Q1 2025 Earnings | Friday, May 9

DraftKings Inc.

DraftKings Q1 2025 Earnings Call Summary

Key Highlights

  • Revenue for Q1 2025 reached $1.409 billion, a 20% year-over-year growth.
  • Adjusted EBITDA for the quarter was $103 million.
  • Sportsbook handle increased 15% year-over-year to $13.9 billion.
  • Structural sportsbook hold percentage improved to 10.4%, a 50 basis points increase year-over-year.
  • The company expects revenue growth of 32% year-over-year for fiscal year 2025.

Market Performance & Strategy

  • Customer acquisition remains efficient, leveraging brand recognition and optimizing marketing channels.
  • Management discussed the impact of favorable sports outcomes on revenues, particularly in March.
  • DraftKings remains confident in its analysis of customer-friendly outcomes being random, with expectations of normalization.
  • The company has a strong balance sheet with $1.1 billion in cash after repurchasing shares.

Fiscal Year 2025 Guidance

  • Revised revenue guidance: $6.2 billion to $6.4 billion.
  • Adjusted EBITDA guidance: $800 million to $900 million.
  • Expecting sports book net revenue margin of 7% to 7.5%.
  • Adjusted gross margin anticipated to be 46%, improving over 300 basis points year-over-year.

Live Betting & Product Developments

  • Live betting accounted for over 50% of total handle in Q1.
  • Significant improvements noted in live betting products, contributing to handle growth.
  • DraftKings+ product showing positive initial results in New York with high satisfaction ratings.

Market Challenges & Opportunities

  • Discussion of M&A strategies focused on creating shareholder value while maintaining a strong capital position.
  • Increased taxes in states like Maryland and Illinois pose challenges, with a growing illegal market being a concern.
  • Management is exploring opportunities for international expansion but remains focused on U.S. growth.

Conclusion

  • Management expressed optimism for continued growth in 2025, emphasizing the importance of product enhancements and market positioning.
  • Investors are encouraged to monitor ongoing developments in product offerings and market conditions.

 

 

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