Executive Summary

As of Nov 20, 2025, the latest reported quarter is Q3 FY2025; Q1 FY2026 results (8‑K 2.02 and call) are not yet released. Management reiterated FY2025 outlook in Q3, narrowing net closure expectations and emphasizing improving marketing efficiency and franchisee engagement .
Setup into Q1 FY2026: Street expects $51.78M revenue*, $0.18 EPS*, and $18.62M EBITDA*; the recent trajectory shows stabilizing comps (+0.3% in Q2, +0.2% in Q3) and margin gains (Adj. EBITDA margin 38.7% in Q2 and 37.2% in Q3) while revenue softened YoY on lower product mix .
Guidance changes in 2025: revenue and SSS ranges were lowered/narrowed in Q2, then reaffirmed in Q3; closures outlook narrowed to 35–40 for FY2025, reflecting both timing and traction with franchisee initiatives—supportive for narrative stabilization into 2026 .
Catalysts to watch: sustained SSS/traffic improvement from data-driven marketing and influencer strategy, timing of marketing/tech spend into Q4, franchise unit economics support (COO-led ops focus), and closure moderation—key for Q1 FY2026 delivery vs Street .

What Went Well and What Went Wrong

What Went Well

Efficiency and margins improved despite softer revenue: Q3 Adj. EBITDA rose to $20.2M (+9.6% YoY) and margin expanded 400 bps to 37.2%; Q2 margin was 38.7% (+420 bps YoY) .
Marketing and guest analytics are gaining traction: contactability increased materially (to 60% by Q3; 57% in Q2), with structured lifecycle campaigns improving frequency; influencer strategy showed 75% efficiency improvement; Eyebrow Day delivered 75M+ impressions and a 53% lift in unique site visitors .
Network health actions: closure outlook narrowed and net leverage trended to 3.9x (3.7x ex-buybacks) by Q3; franchisee engagement and in-center coaching improved KPIs in engaged centers, supporting long-term unit economics .

What Went Wrong

Top-line softness: Q3 revenue declined 2.2% YoY to $54.2M and system-wide sales fell 0.8%; Q2 revenue fell 6.6% YoY to $55.9M, driven by lower wholesale/retail mix and timing effects .
New guest acquisition lagged expectations: while cost per acquisition and efficiency improved, management acknowledged slower-than-desired progress, expecting more improvement in 2026 .
Regional unevenness and unit closures: continued relative weakness in NY/Philadelphia/DC and ongoing closures of low-volume units (bad real estate/markets), though the closure range narrowed; timing shifts also affected quarter-to-quarter closure cadence .

Financial Results

Note: Q1 FY2026 actuals are not yet reported; Street estimates shown with an asterisk and S&P Global disclaimer.

Metric	Q2 2025	Q3 2025	Q1 2026E
Total Revenue ($)	$55,911,000	$54,185,000	$51,775,000*
Diluted EPS ($)	$0.09	$0.09	$0.18*
Adjusted EBITDA ($)	$21,613,000	$20,174,000	$18,622,500*
Adjusted EBITDA Margin (%)	38.7%	37.2%	n/a
Same-Store Sales YoY (%)	+0.3%	+0.2%	n/a
System-Wide Sales ($)	$257.6M	$238.2M	n/a
Total Centers (EoP)	1,059	1,053	n/a

Values retrieved from S&P Global for Q1 FY2026 estimates.

Segment revenue breakdown (actuals):

Revenue Component ($)	Q2 2025	Q3 2025
Product Sales	$30,515,000	$30,606,000
Royalty Fees	$14,278,000	$13,195,000
Marketing Fees	$8,108,000	$7,574,000
Other Revenue	$3,010,000	$2,810,000
Total Revenue	$55,911,000	$54,185,000

Key KPIs and profitability:

KPI	Q2 2025	Q3 2025
GAAP Net Income ($)	$5,393,000	$5,367,000
Net Income Margin (%)	9.6%	9.9%
Adjusted Net Income ($)	$11,773,000	$10,684,000
Advertising Expense ($)	$8,157,000	$7,610,000
Cash & Equivalents (EoP)	$63.9M	$73.6M
Total Debt (Notes) ($)	$388.0M	$387.0M
Net Leverage (TTM)	4.2x	3.9x

Context for deltas:

Q2 revenue decline tied to lower wholesale/retail mix and Q1 tariff pull-forward effects; margins benefited from mix and cost discipline .
Q3 margins improved with lower SG&A and ad timing; some expenses shift to Q4, tempering sequential comparison .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
System-Wide Sales	FY2025	$940–$960M	$940–$950M	Narrowed
Total Revenue	FY2025	$210–$214M	$205–$209M	Lowered
Same-Store Sales	FY2025	0.0%–2.0%	0.0%–1.0%	Lowered
Adjusted EBITDA	FY2025	$69–$71M	$69–$71M	Maintained
Adjusted Net Income	FY2025	$31–$33M	$31–$33M	Maintained
Net Center Openings/Closures	FY2025	Open 10–12; close 40–60 (net -28 to -50)	Open 12; close 35–40 (net -23 to -28)	Improved/narrowed

Why: Management adopted a more conservative top-line outlook given timing of marketing impact and new guest acquisition ramp, while cost control and mix preserved EBITDA; closures narrowed due to timing and better traction with franchisee initiatives .

Earnings Call Themes & Trends

Topic	Q2 2025 (Prev)	Q3 2025 (Prev)	Q1 2026 (Current)	Trend
Data-driven marketing & contactability	Contactability improved to 57%; CPA down ~40%; lifecycle campaigns raised frequency by ~0.5 visits in opted-in cohort	Contactability up to 60%; influencer efficiency +75%; 75M impressions Eyebrow Day; 53% lift in site visitors	Not yet reported	Improving efficiency and personalization
New guest acquisition	Progress slower than desired; more impact expected late 2025/2026	Still below goals; brand/influencer agency and pilots refined; more improvement expected in 2026	Not yet reported	Gradual improvement expected 2026
Franchisee operations & unit economics	COO appointment; engaged centers +170 bps EBITDA margin; extensive field support	Deeper in-center ops focus and reporting; narrowing closures	Not yet reported	Execution focus strengthening
Closures/development	Guide: open 10–12; close 40–60; return to net growth by end-2026	Narrowed: close 35–40 in 2025; still targeting net growth by end-2026	Not yet reported	Risk moderating; pipeline building
Regional trends	West Coast challenged; improvement in TX/FL and some in NY	Relative weakness in NY/Philadelphia/DC; some California improvement	Not yet reported	Mixed, modest improvement in select regions
Tariffs/supply chain	Proactive mitigation; diversified sourcing	Continued mitigation; confident in EBITDA outlook	Not yet reported	Managed impact

Management Commentary

Strategic priorities: “driving sales through traffic growth, improving four-wall profitability for our franchisees, and pursuing disciplined, profitable expansion” .
On marketing progress: “We… are seeing… improved efficiency and returns… create consistent personalized communication… convert less frequent guests into high-frequency visitors” .
On influencer strategy: “content… showing a 75% improvement in efficiency… Eyebrow Day… delivered more than 75 million impressions and drove a 53% lift in unique website visitors” .
On closures and unit health: closures are low-volume units (real estate/market issues); narrowing closure outlook reflects timing and traction with franchisees .
Non-GAAP framework: Adjusted Net Income definition revised in Q1 2025 to exclude amortization of intangibles; reconciliations provided .

Q&A Highlights

Frequency uplift and contactability: Contactable guest share rose to 60%; management sees “meaningful progress” in moving non-routine guests back into routines but avoids disclosing frequency by band .
Regional commentary: Stability overall with relative softness in NY/Philadelphia/DC and improvement in California; Wax Pass sales up slightly YoY .
Closures outlook and confidence: Closing low-volume units; lease expirations matter; improved visibility and franchisee partnership reduce surprise risk; still targeting net unit growth by end-2026 .
Q4 modeling/timing: Expense timing (marketing/tech) shifts from Q3 to Q4; full-year EBITDA reaffirmed .
New vs ticket strategy: Emphasis on sustainable traffic growth coupled with balanced ticket strategy (price and add-ons), avoiding deep discounting .

Estimates Context

Street (S&P Global) Q1 FY2026 consensus: Revenue $51.78M*, EPS $0.18*, EBITDA $18.62M*; 4 revenue estimates, 3 EPS estimates. These set the near-term bar given improving SSS/margins but softer revenue base in recent quarters. Values retrieved from S&P Global.
Implications: If SSS and traffic initiatives continue to translate, margin resilience could support EBITDA delivery; key is evidence of improved new guest acquisition and sustained frequency into Q1 FY2026 .

Estimates table:

Metric	Q1 2026 Consensus
Revenue ($)	$51,775,000*
Primary EPS ($)	$0.18*
EBITDA ($)	$18,622,500*
EPS – # of Estimates	3*
Revenue – # of Estimates	4*

Values retrieved from S&P Global.

Key Takeaways for Investors

Setup into Q1 FY2026: Street expects ~$51.8M revenue and $0.18 EPS*, with the story hinging on visible SSS/traffic improvement from data-driven marketing and influencer efforts; watch for concrete proof of new guest velocity and frequency uplift. Values retrieved from S&P Global.
Margin resilience vs softer revenue: Mix and cost discipline have expanded Adj. EBITDA margins despite revenue declines; confirm if expense timing into Q4 normalizes and whether margin gains persist in Q1 FY2026 .
Closure moderation and unit economics: Narrowed closure range and stronger ops support should aid network health; updates on 2026 opening pipeline and COO-led ops KPIs will be key .
Regional watchpoints: Continued softness in NY/Philadelphia/DC vs improving Calif./TX/FL; localized execution and marketing effectiveness remain important to the comp narrative .
Guidance discipline: FY2025 outlook held after Q2 lowering; any early FY2026 color could be a stock catalyst, especially on SSS and unit growth trajectory .
Non-GAAP clarity: Adjusted Net Income now excludes intangibles amortization—track reconciliation items and any legal/one-time costs to assess core earnings power .
Balance sheet/capital returns: Net leverage improved to 3.9x (3.7x ex-buybacks) and buybacks largely executed; liquidity and securitization remain supportive of turnaround investments .

Additional Detail and Cross-References:

Q3 FY2025 headline results: Revenue $54.2M (-2.2% YoY), SSS +0.2%, Adj. EBITDA $20.2M (+9.6% YoY; margin 37.2%) .
Q2 FY2025 headline results: Revenue $55.9M (-6.6% YoY), SSS +0.3%, Adj. EBITDA $21.6M (+4.7% YoY; margin 38.7%) .
FY2025 reiterated outlook in Q3: Revenue $205–$209M; SSS 0–1%; Adj. EBITDA $69–$71M; Adjusted NI $31–$33M .
Definitions and reconciliations for non-GAAP metrics provided in filings; Adj. NI definition update in Q1 2025 .

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