Name: Drive Shack Inc. Q2 2022 Earnings Call
Start: 2022-08-09T13:01:00.000Z

Executive Summary

Q2 2022 delivered $86.7M revenue (+17.3% YoY) and Adjusted EBITDA of $4.6M, as events surged; GAAP operating loss widened to $(6.4)M and net loss was $(9.6)M (EPS $(0.12)), driven by pre-opening costs, G&A to support growth, and a lease termination loss on exiting Drive Shack New Orleans .
Events were the growth engine: total event revenue was ~$14M; American Golf events rose to $9.5M (+311% YoY), Drive Shack events $3.2M (+106% YoY), and Puttery venues generated $4.5M total revenue with D.C. newly opened .
Development cadence updated: four additional Puttery openings planned in 2022 to end the year with seven venues; Manhattan and Miami shifted to early 2023; management now expects 18 Puttery openings in 2023 (up from prior 16) .
S&P Global consensus EPS/revenue for Q2 2022 was unavailable at time of analysis, so beat/miss vs Street could not be assessed (note to monitor estimates for revisions). Values were not retrievable from S&P Global due to API rate limits.

What Went Well and What Went Wrong

What Went Well

Event-driven recovery across the portfolio: “Total event revenue in Q2 was $14 million and is up significantly at over $10 million to last year,” led by American Golf private events; demand pipeline supports strong 2H revenue .
Puttery proof-of-concept strengthening: The Colony and Charlotte “delivering profitability margins well within the expected unit economic range,” with D.C. off to a strong start (~$700k in its first 30+ days; 55% of revenue from alcohol) .
Drive Shack events accelerated: DS event revenue was $3.2M in Q2, up $1.6M or 106% YoY, aiding venue-level stability; Raleigh led performance .

What Went Wrong

Profitability pressure: Operating swung to a $(6.4)M loss from +$1.1M YoY, and Adjusted EBITDA fell to $4.6M from $7.7M, driven by pre-opening costs, headcount investments for Puttery growth, and a ~$2M net loss on New Orleans lease termination .
Puttery margin dip (one-time): Venue-level EBITDA margins were temporarily impacted by an inventory accounting true-up related to event POS integration; management expects ~35% run-rate margins going forward after the fix .
Mixed traffic: DS walk-in revenue declined ~$2M YoY with softness in Richmond; American Golf walk-in was modestly below last year given a tough outdoor-golf comp and summer travel dynamics .

Financial Results

Consolidated P&L Snapshot

Metric	Q2 2021	Q1 2022	Q2 2022
Total Revenues ($MM)	$73.9	$69.0	$86.7
Operating Income (Loss) ($MM)	$1.1	$(18.4)	$(6.4)
Consolidated Net Income (Loss) ($MM)	$(2.0)	$(18.9)	$(9.6)
Loss Applicable to Common ($MM)	$(3.4)	$(20.4)	$(10.8)
EPS (Basic, $)	$(0.04)	$(0.22)	$(0.12)
Adjusted EBITDA ($MM)	$7.7	$1.0	$4.6

Cash and cash equivalents: $22.7M at 6/30/22 vs $58.3M at 12/31/21 (capex for Puttery development) .

Segment and Revenue Mix

Segment / Metric	Q2 2021	Q1 2022	Q2 2022
Entertainment Golf (DS + Puttery) Revenue ($MM)	$11.6	$14.2	$15.7
Drive Shack Venues Revenue ($MM)	$11.6	$9.8 (calc from 14.2−4.4)	$11.2
Puttery Venues Revenue ($MM)	N/A (pre-launch)	$4.4	$4.5
American Golf Revenue ($MM)	$62.3	$54.6	$70.8

Note: Q1’22 Drive Shack revenue calculated as Entertainment ($14.2M) minus Puttery ($4.4M) per reported figures .

KPIs and Operational Highlights (Q2 2022 unless noted)

KPI	Value
Total Event Revenue	~$14M
American Golf Event Revenue	$9.5M (+311% YoY)
Drive Shack Event Revenue	$3.2M (+106% YoY)
Puttery Event Revenue	~$1.0M
Puttery Revenue by Venue	The Colony $2.4M; Charlotte $2.0M; D.C. ~$0.1M (10 days in Q2)
Drive Shack Venue EBITDA	$3.7M (33% of sales)
Private Club Membership Capacity (American Golf)	~98%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Puttery total venues open	YE 2022	“On track to open seven locations by the end of 2022” (total)	“End 2022 with a total of 7 Puttery venues open”	Maintained
Specific 2022 openings (site timing)	2H22	Included Manhattan & Miami in 2022 pipeline	Manhattan & Miami moved to early 2023	Lowered (timing)
Puttery planned openings	2023	16 openings targeted	18 openings expected	Raised
Puttery venue EBITDA margins	Ongoing	Illustrative 25–40% range	~35% run-rate expected after one-time true-up	Clarified
Capital plan	2022–2023	~$75M financing initiative underway	Exploring debt, asset monetization, and other sources; cash from operations to support pipeline	Updated approach
Preferred stock dividends	Q3 2022	—	Declared (Series B $0.609375; C $0.503125; D $0.523438 per share)	Announced

Earnings Call Themes & Trends

Topic	Q4 2021 (Prior-2)	Q1 2022 (Prior-1)	Q2 2022 (Current)	Trend
Events recovery	Highest quarterly event revenue since pre-COVID	Events up meaningfully; strong future demand	Events ~$14M; AG +311% YoY; robust pipeline	Strengthening
Puttery proof-of-concept	Two venues positive; scaling under lease	Two venues at 38% venue EBITDA margins	Three venues; DC early metrics strong; mid-30s margin target	Positive
Supply chain/labor	Post-COVID normalization	Managing supply chain; building playbook	Supply chain, labor (GC), zoning/permitting remain hurdles	Persistent headwind
Development cadence	Eight under lease (2021)	10 under lease; 7 to open in 2022	11 lease-committed; 4 openings in 2H; 18 planned in 2023; 2 sites delayed	Accelerating with timing shifts
Capital/financing	Cash $58.3M YE’21	Targeting ~$75M financing	Exploring debt & asset sales; operations to contribute	Ongoing
Drive Shack venues	Walk-in largely normalized	Revenue +19% YoY; events +160%	Events +106% YoY; walk-in softness; Raleigh strong	Mixed

Management Commentary

“Our sales results this quarter reflect the strong momentum we continue to see across our entire brand portfolio… Event revenue was up significantly… demand for future events… continue to rise” — Hana Khouri, CEO .
“We are gaining clear proof of concept with our Puttery brand… best path-forward for growth and profitability for the foreseeable future.” .
“Adjusted EBITDA for the quarter was $4.6 million… expected with the strategic investments in headcount and other related expenses… to support the development and growth in Puttery.” .
“We will end 2022 with a total of 7 Puttery venues open… Unexpected delays… have pushed both the Miami and Manhattan opening dates to early 2023.” .

Q&A Highlights

Capital allocation and funding: 2022 builds funded; 2023 plan supported by operating cash, debt, and potential asset monetization; management “not overly concerned” about next year’s funding ability .
Puttery margin dip was one-time: Inventory POS-to-inventory-system fix drove a Q2 true-up; run-rate venue EBITDA margins expected around 35% going forward .
Concept optimization: Evaluating smaller footprints (2–3 courses), pricing/bundling on softer days, and selective menu tweaks by market; beverage/alcohol remains primary F&B driver .
Repeat visits and throughput: ~11% repeat reservations to date (still early); gameplay target 30–35 minutes/course to balance throughput and guest experience .
G&A step-up: Sequential increase reflects normalization and capacity build (events support, development oversight, training); expected to level off .

Estimates Context

S&P Global consensus for Q2 2022 EPS, revenue, and EBITDA was unavailable at time of analysis due to retrieval limits, so we cannot quantify beat/miss vs Street this quarter. We recommend monitoring for coverage resumption and post-print estimate revisions. Values were not retrievable from S&P Global.

Key Takeaways for Investors

Events-driven operating momentum is the near-term growth engine; rising corporate and social event pipelines should support stronger 2H revenue cadence .
Puttery continues to validate unit economics; DC’s early traction and a clarified ~35% unit-level EBITDA margin target post one-time true-up are constructive for scaling .
Profitability remains investment-laden near term as management builds for scale (pre-opening, G&A); watch for margin normalization as new venues ramp .
Development timing has shifted at select sites (NYC/Miami), but total 2022 venue count goal remains intact; 2023 plan has been raised to 18 openings, increasing execution and capital-raising stakes .
Liquidity and funding are key watch items as cash declined to $22.7M with continued capex; management is exploring debt and asset monetization to bridge growth .
Drive Shack venues are stable with strong events, but walk-in softness and market-specific headwinds (Richmond) bear monitoring; local marketing/brand initiatives are underway .
Near-term trading catalysts: 2H event cadence, on-time Puttery openings (Houston, Chicago, Pittsburgh, Kansas City), evidence of EBITDA margin normalization, and clarity on financing structure .

Citations:

Q2 2022 8-K press release and financials:
Q2 2022 earnings call (prepared + Q&A):
Q1 2022 8-K press release and financials:
Q1 2022 earnings call:
Q4 2021 8-K press release (context):

Drive Shack Inc. (DSHK)·Q2 2022 Earnings Summary