Image source: Dave & Buster's.
There's no pause when your ticker symbol is P-L-A-Y. Shares of Dave & Buster's (PLAY 2.02%) hit all-time highs on Wednesday after posting another blowout quarter.
Revenue clocked in at $262 million for its fiscal first quarter, 18% ahead of the prior year's showing. That's a pretty big deal. For starters, it was only forecasting top-line growth of 12% to 14% for the entire fiscal year, so it's off to a great start. This also follows the mere 13% in year-over-year growth that it posted three months ago, its weakest showing since its return as a public company two years ago. Revenue growth is accelerating again, and that's naturally exciting.
Expansion explains most of the growth, though let's not dismiss the 3.6% uptick in comparable-store sales as petty. This is stacked on top of a 9.9% spike in comps during last year's first quarter. In a nutshell, the average established location is delivering 13.9% more in sales than it was two years ago. Keep that data nugget handy the next time a Dave & Buster's bear tells you that the restaurant concept with a mammoth-sized video game arcade is faddish. Folks continue to flock to this one-stop destination of food, drinks, and fun.
The news gets even better on the bottom line where net income soared 60% to $31.2 million -- or $0.72 a share. Adjusted EBITDA didn't grow as quickly as reported earnings, but a 28% advance there -- headier growth than Dave & Buster's on the top line -- once again illustrates the juicy benefits of this very scalable model.
The unique model where roughly half of its revenue is generated from high-margin arcade games and diversions is clicking with consumers and investors. Once again we saw amusements (up 22%) outpace food and beverages (up 13%), and that's the perfect climate for margin expansion.
Keep beating until you win the game
Dave & Buster's stock has now nearly tripled since going public at $16 in late 2014. A big reason for its success is that it's blowing through Wall Street's profit targets.
It hasn't even been close. Let's score every quarter that Dave & Buster's has cranked out since returning as a public company.
| Quarter | EPS |
EPS | Surprise |
| Q3 2014 | ($0.06) | ($0.09) | 33% |
| Q4 2014 | $0.33 | $0.28 | 18% |
| Q1 2015 | $0.46 | $0.37 | 24% |
| Q2 2015 | $0.40 | $0.23 | 74% |
| Q3 2015 | $0.12 | $0.03 | 300% |
| Q4 2015 | $0.53 | $0.43 | 23% |
Data source: Yahoo! Finance.
Now we can tack on the fiscal first quarter of 2016 where its $0.72 a share profit is 22% ahead of what analysts were modeling. Yes, Dave & Buster's has beaten analyst estimates by double-digit percentage amounts in each of its first seven quarters as a reborn public entity.
Dave & Buster's is raising its guidance following its seventh consecutive blowout report. It now sees $983 million to $995 million in revenue, up from an earlier range of $967 million to $987 million. It's now targeting net income of $80 million to $85 million, up from the $74 million to $80 million it was looking to earn just three months ago.
Dave & Buster's expects to have 90 to 91 locations by the end of the year. That may seem like a lot for a high-volume concept, but the chain still thinks North America alone could hold 200 units. It's hard to dislike a company that keeps raising the bar even as it tends to its own bar.
