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Topgolf Callaway Brands Corp. (MODG)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a clean beat vs guidance: Net revenues $934.0M and Adjusted EBITDA $114.4M both exceeded the company’s Q3 outlook, driven by strength in Golf Equipment and an inflection to positive Topgolf same-venue sales (+1%) .
  • Versus Wall Street, MODG beat S&P Global consensus on revenue ($934.0M vs $903.4M*) and EPS (non-GAAP diluted -$0.05 vs -$0.22*), and modestly exceeded S&P EBITDA (actual $91.1M* vs $87.6M*) while company’s reported Adjusted EBITDA was $114.4M .
  • Management raised FY25 guidance: consolidated net revenues to $3.90–$3.94B and Adjusted EBITDA to $490–$510M; Topgolf revenue to $1.77–$1.79B and Adjusted EBITDA to $295–$305M; Topgolf same-venue sales outlook improved to down mid-single-digits .
  • Strategic catalyst post-quarter: agreement to sell 60% of Topgolf and Toptracer to Leonard Green, valuing Topgolf at ~$1.1B and delivering ~$770M net proceeds; MODG retains 40% and plans to rebrand as Callaway Golf (CALY) at closing (expected Q1 2026) .

S&P Global disclaimer: Values marked with an asterisk (*) are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Revenue and Adjusted EBITDA exceeded Q3 guidance; CEO: “both revenue and Adjusted EBITDA exceeding our expectations,” led by Golf Equipment and Topgolf’s return to positive SVS growth .
  • Topgolf demand re-accelerated: traffic up high teens, one-to-two bay same-venue sales +2.4% on “Sunday Funday” and half-off Mon–Thu value initiatives; venue EBITDA margins held just over 33%, roughly flat YoY despite higher value offers .
  • Guidance raised across the board (consolidated and Topgolf) on improved trends and cost actions mitigating tariffs; consolidated liquidity increased $391M YoY to $1,254M .

What Went Wrong

  • Tariffs remained a material headwind: $12M incremental in Q3 within Core business; $40M expected for FY25; management warned 2026 tariff impact could be “a little more than double” if current rates hold .
  • Active Lifestyle revenue fell 41% YoY on Jack Wolfskin divestiture; segment operating income down $5.7M YoY with $4M incremental tariffs, though ex-Jack Wolfskin revenue was approximately flat .
  • Q4 outlook implies a sharp sequential step-down in Adjusted EBITDA ($13–$33 vs $101 last year) on calendar shift, events mix, incentive comp accruals, tariffs, and WGT sale impacts; three-plus bay corporate events remain pressured, albeit moderating .

Financial Results

Consolidated headline metrics (chronological: Q3 2024 → Q2 2025 → Q3 2025)

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$1,012.9 $1,110.5 $934.0
GAAP Diluted EPS ($)-$0.02 $0.11 -$0.08
Non-GAAP Diluted EPS ($)$0.02 $0.24 -$0.05
Adjusted EBITDA ($USD Millions)$119.8 $195.8 $114.4
Net (Loss) Income ($USD Millions)-$3.6 $20.3 -$14.7
Income from Operations ($USD Millions)$33.7 $105.8 $28.3

Segment breakdown (Q3 2024 vs Q3 2025)

SegmentRevenue ($M) Q3 2024Revenue ($M) Q3 2025Segment Op Inc ($M) Q3 2024Segment Op Inc ($M) Q3 2025
Topgolf$453.2 $472.2 $28.3 $31.1
Golf Equipment$293.5 $305.3 $26.8 $23.2
Active Lifestyle$266.2 $156.5 $19.4 $13.7

KPIs and operating indicators (Q2 2025 → Q3 2025)

KPIQ2 2025Q3 2025
Topgolf Same-Venue Sales (SVS) YoY-6% +1%
One–Two Bay SVS YoY-5% (core) +2.4%
Topgolf Traffic Growth+6% High teens
Topgolf Adjusted Segment EBITDA ($M)$110.8 $83.5
Topgolf Venue EBITDA Margin—just over 33%
Available Liquidity ($M)$1,161.7 $1,254.2
Inventory ($M)$608.9 $568.7
Tariff Impact ($M)—$12 (Q3); ~$40 (FY25)

Results vs S&P Global consensus (Q3 2025)

MetricConsensusActual
Revenue ($USD Millions)$903.4*$934.0
Primary EPS (Normalized) ($)-$0.22*-$0.05
EBITDA ($USD Millions)$87.6*$91.1*

S&P Global disclaimer: Values marked with an asterisk (*) are retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net Revenues ($B)FY 2025$3.80 – $3.92 $3.90 – $3.94 Raised
Consolidated Adjusted EBITDA ($M)FY 2025$430 – $490 $490 – $510 Raised
Topgolf Revenue ($B)FY 2025$1.71 – $1.77 $1.77 – $1.79 Raised
Topgolf Adjusted EBITDA ($M)FY 2025$265 – $295 $295 – $305 Raised
Topgolf Same-Venue Sales YoYFY 2025-6% to -9% Down mid-single digits Improved
Consolidated Net Revenues ($M)Q4 2025—$763 – $803 New
Consolidated Adjusted EBITDA ($M)Q4 2025—$13 – $33 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Tariffs / MacroFY25 tariff estimate raised to ~$40M; mitigation underway $12M Q3 hit; ~$40M FY; 2026 impact “a little more than double” if rates hold Worsening cost headwind, mitigation ongoing
Topgolf Value & DemandSVS -12% Q1; -6% Q2; July SVS -3%; traffic +6–12% SVS +1%; one–two bay SVS +2.4%; traffic high teens; value offers continued Improving
Separation / Strategic PathCEO resignation; spin impractical in 2025; process active CEO search ongoing; reaffirm separation; post-Q3: 60% Topgolf sale to LGP announced Progressing toward monetization
Golf Equipment ExecutionStrong margins Q1; product launches and pipeline Revenues +4% YoY; ball share records; AI-enabled driver wins Strong
Digital / POS (Toast)~20% venues; speed of service improved ~half by YE; all venues by end of Q2 2026; piloting pay-in-bay, mobile ordering Scaling
Corporate Events (3+ bays)-12% Q2; pressure on events Declines moderating; Q4 mix ~30% weighs on SVS Stabilizing

Management Commentary

  • “We are pleased with our third quarter results, with both revenue and Adjusted EBITDA exceeding our expectations… led by strong performance… in our Golf Equipment segment and by our Topgolf business which transitioned to positive same venue sales growth in the quarter.” — Chip Brewer, CEO .
  • “Traffic has been up mid-high teens… driven by our value initiatives, principally Sunday Funday and half-off golf Monday through Thursday.” — Chip Brewer .
  • “Across our products business, we had an incremental tariff expense of $12 million in the quarter, and we continue to forecast approximately $40 million for the full year… the impact will unfortunately increase meaningfully going forward.” — Chip Brewer .
  • “We are raising our full year 2025 revenue guidance… and our full year adjusted EBITDA guidance… including an improvement in Topgolf same-venue sales outlook.” — Brian Lynch, CFO .
  • “We remain committed to the separation of Topgolf and are fully engaged in that strategic process.” — Chip Brewer .

Q&A Highlights

  • Pricing power and tariffs: Management sees room to price new products strategically to offset tariffs given DSPD product differentiation and a relatively inelastic consumer; 2026 tariff impact could exceed double FY25 if rates persist .
  • Operating levers: Shorter bay booking windows (60/90 minutes) and menu innovations are lifting F&B attach; Toast POS rollout improving speed-of-service and spend per visit; pay-in-bay and mobile ordering pilots slated for 2026 scale .
  • Demand and sell-through: Golf equipment sell-through trends “terrific,” with retail destocking and a healthy, engaged consumer supporting outlook .
  • Events visibility: ~Just over half of corporate events typically booked 30 days out; remaining bookings flow through late November and early December; guidance reflects this .
  • Growth plans: Topgolf planning three new venues in 2026; PlayMore subscription launched to drive frequency; value initiatives to continue .

Estimates Context

  • Q3 2025 beats vs S&P: Revenue $934.0M vs $903.4M*; EPS (normalized) -$0.05 vs -$0.22*; EBITDA $91.1M* vs $87.6M*. Company-reported Adjusted EBITDA was $114.4M, reflecting non-GAAP add-backs and excluding non-recurring items .
  • Q4 2025 setup: Company guides revenue $763–$803M and Adjusted EBITDA $13–$33M; S&P revenue consensus sits near $785.6M*, broadly consistent with guidance midpoint .
  • Target price and recommendation: S&P consensus target price ~$11.61*; consensus recommendation text unavailable*.

S&P Global disclaimer: Values marked with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: The combination of Topgolf SVS inflecting positive and stronger Golf Equipment demand produced a clear beat vs guidance and consensus; however, Q4 is seasonally and mix-challenged with lower three-plus bay events and calendar headwinds — expect volatility into year-end .
  • Medium-term: Raised FY25 guidance and liquidity build provide cushion against tariff headwinds; cost actions are visible in steady venue margins and improved gross margin trajectory in equipment .
  • Strategic unlock: The agreed sale of 60% of Topgolf delivers ~$770M in net proceeds and de-risks the separation thesis while retaining upside via a 40% stake; rebrand to CALY post-close focuses the equity story on equipment/apparel .
  • Tariff risk remains the swing factor for 2026; management signaled pricing, efficiency, and vendor negotiation as mitigants, but investors should model higher product costs if rates persist .
  • Watch operational levers at Topgolf: the Toast rollout, membership/subscription (PlayMore), and value initiatives are boosting traffic/frequency and spend-per-visit — key drivers of SVS and venue margins into 2026 .
  • Corporate events trajectory is stabilizing; leads and conversions are improving, but Q4 mix remains heavy — monitor event recovery into early 2026 for SVS normalization .
  • Equipment category strength and brand share gains (especially golf balls) support a constructive 2026 product cycle; AI-enabled product wins reinforce DSPD positioning .

Additional Relevant Press Releases (Q4-to-date)

  • Topgolf PlayMore $20 monthly membership launched to drive frequency and value perception (free hour + appetizer every visit) .
  • Topgolf Woodbury (MN) opened Oct 30, expanding footprint to 111 outdoor venues .
  • Callaway Apparel license with Perry Ellis extended through 2032; premium line targeted by 2028 (supports brand momentum in Active Lifestyle) .