Stock Story -
Coffee chain Dutch Bros (NYSE:BROS) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 25.9% year on year to $254.1 million. On the other hand, the company's full-year revenue guidance of $1.20 billion at the midpoint came in 1.9% below analysts' estimates. It made a non-GAAP profit of $0.04 per share, improving from its profit of $0.03 per share in the same quarter last year.
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Dutch Bros (BROS) Q4 FY2023 Highlights:
- Revenue: $254.1 million vs analyst estimates of $252.9 million (small beat)
- EPS (non-GAAP): $0.04 vs analyst estimates of $0.01 ($0.03 beat)
- Management's revenue guidance for the upcoming financial year 2024 is $1.20 billion at the midpoint, missing analyst estimates by 1.9% and implying 24% growth (vs 30.7% in FY2023)
- Gross Margin (GAAP): 23.3%, down from 26.9% in the same quarter last year
- Same-Store Sales were up 5% year on year (beat vs. expectations of up 2.4% year on year)
- Store Locations: 831 at quarter end, increasing by 160 over the last 12 months
- Market Capitalization: $2.05 billion
Started in 1992 by two brothers as a single pushcart, Dutch Bros (NYSE:BROS) is a dynamic coffee chain that’s captured the hearts of coffee enthusiasts across the United States.
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthDutch Bros is a mid-sized restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the other hand, Dutch Bros can still achieve high growth rates because its revenue base is not yet monstrous.
As you can see below, the company's annualized revenue growth rate of 41.9% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was incredible as it added more dining locations and increased sales at existing, established restaurants.
This quarter, Dutch Bros's year-on-year revenue growth of 25.9% was excellent, and its $254.1 million in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 26.2% over the next 12 months, an acceleration from this quarter.
Same-Store SalesDutch Bros's demand within its existing restaurants has been relatively stable over the last eight quarters but fallen behind the broader sector. On average, the company's same-store sales have grown by 1.8% year on year. With positive same-store sales growth amid an increasing number of restaurants, Dutch Bros is reaching more diners and growing sales.
In the latest quarter, Dutch Bros's same-store sales rose 5% year on year. This growth was a well-appreciated turnaround from the 0.6% year-on-year decline it posted 12 months ago, showing the business is regaining momentum.
Key Takeaways from Dutch Bros's Q4 Results We liked how Dutch Bros beat same-store sales and EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street's estimates. On the other hand, its gross margin missed analysts' expectations and its full-year revenue guidance missed Wall Street's estimates. Overall, the results could have been better. The stock is flat after reporting and currently trades at $27 per share.
