The Topgolf Callaway brand's financial results in the first quarter of 2025 exceeded market expectations, after the company reported forecast figures in various areas of its business far outperformed some major economic headwinds.
The company reported revenues of $1.09 billion for the first three months of the year, with a forecast of $1.07 billion, but fell 4.5% in the same period in 2024, highlighting the softening demand due to consumer confidence in the broader economy.
With the impact of the proposed increase in imports in many industries, revenue guidance for the next quarter fell to $1.1 billion, below analyst estimates of 2.5%, although Callaway Topgolf's non-GAAP profit per share was $0.11, higher than analyst consensus forecasts.
The company's shares rose 4.2% to $8.25 after the first quarter results were announced.
“Q1 was a strong quarter for our company as we met or beat expectations in all areas of our business,” said Chip Brewer, President and CEO of Topgolf Callaway brand.
Brewer noted that when discussing the potential impact of U.S. tariffs, “assuming the current ratio of all countries of origin is about all countries of origin outside Mexico, Canada and China, the unavoidable impact this year is about $25 million, an increase of $20 million to our last call.”
The golf equipment division (Callaway/Odyssey) divided the company's performance into its different elements, but revenue fell 1% to $444 million, despite operating income rising 24% to $102 million, driven by improved gross margins.
Meanwhile, revenue from the golf entertainment business fell 7% year-on-year, with operating income falling by $15 million and losing $12 million due to low sales at the same venue. The company revised TopGolf's same site sales guide, down 6%-12% for the whole year and is expected to decline 7%-12% in the second quarter.
TopGolf revenue guidance fell to $1.79 billion for the full year, $45 million lower than previous guidelines, while TopGolf's adjusted EBITDA guidance ranged from $24 billion to $300 million.
Topgolf CEO Artie Starrs reported: “Topgolf’s Q1 same venue sales fell 12% and were in line with our guidance,” but pointed out that the improvements were attributed to new, attributed to new value offers, especially Sunday Fundament and Topgolf Nights. “Our priority is to drive transportation growth and improve value perception, which we believe is key to our current environment and brand health in the long term.”
“We decided to reset Topgolf's positioning while continuing our efforts to improve efficiency and continuously improve and refresh the experience,” Brewer added.
Last month, Topgolf Callaway agreed to the terms of selling outdoor clothing brand Jack Wolfskin to Anta Sports as part of its renewed focus on its core business. The deal is worth $290 million and is expected to be completed in the second or third quarter of 2025.
“This sale will allow us to increase our focus and optimize our resources for our core business. Importantly, earnings will further enhance our balance sheet and liquidity, enhancing our financial flexibility before planning to separate TopGolf from our core business. We believe that Anta Sports will be a good Jack Wolfskin brand for the Jack Wolfskin brand, our Jack Wolfskin brand and Jack Wolfskin businesses work hard and hard to follow suit.”
