Exchange: NYSE | Sector: Communication Services | Industry: Entertainment
Q1 2025
Published: Nov 4, 2024
Earnings Highlights
Revenue of $260.20M up 5.7% year-over-year
EPS of $0.13 increased by 141% from previous year
Gross margin of 92.1%
Net income of 23.10M
""Total location revenue grew 17.5% year-over-year in the quarter."" - Thomas Shannon
Bowlero Corp (BOWL) QQ1 2025 Earnings Analysis: M&A Accretive Growth, Margin Expansion, and Multi-Asset Strategy in Entertainment Centers
Executive Summary
Bowlero’s QQ1 2025 results reflect a transitions-period narrative: a diversified portfolio approach expanding beyond core bowling centers into water parks and related family entertainment concepts. Total location revenue rose 17.5% year-over-year, with same-store comps up 0.4%, underscoring improving mix and retention of customers even as weather events weighed on a portion of the quarter. Management highlighted a material margin expansion and a continued shift toward high-return capital deployment, anchored by a robust M&A pipeline and operational enhancements driven by data analytics and a revitalized food-and-beverage strategy.
The company closed Spectrum Entertainment Complex in Grand Rapids (Michigan) and Boomers acquisition, while also expanding Lucky Strike assets and advancing new builds in Denver and Beverly Hills, signaling a multi-year growth trajectory anchored in scale, higher attach rates, and cross-brand opportunities. Adjusted EBITDA for QQ1 2025 was $62.9 million with a margin around the mid-20s, reflecting a ~21% YoY improvement despite a near-term adverse EBITDA drag from acquisitions (Boomers and Raging Waves) and weather-related headwinds. Management raised the lower end of FY2025 revenue guidance by $10 million, signaling confidence in the multi-quarter cadence of New Year-driven demand, seasonal events, and the upside from pricing and F&B enhancements.
Investors should monitor leverage and liquidity given the increased debt load from recent acquisitions and substantial capex in growth projects, balanced against a high-velocity pipeline of redeployments and operational improvements. The combination of premium F&B initiatives, data-driven labor and procurement optimization, and a selective M&A program positions Bowlero to generate favorable returns if the current growth thesis sustains and near-term headwinds abate.
Adjusted EBITDA: $62.9 million in QQ1 2025; margin approx. 24.2%, up ~130 basis points YoY; reflects growing operational leverage and cost controls despite weather headwinds.
Total location revenue growth: +17.5% YoY; same-store sales (SSS) +0.4% in the quarter.
Gross profitability: reported as GAAP figures are inconsistent within the dataset; peer-consistent sources indicate a gross margin in the low-to-mid 30% range, with management emphasizing F&B improvements as a key margin driver. The company cited a strong F&B uplift (see below) contributing to value creation.
F&B and menu strategy: F&B sales up 18% YoY; F&B to bowling cross-portfolio near $0.80 per bowl; premium plus menu in top 50 Bowlero locations around $1.10 per bowl, up ~ $0.18 vs prior year.
Financial Highlights
- Revenue (ex-service fee) for QQ1 2025: $260.2 million; YoY growth ~5.7%; QoQ growth ~15.3% (per earnings metrics).
- Adjusted EBITDA: $62.9 million in QQ1 2025; margin approx. 24.2%, up ~130 basis points YoY; reflects growing operational leverage and cost controls despite weather headwinds.
- Total location revenue growth: +17.5% YoY; same-store sales (SSS) +0.4% in the quarter.
- Gross profitability: reported as GAAP figures are inconsistent within the dataset; peer-consistent sources indicate a gross margin in the low-to-mid 30% range, with management emphasizing F&B improvements as a key margin driver. The company cited a strong F&B uplift (see below) contributing to value creation.
- F&B and menu strategy: F&B sales up 18% YoY; F&B to bowling cross-portfolio near $0.80 per bowl; premium plus menu in top 50 Bowlero locations around $1.10 per bowl, up ~ $0.18 vs prior year.
- Operating cash flow and capex: Operating cash flow of ~$29.4 million; capital expenditures of ~$41.6 million (growth CapEx $16m; new-build CapEx $17m; maintenance $8m); free cash flow negative ~$12.2 million, largely reflecting acquisitions and build-outs.
- Liquidity and leverage: End-of-quarter liquidity ~$355 million with essentially undrawn revolver; cash ~$38 million; net debt around $1.1 billion; bank facilities net leverage ~2.6x (per call).
- M&A and pipeline: Spectrum Entertainment Complex (Grand Rapids, MI) closed; Boomers acquired (nine assets including five FECs and two water parks); ongoing expansion through Lucky Strike openings; robust new-build pipeline with Denver and Beverly Hills launches.
- Management guidance: FY2025 revenue range increased at the bottom by $10 million; expected EBITDA drag in 2Q–3Q from Boomers/Raging Waves during peak season; transparency about weather headwinds and macro environment.
- Operational improvements: Mobile ordering rolled out across all properties; server tablets to be deployed company-wide by early 2025; procurement function optimization with a Chief Procurement Officer.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
260.20M
5.71%
15.33%
Gross Profit
239.67M
83.07%
-48.56%
Operating Income
12.95M
236.84%
262.07%
Net Income
23.10M
145.53%
22.57%
EPS
0.13
140.96%
30.77%
Key Financial Ratios
currentRatio
0.46
grossProfitMargin
33.1%
operatingProfitMargin
4.98%
netProfitMargin
8.88%
returnOnAssets
0.75%
returnOnEquity
-57.2%
debtEquityRatio
-70.76
operatingCashFlowPerShare
$0.2
freeCashFlowPerShare
$-0.08
dividendPayoutRatio
37%
priceToBookRatio
-42.35
priceEarningsRatio
18.52
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and M&A discipline:
- Tom Shannon: The market for M&A is the most opportunistic we have ever seen and we look forward to continuing to deploy capital accretively bringing attractive locations with significant upside into our portfolio.
- Lev Ekster on data-driven optimization: 350 Power BI subscriptions rolled out; GMs and department leaders now accountable to daily data metrics; mobile ordering and tablets to further drive labor efficiency and order flow.
- Operational and culinary advances:
- Lev Ekster: F&B initiatives are bearing fruit with 18% YoY F&B sales growth; top 50 Bowlero locations with premium plus menu generating ~$1.10 F&B per bowl, up $0.18 YoY; new events menu launching in November; mobile ordering enabling better labor efficiency and customer satisfaction.
- Management notes on pricing: Tom Shannon indicates price increases on food have contributed to upside; ongoing focus on price/volume balance as the core bowling product matures.
- Weather and seasonality impact:
- Bobby Lavan: Weather headwinds in 3Q and 2Q including two hurricanes cost around $2 million in the quarter; December events expected to remain strong; New Year’s shift to Q3 highlights cadence changes and revenue timing.
- Capital allocation and integration:
- Tommy/Steven: Spectrum Entertainment Complex closed; Boomers acquisition completed; the integration of purchasing and procurement functions begins to unlock cost efficiencies due to scale.
- Pass programs and customer engagement:
- Lev Ekster: Fall Season Pass launched due to revenue softness signals; Summer Season Pass delivered strong engagement; future passes to emphasize cross-portfolio value (including Boomers and water parks) and higher price realization without eroding value.
"Total location revenue grew 17.5% year-over-year in the quarter."
— Thomas Shannon
"The greatest margin expansion will occur in the third quarter... New Year’s has shifted from second quarter to third quarter, which is a $5 million to $7 million swing in the comp between 2Q and 3Q."
— Bobby Lavan
Forward Guidance
Bowlero reaffirmed and modestly raised FY2025 revenue guidance at the bottom end by $10 million, underscoring optimism around mid-to-late-year cash flow generation and the effect of acquisitions on top-line growth. The management commentary highlights a cadence where 1Q and 2Q are expected to deliver lower comparables versus the stronger 3Q and 4Q driven by seasonal events (notably New Year’s) and pass-holder visitation. The company also acknowledged near-term EBITDA drag from Boomers and Raging Waves in 2Q–3Q while anticipating higher margin capture in 3Q as the New Year’s shift from 2Q to 3Q and underlying pricing/F&B actions materialize.
Key factors investors should monitor:
- Execution on new-build and premium menu initiatives, including rollouts in Denver and Beverly Hills and cross-banner potential (rebranding of premium-plus Bowlero locations to Lucky Strike where applicable).
- Integration benefits from Boomers and Spectrum, including procurement synergies and labor optimization across the enlarged portfolio.
- Seasonal and weather-related volatility, particularly the impact on 2Q and 3Q EBITDA and the degree to which the New Year’s shift drives upside in the second half.
- Pass program performance across the portfolio and its spillover effect on bowling utilization and attachment rates.
- Leverage trajectory and liquidity runway as acquisition-driven capex continues, with attention to debt maturities and covenants.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
BOWL Focus
92.11%
4.98%
-57.20%
18.52%
GOLF
53.40%
17.70%
9.93%
12.34%
HPK
39.00%
35.80%
0.42%
77.12%
LTH
32.40%
12.10%
1.08%
30.14%
MODG
60.10%
6.24%
0.17%
116.37%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Bowlero is transitioning into a more diversified, multi-brand, multi-asset platform with a growing M&A backbone and a clear emphasis on data-driven operational improvements and high-margin attachments through F&B and premium offerings. The QQ1 2025 results show meaningful top-line growth (17.5% location revenue), a solid adj. EBITDA margin of ~24% despite near-term drag from acquisitions, and a capital allocation strategy that leverages scale to unlock procurement and labor efficiencies. Near-term risks center on leverage, integration timelines, and weather-driven variability; however, strong liquidity, a robust new-build cadence, and a pipeline of accretive assets support an attractive long-term thesis if the company maintains disciplined capital deployment and execution. Key catalysts include successful integration of Spectrum and Boomers, continued optimization of F&B mix and pricing, and the cross-portfolio pass programs that can lift utilization and drive higher margins. Overall, Bowlero offers a differentiated growth story in the entertainment services/consumer leisure space with meaningful optionality from cross-portfolio synergies and a proven track record of creating outsized returns through disciplined site selection and capital deployment.
Key Investment Factors
Growth Potential
- Diversified asset base: Bowling centers + water parks + FECs (Lucky Strike, Spectrum, Boomers) provide multiple upside levers for attendee traffic, cross-pollination, and higher attach rates; early indicators show Lucky Strike assets outperforming expectations (11 of 14 assets) and Miami’s new build delivering ahead of underwriting (targetting ~$10m first-year revenue).
- Premium F&B and pass programs: Upsell opportunities through revamped menus and mobile/tablet ordering show potential to push F&B per guest toward and above $1.00 per bowl in the mid-term; Fall and Summer Season Pass programs demonstrate strong visitation frequency and consumer engagement with potential for broader cross-portfolio passes.
- M&A pace and capital deployment: A robust pipeline with accretive deals and efficient integration (procurement, labor optimization) supports higher-scale EBITDA with favorable returns if deployment remains disciplined.
Profitability Risk
- Leverage and capital structure: Elevated debt load and negative book equity historically raise balance sheet risk; reliance on acquisitions for growth can lead to integration risk and potential overhang if macro conditions deteriorate.
- Weather and seasonality: Off-season drag and weather disruptions (e.g., hurricanes) can compress near-term EBITDA and cash flow, requiring robust liquidity management.
- Execution risk of new builds and rebranding: While new builds outperform, the risk remains that site selection, capex overruns, or slower-than-expected customer conversion could dampen returns.
- Competition in the entertainment space and macro volatility: Consumer discretionary spending could slow with macro uncertainty or increased competition from other experiences, impacting walk-ins and group bookings.
Financial Position
- Liquidity and leverage: End-of-quarter liquidity of ~ $355 million with an undrawn revolver and cash on hand ~ $38 million; bank facilities reported a net leverage around 2.6x; however, balance sheet shows substantial long-term debt (~$2.82 billion) and total debt (~$2.86 billion) with negative stockholders’ equity (~$40 million). This underscores reliance on continued operating cash flow and asset-light procurement improvements to sustain leverage targets.
- Cash flow: Operating cash flow approx. $29.4 million; free cash flow negative about $12.2 million, largely reflecting acquisitions and growth capex; capex mix: Growth CapEx $16m, New-build CapEx $17m, Maintenance $8m.
- Asset-light expansion potential: With cross-border and multi-brand expansion (Lucky Strike conversion potential, premium menus, and integrated events/catering), Bowlero can improve asset utilization and return on invested capital if integration and cost discipline remain disciplined.
SWOT Analysis
Strengths
Diversified and scalable multi-asset platform (bowling centers, water parks, FECs) with cross-promotional potential
Strong early indicators from Lucky Strike integration; multiple centers outperforming under current strategy
Robust new-build pipeline in high-demographic markets (Denver, Beverly Hills, Ladera Ranch) with higher per-center profitability
Progress in F&B transformation and pricing strategy boosting attach rates (premium-plus menu, top locations near $1.10 F&B per bowl)
Data-driven operations and labor optimization enabled by widespread analytics adoption and mobile/tablet ordering
Weaknesses
High debt load and negative book equity raising balance sheet risk