Lucky Strike Entertainment's Q4 2025: Contradictions Emerge on Marketing Spend, Events Recovery, and Premium Product Focus

The above is the analysis of the conflicting points in this earnings call

Date of Call: August 28, 2025

Financials Results

• Revenue: $301.2M, up 6.1% YOY (vs $283.9M)

Guidance:

• FY26 revenue expected at $1.26B–$1.31B (+5–9% YOY).
• FY26 adjusted EBITDA targeted at $375M–$415M.
• Implied positive same-store comps of ~+1% to +5%.
• September quarter to show double-digit growth; Q4 revenue $10M–$20M above Q2.
• FY26 CapEx about $130M, focused on high-ROI projects.
• FY26 GAAP rent expense down ~$3M and capitalized lease expense down ~$21M from real estate buy.
• Marketing spend to increase by ~$10M–$15M within location operating costs.

Business Commentary:

* Revenue Growth and Organic Initiatives: - Lucky Strike Entertainment reported total revenue of $301.2 million for Q4 2025, growing 6.1% year-on-year. - The growth was driven by strong organic initiatives, including the successful summer season pass program and enhanced food and beverage offerings.

• Season Pass Program Success:
• The summer season pass program generated over $13.4 million in pass revenue, more than double the previous year's $8.5 million.

• The growth was driven by increased marketing spend and employee engagement tools, which significantly improved membership numbers and guest visits.

• Water Parks and FEC Acquisitions:

• The acquisition of two iconic water parks and several family entertainment centers expanded Lucky Strike's leadership in their respective verticals.

• This expansion aims to build the premier location-based entertainment platform in North America, targeting water parks, FECs, and next-generation bowling concepts.

• Food and Beverage Strategy:

• Lucky Strike's food and beverage offerings outperformed overall comps, with food revenue delivering positive 2.5% same-store comps.
• This was achieved through innovative menu items, targeted marketing, and increased employee training, contributing to higher attachment rates and guest satisfaction.

Sentiment Analysis:

• Same-store sales improved sequentially each month and turned positive in July; July delivered double-digit total revenue growth YOY. Management guided FY26 revenue up 5–9% with adjusted EBITDA of $375M–$415M. They highlighted accretive real-estate acquisitions and successful season pass growth ($13.4M vs $8.5M prior year).

Q&A:

• Question from Jackson R. Gibb (Stifel): Why is FY26 EBITDA guidance seemingly conservative, and why resume guidance now?
  Response: July was positive organically and double-digit total; guidance embeds higher marketing spend and newly acquired parks that lose money for three quarters before peak summer earnings, skewing gains to FY27.

• Question from Jackson R. Gibb (Stifel): How should FY26 quarterly cadence play out with water parks and events seasonality?
  Response: Expect double-digit growth in the September quarter; Q4 revenue should be $10–$20M higher than Q2.

• Question from Randal J. Konik (Jefferies): When do events and California inflect?
  Response: Comps ease from September; offline events improved and can be flat by late Sep/Oct as marketing ramps to capture share.

• Question from Randal J. Konik (Jefferies): How will you lift profitability in water parks/FECs versus bowling?
  Response: Apply the same playbook: refresh assets, address deferred maintenance, add games, emphasize F&B and packaged pricing, and materially increase brand/marketing.

• Question from Randal J. Konik (Jefferies): What is the long-term portfolio mix by revenue?
  Response: Roughly 40% bowling, 40% water parks, 20% FECs, with water parks scaling faster due to larger unit volumes.

• Question from Jason Ross Tilchen (Canaccord Genuity): Are increased marketing investments lifting comps, and how much spend is contemplated?
  Response: $1M incremental spend drove season pass sales to $13.4M from $8.5M; marketing is moving toward ~2.5–3% of revenue from sub-1%.

• Question from Jason Ross Tilchen (Canaccord Genuity): Why file a shelf registration now?
  Response: Housekeeping to access unsecured debt markets to repay the July bridge loan; intention is to tap debt, not equity.

• Question from Ian Alton Zaffino (Oppenheimer): Q4 monthly cadence and any regional weaknesses?
  Response: Comps improved April -6%, May -3%, June -1%, July >+1%; weakness concentrated in California, while New York is comping positive.

• Question from Ian Alton Zaffino (Oppenheimer): Is alcohol softness a trade-down and how are you responding?
  Response: Leaning into non-alcohol innovation (craft lemonade, zero-proof) while refreshing cocktails; F&B outperformed comps and should benefit from the Lucky Strike rebrand.

• Question from Michael A. Kupinski (NOBLE Capital Markets): Trajectory for location operating costs and impact from Topgolf’s ad?
  Response: Reported costs include a $21M noncash item; underlying ratios align with historical trends; the Topgolf campaign had minimal impact—focus remains on core product and marketing.

• Question from Eric Owen Handler (ROTH Capital Partners): What comps are implied in the revenue guide and how is the Lucky Strike rebrand performing?
  Response: Guide implies +1–5% comps; early rebrand results are encouraging with 55 conversions (100 by year-end), and California rebrands should provide lift.

• Question from Jeremy Scott Hamblin (Craig-Hallum Capital): FY26 cost structure and CapEx outlook?
  Response: SG&A to track Q4 run-rate; marketing adds ~$10–$15M to location costs; Boomers/water parks run negative most of year but deliver high summer margins; non-acquisition CapEx ≈ $130M.