DraftKings Q3 earnings: Focus on customer engagement

DraftKings (NASDAQ:DKNG) is set to post third quarter earnings on Thursday, and investors will focus on the sport betting company’s customer engagement health, as well as acquisition of new ones.

Wall Street expects the Boston-based company to post quarterly EPS of -$0.41, while revenue is expected to rise above 40% to $1.11B.

During its Q2 earnings call, DraftKings increased its fiscal year 2024 revenue expectations, thanks to strong customer acquisition, engagement and retention trends and inclusion of Jackpocket.

Eyeing the quarterly earnings, Stifel forecast a modest Q3E Adj. EBITDA beat, driven by slightly favorable sport outcomes & healthy user acquisition, retention, & monetization trends. The brokerage expects DraftKings to lift FY24 guidance slightly.

Mizuho added DKNG to its top picks list as analysts see upside to DKNG’s ’25/’26/’28 EBITDA guide.

Analysts from Mizuho believe the market is overly focused on quarter-to-quarter variations (game outcomes, seasonality, monthly revenue) and potentially missing a larger, more powerful, story.

Over the last one year, DraftKings has beaten EPS estimates 75% of the time and has beaten revenue estimates 50% of the time.

As per the Seeking Alpha’s Quant Ratings, DraftKings has a Hold rating, while Seeking Alpha analysts and Wall Street are bullish on the stock and rated it a Buy.

Over the last three months, EPS estimates have seen five upward revisions and two downward revisions. Revenue estimates have seen 12 upward revisions and six downward moves.

DraftKings shares have raised above 8% in this year so far, compared to the broader S&P 500 index gain of over 21%.