DraftKings stock surged to its highest level since August 2021 after the company announced fourth-quarter earnings and 2024 financial figures.
DraftKings posted strong revenue growth and record customer engagement in Q4, but historically unfavorable NFL betting and lower-spending lottery customers weighed on EBITDA. On Friday morning’s earnings call, CEO Jason Robins touted live betting, parlays and iGaming to drive a 35% projected revenue growth in 2025.
DKNG shares were up around 11.5% to $51. 75 at 1 p.m. Eastern.
DraftKings posts positive year
The company reported $1.39 billion in Q4 revenue, a 13% year-over-year increase, surpassing Wall Street estimates. Adjusted EBITDA for Q4 fell 40% year over year to $151 million, largely due to a 16% decline in revenue per user to $97.
Full-year revenue reached $4.77 billion, up 30%, with $181.3 million in adjusted EBITDA, marking its first profitable year and a sharp reversal from a $151 million loss in 2023. Net losses more than doubled to $134.9 million, with a quarterly loss of $0.28 per share, compared to $0.10 a year ago.
DraftKings raised its 2025 revenue guidance to a midpoint of $6.45 billion and reaffirmed its adjusted EBITDA guidance of $900 million to $1 billion.
Super Bowl and NFL headwinds
Super Bowl 59 delivered DraftKings’ largest single-day handle and gross gaming revenue ever. It took $436 million on Super Bowl Sunday from 12 million bets from 2.5 million customers.
Super Bowl same-game parlay handle was up 40% year over year, resulting in a 13% hold rate despite the public winning major markets in the spread, moneyline and game total.
The broader NFL season, however, was challenging. According to DraftKings, favorites won 75% of games in 10 out of 17 weeks, the highest rate in over 40 years.
The company said the historically favorable outcomes for bettors resulted in a slightly lower sportsbook hold rate than expected.
Handle, hold, customers trending up for DraftKings
Handle growth across the industry slowed during the quarter. Robins attributed that to fewer games, the presidential election and lower sports viewership, which he said have bounced back in Q1, a good sign for handle.
DraftKings acquired 3.5 million new customers in 2024, with parlays driving structural hold to 10.5%, up from 9.8% in 2023. DraftKings projects an 11% hold rate for 2025.
Also seeing strong growth was iGaming revenue, which rose 21% year over year to $426 million, despite no new state launches.
Jackpocket adds lower-spending users
DraftKings averaged 4.8 million monthly unique players in Q4, up 36% year over year. However, revenue per user declined.
DraftKings attributed this to Jackpocket, which accounted for a 20% chunk of that customer growth but brought in lower-spending players. The company said that excluding Jackpocket, revenue per user would have declined just 4%.
“There’s room to invest more there. It’s probably more effective in states with sports betting and iGaming because LTVs will be higher right away,” Robins said.
Sales and marketing expenses rose 26% year over year to $368.6 million, while product and technology costs increased 27% to $112.1 million.
Contract markets change competitive landscape
Robins said DraftKings is closely monitoring event contract markets, which have begun offering products that resemble sports wagering.
Contract markets like Polymarket and Kalshi, as well as trading platforms like Crypto.com and Robinhood, have been asked by the Commodity Futures Trading Commission to pause operations while the agency reviews their legality, but not all have complied.
These platforms allow users in all 50 states to bet on major events, including the Super Bowl, and offer markets DraftKings cannot, such as presidential election outcomes.
Polymarket reported $1.1 billion in total Super Bowl betting volume, while Kalshi handled nearly $27 million.
Focus on live betting
Live betting is a top priority going forward, and Robins cited it as a major reason for the guidance raise. In August, DraftKings acquired Simplebet, a micro-betting company, to enhance its real-time wagering capabilities.
That investment, along with other live betting acquisitions, Sports IQ Analytics and Mustard Golf, is expected to be EBITDA-neutral in 2025 and EBITDA-positive by 2026.
“Looking ahead to 2025 and beyond, I am excited to further enhance our customer economics through new initiatives such as extending our lead in live betting and advancing cross-sell efforts to and from new verticals,” Robins said.
