Executive Summary

Q1 2025 revenue rose 9.0% year over year to $21.92M and increased 12.1% sequentially, driven by higher royalties and a $2.2M one-time leasing income from litigation settlement; revenue beat Wall Street consensus by ~$1.01M while diluted EPS of $2.71 was a slight miss versus the $2.74 consensus *.
Operating income expanded to $13.60M (vs. $12.77M in Q4 and $12.22M in Q1 2024), with SG&A up modestly year over year; net income increased to $9.96M (+12.9% YoY) .
The Board raised the quarterly dividend to $0.96/share (from $0.90), payable June 2, 2025, reinforcing capital return discipline amid a largely completed leasing portfolio run-off .
Management highlighted: “The run-off of our leasing portfolio announced in May of 2021 is substantially complete,” signaling future results will be less influenced by leasing items and more by core franchising economics .

What Went Well and What Went Wrong

What Went Well
- Revenue beat consensus, led by stronger royalties and a one-time leasing income settlement; total revenue $21.92M vs. $20.91M consensus *.
- Operating leverage: income from operations increased to $13.60M (+11.3% YoY), with interest expense lower year over year ($0.61M vs. $0.74M) .
- Strategic capital return: quarterly dividend increased to $0.96/share, reflecting confidence in cash generation .
- Quote: “The run-off of our leasing portfolio… is substantially complete,” positioning the model to rely more on recurring franchising royalties .
What Went Wrong
- EPS missed by $0.03 vs. consensus despite the litigation settlement benefit (diluted EPS $2.71 vs. $2.74 consensus), suggesting mix/tax rate or cost dynamics offset the top-line beat *.
- SG&A increased year over year ($7.43M vs. $6.82M), partially diluting incremental operating gains .
- Merchandise sales continued to decline year over year ($0.94M vs. $1.11M), consistent with the company’s longer-term shift away from direct merchandise activities .

Metric	Q1 2025 Actual	Q1 2025 Consensus	Surprise
Revenue ($USD)	$21.92M	$20.91M*	+$1.01M
Diluted EPS ($USD)	$2.71	$2.74*	-$0.03

Note: Values marked with an asterisk were retrieved from S&P Global.

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD)	$21.51M	$19.55M	$21.92M
Net Income ($USD)	$11.12M	$9.58M	$9.96M
Diluted EPS ($USD)	$3.03	$2.60	$2.71
Income from Operations ($USD)	$14.93M	$12.77M	$13.60M
SG&A ($USD)	$5.92M	$5.97M	$7.43M
Interest Expense ($USD)	$0.70M	$0.69M	$0.61M

Category	Q3 2024	Q4 2024	Q1 2025
Royalties ($USD)	$19.51M	$17.64M	$17.77M
Leasing Income ($USD)	$0.32M	$0.13M	$2.31M
Merchandise Sales ($USD)	$0.70M	$0.86M	$0.94M
Franchise Fees ($USD)	$0.45M	$0.36M	$0.33M
Other ($USD)	$0.53M	$0.55M	$0.56M
Total Revenue ($USD)	$21.51M	$19.55M	$21.92M

KPI	Q3 2024	Q4 2024	Q1 2025
Franchises in Operation	1,343	1,350	1,363
Awarded Not Open	82	79	79
Weighted Avg Diluted Shares	3,671,121	3,679,992	3,672,943
Net Cash from Ops (Quarter)	N/A	N/A	$15.08M

Q1 2025 notes: leasing income includes ~$2.2M from litigation settlement .

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend per Share	Q2 2025 payment (record 5/14; payable 6/2)	$0.90 (announced 1/29/2025)	$0.96 (announced 4/16/2025)	Raised

No revenue, margin, OpEx, OI&E, tax rate, or segment guidance was provided in Q1 materials; the company primarily communicates via press releases .

No Q1 2025 earnings call transcript was available in our document set; themes below reflect management press releases.

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Leasing Portfolio Run-off	Results impacted by decision to run-off portfolio	2024 results impacted by run-off	Run-off “substantially complete”; $2.2M settlement income	Winding down/completing
Franchise Footprint Growth	1,343 operating; 82 awarded-not-open	1,350 operating; 79 awarded-not-open	1,363 operating; 79 awarded-not-open	Expanding steadily
Capital Returns (Dividends/Special)	Regular dividend and $7.50 special dividend announced (paid Dec 2, 2024)	Year-end update; dividend cadence ongoing	Quarterly dividend raised to $0.96/share	Positive/commitment reinforced
Macro/Supply Chain/Tariffs	Not highlighted	Not highlighted	Not highlighted	Neutral/Not discussed
Technology/AI/R&D	Not highlighted	Not highlighted	Not highlighted	Neutral/Not discussed

Strategic message: “The run-off of our leasing portfolio announced in May of 2021 is substantially complete.” — Brett D. Heffes, Chair and CEO .
Capital return positioning: The Board approved raising the quarterly dividend to $0.96/share, underscoring confidence in cash flow and core franchising economics .
Brand and mission reminder: Winmark emphasizes sustainability and small business formation; franchising brands include Plato’s Closet, Once Upon A Child, Play It Again Sports, Style Encore, and Music Go Round .

No Q1 2025 earnings call transcript was available; the company communicated results and dividend changes via press releases .
Guidance clarifications were not provided beyond dividend policy updates .

Consensus comparison (S&P Global): Revenue beat by ~$1.01M ($21.92M vs. $20.91M); EPS missed by $0.03 ($2.71 vs. $2.74). Coverage is limited (one estimate each for EPS and revenue)*.
Implication: Given the one-time leasing income, the beat on revenue and near-in-line EPS suggest modest underlying strength in royalties but continuing cost normalization (higher SG&A) that could temper near-term EPS revisions toward flattish to slightly lower for Q2 if the one-time benefit rolls off *.

Note: Values marked with an asterisk were retrieved from S&P Global.

Core engine is royalties: sequential and year-over-year revenue growth was driven primarily by royalty strength; watch same-store dynamics and store openings as leading indicators .
One-time tailwind: $2.2M leasing income from litigation settlement boosted Q1; expect a reversion in leasing income going forward as run-off is “substantially complete” .
Capital returns remain robust: dividend lifted to $0.96/share, consistent with strong cash generation in Q1 ($15.08M operating cash flow) .
Cost watch: SG&A rose year over year; monitoring cost discipline is key to preserving operating margins as the leasing contribution fades .
Limited sell-side coverage: With only one estimate, consensus signals may be noisy; fundamental focus on royalties and unit growth is more informative for the medium-term thesis*.
Near-term trading lens: Revenue beat and dividend increase are supportive, but the EPS miss and one-time nature of leasing income may cap immediate upside absent further franchise acceleration *.
Medium-term thesis: As leasing run-off completes, the business should exhibit cleaner, recurring franchising-driven earnings and cash flows, supporting ongoing shareholder distributions and disciplined growth .