Fantasy sports and betting company DraftKings (NASDAQ: DKNG) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 42.8% year on year to $1.99 billion. On the other hand, the company’s full-year revenue guidance of $6.7 billion at the midpoint came in 8.2% below analysts’ estimates. Its non-GAAP profit of $0.36 per share was 12.5% below analysts’ consensus estimates.
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DraftKings (DKNG) Q4 CY2025 Highlights:
- Revenue: $1.99 billion vs analyst estimates of $1.99 billion (42.8% year-on-year growth, in line)
- Adjusted EPS: $0.36 vs analyst expectations of $0.41 (12.5% miss)
- Adjusted EBITDA: $343.2 million vs analyst estimates of $269.4 million (17.3% margin, 27.4% beat)
- EBITDA guidance for the upcoming financial year 2026 is $800 million at the midpoint, below analyst estimates of $980.6 million
- Operating Margin: 7.6%, up from -10% in the same quarter last year
- Free Cash Flow Margin: 14%, down from 23.2% in the same quarter last year
- Monthly Unique Payers: 4.8 million, in line with the same quarter last year
- Market Capitalization: $13.09 billion
“We closed 2025 on a high note. Fourth quarter revenue increased 43% year-over-year and we achieved records for revenue and Adjusted EBITDA. Our core business is strong as we enter 2026,” said Jason Robins, DraftKings’ Chief Executive Officer and Co-founder.
Company Overview
Getting its start in daily fantasy sports, DraftKings (NASDAQ: DKNG) is a digital sports entertainment and gaming company.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, DraftKings’s sales grew at an impressive 56.6% compounded annual growth rate over the last five years. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. DraftKings’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 28.5% over the last two years was well below its five-year trend. 
This quarter, DraftKings’s year-on-year revenue growth of 42.8% was magnificent, and its $1.99 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 20.6% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and implies the market is baking in success for its products and services.
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Operating Margin
DraftKings’s operating margin has been trending up over the last 12 months, but it still averaged negative 5.8% over the last two years. This is due to its large expense base and inefficient cost structure.
This quarter, DraftKings generated an operating margin profit margin of 7.6%, up 17.6 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
DraftKings’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q4, DraftKings reported adjusted EPS of $0.36, up from $0.14 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects DraftKings’s full-year EPS of $0.60 to grow 95.3%.
Key Takeaways from DraftKings’s Q4 Results
We were impressed by how significantly DraftKings blew past analysts’ EBITDA expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 8.5% to $23.02 immediately following the results.
DraftKings’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
