DraftKings Inc. DKNG is scheduled to report first-quarter 2026 results on May 7.
DKNG’s earnings missed the Zacks Consensus Estimate in each of the trailing four quarters, the average miss being 19.3%.
Trend in Estimate Revision of DKNG
The Zacks Consensus Estimate for first-quarter earnings per share (EPS) is pegged at 22 cents, indicating a surge of 83.3% from 12 cents reported in the year-ago quarter.
For revenues, the consensus mark is pegged at nearly $1.65 billion, suggesting growth of 17% from the prior-year quarter’s figure.
DraftKings Inc. Price and EPS Surprise
DraftKings Inc. price-eps-surprise | DraftKings Inc. Quote
Let's look at how things have shaped up in the quarter.
Factors to Note Ahead of DraftKings’ Q1 Results
DraftKings’ first-quarter performance is likely to have reflected a combination of sustained operating momentum in its core business and near-term investment pressures tied to emerging growth initiatives, with both factors shaping the top line and profitability trajectory.
On the revenue front, underlying demand trends in Sportsbook and iGaming are expected to have remained supportive in the first quarter. The company likely continued to benefit from structural improvements in its revenue model, particularly through a rising parlay mix, which has been a multi-year driver of higher net revenue margins. Management indicated that parlay penetration continues to expand, supported by product enhancements and customer engagement initiatives, reinforcing monetization per user. This, alongside steady growth across non-NFL sports and broader engagement trends, likely supported handle growth outside of seasonal volatility, providing a stable base for revenue generation.
Customer monetization dynamics are expected to have played a constructive role. DraftKings continues to highlight strong retention trends, with cohort economics improving over time, aided by product innovation, machine learning-driven personalization and a more efficient promotional strategy. The company has been optimizing promotional intensity using AI-driven tools, likely supporting higher revenue conversion in the first quarter.
However, top-line growth in the quarter may have been tempered by certain moderating factors. Customer acquisition trends have normalized following elevated levels in prior periods, which is likely to have impacted monthly unique player growth and, by extension, incremental revenue contribution. At the same time, fluctuations in sportsbook outcomes may have introduced variability in hold rates, creating short-term noise in revenue realization.
On the profitability side, margin performance is likely to have benefited from structural efficiencies embedded in the business model. Continued expansion in net revenue margins, driven by favorable product mix and improved promotional efficiency, is expected to have supported EBITDA flow-through. The company’s ability to leverage its scale, proprietary technology stack and in-house pricing models likely contributed to improved operating leverage in the first quarter.
That said, these positives are likely to have been partly offset by incremental investments, particularly in the newly launched “Predictions” vertical. Management has emphasized an aggressive push into this category, viewing it as a significant long-term opportunity, which likely resulted in elevated marketing spend and upfront operating costs during the quarter. While these investments are strategic and aimed at customer acquisition and product development, they are expected to have weighed on near-term margins. Additionally, ongoing investments in new jurisdictions and platform enhancements may have further contributed to cost pressures in the first quarter.
What Our Model Says About DKNG Stock
Our proven model does not conclusively predict an earnings beat for DraftKings this time. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. However, that's not the case here.
DKNG’s Earnings ESP: DraftKings has an Earnings ESP of +2.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DraftKings’ Zacks Rank: The company currently has a Zacks Rank #5 (Strong Sell).
Stocks Poised to Beat on Earnings
Here are some stocks from the Zacks Consumer Discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat.
Hasbro, Inc. HAS has an Earnings ESP of +5.81% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hasbro’s earnings for the to-be-reported quarter are expected to increase 4.81%. HAS reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 43.9%.
Marriott International, Inc. MAR currently has an Earnings ESP of +1.24% and a Zacks Rank of 3.
MAR’s earnings for the to-be-reported quarter are expected to increase 11.2%. Marriott reported better-than-expected earnings in the trailing three out of four quarters and missed once, the average surprise being 0.7%.
Expedia Group, Inc. EXPE currently has an Earnings ESP of +10.04% and a Zacks Rank of 3.
In the to-be-reported quarter, Expedia’s earnings are expected to surge 252.5%. Expedia’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 3%.
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Marriott International, Inc. (MAR): Free Stock Analysis Report
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DraftKings Inc. (DKNG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).