Domino's Pizza Inc (DPZ) Earnings & Analysis

Latest quarter

Domino’s reported Q3 FY2026 revenue of $1.2 billion, up 3.36% from Q3 FY2025. The company reported adjusted EPS of $4.60, which exceeded the consensus of $4.33 by 6.24%, while revenue exceeded the consensus by 1.63%.

The filing said consolidated revenue growth was driven primarily by higher supply-chain revenue and global franchise royalty revenue. Supply-chain revenue rose on higher order volumes and food-basket pricing, while U.S. Company-owned store revenue declined following the refranchising of certain markets. Domino’s said global retail sales excluding foreign currency rose 3.2%, with U.S. retail sales up 2.1% and international retail sales up 4.3%.

The company reported gross margin of 40.2%, compared with 40.1% a year earlier, and operating margin of 20.4%, compared with 19.5%. Domino’s reported free cash flow of $158.6 million, compared with $164.0 million in Q3 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Joe Jordan said underlying demand remained focused on order-count growth in delivery and carryout, while consumers continued to face pressure. He said the company needs to balance order growth with improved ticket growth, after the Q3 ticket was affected by fewer items per order in carryout and first-party delivery. Jordan said the company used value offers and introduced stuffed crust within its Best Deal Ever promotion to encourage product trial and subsequent purchases at higher tickets.

Asked about third-party delivery, Jordan said Domino’s continued to see growth potential in delivery and was monitoring whether third-party orders were incremental rather than shifting orders from its first-party channels. He said management’s estimate for third-party delivery incrementality remained around 50%.

Jordan said the company expects consumer and competitive pressure to continue through the rest of FY2026, while a fourth-quarter calendar would provide opportunities to compete. He said Domino’s was using targeted promotions and a new website to seek higher items per order over time.

Chief Financial Officer Sandeep Reddy said Q3 operating-income growth was driven primarily by higher U.S. and international franchise royalties and fees, plus supply-chain gross-margin dollar growth from U.S. order counts and procurement productivity. Reddy said route optimization within supply-chain centers also benefited Q3 results, and that the company intends to focus on gross-profit-dollar growth in 2027 rather than margin expansion; he said U.S. supply-chain profits are shared 50-50 with franchisees.

Analysts asked about store openings, and Reddy said pressure on franchisee profitability had weighed on the development pipeline. He said management would not quantify that pressure during the call and would provide more color on full-year franchise profits with Q4 results. Reddy also said Domino’s repurchased approximately $305 million of shares through the first three quarters of FY2026.

Guidance

On its updated FY2026 outlook, Domino’s said U.S. same-store sales should rise by low single digits, toward the low end of that range. The company now expects international same-store sales growth to be approximately flat and U.S. net new stores of 125 to 150. Domino’s now expects global retail-sales growth in the low- to mid-single digits and currently anticipates finishing near the midpoint. It now expects operating-income growth in the mid-single digits, excluding foreign currency, refranchising gains and the gain on the sale of its corporate aircraft.