DraftKings Inc (DKNG) Q3 2025 Earnings Call Highlights: Revenue Growth Amidst Challenges

This article first appeared on GuruFocus.

Revenue: $1.144 billion in Q3 2025, representing 4% year-over-year growth. Adjusted EBITDA: Negative $127 million for Q3 2025. Sportsbook Handle: Increased 10% year-over-year to $11.4 billion. iGaming Net Revenue Growth: Accelerated to 25% year-over-year in Q3 2025. Fiscal Year 2025 Revenue Guidance: Revised to $5.9 billion to $6.1 billion. Fiscal Year 2025 Adjusted EBITDA Guidance: Revised to $450 million to $550 million. Share Repurchase Program: Increased from $1 billion to $2 billion.

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Release Date: November 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

DraftKings Inc (NASDAQ:DKNG) reported significant revenue growth, expecting to generate $5.9 billion to $6.1 billion in 2025, up from $2 billion in 2022. The company has secured new exclusive marketing agreements with ESPN and NBCUniversal, enhancing brand reach and customer engagement. DraftKings Inc (NASDAQ:DKNG) is launching a new predictions market, which is seen as a significant incremental opportunity to expand its total addressable market. Customer retention rates have improved, with NFL week-one customer retention up over 300 basis points compared to the previous year. The company has increased its share repurchase program from $1 billion to $2 billion, indicating confidence in its financial position and commitment to returning capital to shareholders.

Negative Points

DraftKings Inc (NASDAQ:DKNG) revised its fiscal year 2025 guidance downward, with revenue guidance reduced from $6.2 billion to $6.4 billion to $5.9 billion to $6.1 billion. The company experienced a negative impact of over $300 million in revenue due to customer-friendly sports outcomes in September and October. DraftKings Inc (NASDAQ:DKNG) reported a negative $127 million adjusted EBITDA for the third quarter of 2025, falling short of expectations. The predictions market is still nascent, with uncertainties around customer retention and monetization, leading to conservative investment approaches. There is concern about the volatility of hold percentages, particularly with the increased focus on parlays, which could impact financial stability.

Q & A Highlights

Q: How do you get confidence that the OSB hold percentage will swing back around given recent customer-friendly outcomes? A: Jason Robins, Co-Founder, Chairman & CEO, explained that while recent outcomes have been customer-friendly, the business model has shown strength in previous quarters with positive outcomes. Over time, these outcomes tend to normalize, and while short-term impacts can occur, the long-term model remains robust.

Story Continues

Q: Can you elaborate on the profitability of a prediction market product and the potential investment? A: Jason Robins stated that DraftKings will approach the prediction market with a data-driven and conservative strategy, focusing on shorter payback periods. The company will gather data post-launch to refine its approach and ensure investments are aligned with expected returns.

Q: How do you see the prediction market product evolving, and will it be limited to sports? A: Jason Robins noted that while sports will likely be the primary focus due to its volume and opportunity, there could be other innovations over time. However, the current focus is on sports, with potential for other areas like elections.

Q: What are the biggest opportunities to dampen the volatility of hold over time? A: Jason Robins emphasized maximizing long-term value while managing risk. Volatility is more pronounced in concentrated events like NFL weekends, but overall risk is managed to ensure business stability.

Q: How significant is the ESPN deal for DraftKings, and how will it impact future growth? A: Jason Robins expressed excitement about the strategic partnership with ESPN, highlighting its potential to enhance customer engagement and acquisition through integration with ESPN's apps and content, leveraging ESPN's strong brand and reach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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