DraftKings reported a 20% rise in first-quarter 2025 revenue to $1.41 billion, but the company lowered its full-year revenue guidance after unfavorable sports outcomes in March offset strong performance metrics and product enhancements.
Q1 Results and Drivers
For the first quarter ended March 31, 2025, DraftKings recorded $1.41 billion in revenue, representing a 20% increase over the same period a year earlier. The company attributed this growth to robust customer engagement, efficient acquisition of new users, improved sportsbook hold rates, and the positive impact of the Jackpocket acquisition, which closed in May 2024. CEO Jason Robins noted that product enhancements continue to drive strong results even amid changing market conditions[4].
Adjusted Earnings and Profitability
DraftKings reported adjusted earnings per share (EPS) of $0.12 for the quarter, up from $0.03 in the first quarter of 2024. This improvement came despite some headwinds, including a series of 'customer-friendly' sporting outcomes in March—which led to higher payouts to bettors and thus negatively impacted profitability[1][4].
Full-Year 2025 Guidance Cut
Despite the strong Q1 showing, DraftKings lowered its 2025 revenue and adjusted EBITDA guidance. The company cited unfavorable sports outcomes in March as a primary reason, noting that these events offset gains made through customer growth and operational efficiency. In a statement, Robins said, 'If not for customer-friendly sport outcomes in March, we would be raising our fiscal year 2025 revenue and Adjusted EBITDA guidance'[4].
Market Reaction and Context
DraftKings' performance in the quarter came amid a competitive U.S. sports betting environment that featured major events such as the Super Bowl and March Madness. The company’s ongoing integration of Jackpocket and continued product innovation are seen as positives by analysts, though guidance reductions may weigh on investor sentiment in coming quarters[2][4].
Analysis
DraftKings delivered strong year-over-year growth in Q1, supported by ongoing customer engagement and successful integration of Jackpocket. However, the impact of customer-friendly sports outcomes in March—where bettors won more often than historical averages—offset profitability gains and prompted the company to cut forward guidance. The move underscores the volatility inherent in the sports betting industry and the sensitivity of operators’ results to sports outcomes. While operational improvements are evident, maintaining both growth and profitability could remain challenging if similar betting trends persist.
Outlook
Analysts anticipate continued volatility for DraftKings shares as investors assess the company's ability to navigate unpredictable sports results while driving user growth and efficiency. The integration of Jackpocket and expansion into new states could support longer-term growth, but near-term financial performance may remain subject to swings in sports outcomes and market competition.
