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Dave & Buster's Entertainment, Inc. (PLAY)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $453.0M, down 3.0% y/y; comparable store sales declined 7.7%, with seasonality, calendar shifts (53rd week lap), weather, and remodel construction disruptions cited as headwinds .
  • EPS was $(0.84); adjusted EPS $(0.45); adjusted EBITDA was $68.3M (15.1% margin), reflecting deleverage on comps in the lowest seasonal quarter and non-GAAP addbacks including debt-refinancing costs .
  • Management introduced fiscal 2024 adjusted EBITDA guidance of $505–$515M and noted Q4 calendar shift tailwinds of roughly ~$5M (about half or less of Q3’s adverse shift), while framing the guide as conservative given comparability noise .
  • Strategic focus remains on six initiatives (marketing optimization, strategic games pricing, F&B, remodels, special events, technology); CEO transition announced with Kevin Sheehan as interim CEO, while the Board conducts a search for a permanent CEO—narrative continuity emphasized .

What Went Well and What Went Wrong

What Went Well

  • Special events grew mid-single digits y/y, with customer deposits up low double digits heading into the holiday season, supported by a new banquet menu and in-store sales managers .
  • Loyalty database surpassed 7 million members; relaunches like Eat & Play Combo and Winter Pass (tested in 36 stores) aim to boost visit frequency and F&B attach, underpinning marketing optimization efforts .
  • Fully programmed remodels continue to outperform; Phase I remodels delivered double-digit growth, validating ROI and informing enhanced marketing/training for subsequent waves .

What Went Wrong

  • Comparable store sales fell 7.7% on a like-for-like calendar basis; Q3 revenue per store-week declined to $153k vs $168k in prior year and $187k in Q2, illustrating volume/mix pressure in the lowest seasonal quarter .
  • Macro pressure persisted—low-end consumer spend declined roughly “twice as much” as higher quintiles, dampening walk-ins; adverse weather and remodel disruptions added 50–100 bps drag to comps .
  • Marketing overcorrection to 90% digital (elimination of linear TV) likely weakened top-of-funnel awareness; the team is rebalancing media mix and reallocating spend toward remodel-heavy markets to improve returns .

Financial Results

Consolidated Performance vs Prior Year, Prior Quarter, and Estimates

MetricQ3 2024 (prior year)Q2 2025 (prior quarter)Q3 2025 (current)
Revenue ($USD Millions)$466.9 $557.1 $453.0
Diluted EPS ($)$(0.12) $0.99 $(0.84)
Adjusted EPS ($)$0.01 $1.12 $(0.45)
Adjusted EBITDA ($USD Millions)$81.6 $151.6 $68.3
Adjusted EBITDA Margin (%)17.5% 27.2% 15.1%
Comparable Store Sales (%)—(6.3%) (7.7%)
Wall St. Revenue Consensus ($)Unavailable (S&P Global rate limit)Unavailable (S&P Global rate limit)Unavailable (S&P Global rate limit)
Wall St. EPS Consensus ($)Unavailable (S&P Global rate limit)Unavailable (S&P Global rate limit)Unavailable (S&P Global rate limit)

Note: Consensus estimates unavailable due to S&P Global access limits; anchor comparisons cannot be provided this quarter.

Segment Breakdown

SegmentQ3 2024Q2 2025Q3 2025
Entertainment Revenues ($USD Millions)$302.0 $375.7 $294.6
Food & Beverage Revenues ($USD Millions)$164.9 $181.4 $158.4

KPIs and Operating Metrics

KPIQ3 2024Q2 2025Q3 2025
Store Operating Income before D&A ($USD Millions)$102.9 $176.5 $92.6
Company-Owned Stores (end of period)214 224 227
Store Operating Weeks (period)2,774 2,987 2,966
Revenue per Store-Week ($ Thousands)$168 $187 $153
Net Total Leverage Ratio (x)—2.3x 2.6x
Cash & Revolver Availability ($USD Millions)—Cash $13.1; Revolver Avail $481.0 Cash $8.6; Revolver Avail $537.4
Operating Cash Flow ($USD Millions)$70.8 $101.8 $(7.2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2024None$505–$515Introduced
Calendar Shift Impact on Q4 Revenue ($USD Millions)Q4 2025None~+$5 (half or less of Q3 adverse shift)Quantified tailwind

Management described the FY guide as conservative, driven by walk-in trends and forward bookings, with modest improvement assumptions vs Q3 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Marketing OptimizationQ1: $10M incremental labor/marketing and an unsuccessful campaign test; building data/analytics foundation . Q2: Progress on margins with continued testing of pricing; special events bookings significantly above prior year .New agency onboarded; over-rotation to digital (90%) being corrected with linear TV tests; heavier spend in remodel markets; loyalty to be optimized .Pivot to balanced mix; execution ramping in Q4/Q1.
Strategic Games PricingContinued testing of games pricing, enhancing margins .First chip price increase in 25+ years; granular store-level dynamic pricing; new games (Human Crane) planned pre-spring 2025 .Pricing capabilities enhanced; pipeline of attractions.
Food & BeverageNew menu rollout; improving F&B performance and guest satisfaction .Guest satisfaction up 6 points y/y; Phase IV menu launched with beverage innovation; higher F&B attach .Improving attachment, experience scores rising.
RemodelsSignificant program underway; strong returns in prototypes .11 completed in Q3; Phase I double-digit growth; later waves mid–high single-digit; plan to plus-up marketing/training for Phase III; 44 completions expected FY-end .Returns validated; emphasis on execution boosting later waves.
Special EventsSubstantial growth in same-store sales; forward bookings significantly above prior year .Mid-single-digit growth y/y; deposits up low double digits; marketing and on-premise sales managers driving .Strength sustained; Q4 seasonally favorable.
Technology EnablementERP/HCM inventory systems rollout; investments ongoing .IT enhancements underpin loyalty, gaming, remodels; cost optimization and scalability highlighted .Foundation laid; productivity improvements targeted.
Macro & CalendarQ1 comps down 5.6%; complex macro . Q2 comps down 6.3% .Low-end consumer under pressure; Q3 calendar shift adverse; Q4 shift modest tailwind .External headwinds persist; calendar noise moderates.

Management Commentary

  • “Our fully programmed remodels continue to outperform the rest of the store base and we are excited for the opportunity these remodels give us to drive traffic, sales and EBITDA.” — Darin Harper, CFO .
  • “We fully onboarded a new marketing agency… implementing capabilities to better track and optimize the return on our digital marketing spend… spending dollars during the periods when they had the greatest impact.” — Darin Harper .
  • “Prior to this year, the company had not increased chip prices in more than 25 years… enhanced game system allows for granular store level price adjustments.” — Darin Harper .
  • “We completed 11 new fully programmed remodels… fully program remodels continue to demonstrate improved top line performance.” — Darin Harper .
  • “We expect fiscal 2024 adjusted EBITDA to be within a range of $505 million and $515 million.” — Darin Harper .
  • “The Board… has the utmost confidence in this management team and the company’s strategy.” — Kevin Sheehan, Interim CEO .

Q&A Highlights

  • CEO transition and strategy continuity: Sheehan emphasized unwavering commitment to the June 2023 Investor Day plan and criteria for a successor CEO focused on strategic vision, operational execution, and capital allocation .
  • FY guide construct: Q4 assumed similar performance to Q3 with modest improvements; guidance framed as conservative due to calendar/53-week noise; special events strength expected to be concentrated in coming weeks .
  • Calendar shift quantification: Q4 benefit estimated at half or less of Q3’s adverse effect; ~+$5M revenue cited vs $39M impact from the 53rd week in prior year .
  • Remodel ROI: Phase I double-digit sales uplift sustained; later waves mid–high single-digit with learnings prompting heavier marketing/training to optimize returns .
  • Marketing mix rebalancing: Over-rotation to digital will be corrected with linear TV to restore top-of-funnel; tests underway to refine targeting and spend allocation .
  • Macro backdrop: Low-end consumer softness persists (spend down ~2x vs higher-income cohorts), with regional trends broadly similar; weather/remodel construction contributed ~50–100 bps comp drag .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2025 EPS and Revenue was unavailable due to data access limits this cycle; as a result, beat/miss vs consensus cannot be determined. Future reports will anchor comparisons on S&P Global data when accessible.

Key Takeaways for Investors

  • The quarter’s softness was primarily mechanical and seasonal: calendar shift, weather, and remodel disruptions compounded macro pressure on low-end consumers; leverage dynamics compressed margins in the lowest seasonal quarter .
  • Management’s FY adjusted EBITDA guide ($505–$515M) and Q4 commentary suggest a conservative baseline with special events strength and incremental marketing improvements as near-term offsets; monitor execution on media mix and loyalty optimization .
  • Strategic pricing and attractions pipeline (e.g., Human Crane) enhance monetization and differentiation; store-level dynamic pricing is a structural capability likely to support margin over time .
  • Remodels remain a core capital allocation pillar; Phase I returns are robust, and enhanced marketing/training should lift subsequent cohorts—watch cadence decisions for FY 2025 and ROI trajectory .
  • Liquidity enlarged via refinancing (term loan due 2031; revolver upsized to $650M) and sale-leasebacks; leverage at 2.6x provides flexibility to fund growth and buybacks ($112M remaining authorization) .
  • Marketing overcorrection is being addressed; reintroducing linear TV for awareness and sharpening targeting around remodel markets should aid traffic recovery—track comp trends into Q4/Q1 .
  • CEO transition is a narrative overhang but Board emphasizes plan continuity; expect incremental disclosure on FY 2025 remodel cadence and marketing KPIs as catalysts for sentiment .

Appendix: Discrete Items and Context

  • Q3 discrete impacts included unfavorable calendar shift, changes in deferred entertainment revenue (breakage), and prior-year credits; company provided reconciliation showing net y/y changes in revenue and adjusted EBITDA after adjusting for these items .
  • Cash flow in Q3 reflected $(7.2)M operating outflow, capital additions of ~$131M, share repurchases of $28M, and liquidity of $546M (cash + revolver availability) .