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DraftKings (DKNG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 7, 2026

Source: earnings call transcript

Executive summary

DraftKings Q2 FY26 — Strong Core Business and Rapid Predictions Growth

DraftKings delivered a strong Q2 FY26, driven by robust core business performance and rapid adoption of its new predictions offering. The company achieved significant customer acquisition efficiency and accelerated unique payer growth, while its vertically integrated Super App strategy is yielding strong engagement. Management maintains its full-year guidance, confident in the underlying earnings power and the incremental opportunity presented by predictions, despite near-term profitability impacts from customer-friendly sport outcomes and increased acquisition spend.

Highlights

5

  • Adjusted EBITDA reached $115 million in Q2 FY26.

  • Customer acquisition grew nearly 75% year-over-year, with costs approximately 25% better than anticipated.

  • Monthly unique payers growth accelerated to 9% year-over-year.

  • Predictions offering engaged over 600,000 customers year-to-date, with annualized total volume traded growing nearly 5x from $2.3 billion to $11 billion from April to July.

  • Sportsbook handle increased 11% year-over-year in Q2 FY26, with handle share improving year-over-year for the third consecutive quarter.

Concerns

2

  • Customer-friendly sport outcomes in Q2 FY26 resulted in an $80 million revenue headwind.

  • Higher-than-expected customer acquisition in Q2 FY26 weighed on near-term profitability.

Guidance & targets

CategoryTargetConfidence
Adjusted EBITDA (Core Business)
$1 billion
high materiality
High
Revenue
$6.5 billion to $6.9 billion
high materiality
High
Adjusted EBITDA
$700 million to $900 million
high materiality
High

Product announcements

ProductTypeDetails
Super Appupdate
DKeXlaunch
Futures Commission Merchant (FCM) licensemilestone
Flex Spinslaunch
Lightning Linklaunch
Moonshotlaunch

Risks & headwinds

Customer-friendly sport outcomes Q2 FY26

$80 million revenue headwind

Mitigation:Sportsbook friendly World Cup outcomes in July have been a positive tailwind so far in the third quarter, mostly offsetting the aforementioned customer-friendly outcomes experienced in June.

Higher-than-expected customer acquisition spend Q2 FY26

weighed on near-term profitability

Mitigation:view this as a pull forward of acquisition and an optimized use of investment; underlying earnings power of our core business continues to exceed our expectations.

Regulatory uncertainty for Predictions future

not entirely certain

Mitigation:taking a little bit more of a cautious approach in Predictions investment

What to watch in Q3 FY26

Predictions annualized total volume traded

next quarter
Current nearly 5x growth from $2.3B to $11B (April-July)
Target Continued rapid growth, further closing the gap to OSB LTVs.

Why it matters

Rapid volume growth and LTV parity are key to predictions becoming a significant incremental opportunity.

We are excited to update you over the next quarter as this momentum continues.

Find out whether DKNG delivers this. Inve re-checks your case every morning.

Q&A highlights

Why does DraftKings expect to capture a different customer profile in prediction markets compared to competitors (who attract professionals), and are there product/promo limitations for the vertically integrated platform?

DraftKings focuses on states without legal OSB (e.g., California, Texas) where they see a similar customer profile to OSB. They believe their differentiated content, promotions, and product experience, combined with customer stickiness, will attract a broader audience. They also note minimal cannibalization with OSB, as competitor prediction markets primarily attract professional syndicates.

“where we're focused is on the states we don't have an OSB offering. And there, because you don't have competitive OSB offerings, it's a very different picture.”

asked by Stephen Grambling · answered by Jason Robins

2 min read 6 chapters

Detailed narrative

Super App Strategy and Customer Acquisition

DraftKings' Super App strategy, outlined at its Investor Day, is driving massive new customer acquisition, particularly in states without regulated sportsbooks. Customer acquisition grew nearly 75% year-over-year in Q2 FY26, with costs approximately 25% better than anticipated, leading to a pull-forward of acquisition. The company leaned into this demand, investing 10% more in customer acquisition spend.

Predictions Offering Rapid Growth

The newly launched predictions offering has surpassed expectations, engaging over 600,000 customers year-to-date. Annualized total volume traded grew nearly 5x from $2.3 billion in April to $11 billion in July. Early data indicates similar volume per customer and month-over-month retention to Sportsbook customers, with acquisition costs well below those for Sportsbook customers.

Vertical Integration Advantage

DraftKings has achieved vertical integration in its predictions offering, owning the brokerage, exchange (DKeX), and market maker. This allows the company to capture economics across the entire value chain, providing a structural lifetime value advantage over competitors. The in-house exchange, DKeX, launched in June, and the company obtained Futures Commission Merchant approval in July, enabling rapid content expansion and improved customer experience.

Core Business Momentum

The core Sportsbook business is performing strongly, with handle increasing 11% year-over-year in Q2 FY26 and parlay handle mix continuing to rise. Handle share improved for the third consecutive quarter. Post-World Cup, July handle was up 20% year-over-year, indicating sustained momentum. The company expects a strong NFL season, anticipating that increased market chatter and awareness will lift overall engagement.

iGaming Business Stabilization and Growth

After several quarters of underperformance, the iGaming business is showing renewed momentum. Key drivers include the successful launch of Lightning Link, a major land-based game, and Flex Spins, a unique bonus spin product. Customer acquisition in iGaming also exceeded expectations in Q2 FY26, leading to stabilization in market share and expectations for future gains.

Cost Discipline and Profitability

DraftKings continues to operate with cost discipline, with adjusted G&A expense declining 6% year-over-year and adjusted operating expenses (excluding external marketing and predictions) also improving. The company remains focused on efficiency while investing in long-term value opportunities, with the core business on track to generate approximately $1 billion in adjusted EBITDA for FY26.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.