Dave & Buster's Entertainment, Inc. Q4 FY2025 earnings call

• Back-to-basics strategy gaining traction: Same-store sales improvement, including six consecutive fiscal months of improving same-store sales for the Dave & Buster's brand adjusting for storm impact, and flat same-store sales in February.
• Priorities for financial year 2026: Grow same-store sales and generate meaningful free cash flow.
• Marketing: Reconstructed marketing strategy with simplified calendar, leveraging data to balance media mix, promoting culturally relevant promotions, activating loyalty program, and building special events business engine. For example, Valentine's Day promotion with diamond engagement rings giveaway and Super Bowl being a productive day with ticketed advanced purchase programming.
• Food and beverage: New menu launched in October, reversing the trend of decline in guests coming to play games and eat food. F&B same-store sales positive for six fiscal months through February 2026, and guest opt-in to eat and play combo improved.
• Games offering: Introducing at least 10 new games and attractions in 2026 associated with cultural IPs, rolled out Human Crane across the entire system, and leveraging watch offering for World Cup soccer games.
• Operations: Reinvesting in field operations with training programs, establishing obsession metric around speed of service, revamping labor model, and elevating culture and people capabilities.
• Remodel program: High confidence in the right layout, opened three new remodels, has three under construction, and plans to open additional four remodels in the next nine months, with remodel stores outperforming non-remodel stores by ~700 basis points.

In the fourth quarter of fiscal 2025, comparable store sales decreased 3.3% versus the prior year, excluding the impact from the extreme winter weather, it would have decreased 1.5%. F&B same store sales increased approximately 7%. Special events grew nearly 7%. Remodel locations continue to outperform the balance of the system by approximately 700 basis points. During the first fiscal month of 2026, there was roughly flat total company same-store sales, as well as growth in revenue and adjusted EBITDA. The Dave & Buster's brand had six consecutive fiscal months of improving same-store sales when adjusting for the three-day storm impact and ended February roughly flat in same-store sales.

• Management is highly confident in delivering an increase in same-store sales, revenue, and adjusted EBITDA during financial year 2026.
• Expect to generate more than $100 million in free cash flow during FY26.
• Plan to spend no more than $200 million in CapEx during FY26.
• Anticipate positive comps in FY26 leading to EBITDA growth and steady improvement of margin profile.

Q: On the fourth quarter comps and monthly cadence, asked about November comps down one, January up 90 bps and if December was down significantly and color on December.

A: Same store sales cadence sequentially improved throughout the quarter, P10 was the softer one and adjusting for weather impact.

Q: On strategic upside to double-digit store growth after same-store sales declines, asked about strategy.

A: Historically good returns on locations, competition not slowing down helps fill out markets, hyper diligent on investing correctly and ensuring right return.

Q: On marketing plans for 26, asked about spend level and mix between traditional TV and digital.

A: Anticipate traditional media spend similar year over year, non-traditional may go down a bit, mix will continue to optimize with good blend through right mix analysis and iterating with consumers.

Q: On fourth quarter comps and marketing spend, asked about 2025 marketing spend and 2026 plans.

A: 2025 marketing spend about $93 million, 2026 traditional media spend similar, non-traditional may go down, mix will be optimized with blend of TV, CTV, digital etc.

Q: On 1Q same-store sales, February flat, March and inflection point.

A: Spring break is high watermark, too early to say Q1 print and inflection point, but focused on internal plans and optimistic about 10 new games and staycation concept.

Q: On new games, asked about excitement and World Cup game.

A: New games have good quality, tested with guests, have games associated with Stranger Things, John Wick, and two World Cup associated games in arena, IPs and games are exciting.

Q: On Sunday through Thursday half-price games, asked about consumer response.

A: Saw traffic lift, spend lift, good learnings on impact on different consumers, anticipate more of it ahead.

Q: On net capex variance, asked about variance reason.

A: Most of it from $33 million of FY24 CapEx bleeding into FY25, some from rolling out Human Crane faster and other areas, timing from prior year FY24 bleeding into FY25