DraftKings Inc. Q4 FY2025 earnings call

• Closed 2025 on a high note with new quarterly records for revenue and adjusted EBITDA. - Adjusted EBITDA margin expanded to 17% in Q4. - Repurchased 8 million shares in Q4 and expect continued share repurchases. - Predictions is a key growth opportunity, with early signals strong, targeting hundreds of millions in annual revenue. - Core business strength with LTV flywheel improvement powered by sustainable advantages in product, technology, trust, and marketing. - Virtual Investor Day on March 2 to share more details. - Sportsbook performed strongly in Q4 with handle growth and net revenue margin expansion.

Fourth quarter revenue grew 43% year-over-year to nearly $2 billion. Adjusted EBITDA was $343 million, 4x the prior year period, with an adjusted EBITDA margin of 17%. In fiscal year 2025, revenue grew 27% year-over-year to above $6 billion, and adjusted EBITDA more than tripled to over $600 million. Fantasy revenue increased as Pick6 scaled. Sportsbook revenue increased over 30% year-over-year, with Q4 revenue up 64% to $1.4 billion and handle growth accelerating to 13% year-over-year. iGaming revenue increased 20% as the offering expanded. Lottery revenue benefited from a stronger jackpot environment. Predictions is a new growth focus.

• Fiscal year 2026 revenue guidance is between $6.5 billion and $6.9 billion. - Fiscal year 2026 adjusted EBITDA guidance is between $700 million and $900 million. - Guidance reflects investments in Predictions, line of sight jurisdiction launches, and disciplined planning.

• Regulatory uncertainties related to predictions markets. - Variance in sports outcomes affecting the business, which can be a tailwind or headwind in the short term.

Q: Dan Politzer asked about why DraftKings is aggressively leaning into prediction markets and investment levels.

A: Jason Robins responded that there's been a lean in from the CFTC, clearing regulatory uncertainty, early numbers and market potential are promising, and investments can repurpose existing resources with synergy.

Q: David Katz asked about 2026 guidance and Predictions revenue.

A: Jason Robins said Predictions is all upside with no revenue in the guide, core business has upside, and handle growth is affected by net revenue margin changes.

Q: Stephen Grambling asked about NGR spend and customer penetration.

A: Jason Robins said growth is across states, and it's both penetration and spend per head, with parlay mix growth and AI in promo as levers.

Q: Eric Sheridan asked about Predictions user growth and activity.

A: Jason Robins said Predictions is about incremental customers and new states, leveraging existing customer base synergy.

Q: Benjamin Chaiken asked about building liquidity in Railbird exchange and DraftKings OSB as a differentiator.

A: Jason Robins said OSB is a differentiator with infrastructure and data, and Railbird will have market-makers with DraftKings as a key market-maker.

Q: Brandt Montour asked about Predictions launch and marketing.

A: Jason Robins said initial launch was bare-bones, marketing uses national footprint synergy, and details will be at Investor Day.

Q: Raymond Bowers asked about revenue guide granularity and player numbers.

A: Jason Robins said revenue guide is interactive with handle, promo, and outcomes, and MUPs are affected by customer acquisition and retention.

Q: Robert Fishman asked about prediction market legislative front and promo intensity.

A: Jason Robins said prediction markets are getting traction, promo is rational, and conservative guide has cushion.

Q: Robin Farley asked about Prediction market EBITDA impact and state start-up costs.

A: Jason Robins said includes Maine iGaming and Alberta, Predictions has incremental spend but synergy, and details at Investor Day.

Q: William Lampen asked about promo intensity in Sportsbook and guidance.

A: Jason Robins said guide has cushion, promo environment is rational in both OSB and predictions.

Q: Jordan Bender asked about prediction market players and NFL handle underperformance.

A: Jason Robins said prediction players are like existing customers, NFL handle underperformance is due to net revenue margin changes and variance in outcomes.