DRAFTKINGS INC-CL A (NASDAQ:DKNG) reported fourth-quarter financial results that presented a stark contrast between a strong operational finish to 2025 and a cautious outlook for the year ahead, triggering a sharp negative reaction in after-hours trading.
Quarterly Performance vs. Estimates
The company's results for the final quarter of its 2025 fiscal year were a mixed bag relative to Wall Street's expectations. While revenue growth remained robust, profitability fell short of analyst forecasts.
- Revenue: DraftKings reported Q4 revenue of $1.99 billion, marking a significant 43% increase year-over-year. This figure was essentially in line with the analyst consensus estimate of approximately $2.01 billion.
- Earnings Per Share (Non-GAAP): The company posted adjusted earnings per share of $0.36. This missed the analyst consensus estimate of $0.41 per share by approximately 12%.
The quarter itself was operationally strong. The company highlighted record revenue and Adjusted EBITDA, driven by healthy customer engagement, efficient new customer acquisition, and higher sportsbook net revenue margins. Notably, DraftKings reported its first full year of positive net income.
Market Reaction and the Guidance Catalyst
Despite the solid quarterly revenue and milestone annual profit, DraftKings' stock plummeted roughly 15% in after-hours trading following the report. The primary driver of this selloff was the company's financial guidance for fiscal year 2026, which fell meaningfully below Wall Street's expectations.
- FY 2026 Revenue Guidance: DraftKings introduced a revenue guidance range of $6.5 billion to $6.9 billion, with a midpoint of $6.7 billion. This midpoint is approximately 8-10% below the analyst consensus estimate of $7.3 billion.
- FY 2026 Adjusted EBITDA Guidance: The company's EBITDA guidance range of $700 million to $900 million also came in below expectations.
Management attributed the conservative outlook to planned investments in its new "DraftKings Predictions" product, costs associated with launching in new jurisdictions, and disciplined planning amid evolving business conditions.
Key Takeaways from the Earnings Release
Beyond the headline numbers and guidance, the earnings release underscored several important aspects of DraftKings' business:
- Customer Monetization Strength: Average Revenue per Monthly Unique Payer (ARPMUP) surged 43% year-over-year to $139, indicating the company is successfully generating more value from its user base.
- Geographic Footprint: The company maintains a leading presence, with mobile sports betting live in states representing about 52% of the U.S. population and iGaming in states representing about 11%.
- Capital Return: DraftKings repurchased 16 million shares during fiscal year 2025, reflecting growing financial flexibility.
Conclusion
DraftKings' Q4 report illustrates the challenging transition from a high-growth, investment-heavy phase to a more mature, profitability-focused one. While the company demonstrated powerful operational execution in the quarter and achieved a key profitability milestone for the full year, its decision to prioritize investment in new initiatives over near-term financial targets has unsettled investors. The market's severe after-hours reaction highlights the heightened sensitivity to guidance in the current environment, where premium valuations are closely tied to future growth expectations.
For a detailed breakdown of historical earnings, future estimates, and analyst projections, you can review the full data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investing involves risk, including the potential loss of principal.
