Topgolf Callaway 2025 Q2 Earnings Beats Expectations Despite Net Income Drop

Topgolf Callaway (MODG) reported its second quarter 2025 earnings on August 6, 2025. The company slightly exceeded expectations with revenue and Adjusted EBITDA, although net income declined. The results reflect ongoing challenges in the Active Lifestyle segment due to the sale of Jack Wolfskin, yet the company raised its full-year guidance for continuing operations.

Revenue for Topgolf Callaway totaled $1.11 billion in the second quarter of 2025, a 4.1% decrease from the $1.16 billion in the same period in 2024. The decline was primarily driven by the Active Lifestyle segment, particularly impacted by the sale of Jack Wolfskin. However, the company outperformed expectations in its Topgolf and Golf Equipment segments. The Topgolf segment generated $485.3 million, while Golf Equipment revenue stood at $411.6 million. The Active Lifestyle segment saw a significant drop in revenue to $213.6 million. Other revenue streams included Venues at $468 million, Topgolf other business lines at $17.30 million, Golf balls at $98.90 million, Apparel at $123.70 million, and Gear, accessories & other at $89.90 million.

The company's net income for Q2 2025 was $20.30 million, a 67.3% decrease compared to $62.10 million in Q2 2024. On a per-share basis, the earnings per share (EPS) declined 65.6% to $0.11 in 2025 Q2 from $0.34 in 2024 Q2. This decline was attributed to non-recurring charges related to the sale of Jack Wolfskin, increased foreign currency hedge losses, and higher income tax expenses. Despite the drop, the company maintained strong operational resilience, having remained profitable for over 20 consecutive years in the corresponding fiscal quarter.

MODG's stock price has shown mixed performance recently. The stock dropped 3.62% during the latest trading day, 5.48% during the most recent full trading week, but gained 1.74% month-to-date. Post-earnings, the stock initially dipped 10.2% after a downgrade from "hold" to "sell," but it rebounded with a 2.9% gain over the past month, outperforming the S&P 500's 0.5% increase.

Chip Brewer, CEO of Topgolf Callaway Brands, highlighted the company's strong second-quarter performance, noting that consolidated net revenue and Adjusted EBITDA exceeded expectations. He attributed this to strong consumer demand in the golf equipment segment, gross margin and cost savings initiatives, and successful value initiatives at Topgolf venues. The CEO also mentioned the company's ability to absorb increased tariffs and raised full-year guidance for continuing operations.

Following the sale of Jack Wolfskin, the company updated its full-year 2025 guidance, excluding Jack Wolfskin from its outlook. For continuing operations, it expects to maintain strong performance across Topgolf and Golf Equipment, with improved traffic and sales trends. The company anticipates absorbing the increased tariffs while delivering improved results year-over-year. It also raised its full-year guidance for Adjusted EBITDA and revenue, reflecting the strong second-quarter performance and improved outlook for the year.

Additional news included the resignation of Artie Starrs, CEO of Topgolf, who is expected to stay until September 2025 to assist with the transition. The company also announced the sale of Jack Wolfskin, strengthening its liquidity position by 48% year-over-year to over $1.1 billion. This strategic move is part of the company's ongoing efforts to focus on its core businesses and improve financial performance. The company remains committed to separating its Topgolf and Core businesses, with a potential spin-off or sale of Topgolf likely delayed until 2026 due to the need for a new CEO.