Dave & Buster’s Entertainment Q2 Earnings Call Highlights

• PLAY
  +4.05%

Key Points

• Interested in Dave & Buster’s Entertainment, Inc.? Here are five stocks we like better.

• Second-quarter performance weakened, but trends improved: Revenue fell to $544.1 million, the company posted a $12.5 million net loss, and adjusted EBITDA declined 18.2% to $98.9 million. Same-store sales improved from a 5.4% decline in Q1 to 2.9% in Q2 and 1.6% in July.

• Food and beverage and events provided bright spots: Food-and-beverage comparable sales rose 7.6% for the fifth consecutive quarter, while special-events sales increased for the seventh straight quarter. Management is emphasizing targeted occasions, sports viewing, value, simplified game pricing and new attractions to rebuild traffic.

• Cost and capital discipline are increasing: Adjusted free cash flow turned positive at $19.5 million, net capital expenditures fell to $127.6 million, and management identified $15 million in savings over the next 12 months, with potential for at least twice that amount. The company expects fiscal 2026 capital spending below $200 million while continuing selective store openings and remodels.

• Dave & Buster’s Q1 Miss Raises the Stakes for Its Turnaround Plan

Dave & Buster’s Entertainment (NASDAQ:PLAY) reported lower second-quarter revenue and earnings but said same-store sales trends improved during July and the early weeks of its third quarter as the company pursues a “back-to-basics” strategy centered on traffic, value and store execution.

Revenue for the second quarter was $544.1 million, down from $557.4 million a year earlier. Company-wide same-store sales declined 2.9%, an improvement from the 5.4% decline reported in the first quarter. Interim CFO Cory Hatton said sales trends improved further in July, when same-store sales were down 1.6%, compared with a 5% decline in June.

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• Why Dave & Buster’s Stock Is Ripping Higher Despite Ugly Earnings

The company recorded a GAAP net loss of $12.5 million, or $0.36 per diluted share, compared with net income of $11.4 million, or $0.32 per diluted share, in the prior-year period. Adjusted EBITDA declined to $98.9 million, representing an 18.2% margin, from $129.7 million and a 23.3% margin a year earlier.

Food and beverage growth offsets some entertainment weakness

CEO Darin Harper said the company’s food-and-beverage comparable sales rose 7.6% in the second quarter, marking its fifth consecutive quarter of growth in that category. Special-events sales have increased for seven straight quarters, he added.