Callaway Golf’s 2026 Q2 Call: Revenue Guidance Shifts, Slowing Margins, and Contradictory Launch Strategy Outcomes

Date of Call: Aug 4, 2026

Financials Results

• Revenue: $612M, up 2% YOY
• Gross Margin: 48.5%, up 460 basis points YOY

Guidance:

• Full-year 2026 net sales expected to be $2.045B-$2.070B, up $15M at midpoint.
• Full-year adjusted EBITDA expected to be $246M-$260M, up $31M at midpoint.
• Q3 2026 net sales forecast $415M-$435M; adjusted EBITDA forecast $10M-$20M.

Business Commentary:

Strong Financial Performance and Market Conditions:

• Callaway Golf Company reported Q2 revenue of $612 million, up 2% year-over-year, and adjusted EBITDA of $125 million, up 36% versus the prior year.
• The revenue growth was driven by healthy market conditions, strong product acceptance, and meaningful gross margin improvement.

Gross Margin Improvement:

• The company's gross margin expanded by 460 basis points in Q2 and 360 basis points for the first half of the year.
• This improvement was attributed to progress on margin initiatives, cost management, and the benefits of portfolio actions.

Golf Equipment and Apparel Performance:

• Golf ball revenue was up 15% in Q2, with first-half growth of 8%, and golf equipment revenue grew faster than the market in all major regions.
• The strong performance was due to the resilience of the golf consumer and the company's strategic focus on core golf products.

Tariff Impact and Refunds:

• The full-year gross tariff expense for 2026 is expected to be approximately $43 million, a net improvement of $7 million compared to prior guidance.
• The change was due to the implementation of new Section 301 forced labor tariffs, with potential refund opportunities up to just under $50 million.

Strategic Business Decisions and Growth Initiatives:

• Callaway Golf returned to being a pure-play golf company, having sold non-core assets and repurchased $84 million worth of stock.
• These actions, along with a disciplined approach to product launches and business rationalization, reflect the company's focus on enhancing long-term profitability.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: 'I’m pleased to report that our company delivered a strong second quarter and a very solid first half.' and 'We are encouraged by the fact that the game of golf remains healthy... our brands and products are resonating well... allowing us to grow faster than the market.'

Q&A:

• Question from Simeon Gutman (Morgan Stanley): Can you talk about your outlook for the industry launch calendar and any changes in competitors' schedules?
  Response: Management is lengthening product life cycles to increase profitability, a decision others are also making, which is seen as positive for the market long-term.

• Question from Simeon Gutman (Morgan Stanley): Did the Q3 outlook change from last quarter?
  Response: Management raised the organic revenue outlook for the second half by about $5 million.

• Question from Matthew Boss (J.P. Morgan Securities): What drove the constant currency revenue guidance raise?
  Response: The raise reflects the market's resilience, a slightly improved organic growth forecast, and the impact of tougher year-over-year comparisons.

• Question from Matthew Boss (J.P. Morgan Securities): What drove Q2 gross margin expansion, and how should we think about back-half puts and takes?
  Response: Gross margin expanded due to initiatives, market strength, and less promotion. Improvement will slow in H2 due to fewer new launches, seasonality, and lower volumes.

• Question from John Kernan (Goldman Sachs): Why is Q4 sales guidance softer than expected?
  Response: The phasing reflects the impact of year-over-year launch timing differences; no meaningful change in quarterly forecasts aside from that.

• Question from Anna Glaessgen (B. Riley Securities): What drove the 15% golf ball revenue growth in Q2?
  Response: Growth was due to fundamental improvements from investments in green grass distribution and manufacturing capabilities, with no one-time items.

• Question from Anna Glaessgen (B. Riley Securities): Why is the implied margin degradation heavier in Q4?
  Response: The Q4 margin impact is primarily due to lower volume and seasonality.

• Question from Noah Zatzkin (KeyBanc Capital Markets): How far along are you in structural margin improvements?
  Response: Progress has been faster than expected, with gross margins near historical highs (2017-2019 levels). Future margins will depend on FX and tariffs.

• Question from Noah Zatzkin (KeyBanc Capital Markets): How are you thinking about the long-term opportunity for TravisMathew?
  Response: Management is optimistic about TravisMathew's outlook, citing strong growth and positive results from its revised men's strategy, with store closures being a disciplined, long-term improvement action.

• Question from Joseph Altobello (Raymond James): Were the TravisMathew store closure charges included in adjusted EBITDA?
  Response: Yes, the charges were included in both GAAP and non-GAAP results, amounting to roughly $1.5 million.

• Question from Joseph Altobello (Raymond James): How much additional commodity cost pressure is baked into H2 EBITDA?
  Response: The guidance includes the current view of cost pressures, which are dynamic but manageable, with volatility primarily driven by oil prices.

• Question from Arpine Kocharyan (UBS): Can you bridge the $31M EBITDA guidance raise and discuss upside scenarios?
  Response: The raise is driven by Q2 EBITDA beat ($21M), organic revenue increase ($3M flow-through), and improved tariff estimates ($7M). Management sees a balanced range of outcomes in H2.

• Question from Arpine Kocharyan (UBS): Can you comment on July retail trends?
  Response: Guidance incorporates July results, which saw some softening due to the World Cup, followed by an improvement.

Contradiction Point 1

Drivers of Revenue Growth and Guidance

Contradiction on whether Q2 revenue outperformance and guidance raise are based on strong underlying demand or timing/supply chain factors.

Matthew Boss (J.P. Morgan Securities) - Matthew Boss (J.P. Morgan Securities)

2026Q2: The second-half outlook is impacted by fewer new product launches year-over-year (affecting revenue comparisons)... - [Chip Brewer](CFO)

What was the underlying revenue growth in Q2 outside of strategic actions? What are the drivers of the constant currency revenue guidance raise for the back half? - Matthew Boss (J.P. Morgan)

2026Q1: The Q1 revenue beat was due to ~$28 million more demand than expected and $10 million from supply chain timing (shipping Q2 inventory earlier)... - [Chip Brewer](CFO)

Contradiction Point 2

Full-Year Revenue Guidance Raise Composition

Contradiction on the magnitude and composition of the raised full-year revenue guidance.

Simeon Gutman (Morgan Stanley) - Simeon Gutman (Morgan Stanley)

2026Q2: The organic revenue outlook for the second half was raised by about $5 million. - [Chip Brewer](CFO)

How is the change in the launch schedule impacting the industry outlook and competitive calendar, and is it a response to industry-wide inflationary limitations or too much innovation? - Matthew Boss (J.P. Morgan)

2026Q1: The company is raising full-year revenue guidance by $28 million at the midpoint... - [Chip Brewer](CFO)

Contradiction Point 3

Gross Margin Trajectory in the Second Half

Contradiction on the expected rate of gross margin improvement in the second half of the year.

Matthew Boss (J.P. Morgan Securities) - Matthew Boss (J.P. Morgan Securities)

2026Q2: For the full year, gross margin will still be up meaningfully but the rate of improvement will slow in the second half. - [Brian Lynch](CFO)

What factors contributed to Q2 gross margin expansion, and how will pricing and mix impact the back half? - Arpine Kocharyan (UBS)

2026Q1: The 260 basis point gross margin increase in Q1 was driven by margin initiatives... The company is driving efficiencies, as seen by over 100 basis points of margin improvement in Q1 on a clean basis... - [Brian Lynch](CFO) and [Chip Brewer](CFO)

Contradiction Point 4

Purpose and Market Impact of Launch Cadence Changes

Contradiction on whether lengthening product life cycles is a positive market response or a negative headwind.

Simeon Gutman (Morgan Stanley) - Simeon Gutman (Morgan Stanley)

2026Q2: The company has decided to lengthen product life cycles... Similar decisions by competitors are also seen as positive for the market in the long run. - [Chip Brewer](CEO)

Can you discuss the industry outlook and competitive launch calendar, and clarify if the revised schedule is due to inflationary limitations or an oversaturation of innovation? - Anna Glaessgen (B. Riley Securities, Inc.)

2025Q4: Additionally, changes to launch cadence and product cycles in the second half (fewer launches than typical) will create a headwind but are expected to improve long-term profitability... - [Oliver Brewer](CEO)

Contradiction Point 5

Characterization of Golf Market Growth Outlook

Contradiction on describing the market's health and growth expectations between the first and second halves of 2026.

Matthew Boss (J.P. Morgan Securities) - Matthew Boss (J.P. Morgan Securities)

2026Q2: The second-half outlook is impacted by... some FX noise, and a slight organic growth uptick. The market is expected to be positive on a two-year stack but potentially slower than the first half. - [Chip Brewer](CEO)

What was the underlying revenue growth in Q2 excluding strategic actions, and what are the drivers behind the constant currency revenue guidance raise for the back half? - Anna Glaessgen (B. Riley Securities, Inc.)

2025Q4: The company feels good about the healthy state of the golf market, with excellent fundamentals like strong participation growth. Guidance reflects cautious optimism... - [Oliver Brewer](CEO)