DraftKings Inc. (DKNG) delivered fourth-quarter results Thursday that beat Wall Street's expectations on both the top and bottom lines. The market's reaction? A 14% drop in after-hours trading. Welcome to the wonderful world of "good news is bad news."

The Numbers Were Actually Pretty Good

DraftKings reported fourth-quarter revenue of $1.99 billion, edging past analyst estimates of $1.98 billion. But here's where things get interesting: the sports betting and online gaming company posted adjusted earnings of 36 cents per share, more than doubling the Street's expectations of 14 cents per share.

Revenue jumped 43% compared to the same quarter last year, fueled by healthy customer engagement, efficient customer acquisition, and better profit margins on its sportsbook business. Monthly unique payers held steady at 4.8 million year-over-year, but the real story is average revenue per user, which climbed to $139 in the quarter—a 43% increase. The company closed the period with approximately $1.13 billion in cash and cash equivalents.

"We closed 2025 on a high note. Fourth quarter revenue increased 43% year-over-year and we achieved records for revenue and Adjusted EBITDA. Our core business is strong as we enter 2026," said Jason Robins, co-founder and CEO of DraftKings.

Looking Ahead: Big Plans and Big Spending

For fiscal 2026, DraftKings expects revenue between $6.5 billion and $6.9 billion, with adjusted EBITDA projected in the range of $700 million to $900 million.

But here's likely what spooked investors: Robins announced aggressive expansion plans for DraftKings Predictions. "We also see a massive, incremental opportunity in DraftKings Predictions. We plan to deploy growth capital to build the best customer experience in Predictions, and acquire millions of customers. We have the playbook to execute and win," he said.

Translation: the company plans to spend heavily on a new product line, which means short-term profitability might take a back seat to growth. Investors who were hoping for a more conservative, profit-focused approach got something else entirely.

DraftKings executives will discuss the quarter in more detail during an earnings call Friday morning at 8:30 a.m. ET. The company is also hosting an investor day on March 2.

DKNG Price Action: DraftKings shares were down 13.95% in after-hours trading at $21.65 at the time of publication on Thursday.