DraftKings Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted EBITDA: $115 million for Q2 2026, with potential for higher results if not for customer-friendly sports outcomes and increased customer acquisition costs.

Revenue Growth: Normalized revenue increased 10% year-over-year, driven by a nearly 75% increase in customer acquisition.

Customer Metrics: Monthly unique payers grew 9% year-over-year; sports consumer volume rose 15% year-over-year.

Customer Acquisition Costs: Achieved the best acquisition costs since Q1 2025, with a 25% improvement despite a 10% increase in acquisition spending.

2Strategic Updates and Business Highlights

Super App Strategy: The rollout of the Super App is yielding significant customer acquisition, particularly in states without regulated sportsbooks.

Predictions Offering: Launched nationwide with over 600,000 customers engaged, showing strong retention and engagement metrics similar to Sportsbook customers. The volume traded grew nearly 5x from April to July.

Market Making and Exchange: Successfully launched the in-house exchange (DKeX) and received approval as a Futures Commission Merchant, enhancing the company's vertical integration and market-making capabilities.

Cost Management: Continued discipline in operating costs with adjusted G&A expenses down 6% year-over-year.

3Forward Guidance and Outlook

Fiscal Year 2026 Guidance: Maintained revenue guidance of $6.5 billion to $6.9 billion and adjusted EBITDA guidance of $700 million to $900 million, reflecting confidence in core business performance and ongoing investments in Predictions.

Long-term Goals: Targeting a $55 billion to $80 billion industry gross revenue opportunity by 2030 with at least a 30% long-term adjusted EBITDA margin.

4Challenges and Points of Concern

Customer-Friendly Outcomes: Experienced a headwind from favorable sports outcomes in June, impacting revenue. This was partially offset by positive outcomes in July.

Competitive Pressures: Acknowledgment of increased promotional spending by competitors, though management expressed confidence in their ability to maintain efficiency and market share without significantly altering their promotional strategy.

Regulatory Uncertainty: Some caution in aggressively marketing the Predictions product due to ongoing regulatory questions and the need for customer education in new states.

5Notable Q&A Insights

Customer Acquisition Dynamics: Management noted that the customer base in states without established sportsbooks is similar to those with sportsbooks, suggesting a strong opportunity for Predictions.

Promotional Environment: Management is confident in their ability to manage promotional spending efficiently, despite competitors increasing their marketing budgets.

Vertical Integration Benefits: The integration of brokerage, exchange, and market-making functions is expected to enhance unit economics and customer lifetime value, similar to the strategy employed in the Sportsbook segment.

Future Investments: Management indicated a willingness to adjust spending based on data-driven results, potentially increasing investment in Predictions if customer acquisition metrics remain strong. Overall, DraftKings reported strong growth and confidence in its core business while navigating challenges and competitive pressures, particularly in the evolving landscape of prediction markets.