Sweetgreen(SG) - 2023 Q4 - Annual Results

Sweetgreen, Inc. Announces Fourth Quarter and Fiscal Year 2023 Financial Results Sweetgreen reported strong Q4 and FY2023 financial results, showing significant revenue growth and improved profitability Fourth Quarter 2023 Financial Highlights In the fourth quarter of 2023, Sweetgreen's total revenue increased by 29% year-over-year to $153.0 million, driven by a 6% rise in same-store sales, significantly improving profitability by narrowing its net loss to $(27.4) million and increasing its Restaurant-Level Profit Margin to 16% from 11% Q4 2023 vs. Q4 2022 Key Financial Metrics | Metric | Q4 2023 (Millions USD) | Q4 2022 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $153.0 | $118.6 | +29% | | Same-Store Sales Change | 6% | 4% | +2 p.p. | | Restaurant-Level Profit | $24.8 | $12.8 | +93.8% | | Restaurant-Level Profit Margin | 16% | 11% | +5 p.p. | | Net Loss | $(27.4) | $(49.3) | Improved | | Adjusted EBITDA | $(1.8) | $(17.9) | Improved | - The company opened 1 net new restaurant in Q4 2023, compared to 10 in the same period last year[3] - Total Digital Revenue Percentage was 58% and Owned Digital Revenue Percentage was 34%, down from 61% and 40% respectively in the prior year period[3] Full Year Fiscal 2023 Financial Highlights For the full fiscal year 2023, total revenue grew by 24% to $584.0 million, with profitability metrics showing substantial improvement as net loss reduced to $(113.4) million and Adjusted EBITDA neared breakeven at $(2.8) million Fiscal Year 2023 vs. 2022 Key Financial Metrics | Metric | Fiscal Year 2023 (Millions USD) | Fiscal Year 2022 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $584.0 | $470.1 | +24% | | Same-Store Sales Change | 4% | 13% | -9 p.p. | | Restaurant-Level Profit | $101.9 | $69.3 | +47.0% | | Restaurant-Level Profit Margin | 17% | 15% | +2 p.p. | | Net Loss | $(113.4) | $(190.4) | Improved | | Adjusted EBITDA | $(2.8) | $(49.9) | Improved | | Net New Restaurant Openings | 35 | 36 | -1 | - Average Unit Volume (AUV) remained consistent with the prior year at $2.9 million[3] Management Commentary and Operational Review Management highlights strong 2023 performance, driven by operational improvements and strategic initiatives, focusing on future profitability CEO Commentary and Q4 Performance Details Management highlighted 2023 as a strong year of high growth and significant operating leverage, with a 500 basis point expansion in restaurant-level profit margins, driven by 29% Q4 revenue growth and a $6.4 million reduction in stock-based compensation - CEO Jonathan Neman stated that the company's guidance calls for Adjusted EBITDA profitability in 2024, with a focus on menu innovation, restaurant operations, and the Infinite Kitchen to drive traffic[4] - Q4 2023 revenue growth of 29% was primarily due to 45 net new restaurant openings since Q4 2022 and a 6% same-store sales increase[5] - Restaurant-Level Profit Margin increased by over 500 basis points in Q4 2023 versus the prior year, attributed to menu price increases, labor optimization, and improved supply chain sourcing[6] - General and administrative expense decreased to 23% of revenue in Q4 2023 from 37% in Q4 2022, largely due to a $6.4 million decrease in stock-based compensation expense[7] 2024 Outlook The company provides its 2024 financial outlook, projecting continued revenue growth and a path to Adjusted EBITDA profitability Full Year 2024 Outlook For the full fiscal year 2024, Sweetgreen anticipates achieving positive Adjusted EBITDA between $8 million and $15 million, planning 23-27 net new restaurants and projecting revenue in the range of $655 million to $670 million Fiscal Year 2024 Guidance | Metric | Guidance Range (Millions USD) | | :--- | :--- | | Net New Restaurant Openings | 23 - 27 | | Revenue | $655 - $670 | | Same-Store Sales Change | 3% - 5% | | Restaurant-Level Profit Margin | 18.0% - 19.5% | | Adjusted EBITDA | $8 - $15 | First Quarter 2024 Outlook For the first quarter of 2024, the company forecasts revenue between $150 million and $154 million and a same-store sales increase of approximately 3%, with an Adjusted EBITDA loss of $(2) million to $(4) million expected First Quarter 2024 Guidance | Metric | Guidance Range (Millions USD) | | :--- | :--- | | Net New Restaurant Openings | 5 - 6 | | Revenue | $150 - $154 | | Same-Store Sales Change | ~3% | | Restaurant-Level Profit Margin | 16% - 17% | | Adjusted EBITDA | $(4) - $(2) | Financial Statements This section presents the company's condensed consolidated financial statements, including operations, balance sheet, and cash flow data Condensed Consolidated Statements of Operations The statements of operations for Q4 and fiscal year 2023 show year-over-year revenue growth and significant reductions in operating and net losses, with full-year revenue increasing 24% to $584.0 million and net loss improving to $(113.4) million Q4 Statement of Operations Highlights (in thousands) | Account | Q4 2023 (Thousands USD) | Q4 2022 (Thousands USD) | | :--- | :--- | :--- | | Revenue | $153,026 | $118,570 | | Loss from operations | $(29,289) | $(47,711) | | Net loss | $(27,414) | $(49,258) | | Net loss per share | $(0.24) | $(0.44) | Full Year Statement of Operations Highlights (in thousands) | Account | FY 2023 (Thousands USD) | FY 2022 (Thousands USD) | | :--- | :--- | :--- | | Revenue | $584,041 | $470,105 | | Loss from operations | $(122,344) | $(193,337) | | Net loss | $(113,384) | $(190,441) | | Net loss per share | $(1.01) | $(1.73) | Selected Balance Sheet, Cash Flow and Operating Data As of December 31, 2023, Sweetgreen held $257.2 million in cash and cash equivalents, demonstrating a significant turnaround by generating $26.5 million in cash from operations in 2023, while key operating metrics like AUV remained stable Selected Balance Sheet Data (in thousands) | Account | Dec 31, 2023 (Thousands USD) | Dec 25, 2022 (Thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $257,230 | $331,614 | | Total assets | $856,557 | $908,935 | | Total liabilities | $373,960 | $367,709 | | Total stockholders' equity | $482,597 | $541,226 | Selected Cash Flow Data (in thousands) | Activity | FY 2023 (Thousands USD) | FY 2022 (Thousands USD) | | :--- | :--- | :--- | | Net cash from operating activities | $26,480 | $(43,169) | | Net cash used in investing activities | $(95,665) | $(102,023) | | Net cash (used in) from financing activities | $(5,199) | $4,632 | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP to non-GAAP measures, including Restaurant-Level Profit and Adjusted EBITDA, for a clearer view of core operational performance Reconciliation of Loss from Operations to Restaurant-Level Profit This reconciliation adjusts GAAP loss from operations to Restaurant-Level Profit by adding back corporate expenses, showing a substantial increase to $101.9 million (17% margin) in fiscal year 2023, demonstrating improved store-level profitability Restaurant-Level Profit Reconciliation - Full Year (in thousands) | Line Item | FY 2023 (Thousands USD) | FY 2022 (Thousands USD) | | :--- | :--- | :--- | | Loss from operations | $(122,344) | $(193,337) | | Add back: G&A, D&A, etc. | $224,264 | $262,623 | | Restaurant-Level Profit | $101,920 | $69,286 | | Restaurant-Level Profit Margin | 17% | 15% | Reconciliation of Net Loss to Adjusted EBITDA This table reconciles GAAP net loss to Adjusted EBITDA by excluding non-cash expenses and other specific items, showing dramatic improvement from a loss of $(49.9) million in fiscal 2022 to $(2.8) million in fiscal 2023, indicating strong progress towards profitability Adjusted EBITDA Reconciliation - Full Year (in thousands) | Line Item | FY 2023 (Thousands USD) | FY 2022 (Thousands USD) | | :--- | :--- | :--- | | Net loss | $(113,384) | $(190,441) | | Add back: Adjustments* | $110,589 | $140,507 | | Adjusted EBITDA | $(2,795) | $(49,934) | | Adjusted EBITDA Margin | 0% | (11)% | *Adjustments include taxes, interest, D&A, stock-based compensation, etc. - The largest adjustment in the reconciliation for FY 2023 was stock-based compensation expense of $49.5 million, followed by depreciation and amortization of $59.5 million[40] Glossary and Definitions This section defines key performance indicators and non-GAAP financial measures used to evaluate the company's operational and financial performance Key Performance Indicators and Non-GAAP Measures This section defines key operational metrics like Average Unit Volume (AUV) and Same-Store Sales Change, along with non-GAAP financial measures such as Restaurant-Level Profit and Adjusted EBITDA, explaining their composition and rationale - Key operational metrics are defined, including Average Unit Volume (AUV), Same-Store Sales Change, and Net New Restaurant Openings[17] - Restaurant-Level Profit is defined as loss from operations adjusted to exclude general and administrative expenses, depreciation and amortization, and other specific costs to measure the profitability of restaurants[18] - Adjusted EBITDA is defined as net loss adjusted for items including interest, taxes, depreciation, amortization, and stock-based compensation to facilitate operating performance comparisons[19]