DPZ Q1 Earnings Call: New Menu Launches and Aggregator Partnerships Shape Outlook

May 12, 2025 at 08:54 AM EDT

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Fast-food pizza chain Domino’s (NYSE: DPZ) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 2.5% year on year to $1.11 billion. Its non-GAAP profit of $4.33 per share was 6.3% above analysts’ consensus estimates.

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Domino's (DPZ) Q1 CY2025 Highlights:

Revenue: $1.11 billion vs analyst estimates of $1.13 billion (2.5% year-on-year growth, 1.2% miss)
Adjusted EPS: $4.33 vs analyst estimates of $4.07 (6.3% beat)
Adjusted EBITDA: $230.5 million vs analyst estimates of $235.8 million (20.7% margin, 2.3% miss)
Operating Margin: 18.9%, in line with the same quarter last year
Free Cash Flow Margin: 14.8%, up from 9.5% in the same quarter last year
Locations: 21,358 at quarter end, up from 20,755 in the same quarter last year
Same-Store Sales rose 1.6% year on year (3.2% in the same quarter last year)
Market Capitalization: $16.4 billion

StockStory’s Take

Domino’s Q1 results were shaped by the introduction of its Parmesan Stuffed Crust pizza, ongoing value-focused promotions, and a challenging macroeconomic environment that impacted both delivery and carryout traffic. Management discussed the initial performance of the new stuffed crust item, which launched late in the quarter, and highlighted strategic investments in digital platforms and franchisee support as key contributors to maintaining market share amid competitive pressures. CEO Russell Weiner emphasized, “We’re excited about the impact this product will have not only this year, but as a market share driver for years to come.”

Looking ahead, Domino’s leadership focused on the expected benefits from its DoorDash partnership, which is set for a national rollout in the coming months. The company reiterated its strategy of combining its own digital channels with third-party aggregator platforms to reach a broader customer base. CFO Sandeep Reddy noted, “All of our key initiatives, including aggregator partnerships and new product launches, are incorporated into our full-year outlook,” while also cautioning that continued macroeconomic headwinds could affect same-store sales expectations.

Key Insights from Management’s Remarks

Domino’s management attributed Q1 performance to a combination of new product initiatives, operational improvements, and expanding digital partnerships. They also commented on the external pressures facing the quick-service restaurant (QSR) industry, including consumer spending trends and heightened competition.

• Stuffed Crust Pizza Launch: The Parmesan Stuffed Crust pizza was launched in early March, representing Domino’s largest new menu item in years. While it had limited impact on Q1 results due to timing, management reported strong initial customer feedback and a high proportion of orders including the new crust. Russell Weiner stated that this launch filled a major gap in the menu and is expected to contribute meaningfully to future sales.

• DoorDash Aggregator Rollout: Domino’s initiated a pilot with DoorDash, the largest delivery aggregator in the US, and plans a national rollout by the end of Q2. Management expects approximately 50% of the orders through DoorDash to be incremental, citing the platform’s scale compared to previous partnerships. The anticipated impact is weighted toward the second half of the year.

• Organizational Restructuring: In Q1, Domino’s elevated Joe Jordan to Chief Operating Officer and promoted Weiking Ng to Head of International. The company also streamlined its structure, resulting in some severance expenses but aiming for greater market agility and efficiency in pursuing its “Hungry for MORE” strategy.

• Value and Loyalty Initiatives: Promotions like the “Best Deal Ever” and ongoing enhancements to the Domino’s Rewards loyalty program supported customer retention and frequency, particularly among carryout customers. Management cited the multi-year impact of loyalty on driving repeat business.

• International Store Dynamics: While the international unit count declined due to closures by the Australia-based master franchisee (mainly in Japan), core international markets such as India and Canada outperformed, driven by localized value campaigns and digital channel adoption.

Drivers of Future Performance

Management’s outlook for the remainder of the year is shaped by the phased rollout of new menu items, expansion of third-party delivery partnerships, and ongoing investments in customer-facing technology, all set against a backdrop of macroeconomic uncertainty and shifting consumer preferences.

• Aggregator Platform Expansion: The full nationwide launch of DoorDash is expected to significantly broaden Domino’s delivery reach, with management estimating that about half of the orders from this channel will be incremental to existing sales.

• Loyalty and Digital Initiatives: The enhanced Domino’s Rewards program is designed to attract light and infrequent users by lowering the barrier to earning rewards, which management believes will support long-term frequency growth and customer retention across both carryout and delivery segments.

• International Market Volatility: Management highlighted potential risks from geopolitical instability and macroeconomic pressures in international markets. These factors are reflected in the company’s conservative outlook for international same-store sales and unit expansion for the rest of the year.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be monitoring (1) the impact of the DoorDash rollout on delivery traffic and overall sales mix, (2) adoption rates and repeat purchase patterns for the Parmesan Stuffed Crust pizza, and (3) the pace of domestic and international store openings relative to management’s goals. Additional attention will be paid to how Domino’s navigates macroeconomic pressures and competitive value promotions as the year progresses.

Domino's currently trades at a forward P/E ratio of 26.9×. Should you double down or take your chips? Find out in our free research report.

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