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PAPA JOHNS INTERNATIONAL INC (PZZA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered revenue growth and a clean beat vs consensus alongside returning North America to positive comps; adjusted EPS was $0.41 vs $0.34 consensus and revenue was $529.2M vs $516.1M consensus, driven by commissary strength and higher comparable sales .*
  • International momentum accelerated (comps +4%) and the company raised full‑year international comps guidance to +2% to +4% (from flat to +2%), while reiterating all other 2025 guidance metrics .
  • Margin compression reflected deliberate incremental marketing and loyalty investments (~$9M in Q2) and higher labor/food costs; EBITDA margin improved sequentially vs Q1 and commissary margins expanded 130 bps .*
  • Strategic catalysts: value-led barbell, pizza-focused innovation (Cheddar Crust, Shaq-a-Roni), loyalty acceleration (+2.7M accounts since Nov 2024), and Google Cloud AI partnership to personalize ordering and enhance digital experience .

What Went Well and What Went Wrong

What Went Well

  • Returned to positive North America comps (+1%) and strong International comps (+4%), with global system-wide sales up 4% (constant currency) and 45 net openings in the quarter .
  • Commissary strength (+$20.3M YoY) and system maturity drove top-line outperformance; North America commissary EBITDA margin reached 7.3% (+130 bps) on volume and pricing .
  • Management confidence and strategic execution: “second quarter results exceeded our expectations…strategy is working” and “on the right track to deliver significant, sustainable profitable growth” — Todd Penegor, CEO .

What Went Wrong

  • GAAP diluted EPS ($0.28) and adjusted EBITDA ($52.6M) declined YoY on higher G&A tied to incremental marketing/loyalty investments and higher incentive compensation, plus elevated food and labor costs at company-owned restaurants .
  • Domestic company-owned segment EBITDA softened (sequential margin pressures from labor, aggregator fees, advertising, and food cost inflation) despite average ticket growth offset .
  • Early Q3 commentary flagged a more cautious consumer and softer carryout to start the quarter, necessitating agile marketing and product checks and adjusts .

Financial Results

Income Statement, EPS, and Margins vs prior periods and estimates

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$530.8 $518.3 $529.2
Diluted EPS ($USD)$0.44 $0.27 $0.28
Adjusted Diluted EPS ($USD)$0.63 $0.36 $0.41
EBIT Margin %8.1%*5.2%*5.7%*
EBITDA Margin %11.2%*8.8%*9.2%*

Values retrieved from S&P Global for margin metrics (*).

Actual vs S&P Global Consensus (Beat/Miss)

MetricQ1 2025Q2 2025
Revenue Actual ($USD Millions)$518.3 $529.2
Revenue Consensus Mean ($USD Millions)$514.0*$516.1*
EPS Actual ($USD) (Adjusted)$0.36 $0.41
Primary EPS Consensus Mean ($USD)$0.346*$0.340*
SurpriseRev: +$4.3M; EPS: +$0.01*Rev: +$13.1M; EPS: +$0.07*

Values retrieved from S&P Global for consensus metrics (*).

Segment Breakdown (Revenue and Adjusted EBITDA)

SegmentQ2 2024 Revenue ($USD Millions)Q2 2025 Revenue ($USD Millions)Q2 2024 Adjusted EBITDA ($USD Millions)Q2 2025 Adjusted EBITDA ($USD Millions)
Domestic Company-owned Restaurants$173.2 $175.8 $13.5 $9.9
North America Franchising$34.4 $35.4 $27.2 $26.8
North America Commissaries$198.2 $214.8 $15.0 $19.7
International$46.5 $44.2 $3.7 $5.6

KPIs and Operating Metrics

KPIQ4 2024Q1 2025Q2 2025
North America Comparable Sales YoY-4% -3% +1%
International Comparable Sales YoY+2% +3% +4%
Global System-wide Sales ($USD Billions)$1.23 $1.22 $1.26
Global System-wide Sales Growth (c.c.)-7.9% (53rd week impact) +1% +4%
Net Restaurants (Period End)6,030 6,019 5,989
Free Cash Flow ($USD Millions)$34.1 (FY 2024) $19.1 (Q1) $36.5 (6M YTD)
Dividend per Share Declared$0.46 (Q1 2025 payable Feb 21) $0.46 (Q2 payable May 30) $0.46 (Q3 payable Aug 29)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
System-wide Sales GrowthFY 2025+2% to +5% +2% to +5% Maintained
North America Comparable SalesFY 2025Flat to +2% Flat to +2% Maintained
International Comparable SalesFY 2025Flat to +2% +2% to +4% Raised
Adjusted EBITDAFY 2025$200M–$220M $200M–$220M Maintained
Depreciation & AmortizationFY 2025$70M–$75M $70M–$75M Maintained
Net Interest ExpenseFY 2025$40M–$45M $40M–$45M Maintained
Effective Tax RateFY 202528%–32% 28%–32% Maintained
Capital ExpendituresFY 2025$75M–$85M $75M–$85M Maintained
Dividend per ShareQ3 2025$0.46 (Q2) $0.46 declared for Q3 Maintained

CFO also noted incremental Q3 marketing spend of ~$5M–$7M vs prior year and diluted shares ~33M in H2 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesEmphasis on enhancing digital/loyalty experiences Strategic investments in marketing & technology driving early momentum Google Cloud partnership to enable AI personalization, voice AI, omnichannel app; 70% of sales via own digital channels Accelerating
Supply chain optimizationNot highlighted—Identified >$50M total cost savings; ~40% realized in 2026; target ≥100 bps restaurant margin lift by 2028 Initiated, building
Value barbell & product focusReset to pizza core; comps downSequential comp improvement; value messaging Cheddar Crust, Shaq‑a‑Roni, Garlic Five Cheese; shareable pizza format & dipping sauces pipeline Strengthening
Loyalty & CRMEnhance digital/loyaltyContinued investments; sequential improvement +2.7M loyalty accounts since Nov 2024; faster repeats; deeper personalization Improving
Delivery/aggregators——Aggregator orders up high‑teens YoY; delivery tracking rollout to ~60% of restaurants, substantial completion by 2026 Improving service/penetration
Regional trends (UK)UK repositioning and closures/refranchising International comps +3% UK accelerating, outperformed intl in July; improved brand scores, delivery times Positive trajectory
Macro/tariffsForward‑looking risks noted —Early Q3 North America comps −1% through five weeks; softer carryout, competitive intensity Mixed near term

Management Commentary

  • “Returned to comparable sales growth in North America and achieved strong sales growth internationally, driven by transaction gains…focus on our core pizza business.” — Todd Penegor, CEO .
  • “We invested approximately $9 million in incremental marketing versus last year… targeted approach is paying off as brand health and consumer consideration improved.” — Todd Penegor .
  • “North America commissary segment adjusted EBITDA margins were 7.3%… improvement of 130 basis points reflecting higher volumes and pricing.” — Ravi Thanawala, CFO .
  • “Opportunity to achieve more than $50 million in total cost savings… ~40% expected in 2026… plan to deliver margin improvement of at least one percentage point to our average North American restaurant by 2028.” — Todd Penegor .
  • “Partnership with Google Cloud… enhance ordering experience, anticipate needs, and share relevant offers based on preferences.” — Todd Penegor / Company release .

Q&A Highlights

  • Marketing/local heavy‑ups: Early testing of local co‑op strategies aims to improve frequency; learnings will inform allocation and ROI optimization .
  • Innovation cadence: Near‑term newsflow includes Garlic Five Cheese and shareable pizza with sauces; “Grand Papa” (largest pizza ever) in test; broader innovation pipeline rebuild to hit stride in 2026 .
  • Carryout dynamics: Softer start to Q3; management attributes to messaging and local execution; confident in quick check‑and‑adjust with loyalty/CRM tools .
  • Refranchising: Sale of JV stake in 85 restaurants (Mid‑Atlantic) to a well‑capitalized franchisee focused on transactions; expected negligible net income impact; development commitments part of future deals .
  • Loyalty/app conversion: +2.7M new accounts; faster repeats and higher engagement; app conversion up “a couple hundred bps” over the last year through UX updates; deeper personalization underway .

Estimates Context

  • Q2 2025 delivered beats on both revenue ($529.2M vs $516.1M) and adjusted EPS ($0.41 vs $0.34), reflecting commissary growth, higher comps, and strategic marketing/loyalty investments driving transactions despite margin pressure .*
  • Q1 2025 also beat consensus (Revenue $518.3M vs $514.0M; Adj EPS $0.36 vs $0.35), indicating early momentum in the transformation .*
  • Implication: Street models likely need higher revenue run-rate for 2H (particularly International), while margin trajectories should reflect continued investment in Q3 and commodity deflation tailwinds in 2H, plus supply chain savings ramp in 2026 .

Values retrieved from S&P Global for consensus comparisons (*).

Key Takeaways for Investors

  • Top-line momentum is improving: sequential revenue growth and comps inflection in North America supported by pizza-focused innovation and loyalty/CRM investments .
  • International upgrade: raised FY comps to +2%–4%; UK transformation and broader MEA momentum suggest durable International contribution in 2H .
  • Margin outlook: near-term pressure from incremental marketing/loyalty (Q2 ~$9M; Q3 +$5M–$7M YoY) but 2H benefits from commodity deflation and continued commissary margin improvement; multi‑year supply chain savings (> $50M) underpin FY26+ margin expansion .
  • Digital/AI differentiation: Google Cloud partnership and loyalty personalization should increase conversion/frequency; delivery tracking rollout addresses service gaps; aggregator channel growth high‑teens supports transaction share .
  • Capital allocation disciplined: dividend maintained at $0.46/share and refranchising to strategy‑forward franchisees with limited net income impact; ample liquidity (~$500M) and gross leverage ~3.4x provide flexibility .
  • Near-term trading lens: Q3 start softness and competitive intensity require tactical agility; expect increased marketing and innovation cadence to drive sequential comp acceleration into Q4 as guided .
  • Medium-term thesis: Brand repositioning to core pizza, improved customer experience, structural supply chain productivity, and international recovery create a path to sustainable growth and margin expansion into 2026+ .
S&P Global disclaimer: Consensus estimates and margin metrics marked with * were retrieved from S&P Global.

Document sources: Q2 2025 8-K and press release **[901491_0001628280-25-038567_pzza-62925xpressrelease.htm:0]** **[901491_0001628280-25-038567_pzza-62925xpressrelease.htm:1]** **[901491_0001628280-25-038567_pzza-62925xpressrelease.htm:3]** **[901491_0001628280-25-038567_pzza-62925xpressrelease.htm:4]** **[901491_0001628280-25-038567_pzza-62925xpressrelease.htm:8]** **[901491_85045d42dbb14cd690df379d6a03ea74_0]** **[901491_85045d42dbb14cd690df379d6a03ea74_1]** **[901491_85045d42dbb14cd690df379d6a03ea74_3]** **[901491_85045d42dbb14cd690df379d6a03ea74_4]** **[901491_85045d42dbb14cd690df379d6a03ea74_5]**; Q2 2025 earnings call **[901491_2062817_6]** **[901491_2062817_7]** **[901491_2062817_10]** **[901491_2062817_11]** **[901491_2062817_14]** **[901491_2062817_15]** **[901491_2062817_18]**; Q1 2025 press release **[901491_fafb17ec6ee54347b4e63e42409fd3f0_0]** **[901491_fafb17ec6ee54347b4e63e42409fd3f0_1]** **[901491_fafb17ec6ee54347b4e63e42409fd3f0_2]** **[901491_fafb17ec6ee54347b4e63e42409fd3f0_3]** **[901491_fafb17ec6ee54347b4e63e42409fd3f0_4]**; Q4 2024 press release **[901491_1f6c539c3af145dc9de241a51f2a3dcd_0]** **[901491_1f6c539c3af145dc9de241a51f2a3dcd_1]** **[901491_1f6c539c3af145dc9de241a51f2a3dcd_2]** **[901491_1f6c539c3af145dc9de241a51f2a3dcd_6]**; Google Cloud AI partnership **[901491_20250403SF56517:0]** **[901491_20250403SF56517:1]**.