RAVE Stock Falls Despite Q1 Earnings Uptick, Revenues Down Y/Y

Core Insights - Rave Restaurant Group, Inc. reported earnings per share of 4 cents for the first quarter of fiscal 2025, an increase of 1 cent year over year [1] - The company experienced a revenue decline of 1.2% year over year, totaling $3.1 million, primarily due to lower revenues from the Pie Five Franchising segment [2] - The operating income for the quarter was $0.7 million, reflecting a year-over-year increase of 34.2%, while net income rose by 36.3% to $2.5 million [8] Revenue Breakdown - Rave Restaurant's revenues are derived from two segments: Pizza Inn Franchising and Pie Five Franchising [3] - Pizza Inn Franchising generated revenues of $2.7 million, up 4.5% year over year, attributed to increased supplier and distributor incentives [3] - Pie Five Franchising revenues were $0.3 million, down 29.6% year over year, mainly due to decreases in domestic royalties [4] Comparable Store Sales - Pizza Inn's domestic comparable store retail sales decreased by 2.1% year over year, with a total domestic unit count of 102 and an international unit count of 26 [4] - Pie Five's domestic comparable store retail sales saw a more significant decline of 8.7% year over year, with a domestic unit count of 20 [5] Operating Expenses - General and administrative expenses increased by 7.4% year over year to $1.4 million, driven by higher legal fees [6] - Franchise expenses decreased by 15.1% year over year to $0.9 million, with Pizza Inn franchise expenses down 5.7% and Pie Five franchise expenses down 53.7% [7] Profitability Metrics - Adjusted EBITDA for the quarter increased by 22.9% year over year to $0.7 million [8] - The company exited the quarter with cash and cash equivalents of $8.4 million, up from $7.8 million at the end of fiscal 2024 [9] Strategic Developments - Management signed a four-unit development agreement during the quarter, bringing the total domestic sites contracted for development to 25 [10] - The introduction of the Sandworm Pizzert has boosted dessert sales, with plans for further dessert innovations and main course introductions in the near future [11] Challenges - The decline in top-line results and comparable store retail sales for the Pizza Inn Franchising segment were noted as disappointing [12]