Core Insights - DraftKings experienced a significant decline in stock price following the release of its quarterly results and a weak forward guidance, with shares dropping over 7% to $25 during extended hours [1] Company Summary - The quarterly results published by DraftKings were disappointing, leading to a negative market reaction [1] - The forward guidance provided by the company was perceived as weak, contributing to investor concerns and the subsequent stock price drop [1]

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Revenue Performance - Total revenue for the three months ended September 30, 2025, was $1,144,019, a 4.4% increase from $1,095,490 in the same period of 2024[226] - Total revenue for the nine months ended September 30, 2025, was $4,065,332, a 20.5% increase from $3,374,927 in the same period of 2024[226] - Revenue increased by $690.4 million, or 20.5%, to $4,065.3 million in the nine months ended September 30, 2025, compared to $3,374.9 million in the same period of 2024[268] Net Loss and Income - Net loss for the three months ended September 30, 2025, was $(256,788), compared to a net loss of $(293,688) in the same period of 2024[226] - Net income (loss) attributable to common stockholders improved by $36.9 million, or 12.6%, to $(256.8) million for the three months ended September 30, 2025, from $(293.7) million in 2024[257] - Net loss decreased by $239.7 million to a net loss of $132.7 million in the nine months ended September 30, 2025, compared to a net loss of $372.4 million in the same period of 2024[280] Unique Payers and Revenue Metrics - Monthly Unique Payers (MUPs) increased by 1.5% in the three months ended September 30, 2025, compared to the same period in 2024[238] - Average Revenue per MUP (ARPMUP) increased by $3 or 3.0% for the three months ended September 30, 2025, compared to the same period in 2024[239] Sportsbook Performance - Sportsbook Handle increased by $1.0 billion, or 10.0%, to $11.4 billion in the three months ended September 30, 2025, from $10.4 billion in the same period of 2024[242] - Sportsbook Handle increased by $3.6 billion, or 10.9%, to $36.8 billion in the nine months ended September 30, 2025, from $33.2 billion in the same period of 2024[242] - Sportsbook Net Revenue Margin decreased by 1.1 percentage points to 5.2% in the three months ended September 30, 2025, from 6.3% in the same period of 2024[243] iGaming and Other Revenue - iGaming revenue for the three months ended September 30, 2025, was $451,300, a 24.9% increase from $361,460 in the same period of 2024[242] - iGaming revenue increased by $89.8 million, or 24.9%, to $451.3 million for the three months ended September 30, 2025, compared to $361.5 million for the same period in 2024[244] - Other revenue for the nine months ended September 30, 2025, was $284,953, a 32.5% increase from $215,055 in the same period of 2024[242] - Other revenue rose by $19.5 million, or 25.3%, to $96.6 million for the three months ended September 30, 2025, primarily due to interest income on customer deposits[245] Cost and Expenses - Cost of revenue increased by $41.6 million, or 5.6%, to $784.1 million for the three months ended September 30, 2025, driven by revenue growth and higher variable expenses[258] - Cost of revenue increased by $366.5 million, or 17.3%, to $2,482.4 million in the nine months ended September 30, 2025, from $2,115.9 million in the same period of 2024[270] - Cost of revenue as a percentage of revenue increased by 0.8 percentage points to 68.5% for the three months ended September 30, 2025, compared to 67.8% in 2024[259] - Sales and marketing expense increased by $40.9 million, or 4.6%, to $937.2 million in the nine months ended September 30, 2025, from $896.3 million in the same period of 2024[273] - Product and technology expense increased by $41.3 million, or 14.5%, to $326.4 million in the nine months ended September 30, 2025, from $285.1 million in the same period of 2024[274] - General and administrative expense decreased by $60.6 million, or 11.1%, to $486.9 million in the nine months ended September 30, 2025, from $547.5 million in the same period of 2024[275] Cash Flow and Financing - Cash and cash equivalents as of September 30, 2025, were $1,228.3 million, sufficient to meet current working capital and capital expenditure requirements for at least twelve months[281] - The cash and cash equivalents at the end of the period increased to $1,708.2 million as of September 30, 2025, compared to $1,156.5 million at the end of the same period in 2024[288] - The company experienced a net increase in cash and cash equivalents of $377.9 million during the nine months ended September 30, 2025, contrasting with a decrease of $466.9 million in the prior year[288] - Cash received from borrowing under the Term B Facility amounted to $588.1 million, contributing to a net cash provided by financing activities of $151.7 million for the nine months ended September 30, 2025, compared to a cash outflow of $71.4 million in 2024[291] - Stock repurchase program authorized up to $1.0 billion, with 8.2 million shares repurchased for $314.0 million in the nine months ended September 30, 2025[287] Interest Expense - The company experienced a significant increase in interest expense, with a net expense of $19.6 million for the three months ended September 30, 2025, compared to an income of $8.3 million in 2024[257] - Interest expense net recorded was $14.5 million in the nine months ended September 30, 2025, compared to $36.3 million of net interest income in the same period of 2024[276] Accounting and Risk - There were no changes to the critical accounting estimates discussed in the 2024 Annual Report, indicating consistency in financial reporting practices[294] - The company has not experienced significant changes in exposure to market risk during the nine months ended September 30, 2025[295] - Commitments and contingencies as of September 30, 2025, are summarized in the unaudited condensed consolidated financial statements[292]

Financial Performance - DraftKings reported Q3 2025 revenue of $1,144 million, a 4% increase from $1,095 million in Q3 2024[3] - DraftKings revised its fiscal year 2025 revenue guidance to $5.9 billion to $6.1 billion, indicating a year-over-year growth of 24% to 28%[8] - The company expects fiscal year 2025 Adjusted EBITDA to be between $450 million and $550 million[8] - Net income attributable to common stockholders for the nine months ended September 30, 2025, was a loss of $132.716 million, an improvement from a loss of $372.434 million in the same period of 2024[22] - Adjusted EBITDA for the nine months ended September 30, 2025, was $276.785 million, compared to $91.853 million for the same period in 2024, indicating a significant increase in operational performance[28] - Basic earnings per share attributable to common stockholders for the nine months ended September 30, 2025, was a loss of $0.27, an improvement from a loss of $0.78 in the same period of 2024[33] User Engagement - Monthly Unique Payers (MUPs) rose by approximately 2% to 3.6 million in Q3 2025 compared to the same period in 2024, with a 6% increase excluding Jackpocket[8] - Average Revenue per MUP (ARPMUP) increased to $106, representing a 3% growth year-over-year[8] Cash Flow and Liquidity - Cash flows provided by operating activities for the nine months ended September 30, 2025, were $342.382 million, up from $92.578 million in 2024, reflecting improved cash generation[22] - The company reported a net cash increase of $377.994 million in cash and cash equivalents, restricted cash, and cash reserved for users at the end of the period, compared to a decrease of $466.978 million in the prior year[22] - Cash and cash equivalents at the end of the period were $1.228 billion, up from $877.822 million at the end of the same period in 2024, showing a strong liquidity position[22] Investment and Expenses - Stock-based compensation for the nine months ended September 30, 2025, was $236.020 million, down from $271.307 million in 2024, indicating a reduction in equity-based expenses[22] - The company incurred $93.432 million in cash paid for internally developed software costs during the nine months ended September 30, 2025, compared to $71.059 million in 2024, reflecting ongoing investment in technology[22] - The company reported a net cash flow used in investing activities of $116.109 million for the nine months ended September 30, 2025, compared to $488.184 million in 2024, indicating a decrease in cash outflows for investments[22] - Proceeds from the Term B Loan amounted to $588.116 million, contributing to the financing activities during the period[22] Market Presence and Operations - The company is live with mobile sports betting in 25 states, covering approximately 49% of the U.S. population[7] - DraftKings operates mobile and/or retail sports betting in 28 states, Washington, D.C., and Ontario, Canada, and iGaming in five states and Ontario[37] - DraftKings' daily fantasy sports product is available in 44 states and certain Canadian provinces[37] Future Plans and Guidance - DraftKings announced an increase in its share repurchase program from $1.0 billion to $2.0 billion[4] - DraftKings plans to launch DraftKings Predictions in the coming months, pending licensure[8] - The company forecasts an Adjusted EBITDA range for fiscal year 2025, but cannot assure the predictability of all components due to external factors[35] Regulatory and Compliance - The company is actively seeking licensure for product offerings in jurisdictions where it does not currently operate[36] - DraftKings has a non-GAAP effective tax rate of 23% as of Q3 2025, reflecting its level of non-GAAP profitability[36] Partnerships and Community Engagement - DraftKings emphasizes responsible gaming and has developed educational tools for players[37] - The company has partnerships with major sports leagues including the NFL, NHL, and NBA[37] Risks and Uncertainties - DraftKings' forward-looking statements involve substantial risks and uncertainties, including macroeconomic factors[39] - The company cautions that actual results may differ materially from forward-looking statements due to various risks and uncertainties[39]

Group 1 - DraftKings Inc. (DKNG) has been added to the Zacks Rank 5 (Strong Sell) List, with a 22.1% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Farmer Bros. Co. (FARM) is also on the Zacks Rank 5 (Strong Sell) List, experiencing a 7.3% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Golden Entertainment, Inc. (GDEN) has seen a 16.2% downward revision in the consensus estimate for its current year earnings over the last 60 days, and is included in the Zacks Rank 5 (Strong Sell) List [2]

Core Insights - DraftKings reported $1.14 billion in revenue for Q3 2025, a year-over-year increase of 4.4% [1] - The EPS for the same period was -$0.26, an improvement from -$0.60 a year ago [1] - Revenue fell short of the Zacks Consensus Estimate of $1.21 billion, resulting in a surprise of -5.26% [1] - The company experienced an EPS surprise of -8.33%, with the consensus estimate being -$0.24 [1] Financial Performance Metrics - Average Revenue per Monthly Unique Payer (ARPMUP) was $106.00, below the estimated $108.89 [4] - Monthly Unique Payers (MUPs) totaled 3.6 million, slightly below the estimated 3.65 million [4] - Sportsbook revenue was $596.12 million, significantly lower than the estimated $668.27 million [4] - Revenue from Other sources was $96.6 million, exceeding the estimated $84.95 million [4] - iGaming revenue reached $451.3 million, surpassing the average estimate of $434.36 million [4] Stock Performance - DraftKings shares have returned -17.8% over the past month, contrasting with the Zacks S&P 500 composite's +1.3% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market [3]

Market to get a little muddier when they reported tonight. Now, DraftKings delivered a pretty sizable revenue miss larger than expected loss for the third quarter. But at the same time, management also slashed full year forecasts for both revenue and earnings before interest, taxes, depreciation and amortization.It looked rough, but I got to get to the bottom of this because I've been recommending the stock because I think that this is the best company in gambling. So let's dig deeper with Jason Robbins. He ...

Core Insights - DraftKings reported a significant revenue miss and a larger-than-expected loss for Q3, leading management to cut full-year forecasts for both revenue and EBITDA [1][16] - Despite the challenges, the company is optimistic about future growth, particularly with new partnerships and upcoming sports events [22][34] Financial Performance - DraftKings experienced a 10% handle growth in major sports last quarter, which increased to 13% for NFL and nearly 20% for NBA this year [4][3] - The company faced around $400 million in outcome headwinds this year, primarily affecting Q3 results, but anticipates a potential rebound in Q4 [17][19] Strategic Partnerships - The partnership with ESPN is expected to significantly enhance DraftKings' market presence and customer engagement [2][7] - The company has established agreements with NBC Universal and Amazon, positioning itself strongly in the sports betting landscape [7][8] Market Dynamics - DraftKings is focusing on customer acquisition and expanding its market share, particularly in states like Missouri where it plans to launch soon [19][12] - The company believes that the legal and regulated sports betting market provides a safer environment compared to illegal markets, which can lead to organized crime [26][31] Industry Challenges - DraftKings acknowledges the competitive landscape, particularly from prediction markets, but believes its comprehensive sportsbook offerings will maintain its market share [14][13] - The company is aware of the potential impact of betting scandals on consumer confidence but emphasizes the importance of regulation in maintaining game integrity [24][30]

Core Insights - The current momentum in the market is expected to persist in the near term, presenting an opportunity for participation and success [1] - The offering in states like California and Texas is less robust compared to full online sportsbooks, but it can still generate significant interest [2] - The financial opportunities align with regions that have a clearer regulatory landscape, indicating a strategic focus on these areas [3] Market Dynamics - The comparison between exchange-based betting and traditional sports betting shows that exchange products hold a small market share in regions with both offerings [4] - In markets where both full-fledged sportsbooks and prediction markets exist, there is minimal volume migration from sportsbooks, suggesting that the prediction market may serve as an incremental addition rather than a replacement [5] - Current evidence indicates that the introduction of new products has not negatively impacted existing sportsbook numbers, which remain strong [6]

Core Insights - DraftKings reported Q3 CY2025 revenue of $1.14 billion, which was 4.4% year-on-year growth but fell short of market expectations of $1.21 billion, resulting in a 5.6% miss [7] - The company revised its full-year revenue guidance down to $6 billion from $6.3 billion, reflecting a 4.8% decrease [7] - DraftKings' adjusted EPS was -$0.26, aligning with analysts' consensus estimates [7] Company Overview - DraftKings is a digital sports entertainment and gaming company that began in daily fantasy sports [4] Revenue Growth - Over the last five years, DraftKings achieved a compounded annual growth rate of 62.4%, outperforming the average consumer discretionary company [5] - The company's annualized revenue growth of 28.8% over the last two years is below its five-year trend but indicates healthy demand [6] Financial Performance - Adjusted EBITDA for the quarter was -$126.5 million, significantly missing analyst estimates of -$68.74 million, resulting in an 11.1% margin [7] - Operating margin improved to -23.8% from -27.3% in the same quarter last year [7] - Free cash flow margin increased to 21.9% from 11.9% in the same quarter last year [7] Market Outlook - Analysts project revenue growth of 29% over the next 12 months, consistent with the company's two-year growth rate [8] - Monthly unique payers remained stable at 3.6 million, in line with the same quarter last year [7] - DraftKings' market capitalization stands at $13.86 billion [7] Shareholder Returns - The board of DraftKings authorized an increase in the share repurchase program from $1.0 billion to $2.0 billion, emphasizing a focus on maximizing shareholder returns [3]