Domino’s Pizza(DPZ) - 2026 Q3 - Quarterly Results

Executive Summary & Business Highlights This section provides an overview of Domino's strong third-quarter 2025 financial performance and strategic achievements, highlighting key operational and financial metrics Third Quarter 2025 Overview Domino's Pizza announced strong financial results for the third quarter of 2025, with significant global retail sales growth, positive U.S. same-store sales, and an increase in income from operations Third Quarter 2025 Key Highlights | Metric | Value | | :------------------------------------------------ | :------ | | Global retail sales growth (excluding foreign currency impact) | 6.3% | | U.S. same store sales growth | 5.2% | | International same store sales growth (excluding foreign currency impact) | 1.7% | | Global net store growth | 214 | | Income from operations increase | 12.2% | CEO Commentary CEO Russell Weiner highlighted the successful execution of the 'Hungry for MORE' strategy, driving positive order counts in the U.S. and strong growth in both delivery and carryout, expressing confidence in continued market share gains - The 'Hungry for MORE' strategy is successfully driving positive order counts in the U.S. through promotions like 'Best Deal Ever' and product innovation such as stuffed crust pizza[2] - The company achieved strong growth in both delivery and carryout businesses in the U.S. during the third quarter[2] - Management is confident in continuing to gain QSR pizza market share globally in 2025 and beyond, leveraging tools for long-term value creation for franchisees and shareholders[2] Operational Performance This section details Domino's global retail sales, same-store sales growth, and net store expansion, showcasing robust performance across U.S. and international markets Global Retail Sales and Same Store Sales Growth Domino's reported robust global retail sales and same-store sales growth for both the third quarter and the three fiscal quarters of 2025, with U.S. performance notably strong Global Retail Sales (in millions of U.S. dollars) | Metric | Third Quarter 2025 | Third Quarter 2024 | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | | :------------------ | :----------------- | :----------------- | :------------------------- | :------------------------- | | U.S. stores | $2,320.4 | $2,168.4 | $6,896.8 | $6,602.5 | | International stores | $2,375.8 | $2,223.6 | $6,933.5 | $6,581.9 | | Total | $4,696.2 | $4,392.0 | $13,830.3 | $13,184.4 | Global Retail Sales Growth (versus prior year period, excluding foreign currency impact) | Metric | Third Quarter 2025 | Third Quarter 2024 | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | | :------------------ | :----------------- | :----------------- | :------------------------- | :------------------------- | | U.S. stores | +7.0% | +5.1% | +4.5% | +6.6% | | International stores | +5.7% | +5.1% | +6.6% | +6.5% | | Total | +6.3% | +5.1% | +5.5% | +6.5% | Same Store Sales Growth (versus prior year period) | Metric | Third Quarter 2025 | Third Quarter 2024 | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | | :------------------------------------------ | :----------------- | :----------------- | :------------------------- | :------------------------- | | U.S. Company-owned stores | +3.4% | +3.1% | +1.0% | +5.4% | | U.S. franchise stores | +5.3% | +3.0% | +2.7% | +4.4% | | U.S. stores | +5.2% | +3.0% | +2.7% | +4.5% | | International stores (excluding foreign currency impact) | +1.7% | +0.8% | +2.5% | +1.1% | Store Growth Domino's achieved significant global net store growth in Q3 2025, adding 214 stores worldwide, with a substantial portion from international markets Third Quarter 2025 Store Counts | Metric | U.S. Company-owned Stores | U.S. Franchise Stores | Total U.S. Stores | International Stores | Total | | :-------------------------- | :------------------------ | :-------------------- | :---------------- | :------------------- | :------ | | Store count at June 15, 2025 | 258 | 6,803 | 7,061 | 14,475 | 21,536 | | Openings | 2 | 28 | 30 | 220 | 250 | | Closings | — | (1) | (1) | (35) | (36) | | Store count at September 7, 2025 | 260 | 6,830 | 7,090 | 14,660 | 21,750 | | Third quarter 2025 net store growth | 2 | 27 | 29 | 185 | 214 | | Trailing four quarters net store growth | 3 | 157 | 160 | 588 | 748 | Financial Performance This section analyzes Domino's consolidated revenues, gross margins, income from operations, net income, earnings per share, and cash flow, detailing key financial drivers and capital allocation strategies Consolidated Revenues and Gross Margins Total revenues increased by 6.2% in Q3 2025, driven by higher supply chain revenues and U.S. franchise royalties. Supply chain gross margin improved due to procurement productivity, while U.S. Company-owned store gross margin slightly decreased Total Revenues and Gross Margins | Metric | Third Quarter 2025 | Third Quarter 2024 | Change (%) | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | Change (%) | | :-------------------------- | :----------------- | :----------------- | :--------- | :------------------------- | :------------------------- | :--------- | | Total revenues | $1,147.1M | $1,080.1M | +6.2% | $3,404.3M | $3,262.5M | +4.3% | | U.S. Company-owned store gross margin | 16.3% | 16.8% | (0.5) pp | 16.0% | 17.3% | (1.3) pp | | Supply chain gross margin | 11.3% | 10.6% | +0.7 pp | 11.6% | 11.0% | +0.6 pp | - The increase in supply chain revenues was primarily due to higher order volumes and a 3.3% increase in food basket pricing to stores[5] - U.S. Company-owned store gross margin decreased due to increased food basket pricing and higher wage rates, partially offset by higher sales leverage[5] Income from Operations and Net Income Income from operations increased significantly in Q3 2025, primarily driven by higher U.S. franchise royalties and supply chain gross margin. However, net income decreased due to an unfavorable change in unrealized losses on DPC Dash Ltd. investment and a higher effective tax rate Income from Operations and Net Income | Metric | Third Quarter 2025 | Third Quarter 2024 | Change (%) | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | Change (%) | | :-------------------- | :----------------- | :----------------- | :--------- | :------------------------- | :------------------------- | :--------- | | Income from operations | $223.2M | $198.8M | +12.2% | $658.3M | $605.3M | +8.7% | | Net income | $139.3M | $146.9M | (5.2)% | $420.1M | $414.7M | +1.3% | - The decrease in net income was primarily due to a $29.2 million unfavorable change in pre-tax unrealized losses and gains associated with the investment in DPC Dash Ltd[10] - The effective tax rate increased to 22.3% in Q3 2025 from 20.4% in Q3 2024, contributing to a $2.2 million increase in the provision for income taxes[10] Earnings Per Share (EPS) Diluted EPS decreased in Q3 2025 compared to the prior year, primarily due to lower net income, partially offset by a reduced weighted average diluted share count from share repurchases Diluted Earnings Per Share | Metric | Third Quarter 2025 | Third Quarter 2024 | Change (%) | Three Fiscal Quarters 2025 | Three Fiscal Quarters 2024 | Change (%) | | :------------------ | :----------------- | :----------------- | :--------- | :------------------------- | :------------------------- | :--------- | | Diluted earnings per share | $4.08 | $4.19 | (2.6)% | $12.22 | $11.80 | +3.6% | - The decrease in diluted EPS for Q3 2025 was driven by lower net income, partially mitigated by a lower weighted average diluted share count due to share repurchases[10] Cash Flow and Capital Allocation Domino's demonstrated strong cash flow generation, with significant increases in operating and free cash flow, alongside continued capital returns to shareholders through dividends and share repurchases Operating and Free Cash Flow Net cash provided by operating activities and free cash flow saw substantial increases for the three fiscal quarters of 2025, driven by positive changes in operating assets and liabilities, higher net income, and lower capital expenditures Cash Flow Summary (Three Fiscal Quarters) | Metric | 2025 | 2024 | Change (%) | | :-------------------------------- | :--------- | :--------- | :--------- | | Net cash provided by operating activities | $552.3M | $446.9M | +23.6% | | Capital expenditures | ($56.7M) | ($70.8M) | (19.9)% | | Free cash flow | $495.6M | $376.1M | +31.8% | - The increase in free cash flow was a result of the positive impact of changes in operating assets and liabilities, higher net income excluding non-cash operating activities, timing of advertising activities, and lower investments in capital expenditures[10] Quarterly Dividend The Board of Directors declared a quarterly dividend of $1.74 per share subsequent to the third quarter - A quarterly dividend of $1.74 per share was declared on October 7, 2025, for shareholders of record as of December 15, 2025, to be paid on December 26, 2025[6] Share Repurchases The company continued its share repurchase program, buying back shares in Q3 and year-to-date, with a substantial amount remaining authorized Share Repurchase Activity | Period | Shares Repurchased | Total Value | | :---------------------- | :----------------- | :------------ | | Third Quarter 2025 | 165,778 | $74.7 million | | Three Fiscal Quarters 2025 | 596,754 | $274.7 million | - As of September 7, 2025, the Company had a remaining authorized amount for share repurchases of $539.7 million[7] Debt and Capital Structure This section outlines Domino's recent refinancing activities and leverage ratio, demonstrating its approach to managing debt and maintaining a stable capital structure 2025 Refinancing Domino's completed a $1.00 billion refinancing transaction in September 2025, issuing new fixed-rate senior secured notes to repay existing debt and prefund interest, along with establishing a new variable funding note facility - On September 5, 2025, the Company completed a $1.00 billion refinancing, issuing $500.0 million of 4.930% fixed rate senior secured notes (five-year term) and $500.0 million of 5.217% fixed rate senior secured notes (seven-year term)[8] - Proceeds from the new notes and $160.0 million of unrestricted cash were used to repay $742.0 million of 2015 notes and $402.7 million of 2018 notes, prefund interest, and capitalize financing costs[9] - A new $320.0 million variable funding note facility was issued, replacing previous facilities, and was undrawn at closing[9] Leverage Ratio The company's leverage ratio improved to 4.5x in Q3 2025 from 4.9x in Q3 2024, falling within its historical operating range of four to six times Leverage Ratio | Metric | September 7, 2025 | September 8, 2024 | | :------------ | :------------------ | :------------------ | | Leverage ratio | 4.5x | 4.9x | - The leverage ratio is calculated as securitized debt related to fixed-rate notes and variable funding notes, divided by Consolidated Adjusted EBITDA on a trailing four quarters basis[19] - Domino's historically operates with a leverage ratio between four and six times[19] Non-GAAP Financial Measures and Statistical Definitions This section defines key non-GAAP financial measures and statistical metrics used by Domino's to analyze performance and communicate with investors Definitions of Key Metrics This section provides definitions for various non-GAAP financial measures and statistical metrics used by Domino's to analyze performance and communicate with investors, including global retail sales, same store sales growth, net store growth, food basket pricing change, free cash flow, income from operations excluding foreign currency impact, Consolidated Adjusted EBITDA, and leverage ratio - Global retail sales refer to total worldwide retail sales at Company-owned and franchise stores, used to analyze revenues and assess business trends[12] - Same store sales growth is calculated by including retail sales from stores that had sales in comparable weeks of both periods, with international growth reported excluding foreign currency impacts[13] - Free cash flow is defined as net cash provided by operating activities less capital expenditures, indicating cash available for working capital, debt repayment, acquisitions, share repurchases, or dividends[16] - Consolidated Adjusted EBITDA is calculated as Segment Income less unallocated corporate administrative costs, used for business objectives, long-range planning, and evaluating total Company operating performance[18] Company Information & Forward-Looking Statements This section provides an overview of Domino's company profile and includes a safe harbor statement regarding forward-looking information and associated risks Conference Call and Company Profile Domino's Pizza, founded in 1960, is the world's largest pizza company with over 21,700 stores globally, primarily operated by independent franchisees, and a strong digital sales presence in the U.S - Domino's Pizza is the largest pizza company globally, with over 21,700 stores in more than 90 markets[23] - The company's system is comprised of independent franchise owners, accounting for 99% of stores as of the end of Q3 2025[23] - In 2024, over 85% of U.S. retail sales were generated via digital channels, supported by innovative ordering platforms[23] Safe Harbor Statement This section provides a safe harbor statement for forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially from expectations, advising caution against undue reliance - The press release contains forward-looking statements based on current management expectations, subject to substantial risks and uncertainties[25] - Important factors that could cause actual results to differ materially are described in SEC filings, including the 'Risk Factors' section of the Annual Report on Form 10-K[25] - Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of the press release[25] Condensed Consolidated Financial Statements This section presents Domino's unaudited condensed consolidated statements of income, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Income (Quarterly) The unaudited condensed consolidated statements of income for the fiscal quarter ended September 7, 2025, show total revenues of $1,147.1 million and net income of $139.3 million, with diluted EPS of $4.08 Condensed Consolidated Statements of Income (Fiscal Quarter Ended September 7, 2025 vs. September 8, 2024) | (In thousands) | September 7, 2025 | % of Total Revenues | September 8, 2024 | % of Total Revenues | | :---------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total revenues | $1,147,054 | 100.0% | $1,080,119 | 100.0% | | Total cost of sales | $687,152 | 59.9% | $656,372 | 60.8% | | Gross margin | $459,902 | 40.1% | $423,747 | 39.2% | | Income from operations | $223,168 | 19.5% | $198,831 | 18.4% | | Net income | $139,319 | 12.1% | $146,924 | 13.6% | | Diluted earnings per share | $4.08 | | $4.19 | | Condensed Consolidated Statements of Income (Year-to-Date) For the three fiscal quarters ended September 7, 2025, total revenues reached $3,404.3 million, with net income of $420.1 million and diluted EPS of $12.22 Condensed Consolidated Statements of Income (Three Fiscal Quarters Ended September 7, 2025 vs. September 8, 2024) | (In thousands) | September 7, 2025 | % of Total Revenues | September 8, 2024 | % of Total Revenues | | :---------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Total revenues | $3,404,254 | 100.0% | $3,262,502 | 100.0% | | Total cost of sales | $2,040,235 | 59.9% | $1,979,854 | 60.7% | | Gross margin | $1,364,019 | 40.1% | $1,282,648 | 39.3% | | Income from operations | $658,307 | 19.3% | $605,347 | 18.6% | | Net income | $420,061 | 12.3% | $414,726 | 12.7% | | Diluted earnings per share | $12.22 | | $11.80 | | Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheet as of September 7, 2025, shows total assets of $1,660.3 million and a total stockholders' deficit of ($3,962.0) million Condensed Consolidated Balance Sheets (as of September 7, 2025 vs. December 29, 2024) | (In thousands) | September 7, 2025 | December 29, 2024 | | :---------------------------------- | :------------------ | :------------------ | | Total current assets | $867,734 | $905,278 | | Total assets | $1,660,277 | $1,737,013 | | Total current liabilities | $539,153 | $1,612,462 | | Total long-term liabilities | $5,083,083 | $4,086,842 | | Total stockholders' deficit | ($3,961,959) | ($3,962,291) | | Total liabilities and stockholders' deficit | $1,660,277 | $1,737,013 | Condensed Consolidated Statements of Cash Flows For the three fiscal quarters ended September 7, 2025, net cash provided by operating activities was $552.3 million, while net cash used in investing activities was $6.1 million and net cash used in financing activities was $558.2 million Condensed Consolidated Statements of Cash Flows (Three Fiscal Quarters Ended September 7, 2025 vs. September 8, 2024) | (In thousands) | September 7, 2025 | September 8, 2024 | | :---------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $552,256 | $446,879 | | Net cash used in investing activities | ($6,063) | ($71,895) | | Net cash used in financing activities | ($558,241) | ($312,998) | | Change in cash and cash equivalents, restricted cash and cash equivalents | ($10,561) | $61,397 | | Cash and cash equivalents, end of period | $139,728 | $189,084 |