Dave & Buster's Entertainment, Inc. (PLAY) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: weak financial performance with declining revenue and same-store sales, but optimistic long-term growth and strategic initiatives like new game investments and franchise development. Share repurchases and strong operating cash flow are positives, but economic and leadership risks persist. The Q&A reveals management's cautious optimism but lacks clear guidance, especially on same-store sales. Given the market cap, the stock's reaction is likely muted, resulting in a neutral outlook.
Key Financial Performance
Revenue $568 million, a decrease from the previous year, attributed to a decline in same-store sales and preopening expenses.
Net Income $22 million or $0.62 per diluted share, reflecting a decrease due to lower revenue and increased preopening expenses.
Adjusted Net Income $27 million or $0.76 per diluted share, down from the prior year, impacted by the same factors affecting net income.
Adjusted EBITDA $136 million, resulting in an adjusted EBITDA margin of 24%, a decline attributed to increased preopening expenses and lower revenue.
Operating Cash Flow $96 million, indicating strong cash generation despite the revenue decline.
Total Capital Expenditures $115 million on a gross basis, with a focus on new store growth and remodels.
Net Total Leverage Ratio 3.1x, indicating the company's debt level relative to its earnings.
Preopening Expenses $2.7 million increase compared to the prior year, impacting adjusted EBITDA.
Same-Store Sales Decreased 8.3% year-over-year, with a notable decline in February of 11.9%.
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Operating Highlights
New Product Introduction: Introduced the first-ever Summer Pass, allowing guests unlimited gameplay and food and beverage discounts.
Menu Enhancements: Plans to roll out a new menu later this year after extensive testing, bringing back previously top-selling entries.
New Store Openings: Opened 2 new stores in Killeen, Texas and Lansing, Michigan in Q1 2025, and 2 additional stores in Freehold, New Jersey and Wilmington, North Carolina in Q2 2025.
International Expansion: Opened the first international franchise location in India in December, with plans for at least 7 more international openings over the next year.
Operational Improvements: Implemented a robust store manager incentive plan driven by same-store sales growth.
Remodel Strategy: Completed 48 remodels, with remodel stores outperforming the system by over 700 basis points over the last 3 months.
Back to Basics Strategy: Focused on improving marketing, menu, operations, and games investment to drive revenue growth and free cash flow.
CEO Search: The Board is finalizing the search for a permanent CEO.
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Risk or Challenges
Competitive Pressures: The company faces competitive pressures in the entertainment and dining sector, which could impact its market share and revenue growth.
Regulatory Issues: There are potential regulatory issues that could arise, affecting operations and compliance costs.
Supply Chain Challenges: Supply chain challenges may impact the availability of products and materials necessary for operations and new store openings.
Economic Factors: Economic factors, including inflation and consumer spending trends, could adversely affect customer traffic and spending at Dave & Buster's locations.
Operational Execution Risks: There are risks associated with the execution of the Back to Basics strategy, including the potential for missteps in marketing, operations, and remodels.
Leadership Transition Risks: The ongoing search for a permanent CEO presents risks related to leadership stability and strategic direction.
Financial Management Risks: The company must manage its capital expenditures and operating cash flow effectively to avoid financial strain.
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Guidance & Outlook
Back-to-Basics Strategy: The company is implementing a back-to-basics strategy that is driving a material recovery in top line trajectory, focusing on marketing, menu, operations, remodels, and games investment.
Store Manager Incentive Plan: A robust store manager incentive plan is being rolled out, driven by same-store sales growth, to boost morale and empower managers.
New Store Development: The company opened 2 new stores in Q1 and has plans for 10 to 12 new store openings in fiscal 2025, with a focus on high ROI.
International Franchising: The first international franchise location opened in India, with plans for at least 7 more openings in the next year.
Remodel Strategy: 48 remodels are nearing completion, with remodel stores outperforming the system by over 700 basis points over the last 3 months.
Games Investment: A summer of games initiative is being launched with new and existing games to enhance guest experience and drive sales.
Revenue Expectations: The leadership team is confident that current actions will lead to significantly improved revenue, adjusted EBITDA, and free cash flow in the coming months.
Capital Expenditures: Total capital expenditures are expected to not exceed $220 million for fiscal 2025, including new store capital, remodels, and games.
Preopening Expenses: Preopening expenses are expected to be approximately $20 million for fiscal 2025.
Interest Expense: Interest expense is expected to be in the range of $130 million to $140 million for fiscal 2025.
Same-Store Sales: Positive same-store sales have been achieved in 11 of the last 30 days, with further sequential improvement expected.
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Shareholder Return Plan
Share Repurchase Program: The company is focused on generating free cash flow while continuing to invest in double-digit new store growth and other high ROI initiatives.
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Key Q&A
Q:Can you provide predictability in terms of the trajectory of same-store sales?
A:We have a long way to go, but we expect outsized growth in the next couple of years, aiming for 3% same-store sales growth long-term, with additional growth from new stores and international expansion.
Q:Can you give a breakdown of the CapEx spending?
A:Of the $115 million gross spend, $53 million was for new stores, $20 million for remodels, $30 million on games, and $12.5 million on maintenance CapEx.
Q:Can you share insights on the improved same-store sales trend across demographics and geographies?
A:The improvement is driven by increased traffic, particularly on weekends, and better food and beverage sales without aggressive discounting.
Q:What does the new store manager incentive program look like?
A:We have a competitive salary and a long-term incentive program that rewards managers based on same-store sales over a rolling 3-year basis.
Q:What initiatives have contributed to the improved comp trends?
A:The improvement is largely due to increased traffic and effective promotions, particularly the Eaton & Play Combo.
Q:Will you need to reinvest in the business to drive long-term performance?
A:We will benefit from smarter spending rather than needing to reinvest significantly.
Q:What is the outlook for new gaming cabinets and attractions?
A:We are rolling out 10 new cabinets and 2 new attractions, consistent with pre-COVID levels.
Q:Can you provide details on the traffic versus check impact on same-store sales?
A:We do not provide specific details on traffic versus check, but the majority of the sales trend is driven by traffic.
Q:How do you view macro challenges versus brand-specific issues?
A:We believe the brand-specific improvements will help us navigate macro challenges.
Q:What is the long-term growth outlook for new stores?
A:We plan on 10 to 14 new units a year for the foreseeable future.
Q:What tests are being conducted to improve the gaming experience?
A:We are testing an all-you-can-play option and simplifying the rate card structure for guests.
Q:What changes have been made to the menu design?
A:We have reskinned the existing menu to highlight popular items and are testing new menu configurations.
Q:What is the performance of the special events business compared to walk-in traffic?
A:The special events business has outpaced walk-in traffic slightly year-over-year.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on traffic versus check impact on same-store sales, stating they do not typically disclose that information. Additionally, there was a lack of clarity on the long-term growth outlook for new stores, with management providing a range of 1% to 2% growth without specific guidance.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advisors Todd
America Arcade
Buster store
Chair Interim
Conference
DB
Division Brian
Eat Play
Entertainment Finance
Finance Investor
Head Entertainment
Inc Research
Interim CEO
LLC Research
Play combo
Research Division
Sheehan
Super
class
flow generation
game investment
input store
manager
mistake
opening
operator
oversight
power
progress
promotion
prototype
summer
unit
week sale
PLAY Transcript
Dave & Buster's Entertainment, Inc. (PLAY) Q3 2025 Earnings Call Transcript
Unknown12-9
The earnings call reveals mixed signals: new store openings and international expansion plans are positive, but financial performance is weak with a net loss and declining comparable store sales. The Q&A section highlights consumer engagement with new games and marketing strategies, yet concerns about food and beverage challenges persist. The market cap suggests moderate volatility, and while there are growth initiatives, the financial struggles and uncertainties balance the sentiment, resulting in a neutral stock price prediction.
Dave & Buster's Entertainment, Inc. (PLAY) Q2 2025 Earnings Call Transcript
Unknown9-15
The earnings call presented mixed signals: strong revenue and EBITDA margins, positive special events revenue, and strategic store expansions. However, the lack of specific guidance for Q3, concerns over value perception, and margin misses due to increased costs and one-off expenses create uncertainty. Additionally, management's unclear response to the EBITDA target timeline raises concerns. Given the company's market cap of approximately $1.57 billion, these mixed factors suggest a neutral stock price movement in the short term.
Dave & Buster's Entertainment, Inc. (PLAY) Q1 2025 Earnings Call Transcript
Unknown6-10
The earnings call presents a mixed picture: weak financial performance with declining revenue and same-store sales, but optimistic long-term growth and strategic initiatives like new game investments and franchise development. Share repurchases and strong operating cash flow are positives, but economic and leadership risks persist. The Q&A reveals management's cautious optimism but lacks clear guidance, especially on same-store sales. Given the market cap, the stock's reaction is likely muted, resulting in a neutral outlook.
Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) Q4 2024 Earnings Call Transcript
Unknown4-8
The earnings call presents mixed signals: while there are positive elements like share repurchases and improved cash flow, challenges such as declining revenue, leadership transition risks, and economic factors affecting sales are concerning. The Q&A highlights some strategic improvements but also indicates ongoing operational and competitive challenges. The market cap suggests moderate sensitivity to these factors, leading to a neutral outlook.
PLAY Report
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
