Sign in

You're signed outSign in or to get full access.

EW

European Wax Center, Inc. (EWCZ)·Q3 2026 Earnings Summary

Executive Summary

  • Q3 2026 (fiscal Q3 2025) delivered resilient fundamentals amid soft top-line: revenue $54.19M (-2.2% YoY), Adjusted EBITDA $20.17M (+9.6% YoY) with margin expansion to 37.2% (+400 bps YoY). Same-store sales were +0.2%, system-wide sales $238.2M (-0.8% YoY) .
  • Consensus comparison: revenue beat by ~$1.74M and Primary EPS beat by ~$0.06 in Q3; Q2 had a revenue miss but EPS beat; Q1 beat both revenue and EPS (S&P Global) — see Estimates Context for details.
  • Guidance reiterated: FY revenue $205–$209M, Adjusted EBITDA $69–$71M, Adjusted Net Income $31–$33M; system-wide sales $940–$950M; SSS 0–1% .
  • Network health improving: closure outlook narrowed to 35–40 (from 40–60), with 23–28 net center closures expected for FY; end-Q3 centers 1,053 (3 openings, 9 closures) .
  • Near-term stock catalysts: sustained margin discipline, narrowed closure guidance, and data-driven marketing/guest engagement improvements; watch for Q4 expense timing and 2026 brand/guest acquisition initiatives discussed on the call .

What Went Well and What Went Wrong

  • What Went Well

    • Margin expansion: Adjusted EBITDA margin up 400 bps YoY to 37.2%; Net income margin up 620 bps YoY to 9.9% on SG&A reductions and expense timing .
    • Strategic execution: CEO emphasized focus on three priorities (traffic growth, four-wall profitability, disciplined expansion) and “momentum building across our organization” .
    • Operational clarity and franchisee engagement: new reporting on guest frequency and field operations under new COO improving controllables and consistency; closing guidance range narrowed as initiatives gain traction .

  • What Went Wrong

    • Top-line softness: revenue down 2.2% YoY; product sales and retail contribution decreased, and comps weakened late August–September .
    • New guest acquisition still below desired levels; brand/marketing overhaul scaling into 2026 (influencer/content and new brand agency) .
    • Net unit closures continue: Q3 had 6 net closures; FY still expects 23–28 net closures, reflecting low-volume units (bad real estate/markets, lease timing) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$51.427 $55.911 $54.185
Diluted EPS ($USD)$0.04 $0.09 $0.09
Net Income Margin %5.0% 9.6% 9.9%
Adjusted EBITDA ($USD Millions)$18.752 $21.613 $20.174
Adjusted EBITDA Margin %36.5% 38.7% 37.2%
System-Wide Sales ($USD Millions)$225.9 $257.6 $238.2
Same-Store Sales %0.7% 0.3% 0.2%
Ending Centers (#)1,062 1,059 1,053
Revenue Components ($USD Millions)Q3 2024Q2 2025Q3 2025
Product sales$31.684 $30.515 $30.606
Royalty fees$13.413 $14.278 $13.195
Marketing fees$7.603 $8.108 $7.574
Other revenue$2.730 $3.010 $2.810
Total revenue$55.430 $55.911 $54.185
KPIsQ1 2025Q2 2025Q3 2025
Openings / Closures (#)5 / 10 2 / 5 3 / 9
Same-Store Sales %0.7% 0.3% 0.2%
System-Wide Sales ($USD Millions)$225.9 $257.6 $238.2
Estimates vs ActualsQ1 2025Q2 2025Q3 2025
Revenue Estimate ($USD Millions)49.700*56.890*52.449*
Revenue Actual ($USD Millions)51.42755.91154.185
Revenue Surprise ($USD Millions / %)+1.727 / +3.5%*-0.979 / -1.7%*+1.736 / +3.3%*
Primary EPS Estimate ($)0.0525*0.16286*0.09746*
Primary EPS Actual ($)0.1289*0.1818*0.1559*
EPS Surprise ($)+0.0764*+0.0189*+0.0584*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
System-Wide SalesFY2025$940–$960M (Q1) $940–$950M (Q2, reiterated Q3) Lowered (tightened range)
Total RevenueFY2025$210–$214M (Q1) $205–$209M (Q2, reiterated Q3) Lowered
Same-Store SalesFY20250–2% (Q1) 0–1% (Q2, reiterated Q3) Lowered
Adjusted EBITDAFY2025$69–$71M (Q1) $69–$71M (Q2, reiterated Q3) Maintained
Adjusted Net IncomeFY2025$31–$33M (definition updated in Q1) $31–$33M (Q2, reiterated Q3) Maintained
Net New CentersFY202510–12 openings; 40–60 closures (Q1) 12 openings; 35–40 closures (Q3) Improved (fewer closures)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Data-driven marketing & analytics“Enhanced, data-rich marketing engine” and early efficiency progress (Q1/Q2 PRs) Robust guest lifecycle campaigns; franchisee frequency reporting; improved contactability (from 38% to 60%) Improving
New guest acquisition & brandFocus area with progress; influencer/agency work ramping (Q2 PR) Still below target; new influencer agency (+75% efficiency), Eyebrow Day 75M impressions, 53% lift in unique visitors; brand agency engaged for 2026 rollout Improving but early
Supply chain & tariffsDisciplined approach; diversification (Q1 PR) Proactively managing tariffs via supplier diversification; confidence in EBITDA outlook Stable
Regional trendsNot specifically highlighted in Q1/Q2 PRsImprovement in California; relative weakness in NY/Philadelphia/DC Mixed
Unit development/closuresFY closures 40–60 (Q1); narrowed ranges in Q2 Closures narrowed to 35–40; low-volume, poor real estate/market drivers; aiming for net positive growth by end-2026 Improving
Franchisee operationsEmphasis on four-wall profitability (Q1/Q2 PRs) New COO driving operational excellence, controllables, training/coaching Improving

Management Commentary

  • CEO prepared remarks: “Our new leadership team is executing with discipline and remains focused on our three strategic priorities: driving sales through traffic growth, improving four-wall profitability for our franchisees, and pursuing disciplined, profitable expansion.”
  • CEO on momentum: “Our teams are smarter, faster and more aligned than ever… our reaffirmed full-year guidance reflects clear proof points from our strategy.”
  • CFO on quarter dynamics: revenue decreased ~2.2% YoY due to lower wholesale/retail mix; comps strong through mid-August before softening late Aug–Sep; Adjusted EBITDA margin up 400 bps; some expense timing shifting to Q4 .
  • Operational focus: new reporting on guest frequency enabled franchisees with actionable center-level data; improved guest contactability (60% vs 38% at start of year) .
  • Development outlook: closures primarily low-volume units; narrowed 2025 closure range to 35–40; target net positive growth by end-2026 .

Q&A Highlights

  • Guest engagement/frequency: contactability improved from ~38% to 60%, enabling targeted lifecycle messaging and frequency lifts without deep discounting .
  • Regional patterns: California improving; relative weakness in New York/Philadelphia/DC, but overall national performance relatively consistent .
  • Closures and pipeline: narrowed 2025 closures; closures skew to low-volume/bad real estate; lease timing critical; aiming for net positive NCO growth by end-2026 .
  • Q4 modeling: EBITDA guidance intact; year shows timing effects that normalize to full-year targets .
  • New guest acquisition: data/analytics now informing marketing pivots; influencer/content strategy overhaul underway; brand refresh to target high-value acquisition in 2026 .

Estimates Context

  • Relative to S&P Global consensus, Q3 revenue beat (~$54.19M actual vs $52.45M est) and Primary EPS beat ($0.156 actual vs ~$0.097 est). Q2 had a revenue miss with an EPS beat; Q1 beat both revenue and EPS (see table) — implying near-term estimate revisions biased toward modest upward adjustments on margins/EPS, with top-line still cautious given late-quarter softness and new guest acquisition timing .
    Values retrieved from S&P Global.*

Guidance Changes — Details and Implications

  • FY revenue lowered to $205–$209M and SSS to 0–1% (from $210–$214M and 0–2%), reflecting cautious top-line trajectory and product/retail mix shifts; Adjusted EBITDA $69–$71M maintained, signaling cost discipline and margin resilience .
  • Closure guidance improved to 35–40 (from 40–60) on stronger franchisee engagement and targeted operational support; still 23–28 net closures for FY .
  • Adjusted Net Income definition expanded in 2025 to include amortization of intangible assets; comparative periods adjusted accordingly, supporting clearer view of core operations .

Key Takeaways for Investors

  • Margin story intact: cost discipline and mix drove sustained margin expansion; Adjusted EBITDA guidance reiterated despite top-line variability .
  • Top-line inflection likely 2026: data-driven marketing, brand refresh, influencer strategy, and franchisee operations should support traffic and new guest acquisition over time .
  • Network health improving: narrowed closure guidance and operational support mitigate risk; watch Q4 closure timing and 2026 pipeline updates at year-end/FY call .
  • Cash/Leverage: $73.6M cash, revolver undrawn; net leverage 3.9x (3.7x ex buybacks) provides flexibility for disciplined capital allocation .
  • Near-term trading: favor names with margin resilience; EWCZ’s beat on EPS and reiterated EBITDA may support sentiment, but top-line caution and Q4 expense timing warrant selectivity .
  • Medium-term thesis: if guest frequency initiatives and brand work translate into sustained traffic, margin structure plus franchise model can compound; monitor SSS trajectory, acquisition costs, and closure cadence .
  • Non-GAAP clarity: Adjusted Net Income definition change adds consistency; reconcile to GAAP when modeling tax and amortization impacts .