Earnings Call Insights: DraftKings Inc. (DKNG) Q4 2025
Management View
- Jason Robins, Co-Founder, Chairman & CEO, highlighted that “we closed 2025 on a high note, setting new quarterly records for revenue and adjusted EBITDA. Fourth quarter revenue grew 43% year-over-year to nearly $2 billion. Adjusted EBITDA was $343 million, 4x the prior year period.” He emphasized that DraftKings is “in a strong position” due to sustainable advantages in product, technology, trust, and marketing, further amplified by AI and machine learning, resulting in “predictable in improving cohort economics.” Robins also announced a major strategic focus on the new “Predictions” category, calling it “the most exciting new growth opportunity we have seen since PASPA was struck down in 2018,” and outlined plans to target “hundreds of millions in annual revenue for DraftKings Predictions in the years ahead.”
- Robins directly addressed concerns about overlap between Predictions and Sportsbook, stating “to date, we are not seeing a discernible impact from Predictions on our revenue.”
- The CEO also shared that the company’s newest Sportsbook state, Missouri, saw “adoption of our offering… higher than in any other state launch in our history through the first 2 months.”
- Alan Ellingson, Chief Financial Officer, stated, “Our fourth quarter revenue grew 43% year-over-year to nearly $2 billion, adjusted EBITDA was $343 million, 4x the prior year period. Adjusted EBITDA margins expanded by more than 1,000 basis points year-over-year to 17%. We repurchased another 8 million shares during the quarter, and we expect to remain active with share repurchases as our adjusted EBITDA continues to grow.”
Outlook
- DraftKings expects fiscal year 2026 revenue to be “between $6.5 billion and $6.9 billion” and adjusted EBITDA “between $700 million and $900 million.” Ellingson noted that these guidance ranges “reflect expected investments in DraftKings Predictions, line of sight jurisdiction launches and disciplined planning as business conditions evolve.”
- Robins explained the guidance approach: “We said, let’s make sure we put something out there that we feel really good about… missing numbers again is just not acceptable, and so it’s not something we’re willing to do.” He confirmed that “Predictions really is all upside. There’s nothing in terms of revenue in the guide.”
Financial Results
- Fourth quarter revenue reached nearly $2 billion, a 43% year-over-year increase. Adjusted EBITDA for the quarter was $343 million, with a margin of 17%.
- Sportsbook revenue increased 64% year-over-year to $1.4 billion in Q4, and handle growth accelerated to 13% year-over-year. Sportsbook net revenue margin increased by 250 basis points to 8%, and parlay handle mix increased nearly 500 basis points.
- For fiscal year 2025, revenue was above $6 billion, up 27% year-over-year, and adjusted EBITDA more than tripled to over $600 million. DraftKings reported positive GAAP net income for the first time and repurchased 16 million shares during the fiscal year.
- Fantasy revenue increased as Pick6 scaled, iGaming revenue increased 20%, and Lottery revenue benefited from stronger jackpots and new offerings.
Q&A
- Daniel Politzer, JPMorgan: Asked about the aggressive pivot to prediction markets and investment levels. Robins responded that regulatory clarity from the CFTC and strong early numbers drive the excitement, saying “there’s been a real lean in from the CFTC… they’re going to issue real guidelines and regulations… that has since been cleared up.”
- Politzer: Asked about implied revenue deceleration in 2026 guidance. Robins said, “I thought we had a good year last year. So it’s very frustrating to me that we missed our guide. That was a self-inflicted wound… we really went back the other way.”
- David Katz, Jefferies: Sought details on what could drive revenue higher, especially around predictions. Robins noted, “Predictions really is all upside. There’s nothing in terms of revenue in the guide… the core business has a lot of upside too.”
- Stephen Grambling, Morgan Stanley: Asked about state-level dynamics and spend per head. Robins replied, “We’re seeing growth pretty much across states, state cohorts, I should say… as we drive that parlay mix up as we add more things, I think you’re going to continue to see increased monetization.”
- Eric Sheridan, Goldman Sachs: Queried on Predictions as a lever for user and activity growth. Robins explained the incremental nature: “It’s about incremental customers and other states.”
- Raymond Bowers, Wells Fargo: Asked about revenue guide components and player count trends. Robins indicated, “If you look at MUPs, you’re going to see a real impact from customer acquisition… if you take [Jackpocket] away, we had about 5% growth in MUPs.”
- Multiple analysts probed promotional spend, marketing strategies, and the impact of new products, with management emphasizing a conservative guidance approach and flexibility in marketing spend.
Sentiment Analysis
- Analysts were persistent in pressing for more detail on the Predictions strategy, guidance conservatism, and revenue drivers, reflecting a slightly skeptical tone, especially regarding the lack of Predictions revenue in guidance and the methodology behind the outlook.
- Management maintained a confident and occasionally defensive posture, especially regarding the guidance approach and commitment to conservative forecasting. Robins stated, “missing numbers again is just not acceptable,” and Ellingson affirmed, “we expect to remain active with share repurchases as our adjusted EBITDA continues to grow.”
- Compared to the previous quarter, current management sentiment shifted to a more conservative and disciplined tone, with repeated assurances against overpromising, in contrast to last quarter’s more bullish outlook.
Quarter-over-Quarter Comparison
- Current quarter guidance is more conservative, with explicit statements that Predictions revenue is not included, while previous quarter remarks emphasized bullishness and upside potential from new products.
- The strategic focus has shifted from a general excitement about Predictions to a detailed plan for investment and rapid scaling, with robust discussion about regulatory developments and operational integration.
- Analysts’ focus shifted from concerns about volatility and hold in Sportsbook to more granular questions about Predictions economics, marketing synergy, and customer acquisition strategies.
- Management’s tone is more measured and risk-averse, reflecting lessons learned from missing previous guidance, while last quarter featured a stronger emphasis on growth and expansion.
Risks and Concerns
- Management cited regulatory risk as a key challenge, but highlighted that recent CFTC clarity is positive for Predictions expansion.
- Analysts raised concerns about the impact of Predictions on Sportsbook revenue, potential cannibalization, and the sustainability of promotional and marketing efficiencies.
- Management noted that the competitive and promotional environment remains rational and that guidance includes cushion for potential changes.
- Robins addressed customer acquisition slowdowns and flat MUPs, attributing these to normalization after outperformance in 2024.
Final Takeaway
DraftKings closed 2025 with record financial performance and is positioning itself for continued growth through a cautious yet ambitious strategy. The company’s new Predictions vertical is set for significant investment and operational integration, with management projecting considerable upside but excluding related revenue from its 2026 guidance. A disciplined approach to forecasting, active share repurchases, and a focus on leveraging existing marketing and technology assets define the coming year’s outlook, while the core Sportsbook business continues to expand its market share and profitability.