile sports betting, raising to 17 the states where it now offers the activity. Not all states are not created equal. The two newly launched in the fourth quarter included one of the most lucrative in the U.S., New York, with an estimated potential of $1 billion in gross gaming revenue annually. In all, the states where DraftKings offers sports betting encompass roughly 36% of the U.S. population -- demonstrating the progress it has made, but also plenty of runway to continue.
In addition to expanding into new states, DraftKings increases customer engagement in existing markets. Based on states that were live for the entire Q4 in 2021 and 2020, the online sportsbook handle, which measures the total value of wagers made, increased by 65%. Similarly, iGaming's gross gaming revenue increased 61% under the same assumptions.
The trend shows consumers' increasing engagement over time. That's also evident in the average revenue per unique player, which increased to $77 from $65 in the same quarter the year before. Indeed, signs point to healthy revenue growth for DraftKings for at least the next few quarters.
What this could mean for DraftKings investors
That could be one reason why management raised its revenue target for 2022. DraftKings now expects to deliver revenue in the range of $1.85 billion to $2 billion. The midpoint of that target is an increase of 7% from the previously estimated total. If it manages to meet its guidance, it would be an increase of roughly 47% and put an end to its streak of accelerating revenue growth.
Slowing growth was likely the culprit that sent DraftKings stock down 21% on the day of the announcement. The market has not been kind to unprofitable growth stocks of late, and the end of accelerating revenue growth was yet another reason for the market to grow sour on DraftKings.
