DraftKings announced its Q1 2025 revenue as $1.41 billion, a 20% increase from $1.18 billion in Q1 2024. The company noted high engagement in its sports betting and iGaming products, improved hold rates, and ongoing integration of Jackpocket, acquired in May 2024.
This quarter, the monthly unique paying users (MUP) grew by 28%, reaching 4.3 million. Excluding Jackpocket, the growth would have been 11%. However, due to the lower monetization rate of Jackpocket's customer base, the average revenue per MUP (ARPMUP) decreased by 5% to $108. Without Jackpocket, the ARPMUP would have increased by 7%.
Customer Growth After Soft Sports Results
Despite strong fundamentals, DraftKings noted that "customer-friendly" sports event outcomes in March negatively impacted profit margins. The structural hold percentage in sports betting remains high, but event-level performance resulted in lower-than-expected profit contributions.
CEO Jason Robins stated, "If not for the favorable outcomes for customers in March, we might have raised our performance expectations for 2025. Nevertheless, our core customer metrics and product performance remain strong."
Therefore, DraftKings has slightly lowered its 2025 revenue forecast from the previous range of $6.3 billion to $6.6 billion to $6.2 billion to $6.4 billion. Compared to the FY 2024 revenue of $4.8 billion, this midpoint still reflects a 32% growth rate. The adjusted EBITDA forecast has also been lowered from $900 million to $1 billion to $800 million to $900 million.
Buybacks and Market Expansion
CFO Alan Ellingson confirmed that the company repurchased 3.7 million shares in the first quarter under the existing buyback plan, reinforcing its commitment to shareholder returns.
DraftKings currently offers mobile sports betting in 25 states and the District of Columbia, covering about 49% of the population. The company also operates iGaming in five states, covering 11% of the U.S. population. In Canada, DraftKings continues to operate in Ontario, which accounts for 40% of the total Canadian population.
Following the successful passage of the sports betting initiative in Missouri on November 5, 2024, DraftKings is preparing to launch operations in the state, pending approval. Missouri is expected to further enhance DraftKings' national influence and accelerate revenue growth in the second half of the year.
The Impact of Jackpocket and the Prospects for iGaming
The integration of Jackpocket has significantly contributed to customer acquisition, although ARPMUP has declined. DraftKings reports robust growth in core metrics, excluding Jackpocket.
The company also hopes to launch operations in Puerto Rico later this year and continue to expand its physical sports betting partnerships, including the recent venue opened in February with Live! Casino & Hotel Louisiana.
Past Performance and Strategic Development
DraftKings' revenue grew by 30.1% in 2024, reaching $4.8 billion, and achieved a positive adjusted EBITDA for the first time, at $181.3 million. Although the net loss narrowed by 36.8% to $507.3 million for the year, the loss in Q4 2024 still increased to $139.2 million due to soaring operating expenses and marketing costs.
The acquisition of Jackpocket in May 2024 was a key strategic move to broaden its product line and reach new user groups in digital lottery games. This integration has already impacted customer and profit dynamics in the first quarter.
With continued growth in customer numbers and the anticipation of new product launches within states, DraftKings remains poised for revenue expansion in the new year—however, margin management and improvements in ARPMUP are crucial for achieving revised profit targets.
