Sweetgreen (NYSE: SG) eats its spinach, launches over 20% higher on earnings

In the second quarter of CY2024, Sweetgreen (NYSE:SG) reported strong financial results, outperforming analysts' expectations. The casual salad chain saw its revenue increase by 21.1% year on year to $184.6 million, surpassing Wall Street estimates by 2.1%.

This growth underscores the company's continued momentum and its ability to connect more communities to its health-focused food offerings.

Despite the positive revenue growth, Sweetgreen reported a GAAP loss of $0.13 per share, slightly missing analyst expectations of a $0.12 loss.

However, this represents an improvement from the $0.24 loss per share recorded in the same quarter last year, indicating the company is making strides toward profitability.

Sweetgreen also adjusted its full-year revenue guidance upwards, now expecting revenue to reach $675 million at the midpoint, a 1.1% increase from previous estimates. The company also raised its EBITDA guidance for the full year to $17.5 million at the midpoint, slightly above analyst expectations.

The company reported a gross margin of 22.5%, up from 20.4% in the same quarter last year, and an EBITDA margin of 6.7%, up from 2.1%.

These improvements in profitability metrics highlight Sweetgreen’s focus on operational efficiency and cost management.

Same-store sales, a key indicator of a restaurant chain's health, rose by 9% year on year, a significant acceleration from the 3% growth seen in the same quarter last year.

This increase reflects growing customer demand within Sweetgreen's existing locations and suggests that the company is successfully resonating with its target market.

Sweetgreen’s CEO, Jonathan Neman, expressed satisfaction with the quarter’s results, citing the company’s commitment to innovation and operational execution as drivers of the strong performance.

Sweetgreen, founded in 2007, has carved out a niche in the modern fast food category by offering a middle ground between traditional fast food and sit-down restaurants, with a focus on healthier, high-quality ingredients.

The company’s growth rates have been impressive, driven by an expanding number of dining locations and increased sales at existing restaurants.

However, looking ahead, Wall Street expects Sweetgreen’s sales growth to decelerate to 12.1% over the next 12 months, down from the 21.1% growth seen this quarter.

This potential slowdown suggests that while the company continues to perform well, it may face challenges in maintaining its current growth trajectory.

Sweetgreen’s Q2 CY2024 earnings report was largely positive, with the company exceeding expectations on several key metrics. The upward revision of its full-year revenue and EBITDA guidance further underscores the company’s strong position in the market.

Following the earnings announcement, Sweetgreen’s stock price jumped 18.9% to $31.23, reflecting investor confidence in the company’s continued growth and profitability.