Topgolf Callaway’s third quarter was marked by positive momentum in both its Golf Equipment and Topgolf segments, reflecting management’s focus on value-driven initiatives and operational execution. Management credited the strong consumer response to Topgolf’s new value offerings and sustained demand in its Golf Equipment business as key drivers. CEO Chip Brewer noted, “Traffic has been up mid to high teens candidly. And so we're winning share and I couldn't be more pleased with the reaction.” Incremental tariffs remained a headwind, but cost initiatives and resilient demand underpinned results, leading to an upbeat market response.
Is now the time to buy MODG? Find out in our full research report (it’s free for active Edge members).
Topgolf Callaway (MODG) Q3 CY2025 Highlights:
- Revenue: $934 million vs analyst estimates of $913.2 million (7.8% year-on-year decline, 2.3% beat)
- Adjusted EPS: -$0.05 vs analyst estimates of -$0.22 (76.9% beat)
- Adjusted EBITDA: $114.4 million vs analyst estimates of $87.63 million (12.2% margin, 30.5% beat)
- Revenue Guidance for Q4 CY2025 is $783 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $500 million at the midpoint, above analyst estimates of $468.1 million
- Operating Margin: 3%, in line with the same quarter last year
- Market Capitalization: $1.95 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Topgolf Callaway’s Q3 Earnings Call
- Eric Wold (Texas Capital Securities) asked about pricing power in Golf Equipment to offset tariff pressure. CEO Chip Brewer responded that pricing will be considered for new products, depending on differentiation and market conditions, but no definitive path is set yet.
- Simeon Gutman (Morgan Stanley) inquired about consumer sell-through trends and their implications for next year’s launches. Brewer explained that consumer engagement remained robust in Q3 and that retail sell-through outpaced sell-in, creating a healthy channel inventory position.
- Matthew Boss (JPMorgan) probed the details behind the positive inflection in Topgolf’s same venue sales. Brewer highlighted that value initiatives and increased traffic in key segments were the primary drivers, with trends in October tracking similar to Q3.
- Arpine Kocharyan (UBS) asked for clarity on Topgolf’s same venue growth outlook and the balance of volume versus pricing strategies. Brewer indicated ongoing value initiatives and digital investments are expected to sustain growth, with 1- to 2-bay traffic as the main lever, while pricing actions remain under evaluation.
- Anna Glaessgen (B. Riley Securities) questioned visitor composition and frequency trends at Topgolf venues. Brewer noted that the uptick in traffic is split between new and repeat visitors, with frequency data still too early to assess but showing positive consumer behavior.
Catalysts in Upcoming Quarters
Going forward, our team will be closely monitoring (1) the pace at which Topgolf’s value and digital initiatives translate into higher visit frequency and average spend, (2) the effectiveness of cost management efforts as tariffs rise further, and (3) the progress of Topgolf’s separation process, including leadership transitions. New product launches and venue openings will also serve as indicators of sustained demand and execution.
Topgolf Callaway currently trades at $10.79, up from $9.27 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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