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Bowlero Corp. (BOWL)·Q2 2024 Earnings Summary

Executive Summary

  • Double-digit top-line growth with adjusted EBITDA up year-over-year; revenue rose 11.8% to $305.7M and adjusted EBITDA increased to $103.1M, while GAAP net loss reflected a $64.1M non-cash earnout revaluation burden .
  • Event business was a standout, up “over thirty percent” YoY; same-store revenue turned positive (+0.2%) as midweek promotions were reset and weekend pricing improved .
  • Guidance maintained for FY24 (revenue ex SFR +10–15%; adj. EBITDA margin 32–34%); Q3 guidance set at $335–$350M revenue ex SFR and $128–$143M adjusted EBITDA, with management flagging January weather headwinds but rebound thereafter .
  • Capital returns ramp: quarterly dividend initiated at $0.055 and buyback program replenished to $200M; liquidity at $412M supported by $409M net proceeds from VICI sale-leaseback .

What Went Well and What Went Wrong

What Went Well

  • Events strength and pricing actions: “our event business was up over thirty percent,” aided by optimized weekend pricing and positive same-store revenue .
  • Lucky Strike outperformance: ahead of profitability targets with December center buyouts and strong demand; brand awareness 50–100% stronger than Bowlero per Nielsen; new builds (Moorpark, Miami) outperforming expectations .
  • Shareholder returns and liquidity: initiated $0.055 dividend, buyback authorization replenished to $200M, liquidity of $412M with revolver fully repaid after $409M net proceeds from VICI .

What Went Wrong

  • GAAP optics and margins: net loss of $63.5M driven by $64.1M non-cash earnout revaluation; gross margin compressed to 29.6% on higher payroll and acquisition D&A load (Lucky/new centers) .
  • Retail softness: midweek retail traffic slowed versus prior year; management cited subprime customer spend pressure and lapping strong comps, partially offset by events/leagues .
  • Weather headwind: first three weeks of January impacted Q3 trajectory by ~$7–$8M before trends rebounded; Q3 same-store comp guided to flat to down low-single digits .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Revenue ($USD Millions)$273.385 $227.405 $305.671
Net Income ($USD Millions)$1.435 $18.219 $(63.469)
Diluted EPS ($USD)$(0.01) $0.09 $(0.44)
Gross Margin %34.3% 19.6% 29.6%
Operating Margin %22.1% 2.4% 16.2%
Adjusted EBITDA ($USD Millions)$96.955 $52.134 $103.126
Adjusted EBITDA Margin %35.5% N/A33.7%

Segment revenue mix (Q2 YoY):

CategoryQ2 2023 ($M, %)Q2 2024 ($M, %)
Bowling$131.426 (48.1%) $145.295 (47.5%)
Food & Beverage$100.657 (36.8%) $111.192 (36.4%)
Amusement & Other$36.748 (13.4%) $45.415 (14.9%)
Media$4.554 (1.7%) $3.769 (1.2%)
Total$273.385 (100.0%) $305.671 (100.0%)

Key KPIs:

KPIQ2 2024
Same Store Revenue YoY+0.2%
Total Bowling Center Revenue YoY+14.5%
Revenue ex Service Fee Revenue YoY+13.4%
Event Revenue YoY+30%
League Revenue YoY+14%
Non-comp centers EBITDA / Revenue$14M / ~$41M
Avg. Revenue per Unit YoY+6%
Locations (as of Feb 5, 2024)350

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (ex Service Fee)FY 2024$1.14–$1.19B $1.14–$1.19B Maintained
Adjusted EBITDA MarginFY 202432–34% 32–34% Maintained
Revenue (ex Service Fee)Q3 FY 2024N/A$335–$350M New
Adjusted EBITDAQ3 FY 2024N/A$128–$143M New
Same-store Comp OutlookQ3 FY 2024N/AFlat to down low-single digits New
M&A SpendFY 2024$160M $190M Raised
Conversions & Growth CapexFY 2024$75M $80M Raised
New Builds CapexFY 2024$40M $40M Maintained
Maintenance CapexFY 2024~$40M $45M Raised
DividendOngoingN/A$0.055 per quarter (initiated) Initiated
Share Repurchase AuthorizationOngoing$200M (prior replenishments) Replenished to $200M; time extension, no expiry Increased/Extended

Earnings Call Themes & Trends

TopicQ4 2023 (Prior-2)Q1 2024 (Prior-1)Q2 2024 (Current)Trend
Technology & PricingSpecial upsell, pizza & pitcher; kiosk adoption challenges Dynamic pricing tests; website upgrade planned; MoneyBowl integration Website rolling out to enable dynamic pricing; robust F&B inventory system summer; MoneyBowl relaunch as loyalty app Scaling data-driven systems
Product performanceEvents up 7% YoY; retail softness Events +9% YoY; leagues +12% YoY Events +30% YoY; leagues +14% YoY; same-store +0.2% Strengthening in events/leagues
Macro/WeatherPromotion pullback hurt midweek comps Seasonal set-up; VICI SLB completed January ice hit ~$7–$8M; rebound later; cautious Q3 comp guide Transient weather headwind
Brand strategy (Lucky Strike)Planning rebrand/new builds; brand stronger Acquisition closed; brand awareness materially higher; pipeline expanded Outperforming profitability; capital acceleration; center buyouts Accelerating under Lucky Strike
Capital allocationBuybacks increased; SLB pipeline 100–200 properties $404.8M SLB proceeds; $130M buybacks $409M SLB proceeds; $80M buybacks; dividend initiated; $200M authorization Balanced growth + returns
Regulatory/legalEEOC claims ongoing EEOC matters continue No change; ongoing Unchanged

Management Commentary

  • “Our event business was up over thirty percent and continues to drive the strength of our overall business. Same-store revenue was positive in the quarter, driven by the reset of mid-week promotions, improved pricing dynamics on the weekend, and strong execution from our events team.” — Thomas Shannon, CEO .
  • “In the second quarter of 2024, we generated total revenue ex service fee of $304 million and adjusted EBITDA of $103.1 million… same-store comp was positive 0.2%.” — Bobby Lavan, CFO .
  • “We took an average price increase of 2% across retail in December… we saw no consumer pushback. So we rolled it out in events in January.” — Bobby Lavan, CFO .
  • “Lucky Strike… had a very, very strong December… shockingly high revenue numbers… 50% increase in profitability versus prior ownership… brand awareness 50%–100% stronger than Bowlero.” — Thomas Shannon, CEO .
  • “We are installing a very robust inventory management system… the website will roll out in the next few months… allows for dynamic pricing.” — Bobby Lavan, CFO .
  • “The first 3 weeks of January hit us for kind of about $7 million to $8 million… we’ve seen a rebound… pretty comfortable with our guidance.” — Bobby Lavan, CFO .

Q&A Highlights

  • Guidance and weather: January ice impacted ~$7–$8M; management expects February/March to carry Q3 guidance range; Q3 same-store comp guided flat to down low-single digits .
  • Operational initiatives: President Lev Ekster to drive execution, reduce variance across 350 centers, optimize staffing, and expand best practices (F&B/amusements attachment) .
  • Pricing/promotions: 2% retail price lift tested with no pushback; dynamic pricing via new website; Summer Games returns after last year’s removal cost ~$6M in revenue .
  • Lucky Strike integration: Procurement and events drove profitability; multiple center buyouts; targeting margin expansion from low-20s toward corporate averages .
  • Capital plan: M&A budget raised to $190M, conversions to $80M; accelerating Lucky Strike capex; multiple deals in pipeline .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable due to missing CIQ mapping for BOWL; therefore, comparisons versus consensus EPS or revenue for Q2 2024 cannot be provided at this time [SpgiEstimatesError].

Key Takeaways for Investors

  • Events and leagues are driving resilience: double-digit event growth and positive same-store revenue signal an effective pricing/promotion reset despite retail softness and weather volatility .
  • Earnings quality vs reported optics: adjusted EBITDA growth (+6% YoY) contrasts with GAAP net loss driven by non-cash earnout revaluation; focus on cash generation and underlying margins is warranted .
  • Lucky Strike is a material growth lever: brand-led demand, center buyouts, and capex acceleration should lift unit economics and mix (higher AUVs) into FY25 .
  • Near-term catalysts: dividend initiation, buyback authorization replenishment, and Q3/Q4 seasonality; watch dynamic pricing rollout and Summer Games relaunch for incremental ARPU/traffic benefits .
  • Risk watch: gross margin pressure from payroll normalization and acquisition D&A; monitor weather impacts and consumer midweek spend patterns against guidance .
  • Liquidity supports growth and returns: $412M total liquidity and revolver undrawn post VICI SLB gives flexibility to fund M&A, conversions, and buybacks .
  • Execution focus: center-level process tightening and data-driven staffing/pricing should reduce variance across the fleet and support margin trajectory .