DraftKings has lowered its revenue and adjusted EBITDA guidance for the full financial year 2026 after escalating operating and customer acquisition costs contributed to a sharp increase in its third quarter net loss.
During the three months leading up to September 30, top line revenue demonstrated solid expansion, climbing 16 percent year-on-year to $1.33 billion. However, profitability metrics were heavily impacted as adjusted EBITDA loss widened from $126.5 million to $316.9 million, and quarterly net loss reached $468.7 million.
Detailing the underlying drivers, management pointed to aggressive capital allocation toward customer acquisition and the ongoing scaling of its new Predictions offering. Sales and marketing expenditures surged 68 percent to $605.7 million, while monthly unique payers grew 13 percent to 4.1 million alongside a 3 percent rise in average revenue per user to $109.
Guidance adjustments and predictions investment
The heightened level of investment has substantially reshaped DraftKings financial outlook for the remainder of the year. Full-year revenue is now projected to land between $6.35 billion and $6.55 billion, down from previous expectations of $6.5 billion to $6.9 billion. Meanwhile, full-year adjusted EBITDA is forecast to range from $175 million to $275 million, representing a significant downward revision from earlier projections of $700 million to $900 million.
This adjustment primarily accounts for an expected $650 million to $700 million investment in the company’s Predictions platform during 2026. While core operations are anticipated to generate robust adjusted EBITDA between $875 million and $925 million, introductory customer promotions are expected to offset gross revenues from Predictions throughout the year, with an anticipated adjusted EBITDA investment of $175 million to $225 million allocated solely for the fourth quarter.
Positive projections for 2027
Looking ahead, DraftKings offered a highly optimistic outlook for 2027, anticipating major returns from its strategic Predictions outlay. The company established an initial 2027 revenue guidance range of $7.35 billion to $7.75 billion, with the upper threshold reflecting an 18.3 percent increase over the revised 2026 upper forecast limit. Core operations are projected to contribute between $6.7 billion and $7 billion of that total, with Predictions adding another $650 million to $750 million.
Reflecting on the quarterly performance, DraftKings founder and CEO Jason Robins stated: “The third quarter marked a pivotal moment for DraftKings, as the Predictions offering we have been building is now powering meaningful growth for our business. More than 1.6 million customers have engaged with Predictions year-to-date.
Combined with the strength of our core, we believe we are set up for an exceptional 2027.” CFO Alan Ellingson added that strong free cash flow generation from core operations is being effectively deployed to fuel long-term growth in the Predictions sector.
