In This Article:
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Revenue: $1.409 billion in Q1 2025, 20% year-over-year growth.
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Adjusted EBITDA: $103 million in Q1 2025.
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Sportsbook Handle: $13.9 billion, 16% year-over-year increase.
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Structural Sportsbook Hold Percentage: 10.4%, up 60 basis points year-over-year.
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Actual Sportsbook Hold Percentage: 9.5%.
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Adjusted Gross Margin: Increased over 100 basis points year-over-year to 45%.
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Fiscal Year 2025 Revenue Guidance: Revised to $6.2 billion to $6.4 billion.
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Fiscal Year 2025 Adjusted EBITDA Guidance: Revised to $800 million to $900 million.
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Expected Sportsbook Net Revenue Margin: 7% to 7.5% for fiscal year 2025.
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Expected Adjusted Gross Margin: 46% for fiscal year 2025, an improvement of over 300 basis points year-over-year.
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Free Cash Flow Expectation: Approximately $750 million for fiscal year 2025.
Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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DraftKings Inc (NASDAQ:DKNG) reported a strong start to the year with core value drivers outperforming expectations.
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The company achieved a 20% year-over-year revenue growth in the first quarter, generating $1.409 billion.
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DraftKings Inc (NASDAQ:DKNG) has a healthy balance sheet with $1.1 billion in cash after repurchasing 3.7 million shares.
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The company is realizing efficiencies as broader corporate demand softens, particularly in advertising.
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Live betting has become a significant growth driver, with live handle exceeding 50% of total handle for the first time.
Negative Points
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Customer-friendly sport outcomes, particularly during March Madness, negatively impacted revenue and adjusted EBITDA.
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DraftKings Inc (NASDAQ:DKNG) revised its fiscal year 2025 revenue guidance downward due to unfavorable sport outcomes.
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The company faces headwinds from increased tax rates in Maryland and the shutdown of digital lottery operations in Texas and New Mexico.
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There is concern over the gap between structural and actual hold percentages, attributed to random sport outcomes.
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DraftKings Inc (NASDAQ:DKNG) is cautious about international expansion, focusing primarily on the U.S. market due to high opportunity costs.
Q & A Highlights
Q: What are the boundaries for M&A, including the use of equity and tolerance for leverage? A: Jason Robins, CEO, explained that M&A is evaluated as part of an overall strategy to create shareholder value. He cited past acquisitions like Simplebet and Sports IQ, which have paid dividends in terms of live handle increases and cost reductions. The approach includes considering equity, debt, and cash on the balance sheet.