DraftKings’ third-quarter performance was influenced by unusual swings in sports outcomes, which management described as having a pronounced impact on revenue. While underlying customer engagement and product usage remained healthy, CEO Jason Robins acknowledged that customer-friendly results in several NFL games reduced top-line growth. Robins stated, “In September and October, customer-friendly sport outcomes impacted our revenue by more than $300 million as just a handful of NFL games had a pronounced effect.” Despite these headwinds, management pointed to ongoing product enhancements and partnerships as supporting continued customer activity.
Is now the time to buy DKNG? Find out in our full research report (it’s free for active Edge members).
DraftKings (DKNG) Q3 CY2025 Highlights:
- Revenue: $1.14 billion vs analyst estimates of $1.21 billion (4.4% year-on-year growth, 5.6% miss)
- Adjusted EPS: -$0.26 vs analyst estimates of -$0.26 (in line)
- Adjusted EBITDA: -$126.5 million vs analyst estimates of -$68.74 million (-11.1% margin, 84% miss)
- The company dropped its revenue guidance for the full year to $6 billion at the midpoint from $6.3 billion, a 4.8% decrease
- EBITDA guidance for the full year is $500 million at the midpoint, below analyst estimates of $746.3 million
- Operating Margin: -23.8%, up from -27.3% in the same quarter last year
- Monthly Unique Payers: 3.6 million, in line with the same quarter last year
- Market Capitalization: $15.68 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From DraftKings’s Q3 Earnings Call
- David Katz (Jefferies) asked about volatility in sportsbook hold rates and how DraftKings can provide confidence in future normalization. CEO Jason Robins explained that while short-term swings are inevitable, sports outcomes even out over time, and risk management practices are in place to manage exposure.
- Stephen Grambling (Morgan Stanley) questioned whether the growth in parlays increases revenue volatility. Robins responded that while parlays can add some volatility, the company prioritizes long-term value maximization and actively manages risk exposure.
- Daniel Politzer (JPMorgan) inquired about regulatory perspectives on prediction markets and how DraftKings is engaging with policymakers. Robins emphasized strong communication with regulators and a focus on launching in non-sportsbook states first.
- Brandt Montour (Barclays) sought clarity on the gap between outcome-driven revenue impacts and increased investment, including ESPN and predictions spend. Robins confirmed that most of the gap is sports outcome-related, but there is some early investment in new products and partnerships.
- Jason Tilchen (Canaccord Genuity) asked about the opportunity from the upcoming Spanish language app. Robins described it as a significant customer acquisition lever, particularly with the World Cup on the horizon and in states with large Spanish-speaking populations.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the rollout and customer adoption of DraftKings prediction markets in non-sportsbook states, (2) the effectiveness of ESPN and NBCUniversal partnerships in driving engagement and acquisition, and (3) the launch and traction of the Spanish language app in broadening DraftKings’ reach. Ongoing developments in sports outcome normalization and potential new state entries will also be important to track.
DraftKings currently trades at $31.24, up from $27.96 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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