Domino's Pizza, Inc. (DPZ) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates positive growth in U.S. and international markets, with strategic focus on carryout, loyalty programs, and menu innovations. Despite macro pressures, Domino's is gaining market share, and franchisee store-level EBITDA is expected to grow. The Q&A highlighted management's confidence in overcoming competitive pressures and sustaining growth. The projected 8% operating income growth and strategic expansions further support a positive outlook. However, challenges in the DPE segment and competitive intensity are noted, but management's strategies appear robust. Overall, the sentiment is positive, likely leading to a stock price increase of 2% to 8%.
Key Financial Performance
Income from Operations Increased 4.2% in Q1, excluding the impact of foreign currency and a gain on the sale of the company's corporate aircraft. This increase was primarily driven by higher U.S. and international franchise royalties and fees as well as gross margin dollar growth within the supply chain.
Global Retail Sales Grew 3.4% in the quarter, excluding the impact of foreign currency, due to positive U.S. comps and global net store growth of more than 900 stores over the past 12 months.
U.S. Retail Sales Grew by 2.8% in Q1, driven by same-store sales and net store growth. Same-store sales grew 0.9% for the quarter, driven by marketing promotions and continued growth in the aggregator business. Carryout comps were up 2.4%, while delivery was down 0.3%.
International Retail Sales Grew 4%, excluding the impact of foreign currency, driven by net store growth over the last year, inclusive of 161 stores in Q1. This was slightly offset by a same-store sales decline of 0.4%.
Net Store Growth Added 19 net new stores in the U.S., bringing the U.S. system store count to more than 7,200. Globally, there was a net store growth of more than 900 stores over the past 12 months.
Share Repurchases Repurchased approximately 446,000 shares for a total of $170 million year-to-date in fiscal 2026. As of April 21, $1.29 billion remained on the share repurchase authorization.
Operating Income and Free Cash Flow (Historical Comparison) Operating income grew from approximately $400 million in 2015 to $950 million in 2025. Free cash flow grew from approximately $230 million in 2015 to $670 million in 2025. Over the same period, $7.7 billion was returned to shareholders through share repurchases and dividends.
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Operating Highlights
New App Launch: Domino's launched a modernized app with improvements to the Pizza Tracker, including AI technology for precise ready times, Live Activities for iOS users, and enhanced order progress tracking.
Back-of-House Technology: Introduced DomOS orchestration agent to improve production efficiency, enabling just-in-time pizza making and higher-quality products.
Market Share Growth: Domino's gained market share in the U.S. QSR Pizza category, driven by competitive pricing and marketing promotions.
Store Expansion: Added 19 net new stores in the U.S., bringing the total to over 7,200 stores. Internationally, added 161 stores in Q1, contributing to over 900 new stores globally in the past 12 months.
Operational Income Growth: Income from operations increased by 4.2% in Q1, driven by higher franchise royalties and supply chain gross margin growth.
Cash Flow and Shareholder Returns: Generated $950 million in operating income and $670 million in free cash flow in 2025, with $7.7 billion returned to shareholders since 2015.
Strategic Adjustments: Plans to optimize marketing calendar and introduce bold product innovations in the second half of 2026 to address macroeconomic challenges and elevate the brand.
Long-Term Growth Strategy: Focus on driving more sales, stores, and profits to capture market share and strengthen competitive advantage.
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Risk or Challenges
Consumer Sentiment and Inflation: Growing consumer uncertainty and inflation are impacting purchase decisions, leading to lower-than-expected same-store sales growth.
Weather Impact: Adverse weather conditions affected business operations, including the carryout special boost week.
Competitive Pressures: Increased competition within the QSR Pizza space, with competitors offering deals comparable to Domino's, created short-term pressure on sales.
Macroeconomic Environment: Challenging macroeconomic conditions, including geopolitical uncertainty and economic pressures, are affecting both U.S. and international same-store sales growth.
International Sales Decline: International same-store sales declined slightly, impacted by macroeconomic and geopolitical factors.
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Guidance & Outlook
U.S. Same-Store Sales Growth: Domino's expects U.S. same-store sales to grow in the low single digits for 2026, reflecting adjustments to the marketing calendar and macroeconomic pressures.
International Same-Store Sales Growth: International same-store sales growth is projected to be in the low single digits for 2026, influenced by macroeconomic and geopolitical uncertainties.
Global Retail Sales Growth: Global retail sales are expected to grow in the mid-single digits for 2026, adjusted due to revised same-store sales expectations.
Net Store Growth: Domino's anticipates adding 175+ net new stores in the U.S. and approximately 800 net new stores internationally in 2026.
Operating Income Growth: Operating income growth is forecasted to be in the mid- to high single digits for 2026, excluding foreign currency impacts, refranchising gains, and the sale of corporate aircraft.
Product Innovation: The company plans to introduce bold and exciting product innovations in the second half of 2026, particularly around pizza, to elevate the brand and drive growth.
Long-Term Market Share Growth: Domino's aims to continue capturing meaningful market share in the QSR Pizza category through increased sales, store openings, and franchisee profitability.
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Shareholder Return Plan
Dividend Growth: Domino's has returned approximately $7.7 billion to shareholders through share repurchases and a dividend that has grown annually by more than 20% on average since 2015.
Dividend Outlook: The company expects to deliver meaningful cash to shareholders in 2026 and beyond, in line with its capital allocation priorities.
Share Repurchase Program: Through April 21, Domino's repurchased approximately 446,000 shares for a total of $170 million in fiscal 2026.
Share Repurchase Authorization: As of April 21, the company had approximately $1.29 billion remaining on its share repurchase authorization, which includes an additional $1 billion authorization approved by the Board in April.
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Key Q&A
Q:What are your thoughts on the comps outlook for the remainder of the year, and why do you think the business might accelerate on an underlying basis?
A:Russell Weiner stated that the objective remains 3% same-store sales growth in the U.S. for the year. Adjustments have been made to the calendar to adapt to the environment, including more focus on pizza innovation starting in May. Sandeep Reddy added that they are confident in achieving positive low single-digit growth despite macro volatility, with plans to grow 175 stores this year.
Q:Are you seeing any competitive changes in the environment, and do you expect competitors to close stores later this year?
A:Russell Weiner noted that competitors are adopting promotions similar to Domino's, which created some headwinds in Q1. However, he believes competitors cannot sustain such promotions due to lower advertising budgets and profitability challenges. Sandeep Reddy added that competitors closed about 450 stores last year and are expected to close a similar number this year, which benefits Domino's in terms of market share.
Q:How do you address concerns about the pizza category's growth potential given competition from other delivery categories?
A:Russell Weiner emphasized that the pizza category has consistently grown 1%-2% annually and remains stable. Domino's strategy now includes aggregators, which helped maintain delivery volumes despite headwinds. Sandeep Reddy highlighted that Domino's has a 33% share in delivery and a 20% share in carryout, with significant growth potential in the carryout segment.
Q:What caused the 300 basis point trend change in Domino's comps in Q1, and was it due to taking less share or a change in the QSR Pizza category?
A:Sandeep Reddy explained that Q1 was impacted by weather issues, macro pressures, and increased competitive activity. Despite these challenges, Domino's grew faster than the QSR Pizza category and gained market share.
Q:What is the focus of your product innovation strategy, and are there opportunities in non-pizza categories?
A:Russell Weiner mentioned a multi-year product innovation strategy, with some pizza innovations moved up in the calendar. Domino's also has a robust portfolio of non-pizza items like sandwiches and chicken, and is testing new products like CHICK 'N' DIP in the U.K.
Q:How did the health of the consumer impact Q1 performance, and was the shortfall due to competitive pressure or overall QSR pressure?
A:Russell Weiner noted that consumer confidence is at COVID-level lows, particularly among lower-income customers. While Q1 was not as expected, Domino's grew across all income cohorts, including lower-income groups. Competitive pressures contributed to the shortfall but are seen as transitory.
Q:What sales lift do franchisees see in markets where competitors' stores have closed, and are there specific geographies with more closures?
A:Russell Weiner stated that franchisees see a lift proportional to Domino's market share in areas where competitors close stores. However, closures often involve lower-volume stores, so the impact is gradual. Closures are expected to continue, benefiting Domino's long-term.
Q:How are you addressing value positioning amid competitive intensity from both pizza and non-pizza QSR players?
A:Russell Weiner emphasized that Domino's leads in driving competitive intensity with renowned value offerings. The company can sustain profitable volume growth, unlike competitors who may struggle with franchisee profitability.
Q:What is the impact of gas prices on Domino's business, including consumer demand, delivery driver supply, and commodity costs?
A:Russell Weiner stated that higher gas prices impact consumer disposable income but have not affected Domino's driver staffing levels. Sandeep Reddy clarified that guidance remains positive low single digits, accounting for macro uncertainties.
Q:What caused the narrowing performance between delivery and carryout in Q1?
A:Sandeep Reddy attributed the narrowing to macro pressures, competitive activity, and weather impacts. Despite this, carryout grew 2.4%, and Domino's sees significant growth potential in the carryout segment, where it holds a 20% market share.
Q:What is the outlook for the international business, and how is DPE impacting performance?
A:Russell Weiner stated that the Middle East has not seen significant impacts from the war, and DPE's challenges are being addressed through value adjustments and potential portfolio changes. Excluding DPE, the international business met expectations.
Q:How are you addressing promotional intensity from competitors, and is it sustainable for them?
A:Sandeep Reddy believes competitors' promotional intensity is not sustainable due to franchisee profitability challenges. Russell Weiner added that this creates long-term tailwinds for Domino's as competitors face financial pressures.
Q:How are you managing advertising effectiveness and storytelling?
A:Russell Weiner stated that Domino's is focused on creating compelling stories to enhance advertising effectiveness. The company is working on new campaigns to complement its value and innovation strategies.
Q:What is the margin outlook for the supply chain and company-owned stores?
A:Sandeep Reddy expects positive margin growth in the supply chain business due to procurement productivity and volume growth. Company-owned store margins are less material due to refranchising, but overall operating margins are expected to expand.
Q:How does Domino's view competition from broader QSR players offering value deals?
A:Russell Weiner acknowledged increased value competition from QSR players but noted that Domino's value offerings are tailored to customer preferences. Non-pizza QSR competition did not significantly impact Q1 results, and Domino's remains focused on competing effectively.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the nature of upcoming pizza innovations and the exact impact of competitive pressures on Q1 performance. Additionally, they did not elaborate on the timeline or specific measures for addressing challenges in the DPE segment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI technology
Activities user
COVID level
Competition QSR
Consumer sentiment
DomOS orchestration
Excellence pillar
Officer Chief
Operational Excellence
Pizza Tracker
Pizza space
QSR Pizza
Sustainability statement
Tracker order
Weather beginning
ability value
addition consumer
adjustment macro
advantage effect
advantage power
advertising order
agent production
app improvement
app personalization
app progress
area Operational
backdrop closure
orchestration agent
order count
pizza competitor
store profit
tracker
view
DPZ Transcript
Domino's Pizza, Inc. (DPZ) Q1 2026 Earnings Call Transcript
Positive4-27
The earnings call indicates positive growth in U.S. and international markets, with strategic focus on carryout, loyalty programs, and menu innovations. Despite macro pressures, Domino's is gaining market share, and franchisee store-level EBITDA is expected to grow. The Q&A highlighted management's confidence in overcoming competitive pressures and sustaining growth. The projected 8% operating income growth and strategic expansions further support a positive outlook. However, challenges in the DPE segment and competitive intensity are noted, but management's strategies appear robust. Overall, the sentiment is positive, likely leading to a stock price increase of 2% to 8%.
Domino's Pizza, Inc. (DPZ) Q4 2025 Earnings Call Transcript
Positive2-23
The earnings call highlights a 15% dividend increase, strong franchise economics, and market share gains due to competitive closures. The Q&A reveals management's confidence in growth through product innovations and operational efficiencies. Despite some uncertainties, like insurance costs and GLP-1 drugs, the company's strategic initiatives and optimistic guidance for 2026 bolster a positive sentiment. This suggests a likely stock price increase of 2% to 8% over the next two weeks.
Domino's Pizza, Inc. (DPZ) Q3 2025 Earnings Call Transcript
Positive10-14
The earnings call reflects a positive outlook, with strong focus on long-term growth and strategic initiatives like the loyalty program and new menu items. Despite macro challenges, Domino's shows confidence in its growth targets and market share gains. The Q&A reveals management's commitment to value-driven promotions and unit expansion, while addressing risks and uncertainties. However, some lack of detail on sales mix percentages and macro challenges slightly tempers the overall positive sentiment.
Domino's Pizza, Inc. (DPZ) Q2 2025 Earnings Call Transcript
Positive7-21
Domino's earnings call highlights strong strategic initiatives, including partnerships with DoorDash and Uber Eats, new product launches, and a robust share repurchase plan. Despite some macroeconomic pressures, they project positive growth in US and international markets. The Q&A reveals confidence in sustaining growth, leveraging new platforms, and expanding in key markets like India and China. The lack of specific guidance on certain metrics is a minor concern but doesn't overshadow the overall positive outlook. Given these factors, a short-term positive stock price movement is anticipated.
DPZ Report
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