Potbelly 2025 Q1 Earnings Strong Performance as Net Income Swings 103.2%
Thursday, May 8, 2025 5:33 am ET
3min read PBPB Trend
Revenue
Potbelly reported a total revenue increase of 2.3%, reaching $113.68 million for Q1 2025. The core revenue from its sandwich shops contributed $109 million, while franchise royalties, fees, and rent income added $4.68 million. This revenue growth demonstrates the company's effective sales strategies and its ability to leverage franchise operations for additional income.
Earnings/Net Income
Potbelly achieved a noteworthy turnaround in its earnings, narrowing losses to $0.00 per share in Q1 2025 from a loss of $0.09 per share in Q1 2024. This represents a 97.7% improvement. The company's net income swung positively by 103.2%, from a net loss of $-2.67 million in Q1 2024 to $85,000 this quarter. The EPS figures indicate a significant financial recovery.
Post-Earnings Price Action Review
Potbelly's post-earnings strategy of buying shares after a revenue drop and holding for 30 days has proven highly effective, delivering a 280.44% gain over the past five years. This approach significantly outperformed the market’s 8.2% return, showcasing its ability to capitalize on the company's growth trajectory following revenue dips. Potbelly's stock exhibited higher volatility than the market, with a beta of 1.48, offering more opportunities for gains after revenue drops as the stock price experienced substantial swings due to company-specific news and broader market movements. The success of this strategy depends on the timing of purchases post-revenue drops and holding shares for 30 days to leverage subsequent price increases. However, investors should be aware of risks, including potential revenue or stock price declines and earnings forecast uncertainties. Overall, the strategy has been rewarding, leveraging Potbelly’s growth potential during periods of weakness, but requires careful attention to both the company's fundamentals and broader market conditions.
CEO Commentary
Bob Wright, President and Chief Executive Officer of Potbelly Corporation, commented, “We are pleased with the great start to 2025 and our strong finish to the first quarter which showcased the strength of the Potbelly brand. Not only did we deliver strong system-wide sales growth including positive same-store sales growth that exceeded our expectations, but we also posted another quarter of strong profitability. Following the extensive work we have done over the past four years to rejuvenate this beloved brand, I am proud to call Potbelly a growth company again. Our focus continues to be on delivering results that leave no doubt that Potbelly is a compelling long-term growth story.”
Guidance
For the second quarter of fiscal 2025, Potbelly expects same-store sales growth of 1.5% to 2.5% and adjusted EBITDA in the range of $8.25 million to $9.75 million. For the full year 2025, the company reiterates its guidance of same-store sales growth of 1.5% to 2.5%, plans for at least 38 new unit openings, and adjusted EBITDA between $33 million and $34 million.
Additional News
Potbelly Corporation announced significant franchise development efforts, with 40 new franchise shop commitments secured in Q1, expanding its footprint across different states. The company also initiated a share repurchase program, acquiring approximately 117,000 shares of common stock for about $1.1 million during the first quarter, with $17.5 million remaining under the three-year authorization. These strategic moves underscore Potbelly's commitment to growth and shareholder value, showcasing its proactive approach in expanding franchise operations and optimizing capital structure through buybacks. Investors can expect continued positive developments as Potbelly leverages its strong brand and operational efficiencies.
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