DRAFTKINGS INC-CL A (NASDAQ:DKNG) announced its financial results for the third quarter of 2025, revealing a performance that fell short of market expectations on the top line, contributing to a notable decline in its stock price during after-hours trading.
Revenue and Earnings Performance Versus Estimates
The company reported quarterly revenue of $1.14 billion, which represents a 4.4% increase compared to the $1.10 billion generated in the same period last year. However, this figure came in significantly below the analyst consensus estimate of $1.26 billion. The sports betting and fantasy sports operator reported a non-GAAP loss per share of $0.26, which was notably narrower than the anticipated loss of $0.39 per share projected by analysts.
Key financial metrics from the quarter include:
- Reported Revenue: $1.14 billion
- Analyst Revenue Estimate: $1.26 billion
- Variance: Approximately 9% below estimates
- Reported Non-GAAP EPS: -$0.26
- Analyst EPS Estimate: -$0.39
- Variance: A narrower loss than expected
Market Reaction and Updated Guidance
The market's immediate reaction to the earnings report was negative, with the stock falling over 7% in after-hours trading. This sell-off appears to be a direct response to the revenue miss and a subsequent downward revision to the company's full-year outlook.
For the full 2025 fiscal year, DraftKings provided updated revenue guidance of $5.9 billion to $6.1 billion. The midpoint of this new range, $6.0 billion, falls approximately 3% below the analyst consensus estimate of $6.41 billion. The company also revised its Adjusted EBITDA guidance to a range of $450 million to $550 million.
Operational and Business Highlights
Despite the financial shortfall, the earnings release highlighted several areas of operational growth and strategic initiatives. The company emphasized strong underlying business trends, excluding the impact of customer-friendly sports outcomes during the quarter.
Notable business updates include:
- Monthly Unique Payers (MUPs): Averaged 3.6 million, an increase of approximately 2% year-over-year. Excluding the impact of the Jackpocket acquisition, MUPs grew by 6%.
- Average Revenue Per MUP (ARPMUP): Increased to $106, up 3% from the prior year, driven by growth in iGaming and structural improvements in Sportsbook hold percentage.
- Sportsbook Handle: Reached $11.40 billion for the quarter, a 10% increase year-over-year. The company also noted that October handle grew 17% compared to the previous year.
- Product Launches and Expansion: The company is preparing to launch its Sportsbook in Missouri and is anticipating the release of its "DraftKings Predictions" product in the coming months, pending licensure.
- Capital Return: The Board of Directors authorized an increase to the company's share repurchase program from $1.0 billion to $2.0 billion.
Looking Ahead
The company's performance and outlook for the upcoming quarter will be closely watched. For the fourth quarter of 2025, analysts are projecting revenue of $2.09 billion. DraftKings' ability to meet or exceed these expectations, particularly during a heavy sports season, will be critical in rebuilding investor confidence following this quarter's disappointment.
For a detailed breakdown of future earnings estimates and historical performance, you can review the earnings and estimates data for DKNG.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, nor does it recommend buying or selling any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
