Executive Summary

DraftKings delivered record revenue ($1.513B), net income ($158M), and Adjusted EBITDA ($301M), with revenue growth accelerating to 37% YoY and an approximately 20% adjusted EBITDA margin, aided by sportsbook-friendly outcomes adding ~$110M in May/June .
Revenue and Primary EPS significantly beat S&P Global consensus; management maintained FY25 guidance ($6.2–$6.4B revenue; $800–$900M Adjusted EBITDA) but guided revenue toward the high end and EBITDA toward the midpoint, now including Missouri launch and higher tax rates in NJ/LA/IL .
Sportsbook metrics were strong: net revenue margin rose to a company-record 8.7% (vs. 6.4% LY), handle grew 6%, and live betting handle grew 16% YoY; iGaming revenue rose 23% YoY with rising jackpot engagement .
Near-term stock narrative catalysts: sizable revenue/EPS beat, high-end revenue posture for FY25, live-betting outperformance, and improving promotional efficiency, offset by tax/regulatory headwinds (e.g., Illinois) and the non-recurring benefit from favorable outcomes .

What Went Well and What Went Wrong

What Went Well
- Record quarter driven by revenue +37% YoY to $1.513B and Adjusted EBITDA of $300.6M; CEO: “We set records for revenue, net income and Adjusted EBITDA… revenue growth to 37% year-over-year” .
- Sportsbook KPIs: net revenue margin 8.7% (record; up ~230 bps YoY), live betting handle +16% YoY, parlay mix up, and improved promo efficiency; CFO: “Sportsbook net revenue increased 45%... margins… set a company record at 8.7%... Live betting handle increased 16%...” .
- Cost discipline and tech leverage: adjusted gross margin ~48% (+400 bps YoY); early AI benefits on costs with potential top-line upside in trading/personalization over time .
What Went Wrong
- Favorable outcomes are non-recurring: management noted May/June outcomes added ~$110M to revenue, which may normalize, tempering extrapolation of structural profitability .
- Tax/regulatory headwinds: FY25 guide now contemplates higher tax rates in NJ/LA/IL; Illinois per-wager surcharge creates UX/pricing challenges and uncertain share/TAM impact .
- MUPs down sequentially (seasonality, Jackpocket Texas impact), highlighting continued work to grow and diversify beyond seasonal OSB peaks; iGaming improving but “still not quite” at target trajectory .

Financial Results

Overall P&L (sequential trend; GAAP and non-GAAP)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1,392.8	$1,408.8	$1,512.5
Diluted EPS (GAAP) ($)	$(0.28)	$(0.07)	$0.30
Adjusted EPS ($)	$0.14	$0.12	$0.38
Adjusted EBITDA ($USD Millions)	$89.5	$102.6	$300.6

Results vs S&P Global Consensus (Q2 2025)

Metric	Actual	Consensus	Surprise
Revenue ($USD Millions)	$1,512.5	$1,426.6*	+$85.9M / +6.0%*
Primary EPS ($)	$0.38	$0.162*	+$0.22*
EBITDA ($USD Millions)	$215.9*	$243.6*	$(27.7)M*

Notes: Primary EPS reflects S&P Global’s definition. S&P’s “EBITDA” may differ from company “Adjusted EBITDA” ($300.6M) and is not directly comparable . Values with asterisks retrieved from S&P Global.

Segment/Revenue Disaggregation (YoY)

Metric	Q2 2024	Q2 2025
Sportsbook Handle ($USD Millions)	$10,793.0	$11,474.8
Sportsbook Revenue ($USD Millions)	$686.9	$997.9
Sportsbook Net Revenue Margin (%)	6.4%	8.7%
iGaming Revenue ($USD Millions)	$350.6	$429.7
Other Revenue ($USD Millions)	$67.0	$85.0
Total Revenue ($USD Millions)	$1,104.4	$1,512.5

KPI Trends

KPI	Q4 2024	Q1 2025	Q2 2025
Monthly Unique Payers (MUPs, Millions)	4.8	4.3	3.3
ARPMUP ($)	$97	$108	$151

Profitability/Margin Highlights (Q2 2025)

Adjusted EBITDA margin ~20% (Adjusted EBITDA $300.6M on $1,512.5M revenue) .
Adjusted gross margin ~48% (+400 bps YoY) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$6.2–$6.4B (5/8/25)	$6.2–$6.4B; “closer to high end”	Maintained; bias higher
Adjusted EBITDA	FY 2025	$0.8–$0.9B (5/8/25)	$0.8–$0.9B; “near midpoint”	Maintained; bias to midpoint
Sportsbook net revenue margin	FY 2025	7.0%–7.5% (prior)	>7.5%	Raised
Adjusted gross margin	FY 2025	~46%	~46%	Maintained
Stock-based comp (% of revenue)	FY 2025	~6%	~6%	Maintained
Free cash flow	FY 2025	≈$750M	≈$750M	Maintained
Scope assumptions	FY 2025	Excluded Missouri (Q1)	Now includes Missouri; includes higher tax rates NJ/LA/IL	Expanded assumptions

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2, Q-1)	Current Period (Q2 2025)	Trend
Live betting/product innovation	Q4: extend lead in live betting ; Q1: product enhancements driving outperformance	Live handle +16% YoY; >90% uptime; broader markets; leadership reinforced	Positive momentum accelerating
Structural hold & promotions	Q4: structural hold expanded; promo optimization amid customer-friendly outcomes ; Q1: higher structural hold; outcomes hurt March	Sportsbook margin 8.7% (record); parlay mix up; promo reinvestment improved; outcomes added ~$110M in May/June	Structural improvements plus non-recurring tailwind
AI/technology leverage	—	Early cost benefits; exploring top-line impact in trading/personalization; more to come	Emerging positive
Regulatory/taxes	—	FY25 guide now includes higher taxes (NJ/LA/IL); IL surcharge approach and tax treatment uncertainty	Headwind incorporated
Market access/COGS stack	—	Opportunity to renegotiate access/data/payment costs; AI to improve infra costs	Medium-term margin lever
iGaming execution	Q1: iGaming +14.5% YoY	iGaming +22.6% YoY; jackpots engagement >100% GGR growth cited	Improving
Capital allocation	Q4: began buyback authorization ; Q1: repurchased 3.7M shares	6.5M shares repurchased in H1’25; investing for growth	Ongoing returns

Management Commentary

CEO Jason Robins: “We set records for revenue, net income and Adjusted EBITDA… revenue growth to 37% year-over-year… maintaining our fiscal year 2025 guidance, with revenue expected to be closer to the high end” .
“Sport outcomes… in May and June combined… added $110,000,000 to our revenue” .
CFO Alan Ellingson: “Adjusted EBITDA… $300,000,000… 20% adjusted EBITDA margin… Sportsbook net revenue… set a company record at 8.7… Live betting handle increased 16%” .
“We now expect our Sportsbook net revenue margin to exceed 7.5%… continue to expect adjusted gross margin of 46%… free cash flow of approximately $750,000,000” .

Q&A Highlights

Prediction markets: Opportunity being monitored; early-stage TAM; focus on stakeholder relationships; not rushing to be literal first mover .
COGS and AI: Material opportunity to renegotiate legacy state access/data agreements and optimize payments; AI to lower infra costs and support fixed cost efficiency .
Structural hold drivers: Parlay mix increase was key driver; tax hikes could be ~$200M headwind for 2026 vs prior investor day framework (partially offset by outperformance) .
Illinois surcharge: Pass-through approach chosen (pending tax treatment clarity); unprecedented design creates trade-offs and uncertain share/TAM impact .
Missouri launch: Expected EBITDA impact of ~$35–$45M in FY25; timing around early December; CAC expected to be attractive in NFL season .
Live betting leadership: In-game seen as key handle growth vector; >90% uptime and broad market offering underpin leadership; Simplebet integration a tailwind into NFL .

Estimates Context

Q2 2025 results vs S&P Global consensus: Revenue $1,512.5M vs $1,426.6M* (beat by $85.9M, +6.0%); Primary EPS $0.38 vs $0.162 (beat by $0.22*) .
S&P’s EBITDA consensus $243.6M* vs S&P actual $215.9M* is not directly comparable to company-reported Adjusted EBITDA of $300.6M; use caution in cross-metric comparisons .
Forward estimates context: Street models a seasonal dip in Q3 with revenue ~$1.20B* and EPS ~$(0.41)* before a stronger Q4; monitor how margin assumptions evolve given management’s >7.5% sportsbook net revenue margin outlook*.

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

Quality beat: Strong revenue/EPS beat and record profitability, with structural drivers (parlay mix, promo efficiency, live betting) and a meaningful but non-recurring outcomes boost .
Guidance posture bullish on top line: FY25 revenue steered to high end; EBITDA to midpoint, absorbing Missouri and higher state taxes—suggesting confidence in core unit economics .
Live betting is a moat: +16% YoY handle growth, >90% uptime, and Simplebet integration support DKNG’s lead into NFL, a likely narrative driver in H2 .
Margin levers intact: Access/data/payments renegotiation and AI-driven efficiencies provide medium-term COGS/opex tailwinds, partially offsetting regulatory tax headwinds .
Watch Illinois: Surcharge implementation and tax treatment could affect UX/pricing and market dynamics; learnings may inform strategy in other high-tax states .
KPIs seasonality vs monetization: MUPs seasonally down sequentially, but ARPMUP inflects higher (to $151); sustainment of higher ARPMUP is key for FY25–26 .
Near-term trading lens: Expect focus on live-betting momentum, Q3 seasonality, promo discipline, and any updates on Missouri timing/tax impacts; adjust models for >7.5% sportsbook net revenue margin and potential further promo efficiencies .

DraftKings Inc. (DKNG)·Q2 2025 Earnings Summary