The online sports betting company also cut its guidance.
DraftKings (NASDAQ:DKNG) stock was pretty volatile on Friday in what has been a busy week for the online sports betting company.
On Thursday after the market closed, DraftKings released its Q3 earnings and the results were mixed, as it met earnings projections but missed on revenue and lowered its guidance.
Earlier in the week, DraftKings stock was downgraded by a major analyst, BofA, which sent the stock price lower.
Shares got a brief spike on Thursday when the firm announced a new partnership with ESPN following the closure of ESPN Bet. But after Q3 earnings were released Thursday afternoon, the stock dropped about 7% on the mixed results. But by Friday morning, with some time to digest the numbers, shares were moving higher, up about 3%. Here are some of the key, year-over-year results from Q3.
- Revenue: $1.14B, up 4.6%. This missed analysts’ estimates of $1.21B.
- Net loss: $257M, up from a $294M net loss in Q3 2024.
- Earnings: -52 cents per share, up from -60 cents per share.
- Adjusted EBITDA: -126M, down from -$58M. This missed estimates of $-69M.
- Adjusted earnings: -26 cents per share, down from -17 cents per share. This was in line with estimates.
This derails momentum DraftKings had coming off the second quarter when it generated $158 million in net income, only its second ever quarter generating GAAP profit. DraftKings earnings were weighed down by $361 million in marketing spend, up from $340 million a year ago and $233M million in Q2. Product and technology costs were also higher.
Also, while revenue was up 4.6 year-over-year, it was down 32% from Q2 of 2025.
In addition, monthly unique payers (MUP) rose 2% to 3.6 million in Q3 year-over-year, while average revenue per MUP increased 3% to $106. The firm also touted a higher sportsbook hold percentage, partially offset by customer-friendly sport outcomes.
This is the most bullish I have ever felt about our future,” Jason Robins, DraftKings’ CEO, said. “Underlying growth in the business is accelerating, and we are excited to launch DraftKings Predictions in the coming months, which we view as a significant incremental opportunity.”
Future predictions
The deal with ESPN makes DraftKings the exclusive “official sportsbook and odds provider of ESPN” starting December 1. This comes after Penn Entertainment and ESPN agreed to terminate their agreement and end ESPN Bet.
Essentially, DraftKings sportsbook, fantasy and other products will be exclusively integrated across ESPN’s ecosystem. There weren’t any details on financial terms or what the revenue and earnings expectations are for DraftKings. But considering that ESPN has some 200 million monthly users, it could make customer acquisition much easier, and cheaper.
The company is also gearing up to dive into the prediction market, following in the footsteps of its rival FanDuel. Robins said the launch is coming in the next few months.
In the Q3 release, DraftKings lowered its revenue guidance for fiscal 2025 to $5.9 billion to $6.1 billion, from $6.2 billion to $6.4 billion. The updated range still equates to year-over-year growth of 24% to 28%.
The company also lowered its adjusted EBITDA guidance to a range of $450 million to $550 million, down significantly from the previous range of $800 million to $900 million.
The guidance includes anticipated financial impacts from DraftKings launching mobile sports betting in Missouri and DraftKings Predictions in the coming months. The costs to ramp up these initiatives will be a near-term drag, but the company is hoping for the long-term payoff.
Further, DraftKings boosted its share repurchase program from $1 billion to $2 billion. Several analysts lowered their price targets for Draftkings – Benchmark to $37 per share, BTIG to $42, and Cannacord to $54. But overall, DraftKings is a consensus buy and has a median price target of $51 per share, suggesting 75% upside.
