Golf entertainment and gear company Callaway Golf Company (NYSE:CALY) announced better-than-expected revenue in Q1 CY2026, with sales up 9.2% year on year to $687.5 million. The company expects next quarter’s revenue to be around $597.5 million, close to analysts’ estimates. Its GAAP profit of $0.47 per share was 17% above analysts’ consensus estimates.
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Callaway Golf Company (CALY) Q1 CY2026 Highlights:
Revenue: $687.5 million vs analyst estimates of $651.8 million (9.2% year-on-year growth, 5.5% beat)
EPS (GAAP): $0.47 vs analyst estimates of $0.40 (17% beat)
Adjusted EBITDA: $163.7 million vs analyst estimates of $116.9 million (23.8% margin, 40% beat)
The company lifted its revenue guidance for the full year to $2.04 billion at the midpoint from $2.02 billion, a 1.4% increase
EBITDA guidance for the full year is $222 million at the midpoint, above analyst estimates of $187.7 million
Operating Margin: 20.1%, up from 16.4% in the same quarter last year
Free Cash Flow was -$176 million compared to -$155.1 million in the same quarter last year
Market Capitalization: $2.69 billion
“We had a strong start to the year with first quarter revenue increasing 9% and Adjusted EBITDA increasing 31%,” commented Chip Brewer, President and Chief Executive Officer of Callaway Golf Company.
Company Overview
Formed between the merger of Callaway and Topgolf, Callaway Golf Company (NYSE:CALY) sells golf equipment and operates technology-driven golf entertainment venues.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Callaway Golf Company grew its sales at a weak 3.3% compounded annual growth rate. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis.
Callaway Golf Company Quarterly Revenue
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Callaway Golf Company’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 29.5% annually. Note that COVID hurt Callaway Golf Company’s business in 2020 and part of 2021, and it bounced back in a big way thereafter.
Callaway Golf Company Year-On-Year Revenue Growth
This quarter, Callaway Golf Company reported year-on-year revenue growth of 9.2%, and its $687.5 million of revenue exceeded Wall Street’s estimates by 5.5%. Company management is currently guiding for flat sales next quarter.
Story Continues
Looking further ahead, sell-side analysts expect revenue to decline by 2.7% over the next 12 months. Although this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income – the bottom line – excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Callaway Golf Company’s operating margin has generally stayed the same over the last 12 months, and we generally like to see margin increases due to economies of scale and cost efficiency over time.
Callaway Golf Company Trailing 12-Month Operating Margin (GAAP)
This quarter, Callaway Golf Company generated an operating margin profit margin of 20.1%, up 3.7 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Callaway Golf Company, its EPS declined by 9.4% annually over the last five years while its revenue grew by 3.3%. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.
Callaway Golf Company Trailing 12-Month EPS (GAAP)
In Q1, Callaway Golf Company reported EPS of $0.47, up from $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Callaway Golf Company’s full-year EPS of $0.32 to grow 58.4%.
Key Takeaways from Callaway Golf Company’s Q1 Results
We were impressed by Callaway Golf Company’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 5.2% to $15.52 immediately after reporting.
Indeed, Callaway Golf Company had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.