DraftKings Posts 20% Revenue Growth in Q1 2025

A Strong Q1 Performance

DraftKings kicked off 2025 with a bang, reporting $1.4088 billion in revenue for Q1, a 20% jump from $1.175 billion in Q1 2024. The $234 million increase came from robust customer engagement, efficient new customer acquisition, a higher structural Sportsbook hold percentage of 10.4% (up 60 basis points), and the May 2024 Jackpocket acquisition.

Adjusted EBITDA soared to $102.63 million from $22.39 million, while the net loss shrank to $33.86 million from $142.57 million.

“Recent product enhancements are driving outperformance,” said CEO Jason Robins, though customer-friendly sports outcomes, like an 82% NCAA tournament win rate for higher-seeded teams, clipped $170 million from full-year revenue projections.

Sportsbook and iGaming Shine

DraftKings’ Sportsbook led the charge, generating $881.96 million in revenue, up 20.1% from $734.06 million in Q1 2024. Sportsbook handle hit $13.88 billion, a 15.7% increase from $12 billion, driven by NCAA basketball tournament fervor.

The structural hold rose to 10.4%, boosted by a 370-basis-point spike in parlay bets, though actual hold dipped to 9.5% due to NCAA upsets.

“We’re delivering more unique betting options,” Robins said, citing integrations from SimpleBet, SportsIQ, and Mustard Golf, plus live micro-betting for NBA and MLB.

iGaming revenue grew 14.5% to $423.47 million from $370 million, with proprietary jackpots setting a U.S. record at $9.3 million on a 20-cent bet.

Other revenue, including Jackpocket, surged 45.7% to $103.38 million. Adjusted gross margin climbed to 45%, up 100 basis points, reflecting tighter promotional spending.

Customer Metrics and AI Push

DraftKings’ customer base expanded, with monthly unique paying players (MUPs) reaching 4.3 million, up 26% from 3.4 million in Q1 2024.

Excluding Jackpocket, MUPs grew 11%. Average revenue per MUP (ARPMUP) dipped 5% to $108 from $114, dragged by lower Jackpocket ARPMUP, though core products saw a 7% ARPMUP rise.

“Our customer metrics remain strong despite an evolving macroeconomic environment,” Robins said. The company’s AI-first mentality accelerated product development, from personalized betting options to streamlined customer service.

DraftKings’ platform ranked No. 1 in industry reports for Sportsbook and iGaming for seven straight months. Nearly half its customers used the My Stat Sheet tool, logging 11 million responsible gaming visits in Q1.

“AI is scaling our efficiency,” said CFO Alan Ellingson, noting faster feature rollouts.

Challenges and Revised Outlook

Despite the gains, Q1 wasn’t flawless. Customer-friendly NCAA outcomes, with higher-seeded teams winning at a historic 82% clip, cut actual Sportsbook hold and cost $111 million in full-year adjusted EBITDA.

“If not for March’s outcomes, we’d raise guidance,” Robins said. DraftKings lowered its 2025 revenue forecast to $6.2-$6.4 billion from $6.3-$6.6 billion and adjusted EBITDA to $800-$900 million from $900 million-$1 billion. Jackpocket’s withdrawal from Texas and New Mexico added a $26 million EBITDA hit.

The GAAP net loss of $33.86 million and operating loss of $46.33 million, though improved, signaled ongoing profitability hurdles. High stock-based compensation (6% of revenue) and regulatory risks, like federal prediction market lawsuits, loomed.

Strategic Moves and Future Plans

DraftKings’ omni-channel strategy leveraged Jackpocket’s lottery app to boost MUPs, while Sportsbook and iGaming synergies drove engagement. The company’s preparing to launch Sportsbook in Missouri, pending regulatory approvals, though this isn’t in 2025 forecasts.

DraftKings is monitoring federal prediction markets, eyeing new opportunities amid legal shifts. Its responsible gaming push, with tools embedded platform-wide, aligns with industry trends. “We’re deeply committed to responsible gaming,” Ellingson said.

The company projects a 46% adjusted gross margin for 2025, up 300 basis points, and $750 million in free cash flow. Planned product enhancements include deeper content integrations and live betting expansions.

Share repurchasing will continue, with 3.7 million shares already bought. Risks, economic shifts, competition, and regulatory changes persist, but DraftKings’ $1.1 billion cash reserve offers flexibility. “Our balance sheet will strengthen,” Ellingson said.