0001883685-26-000020
SEC filingRevenue grew 16.8% driven by Sportsbook Net Revenue Margin expansion to 7.8%; net income turned positive to $21.1 million.
DraftKings reported a strong first quarter in 2026, with revenue increasing 16.8% to $1,646 million from $1,409 million in the prior year. The growth was primarily driven by the Sportsbook segment, which saw revenue jump 24.1% to $1,095 million, and iGaming, which rose 8.9% to $461 million. The Sportsbook Net Revenue Margin expanded significantly from 6.4% to 7.8%, reflecting a higher hold percentage and improved promotional reinvestment. Cost of revenue as a percentage of revenue improved to 57.7% from 59.9%, indicating economies of scale. Net income swung to a positive $21.1 million from a loss of $33.9 million, driven by the revenue growth and operational leverage. Diluted EPS improved to $0.03 from ($0.07). Adjusted diluted EPS grew to $0.20 from $0.12.
Sportsbook Handle increased 1.5% to $14.1 billion, with the Net Revenue Margin improvement being the primary revenue driver. iGaming revenue growth was supported by better promotional efficiency. Other revenue declined 13.0% due to lower Fantasy participation and the exit from the Texas lottery market. Monthly Unique Payers (MUPs) decreased 3.6% overall but rose 2.1% excluding Lottery, indicating strong retention in core offerings. Average Revenue per MUP (ARPMUP) increased 21.3% to $23, reflecting higher monetization.
Management emphasized a path to profitability through continued contribution profit growth and fixed cost discipline. Key strategic priorities include investing in offerings, launching in new jurisdictions (notably Missouri and Arkansas), and expanding Prediction Markets. The company expects to achieve positive Adjusted EBITDA as total contribution profit exceeds fixed costs, with the percentage of U.S. adults with access to offerings being a factor. No specific numeric guidance was provided for upcoming quarters, but the company highlighted its scalable technology and focus on unit economics.
As of March 31, 2026, DraftKings held $0.999B in cash and equivalents (excluding restricted cash of $8.7M and cash reserved for users of $378.7M). Total debt stood at $1.835B, consisting of $1.260B in convertible notes (net) and $575.6M in Term B Loan (net). Shareholders' equity was $0.605B. Deferred revenue (a contract liability) was $131.7M, down from $174.8M at year-end 2025, reflecting seasonal settlement of obligations.
The company disclosed $2.139B in non-cancelable vendor contracts as of March 31, 2026. Of this, $423.8M is due within the next nine months (through December 2026), $1.082B in 2027-2028, and $634.0M beyond 2028. Additionally, off-balance-sheet surety bonds of $500.0M were issued at a 0.5% annual premium, with no claims history.
The company operates as a single reportable segment, providing Sportsbook, iGaming, Fantasy, Lottery, Prediction Markets, and other offerings. Revenue for Q1 2026 was $1.646B, a 16.8% increase year-over-year. The CODM (CEO) uses net income to allocate resources; no segment-level operating income is reported. Geographic mix is not separately disclosed in the notes.
Operating cash flow (CFO) improved significantly year-over-year from -$119.0M to -$48.4M, driven by a net income swing from -$33.9M to +$21.1M and positive working capital changes in accounts receivable. However, CFO remained negative, indicating ongoing cash consumption. Capital expenditures (capex) of $44.2M (PP&E and software) represented a moderate intensity relative to negative CFO. The company financed operations and share repurchases ($122.9M) primarily through prior cash reserves, as net cash flow was -$217.8M.
Liabilities to users decreased by $123.4M, a major use of cash, partly due to seasonality and user payout timing. Accounts payable also fell by $81.0M. These working capital outflows partially offset net income improvements. No significant one-time tax payments were noted. The investing cash outflow was nearly equal to CFO, highlighting ongoing investment needs. Overall, the cash flow statement reflects a company still investing heavily for growth, with negative free cash flow.