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Bowlero Corp. (BOWL)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 FY2024 delivered solid top-line with total revenue $337.7M (+7.0% YoY; +10.5% vs Q2), but Adjusted EBITDA of $122.8M missed Q3 guidance as Bowlero leaned into traffic-driving investments (amusements, PBA) and absorbed January weather headwinds; same-store revenue was -2.1% YoY .
  • Management took FY24 outlook “to the low end” of prior ranges ($1.14–$1.19B revenue ex-service fee; $365–$405M Adjusted EBITDA), citing near-term cost impacts and investment timing while pointing to strong April comps (+6% SSS; +20% total revenue) and expected Q4 margin expansion with positive flow-through above 2% comps .
  • Mix continues to tilt to higher-quality revenue: events revenue +27% YoY in Q3; leagues +9% YoY; dynamic pricing, menu upgrades, and a selling culture aim to lift F&B attachment; Lucky Strike performance and new-build pipeline support medium-term growth .
  • Catalysts and watch items: Q4 comp trajectory and margin leverage; execution on F&B/menu rollouts; pacing of investments in amusements/PBA; brand strategy (converting Bowlero to Lucky Strike over time); and legal overhang abating with EEOC matter closed .

What Went Well and What Went Wrong

  • What Went Well

    • Events and leagues outperformed: event revenue +27% YoY; leagues +9% YoY; simplified events pricing and stronger systems boosted momentum .
    • April inflection: preliminary April same-store comps >+6% and total company revenue +20% YoY, suggesting traffic initiatives gaining traction into Q4 .
    • Legal overhang eased: EEOC issued closure notices for individual claims and determined not to bring pattern-and-practice litigation; management emphasized closure of longstanding matter .
    • Management quotes: “In the period that just ended… on a same-store basis, we're up over 6%… total company basis, revenue was up 20%” (Thomas Shannon) . “Above a 2% comp, the dollars flow through… between 75% and 90%” (Robert Lavan) .

  • What Went Wrong

    • Profitability miss vs Q3 guidance: Adjusted EBITDA of $122.8M below guided $128–$143M due to higher-than-expected costs (amusements investment and increased PBA TV coverage) and January weather .
    • Same-store revenue -2.1% YoY in Q3 (January was “full contributor” to the negative comp), though February/March turned positive .
    • Cost pressure: amusements comp gross profit down ~$5M YoY from enhanced gameplay/redemption; PBA swung to ~$2M loss in the quarter as TV stops increased, weighing near-term EBITDA .
    • Analyst concern: Why underperformed Q3 guidance given known weather headwind? CFO: “It was entirely cost,” with payroll and program costs above February expectations .

Financial Results

MetricQ3 FY2023 (oldest)Q2 FY2024Q3 FY2024 (newest)
Revenue ($USD Millions)$315.7 $305.7 $337.7
Revenue excl. Service Fee ($USD Millions)$309.1 $304.0 $336.4
Same-store Revenue Growth (%)N/A+0.2% (2.1)%
Net Income (Loss) ($USD Millions)$(32.1) $(63.5) $23.8
Diluted EPS ($)$(0.22) N/A$0.13
Adjusted EBITDA ($USD Millions)$127.6 $103.1 $122.8
Adjusted EBITDA Margin (%)40.4% 33.7% 36.4%
Net Income (Loss) Margin (%)(10.2)% (20.8)% 7.1%

Segment revenue mix (disaggregation of revenue):

Segment ($USD Millions)Q3 FY2023 (oldest)Q3 FY2024 (newest)
Bowling$155.0 $165.5
Food & Beverage$111.7 $118.0
Amusement & Other$42.7 $48.5
Media$6.3 $5.6
Total Revenues$315.7 $337.7

KPIs and operational indicators:

KPIQ3 FY2023 (oldest)Q2 FY2024Q3 FY2024 (newest)
Event Revenue YoY GrowthN/A~30% 27%
League Revenue YoY GrowthN/A14% 9%
Same-store Revenue GrowthN/A+0.2% (2.1)%
April Same-store Comp (post-Q3)N/AN/A>+6%
April Total Revenue Growth (post-Q3)N/AN/A+20%
NPS (6-month change)N/AN/A+3 pts to 65

Balance sheet and liquidity highlights:

  • Liquidity: $431.6M (cash + undrawn revolver net of LCs) as of March 31; cash $212.4M; revolver capacity $235M with $15.8M LCs outstanding . CFO also cited ~$437M liquidity in remarks .
  • Net debt: ~$942.9M as of March 31; bank net leverage 2.4x .

Estimates vs actual:

  • S&P Global consensus retrieval was unavailable via our tool (mapping error), so vs-consensus comparisons are not shown. Values would typically be pulled from S&P Global if accessible.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/OutcomeChange
Revenue ex-Service FeeFY2024$1.14–$1.19B “Near the low end” Lowered (to low end)
Adjusted EBITDAFY2024$365–$405M “Near the low end” Lowered (to low end)
Revenue ex-SFRQ3 FY2024$335–$350M $336.4M In line
Adjusted EBITDAQ3 FY2024$128–$143M $122.8M Miss
DividendQ3 FY2024$0.055 declared (paid Mar 8) $0.055 declared (pay Jun 7) Maintained
Capital/LiquidityPost-Q3Revolver $235M Revolver increased by $50M to $285M (June 18) Raised capacity

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 FY24)Current Period (Q3 FY24)Trend
Pricing & Promotions/Dynamic PricingReinstated midweek value after testing; turned comps positive mid-Oct; website to enable dynamic pricing; Dec +2% retail price with no pushback .Lowered shoe pricing in April; plan to raise food pricing; dynamic pricing website slated for June 2 .Optimization continuing; balanced value vs upsell.
Food & Beverage AttachmentAim for F&B to approach bowling revenue over time; inventory system rollout planned .New premium menus, training, premium concepts (Lucky Strike Miami); broader roll-out by end of July .Accelerating mix and attachment focus.
AmusementsMidweek detachment observed in Q1 .Invested in gameplay/redemption; amusements comp GP -$5M YoY (investment phase) .Near-term headwind, long-term traffic driver.
PBA & MediaMore FOX/FS1 hours; All-Star, Elite League expansion .PBA loss ~$2M this quarter as coverage expanded; supporting brand awareness .Investing for reach; cost normalizes later.
Events & LeaguesEvents +30% Q2; Leagues +14% .Events +27% YoY; Leagues +9% YoY .Sustained strength.
Legal/RegulatoryOngoing EEOC discussion in filings .EEOC closures issued; no pattern-and-practice suit; positive update .Resolved.
M&A/New BuildsLucky Strike acquisition outperformed; new builds pipeline >5/year .Lucky Strike Miami opened; 4 new builds in next 9 months; pipeline ~a dozen more .Expanding footprint with higher AUVs.
Capital Structure/LiquidityVICI sale-leaseback ($408.5M net) bolstered cash/liquidity .Liquidity ~$432M; net leverage 2.4x; revolver later raised to $285M (post-Q3) .Strong access/liquidity.
Brand StrategyTesting Lucky Strike brand strength/new builds .Plan to convert nearly all Bowlero to Lucky Strike; AMF as traditional .Strategic brand consolidation.
TAM Expansion—Acquired Raging Waves waterpark; attractive returns; evaluate expansion .New adjacency; disciplined rollout.

Management Commentary

  • Traffic and profit flow-through: “If… above a 2% comp, the dollars flow through at anywhere between 75% and 90%” (CFO Robert Lavan) .
  • Monthly cadence: “First 3 weeks of January were worse than minus 10%… ended January minus 7%. February +1%, March +3%, April +6%” (CFO Robert Lavan) .
  • Investment drivers: “Amusements comp gross profit… was minus $5 million… PBA… $2 million loss” (CFO Robert Lavan) .
  • F&B pricing/mix: “We took shoe pricing down… We will take pricing up on food as we roll out the new menu” (CFO Robert Lavan) .
  • April trend: “On a same-store basis, we're up over 6%… total company basis, revenue was up 20%” (CEO Thomas Shannon) .
  • Brand roadmap: “Plan is to convert nearly all our Bowleros to Lucky Strike… and AMF as the traditionals” (CEO Thomas Shannon) .
  • Legal: “EEOC… determined that it will not bring a civil action… [closures issued]” (Company filings; CEO remarks) .

Q&A Highlights

  • Q3 miss vs guidance: Management cited higher-than-expected costs (payroll, amusements, PBA programming) rather than revenue shortfall; January weather amplified uncertainty in cost visibility .
  • Q4 outlook and seasonality: Expect SG&A and corporate to step down sequentially; center payroll seasonally down ~15% Q4 vs Q3; margin expansion with positive comps .
  • Pricing: No negative consumer response to December +2% retail pricing; lowered shoe pricing in April and intend to raise food prices with menu refresh .
  • Capital returns: Management willing to “aggressively buy” stock at current levels; dividend maintained at $0.055 .
  • Strategic TAM expansion: Acquisition of Raging Waves waterpark; viewed as high-return adjacency with potential for further deals after a season of operating experience .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q3 FY2024 (revenue, EPS, EBITDA) but the data was unavailable via our tool due to a mapping error. As a result, vs-consensus comparisons are not shown.
  • Street models may need to bias FY2024 toward the “low end” of Bowlero’s ranges given the Q3 EBITDA miss and management’s updated language; however, intra-quarter commentary (April comps) implies upward bias to Q4 EBITDA margin if positive comps persist .

Key Takeaways for Investors

  • Near-term: Expect a stronger Q4 on improving comps (April +6% SSS) and favorable flow-through; EBITDA margin should expand as investments normalize and seasonal payroll steps down .
  • Medium-term: Structural tailwinds in events/leagues, F&B attachment (new menus, training), brand strategy (Lucky Strike), and a robust new-build pipeline support durable growth above industry .
  • Investments depress today’s margins but are aimed at traffic, awareness, and higher wallet share (amusements, PBA) with clearer benefits into late FY24/FY25; monitor cadence of normalization .
  • Balance sheet/liquidity remain supportive (net leverage 2.4x; revolver later upsized to $285M) to fund new builds, selective M&A, and shareholder returns (dividend, buybacks) .
  • Watch the narrative pivot from January weather to execution: Q4 comp trajectory, F&B pricing/attachment, and cost discipline will be key stock drivers.
  • Legal overhang is easing with EEOC closure, removing a headline risk .

Notes:

  • Financial and document data sourced from Bowlero’s Q3 FY2024 press release/8-K and 10-Q, Q3 earnings call transcript, and related filings .
  • Feb 5, 2024 guidance and Q2 results from 8-K press release .
  • Additional items: Summer Season Pass milestone ($6M sales by June 24) and $50M revolver increase to $285M (June 18) .