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Chipotle Q3 tops estimates, sees digital sales triple

Chipotle Mexican Grill released its third quarter earnings report after hours on Wednesday, beating on its top line and bottom lines. The company saw its comparable sales up 11% year-over-year, and its digital sales triple year-over-year. Yahoo Finance’s Jared Blikre breaks down the company’s earnings report on The Final Round.

Video Transcript

SEANA SMITH: Welcome back to "The Final Round." Chipotle is out with its earnings results. Jared Blikre has those numbers for us. Jared.

JARED BLIKRE: Yeah, we're seeing the stock off a little bit here in the after hours. It had been down as much as 7% or 8%, off about 1% now. And it was a beat on their top and bottom lines, barely squeezing out a beat on revenue of $1.6 billion. And the estimate was for $1.59 billion. And that's up 14% year over year.

The big headline comes from their press release. They just had incredible digital sales growth, basically tripling year over year and accounting for nearly half of their sales. Looking at adjusted EPS, it was a beat. It came in-- I have this number-- $3.76 versus estimates of $3.46.

They opened up 44 new restaurants in the third quarter. And their operating margin-- and there were concerns that their operating margin would take a hit, and it did, 19.5% down from 20.8% year over year. But it did beat the estimate of 19%. And their average restaurant sales now came to $2.2 million. And that is up 2.1% year over year.

So, eked out barely a beat on revenue and a bigger beat on adjusted EPS. But looking like investors are not taking this to heart. The stock is down about 4 and 1/2% in after market trading here, Seana.

ANDY SERWER: Hey, Jared, you know how-- sorry to jump in, Seana. You know how you say digital sales? You know what we used to call that in this business? Takeout and delivery.

JARED BLIKRE: Oh. I thought this was going to be a joke about sticky fingers or something. I don't know.

ANDY SERWER: Well, that's it.

JARED BLIKRE: I figured [INAUDIBLE].

ANDY SERWER: No, it's just funny that-- I mean, really, when you talk about digital business and QSR, it's takeout and delivery. It's funny. And I know it's all-- it's different, but and that's actually much more than that. Because you get people to download your app, and then you get their data, and then you start studying their custom habits.

And then you can offer them promotion, and then they become members. And then you can introduce new items. And then you become an ecosystem with a flywheel. And then you become a platform, and you have a bigger market cap.

So it's not-- I'm poking fun at myself, but it all started with takeout and delivery and having a website, you know, mobile web with the phone number on it that you hit. And now it's gone to this. So it's an incredible evolution. And this is a company that is, you know, along with Starbucks, it's very much at the forefront.

SEANA SMITH: Yeah, and certainly has been. And we've heard Chipotle talk about this numerous times here over the last several quarters. But Andy, like you pointed out, the digital sales were up 202%. About half of those digital sales were via delivery, so benefiting there from their expanded partnerships. We've heard Chipotle talk about that.

And of course, I'm sure analysts will be looking for a little bit more commentary from Chipotle executives during the call which gets underway in just over half an hour from now. Also, the company saying that it opened 44 new restaurants during the third quarter, only closed three. So it's now total restaurant count is just over 2,700. But again, the stock under a little bit of pressure here after hours, with shares off just around 5%.