0001883685-26-000020
SEC filingRevenue grew 16.8% to $1.65B, net income turned positive to $21M, driven by Sportsbook margin expansion and iGaming growth.
In Q1 2026, DraftKings reported total revenue of $1.646 billion, a 16.8% increase from $1.409 billion in Q1 2025. The growth was driven by strong performance in Sportsbook and iGaming. Sportsbook revenue surged 24.1% to $1.095 billion, primarily due to an expanded net revenue margin of 7.8% (up from 6.4%) from higher hold percentage and improved promotional efficiency. iGaming revenue rose 8.9% to $461.3 million, aided by better promotional reinvestment. Other revenue declined 13.0% to $89.9 million, mainly from lower Fantasy entry fees and reduced Lottery revenue following the Texas market exit.
Cost of revenue increased 12.5% to $949.4 million, but as a percentage of revenue it fell to 57.7% from 59.9%, reflecting economies of scale. Sales and marketing expenses grew 16.9% to $401.7 million, driven by higher external marketing costs for new state launches (Missouri, Arkansas) and the Prediction Markets offering. Product and technology expenses increased 19.3% to $123.2 million, primarily from higher compensation and stock-based compensation. General and administrative expenses rose only 0.9% to $165.9 million, as a $26.4 million increase in advocacy costs (related to iGaming legalization and ballot measures) was largely offset by lower stock-based compensation.
Net income turned positive to $21.1 million from a net loss of $33.9 million in the prior year, a $54.9 million improvement. Diluted EPS was $0.03 versus -$0.07. Adjusted EBITDA more than doubled to $167.9 million from $102.6 million, reflecting operating leverage and higher contribution profit.
Sportsbook remains the primary growth engine, with revenue growth of 24.1% far outpacing handle growth of 1.5% ($14.1B vs $13.9B), highlighting margin expansion. The Sportsbook net revenue margin improved 140 basis points to 7.8%, driven by better hold and reduced promotional spend. iGaming continues to show steady growth, with revenue up 8.9%, and management attributes the increase to improved promotional reinvestment. Other revenue, including Fantasy and Lottery, contracted as expected due to the Texas exit and lower engagement. The shift toward higher-margin Sportsbook and iGaming segments is improving overall profitability.
Management's discussion focuses on strategic priorities: investing in offerings, launching in new jurisdictions, achieving scalable unit economics, and expanding into new verticals like Prediction Markets. The company noted that after initial heavy investment in new markets, they expect improved profitability as jurisdictions mature. Key enablers include scalable technology and efficient customer acquisition. While no specific numerical guidance is provided, the path to profitability relies on contribution profit growth exceeding fixed costs. The recent launches in Missouri and Arkansas and the Prediction Markets offering are expected to contribute to user growth. Advocacy spending for legalization in additional states indicates a proactive approach to expanding the addressable market. Overall, management expresses confidence in the long-term outlook based on strong user engagement and margin trends.
Cash and cash equivalents stood at $999.4 million as of March 31, 2026, down from $1.127 billion at year-end 2025. Including restricted cash and cash reserved for users, total liquidity was $1.387 billion. Total debt amounted to $1.835 billion, consisting of $1.260 billion in convertible notes and $575.6 million in Term B Loan. Shareholders' equity was $605 million. The company had $488.1 million available under its $500 million revolving credit facility.
DraftKings disclosed $2.139 billion in non-cancelable vendor commitments, with $423.8 million due within one year, $1.082 billion in years 1-3, and $634 million thereafter. Additionally, the company had $500 million in outstanding surety bonds supporting regulatory licenses.
Capital allocation was active: $98.6 million was spent on share repurchases (3.3 million shares) under the $2.0 billion stock buyback program authorized in November 2025. No dividends were paid. Debt was slightly reduced with $1.5 million in Term B Loan principal repayment. Capital expenditures totaled $45.2 million, including $37.1 million for internally developed software and $7.1 million for property and equipment.
The company operates as a single reportable segment. Revenue is disaggregated in Note 7: Sportsbook $1.095 billion, iGaming $461 million, and Other $90 million (including fantasy, lottery, prediction markets). All revenue is generated in North America.