0001883685-25-000038
SEC filingiGaming drove revenue growth of 4.4% to $1.14B, but sportsbook margin contraction and increased costs led to wider adjusted EBITDA loss.
In Q3 2025, DraftKings generated total revenue of $1.14 billion, up 4.4% year-over-year. The growth was driven entirely by iGaming revenue, which surged 24.9% to $451.3 million, while Sportsbook revenue fell 9.3% to $596.1 million due to customer-friendly sports outcomes, partially offset by a 10.0% increase in handle. Gross profit improved marginally (+1.9%) to $359.9 million, but gross margin contracted 70 bps to 31.5% as cost of revenue grew faster, primarily from higher gaming taxes. Operating loss narrowed 9.0% to $271.9 million, helped by a significant reduction in general and administrative expenses (down 24.7% to $156.8 million), which benefited from the non-recurrence of prior-year restructuring and litigation costs. Net loss improved 12.6% to $256.8 million, resulting in a per-share loss of $0.52 versus $0.60 a year ago. Adjusted EBITDA, however, worsened to a loss of $126.5 million from a $58.5 million loss, reflecting the impact of higher sales and marketing (up 6.0%) and product and technology expenses (up 10.7%).
Management reiterated its focus on long-term profitability, emphasizing the scalability of its technology platform and the maturation of new jurisdictions. The company expects contribution profit to grow as revenue expands and variable marketing expenses stabilize, eventually driving positive consolidated Adjusted EBITDA. Key levers include improving sportsbook hold percentages, optimizing promotional reinvestment, and leveraging national advertising. While no formal numeric guidance was provided, the nine-month Adjusted EBITDA turned positive at $276.8 million, signaling progress. The company also highlighted its strong liquidity position with $1.23 billion in cash and a $500 million revolving credit facility, enabling continued investment in product and market expansion.
DraftKings ended Q3 2025 with $1.23 billion in cash and cash equivalents, up from $0.79 billion at year-end 2024, driven by proceeds from the $600M Term B Loan and positive operating cash flow of $342M in the first nine months. Total debt stood at $1.84 billion, comprising $1.26 billion in convertible notes (net of issuance costs) and $0.58 billion drawn under the new Term B Facility. Shareholders' equity decreased to $0.73 billion from $1.01 billion, primarily due to $314M in share repurchases and ongoing net losses.
Total contractual obligations as of September 30, 2025, amounted to $2.07 billion, including $1.3 billion in expected obligations from three new multi-year content integration agreements signed in Q3. Annual commitments are $161M through end of 2025, $469M in 2026, $491M in 2027, and $404M in 2028, with the remainder thereafter. Additionally, the company maintains $500M in surety bonds at a 0.5% annual premium for regulatory requirements.
During the nine months ended September 30, 2025, DraftKings repurchased 8.2 million shares for $314 million under its $1 billion Stock Repurchase Program. On November 6, 2025, the board increased the authorization by an additional $1 billion, bringing the total to $2 billion. The company did not pay dividends. Capital expenditures totaled $104.8 million (2.6% of revenue), consisting of $11.4M in property and equipment and $93.4M in internally developed software costs. Debt issuance in March 2025 added $600M Term B Loan, used partly to fund buybacks and operations.
DraftKings operates as a single reporting segment, but the notes provide disaggregated revenue by product vertical. For Q3 2025, Sportsbook contributed $596M (down 9% YoY), iGaming $451M (up 25%), and Other $97M (up 25%). The decline in Sportsbook reflects a competitive landscape and higher promotional costs, while iGaming continues to grow from market expansion. All revenue is generated in North America, with no further geographic breakdown provided.