Dave & Buster's Entertainment Inc (PLAY) Reports Record Results for Q2 2023
Dave & Buster's Entertainment Inc (NASDAQ:PLAY) has reported record results for the second quarter of fiscal 2023. The company generated revenue of $542 million and adjusted EBITDA of $140 million, resulting in an adjusted EBITDA margin of 25.9% for the quarter. The company's leadership expressed confidence in their ability to execute against growth initiatives and manage their cost structure effectively.
Key Organic Growth Initiatives
PLAY outlined six key organic growth initiatives during the earnings call. These include marketing optimization, strategic game pricing, improved food and beverage offerings, store remodels, special events, and technology enablement. The company has made significant investments in marketing technology infrastructure and is building a digital marketing engine expected to yield results in early 2024. The company's loyalty database has grown to 5.2 million users, up from 4.8 million last quarter.
Financial Performance
PLAY's approach to running the business with sharpened cost controls enabled the company to expand its margins, which grew 120 basis points versus 2022 and are now up 230 basis points in the second quarter versus 2019. The company continues to find ways to permanently reduce its cost base, which will be particularly powerful for cash flow generation as momentum continues to build in executing their long-term strategic plan.
New Store Openings
In the quarter, PLAY opened two new Dave & Buster's and one new Main Event. The company expects a total of 16 new stores this year across both brands. The new store openings continue to perform exceptionally well and generate strong cash and cash returns.
Share Repurchase Authorization
Despite the progress made toward their strategic plan and the demonstrated strength and resiliency of their business model, PLAY believes it remains undervalued by the market. As a result, the board of directors has approved an increase to the current share repurchase authorization, bringing the current authorization to $200 million.
Looking Ahead
PLAY is confident that their organic growth initiatives will create significant shareholder value over the long term. The company's operational achievements in the quarter are indicative of the progress they are making toward their goal. They remain committed to their long-term target of adjusted EBITDA of $1 billion and are making considerable progress toward that goal.
This article first appeared on GuruFocus.
