DraftKings reports strong Q1 2025 performance, with growth primarily driven by improved customer engagement and the recent Jackpocket acquisition. However, the company has revised its full-year 2025 forecast due to March sports results.
Key Takeaways:
- DraftKings’ Q1 growth attributed to Jackpocket acquisition and customer engagement
- 2025 revenue and Adjusted EBITDA forecasts revised downward
- Expansion plans include Missouri, pending approval
Q1 Performance and Customer Metrics
DraftKings, the Massachusetts-based company known for its daily fantasy sports (DFS) offerings, reported a significant increase in its average monthly unique paying customers (MUPs) for Q1 2025. The number of MUPs rose to 4.3 million, marking a 28% year-on-year growth. This increase was largely influenced by the company’s US$750 million acquisition of Jackpocket, a lottery-of-lotteries app based in California, which was finalized in May of the previous year.
Despite the growth in customer numbers, DraftKings experienced a 5% decline in average revenue per MUP, which fell to US$108 compared to the same period last year. This decrease suggests a shift in customer behavior or product mix that may require further analysis.
Revised 2025 Guidance
DraftKings has adjusted its full-year 2025 revenue forecast in response to what it terms as “customer-friendly” sports outcomes in March. The new projection range is set at US$6.2 billion to US$6.4 billion, down from the previous estimate of US$6.3 billion to US$6.6 billion.
CEO and Co-founder Jason Robins emphasized that despite the downward revision, the new guidance still represents a 32% increase from the midpoint guidance issued last year. This perspective aims to maintain investor confidence in the company’s growth trajectory.
In line with the revenue adjustment, DraftKings has also revised its 2025 Adjusted EBITDA projection. The new range is between US$800 million and US$900 million, reduced from the earlier maximum guidance of US$1 billion.
Expansion and Product Development
DraftKings currently operates mobile sports betting in 25 U.S. states and Washington D.C. The company is eyeing expansion into Missouri, pending regulatory approval. This move aligns with the company’s strategy to increase its market presence across the United States.
In the iGaming sector, DraftKings offers 360 digital products in Ontario, Canada, and five U.S. states. This coverage represents approximately 11% of the U.S. market by population, indicating significant room for growth in the digital gaming space.
Robins attributed the company’s performance to recent product enhancements, stating, “Recent product enhancements are driving our performance and our customer metrics continue to be strong through an evolving macroeconomic environment.”
Financial Management and Stock Repurchase
CFO Alan Ellingson provided insight into the company’s financial management, revealing that DraftKings repurchased 3.7 million shares in Q1 under its existing stock repurchase program. This move demonstrates confidence in the company’s value and commitment to shareholder returns.
Ellingson also noted the impact of March results on the company’s outlook, stating, “If not for March, we would be raising our fiscal year 2025 revenue and Adjusted EBITDA guidance.” This comment suggests that the company’s underlying performance remains strong, with the revision primarily driven by short-term sports betting outcomes.
