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Topgolf Callaway Q1 Earnings Surpass Estimates, Revenues Fall Y/Y

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Topgolf Callaway Brands Corp. (MODG - Free Report) reported first-quarter 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top line declined year over year, while the bottom line declined from the prior-year quarter's figure.

During the quarter, the company stated benefits from cost reduction and margin enhancement initiatives. It announced an agreement to divest its Jack Wolfskin business. Management emphasized that this move will enable MODG to sharpen its focus on core operations, improve resource allocation and strengthen both its balance sheet and liquidity.
 
Looking ahead, management remains optimistic about maintaining full-year revenues and adjusted EBITDA guidance. This outlook is supported by a strong start to the year, favorable currency trends, and ongoing efforts to manage costs and offset tariff-related pressures. Despite market uncertainties, the company believes it is well-positioned to deliver long-term shareholder value through strategic execution, operational focus and key portfolio realignments.

MODG’s Q1 Earnings and Revenues

For the quarter under review, the company reported an adjusted earnings per share (EPS) of 11 cents, beating the Zacks Consensus Estimate of 4 cents. In the prior-year quarter, the company reported an adjusted EPS of 8 cents.

Total revenues of $1.09 billion beat the consensus estimate by 3.1%. However, the top line declined 4.5% year over year.

MODG Segments Discussion

Topgolf: Revenues of this segment amounted to $393.7 million, down 6.8% from the reported value of $422.8 million in the year-ago quarter. The segment's operating loss came in at $11.9 million against an income of $2.9 million reported in the prior-year quarter. The downside can be attributed to lower same-venue sales (down 12% year over year). Segment-adjusted EBITDA came in at $43.9 million compared with $59.8 million reported in the prior-year quarter. The downside was due to a decline in same-venue sales, partially offset by cost reduction efforts.

Golf Equipment: Revenues of this segment amounted to $443.7 million, down 0.3% from $449.9 million reported in the prior-year quarter. The segment's operating income came in at $101.6 million compared with $82.1 million reported in the prior-year quarter. The upside was driven by improved gross margin performance, the favorable impact of cost savings initiatives and a lease termination incentive for our Japan subsidiary.

Active Lifestyle: Revenues of this segment amounted to $254.9 million, down 4.7% from the reported value of $271.5 million in the year-ago quarter. The decline can be attributed to the strategic downsizing of the Jack Wolfskin business in Europe. However, this was partially offset by growth in the China market. The segment's operating income came in at $30.6 million compared with $24.7 million reported in the prior-year quarter.

MODG’s Operating Highlights

During the first quarter of 2025, the company’s total costs and expenses amounted to $1.03 billion compared with $1.08 billion reported in the prior-year period.

Adjusted net income during the quarter came in at $20.3 million compared with $14.4 million reported in the prior-year quarter.

Adjusted EBITDA during the quarter came in at $167.3 million compared with $160.9 million reported in the prior-year quarter.

Balance Sheet

As of March 31, 2025, MODG’s cash and cash equivalents amounted to $317 million compared with $445 million as of Dec. 31, 2024. The company’s long-term debt (as of March 31) was $1.455 billion, almost flat sequentially.

MODG’s Q2 & 2025 Outlook

For the second quarter of 2025, the company expects revenues to be in the range of $1.075-$1.115 billion. It expects adjusted EBITDA to be in the range of $139-$159 million.

In 2025, the company anticipates revenues to be in the range of $4-$4.19 billion. Topgolf revenues are expected to come in between $1.68 billion and $1.79 billion, compared to the previous estimate of $1.725 billion to $1.835 billion. Same venue sales growth for Topgolf is now projected to decline between 6% and 12%, compared with a prior expectation of a mid-single-digit decline. The company expects consolidated adjusted EBITDA to be in the range of $415-$505 million.

MODG’s Zacks Rank

Topgolf Callaway currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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