A dramatic revision to DraftKings’ annual earnings target has exposed the steep price the company is paying to build its new Predictions product.
Full-year adjusted EBITDA guidance has been cut to a range of just $175 million to $275 million, down sharply from the previous forecast of $700 million to $900 million.
The revision is largely driven by an anticipated adjusted EBITDA investment in Predictions of between $650 million and $700 million across fiscal year 2026.
DraftKings expects Predictions revenue to be immaterial this fiscal year, as promotional activity for new customers will offset the lion’s share of gross revenue generated by the product.
Annual revenue guidance has also been trimmed, falling to between $6.35 billion and $6.55 billion from a prior range of $6.5 billion to $6.9 billion.
Underlying those revised targets was a bruising set of third-quarter numbers, with the company’s net loss reaching $468.7 million in the three months to 30 September.
Revenue during that period climbed 16% to $1.33 billion, yet the adjusted EBITDA loss expanded sharply from $126.5 million to $316.9 million.
Sales and marketing expenditure surged 68% to $605.7 million, reflecting heavier spending on customer acquisition alongside investment in the Predictions offering.
Stripped of the Predictions drag, DraftKings sees its core business generating adjusted EBITDA of between $875 million and $925 million for the full fiscal year.
The fourth quarter alone is expected to absorb a further $175 million to $225 million of adjusted EBITDA investment into Predictions, adding pressure to near-term earnings.
Despite the turbulence, DraftKings is presenting 2027 as the year its Predictions gamble starts to pay off, with revenue guidance set at $7.35 billion to $7.75 billion.
The company projects adjusted EBITDA for 2027 of between $800 million and $1.0 billion, with core business EBITDA forecast at $1.15 billion to $1.25 billion.
Core business revenue in 2027 is expected to reach between $6.7 billion and $7.0 billion, representing growth of 4% to 9% year-over-year against the midpoint of 2026 guidance.
Predictions itself is forecast to generate $650 million to $750 million in revenue during 2027, with continued EBITDA investment of $250 million to $350 million anticipated alongside that growth.
The company also cited modestly customer-friendly sport outcomes and a further commitment to iGaming expansion as factors shaping the updated 2026 core business forecasts.
