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Dave & Buster's Entertainment, Inc. (PLAY)·Q2 2026 Earnings Summary

Executive Summary

  • PLAY’s quarter showed stabilization but below Street: revenue $557.4M (+0.05% y/y) and GAAP diluted EPS $0.32; comparable store sales -3.0% y/y; Adjusted EBITDA $129.8M (vs $151.6M y/y), with management citing new units, one‑offs, higher game R&M, and marketing as margin headwinds that should moderate in 2H25 .
  • Versus S&P Global consensus, PLAY missed on revenue ($557.4M vs $562.7M consensus*) and EPS ($0.40 adj. diluted vs $0.92 consensus*); S&P EBITDA (def.) also below ($120.2M actual* vs $137.9M consensus*), while company-reported Adjusted EBITDA was $129.8M .
  • New CEO Tarun Lal outlined a back‑to‑basics, execution‑focused plan (TV back, simplified value messaging, menu revamp, game pricing simplification, 10+ new games/year, remodel cost discipline), and tied incentives to achieving $675M adjusted EBITDA over the near term .
  • Development outlook narrowed: FY25 new stores now expected at 11 (midpoint of prior 10–12); international franchising adds at least five openings over the next six months, offering capital‑light growth .

What Went Well and What Went Wrong

  • What Went Well

    • Marketing and value: TV advertising reintroduced; clearer value messaging (Eat & Play Combo opt‑in ~8–10%, with ~30% food upgrades and substantial Power Card upgrades) .
    • Product/menu and engagement: “Back‑to‑basics” menu to re‑introduce fan favorites in Oct; fall Season Pass launched; football watch specials (10 wings for $10) and national arcade competitions to drive traffic and dwell time .
    • Capital-light growth/liquidity: ~$77M sale‑leaseback proceeds and a long‑term partner enhance funding for future openings; total liquidity $443.3M; international franchising accelerating .

  • What Went Wrong

    • Margins under pressure: Adjusted EBITDA down to $129.8M from $151.6M y/y; margin headwinds came from new unit ramp, lapping prior‑year credits/insurance/franchise tax benefits, unusual legal costs, and elevated R&M/marketing tied to game rollouts .
    • Negative comps: Comparable store sales -3.0% y/y; Q3‑to‑date trends “consistent with” Q2 exit levels (not quantified), signaling continued traffic/value perception work ahead .
    • Execution missteps require repair: Past over‑complex promotions/pricing, limited TV, reduced new games, and remodel overspend weighed on brand distinctiveness and value perception; CEO flagged clear execution failures to fix .

Financial Results

Sequential trend (older → newer)

MetricQ4 2024Q1 2026Q2 2026
Revenue ($M)$534.5 $567.7 $557.4
GAAP Diluted EPS$0.24 $0.62 $0.32
Adjusted Net Income ($M)$26.8 $26.7 $14.1
Adjusted Diluted EPS$0.69 $0.76 $0.40
Adjusted EBITDA ($M)$127.2 $136.1 $129.8
Comparable Store Sales (y/y)-9.4% -8.3% -3.0%

Year-over-year (same quarter)

MetricQ2 2024Q2 2026
Revenue ($M)$557.1 $557.4
GAAP Diluted EPS$0.99 $0.32
Adjusted Diluted EPS$1.12 $0.40
Adjusted EBITDA ($M)$151.6 $129.8
Comparable Store Sales (y/y)—-3.0%

Consensus vs Actual (Q2 2026)

MetricS&P Global ConsensusActual
Revenue ($M)562.7*$557.4
GAAP Diluted EPS0.92*$0.32
Adjusted Diluted EPS—$0.40
EBITDA ($M, S&P def.)137.9*120.2*
Adjusted EBITDA ($M, company)—$129.8

Values with asterisks are retrieved from S&P Global.

Revenue mix and segment detail

MetricQ2 2024Q1 2026Q2 2026
Entertainment Revenue ($M)$375.7; 67.4% $366.6; 64.6% $364.5; 65.4%
Food & Beverage Revenue ($M)$181.4; 32.6% $201.1; 35.4% $192.9; 34.6%

KPIs and operating stats

KPIQ4 2024Q1 2026Q2 2026
Company-owned Stores (EOP)232 234 237
Store Operating Weeks2,969 3,018 3,066
Revenue/Store-Week ($000s)$180 $188 $182
Revenue/Sq Ft/Store-Week ($)$4.34 $4.55 $4.43
Cash from Operations ($M)$108.9 $95.8 $34.0
Available Liquidity ($M)$510.4 $423.2 $443.3
Net Total Leverage (x)2.8x 3.1x 3.2x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/UpdateChange
New store openingsFY202510–12 openings 11 openings (midpoint) Narrowed to midpoint
Capital expenditures (net of TI/sale‑leaseback effects in guidance)FY2025< $220M Reiterated as of Q1 2025 Maintained
Pre‑opening expenseFY2025≈ $20M Reiterated as of Q1 2025 Maintained
Cash interest expenseFY2025$130–$140M Reiterated as of Q1 2025 Maintained
Near‑term adjusted EBITDA aspiration (management incentive)Multi‑year—CEO compensation tied to $675M adjusted EBITDA target New target framing

Note: No explicit revenue/EPS quarterly guide provided; management said Q3‑to‑date comps are consistent with Q2 exit and margin headwinds should moderate in 2H25 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2026)Current Period (Q2 2026)Trend
Marketing/TV and valueTV spend restored; Eat & Play relaunch; simplifying promotions Integrated fall campaign; Season Pass; football watch; keep marketing dollars but improve mix Improving execution
Game pricing/value and newnessTesting to extend time of play; new game lineup and Human Crane rollouts Ended game‑level pricing; simplified rate card to increase dwell time; strategic win pricing Value perception improving
Menu strategyReskinned menu; menu revamp planned for fall Back‑to‑basics menu launching in October to drive check (not via price) Check tailwind expected
Remodel programMixed results; tighter ROI and cadence; value‑engineered prototype New lower‑cost prototype “in coming weeks,” with better marketing support Reset for higher ROI
Capex discipline/free cash flowFY25 capex < $220M; focus on FCF; sale‑leasebacks ~$77M proceeds; partnership funds pipeline; FCF focus reiterated Liquidity reinforced
Development/franchising10–12 FY25 openings; int’l franchise pipeline (35+ agreements) FY25 openings now 11; ≥5 international franchise openings next 6 months Capital‑light growth

Management Commentary

  • “My immediate focus is clear: reinforce our guest‑first culture, deliver memorable experiences, and drive meaningful growth in sales, cash flow and shareholder value.” — Tarun Lal, CEO .
  • “There has been a very clear executional failure that will be rectified... focus areas: marketing, food & beverage, operations, games, and remodels.” — Tarun Lal .
  • “Adjusted EBITDA margin miss… one‑offs in prior year credits and taxes, unusual legal costs, elevated R&M for summer of games, and higher marketing… we expect moderation in 2H.” — Darin Harper, CFO .
  • “Transaction significantly enhances a long‑term partnership… monetizes real estate… provides significant liquidity for growth.” — Darin Harper on sale‑leaseback .
  • “I personally signed up to a compensation package tied to a near‑term achievement of $675 million of annual adjusted EBITDA.” — Tarun Lal .

Q&A Highlights

  • Comps trajectory: Q3‑to‑date “consistent with” patterns exiting Q2; management did not quantify intra‑quarter comps .
  • Margin drivers and outlook: New units, lapping credits/insurance/franchise tax, unusual legal costs, higher R&M/game maintenance and marketing; expected to moderate in 2H25 .
  • Value/Eat & Play: EPC opt‑in ~8–10%; ~30% food upgrade mix; added kiosk upsell (AYCP and $75 card), boosting attach and check without base price hikes .
  • Game pricing: Ended game‑level pricing; simplified rate card to extend time in midway while managing redemption margins via win pricing; exploring regional pricing .
  • Capex and growth: FY25 new units to 11; capex guardrails reiterated (<$220M), focus on FCF; continued international franchising .
  • Marketing spend: No need to increase total dollars near‑term; focus on more effective mix and messaging .

Estimates Context

  • Q2 2026 results vs S&P Global consensus: revenue $557.4M vs $562.7M consensus*, adjusted diluted EPS $0.40 vs 0.92 consensus*, S&P EBITDA actual $120.2M* vs $137.9M consensus*, while company‑reported Adjusted EBITDA was $129.8M .
  • Forward Street view (S&P Global):
    • Q3 2026: Revenue $460.7M*, EPS -$1.02* (seasonal trough), EBITDA $55.8M*
    • Q4 2026: Revenue $563.0M*, EPS $0.52*, EBITDA $132.5M*
    • Q1 2027: Revenue $597.0M*, EPS $0.92*, EBITDA $148.4M*
  • Implication: Street likely to cut near‑term EPS/EBITDA on Q2 miss and margin commentary, but will watch for 2H moderation and fall/winter initiatives execution .

Values with asterisks are retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term setup: Q2 was a clear miss vs consensus with margin pressure; management expects cost headwinds to abate in 2H and is leaning on value/marketing/menu to stabilize comps .
  • Execution pivot: CEO’s plan focuses on simplified value, TV reach, menu revamp, streamlined game pricing, and remodel ROI—an execution story that can re‑rate if comps turn and margins stabilize .
  • Liquidity and growth balance: Sale‑leasebacks and a real estate partner provide funding for an 11‑unit FY25 plan while maintaining FCF discipline; international franchising adds capital‑light upside .
  • KPIs to monitor: EPC opt‑in/upgrade rates, dwell time and game win pricing impact, fall/winter pass adoption, special events trajectory, and store‑week productivity .
  • Valuation catalyst: Credible path toward higher adjusted EBITDA (management’s $675M target) via same‑store sales recovery and cost normalization could be a medium‑term re‑rating driver if evidence mounts over the next two quarters .
  • Trading lens: Watch Q3 (seasonally soft) commentary—management’s “consistent with Q2 exit” comps and margin moderation comments are key; any early proof of improved traffic/check from the October menu and football programming could shift sentiment .

Appendix: Additional Operating/Balance Sheet Highlights

  • Operating cash flow: $34.0M in Q2; YTD $129.8M .
  • Available liquidity: $443.3M at quarter end; Net Total Leverage 3.2x .
  • Store base: 237 company‑owned stores at Q2 end; 3 new D&B opened in Q2; subsequent openings include 1 D&B and 2 Main Events; second franchise store opened in India .