Dave & Buster's Entertainment Inc. (PLAY) reported a second-quarter fiscal 2026 loss that missed analyst estimates by roughly $0.46 a share, sending shares tumbling in after-hours trading on Tuesday.
The entertainment and dining chain posted an adjusted loss of $0.27 per share, compared with consensus expectations for a $0.19 profit and an adjusted profit of $0.40 a year earlier. On a GAAP basis, the company reported a net loss of $12.5 million, or $0.36 per share, versus a profit of $0.32 in the year-ago quarter.
Revenue came in at $544.1 million, down 2.4% from $557.4 million a year earlier and below the $556.83 million analysts had forecast. Adjusted EBITDA fell to $98.9 million from $129.7 million a year ago, with the margin contracting to 18.2% from 23.3%.
Same-store sales declined 2.9%, an improvement from the 5.4% drop in the first quarter, reflecting a 250-basis-point sequential improvement companywide. Monthly trends showed further stabilization: June same-store sales fell 5%, but July narrowed to a 1.6% decline. Food and beverage comparable sales rose 7.6%, marking the fifth consecutive quarter of growth in that segment.
On a positive note, adjusted free cash flow turned positive year-to-date at $19.5 million, compared with a negative $36.5 million a year earlier. Cash from operations reached $160.6 million, up from $129.8 million, while net capital expenditures were $127.6 million, down from $155.4 million.
Management outlined cost-cutting and investment plans. The company identified $15 million in savings expected over the next 12 months, with total available savings estimated at $30 million. Net capital expenditures are projected to remain under $200 million in fiscal 2026 and drop to $150 million or less in fiscal 2027. Dave & Buster's plans to open four domestic stores for the remainder of fiscal 2026 and five more in fiscal 2027.
CEO Darren Harper said the business is "not broken" but has suffered from under-investment in innovation and relevance. He emphasized three strategic priorities — occasion, relevance, and consistent value — and noted that more than 70% of guests said learning about new games would incentivize them to visit more often. The company has launched 10 new games and attractions year-to-date, including licensed offerings such as The Mandalorian and Grogu, John Wick, and Stranger Things, and saw double-digit sales growth during World Cup match activations in its stores.
Shares closed regular-session trading at $8.47, up 4.05%, but fell 12.53% to $7.41 in after-hours trading, dipping below the 52-week low of $7.94. The stock has dropped 47.75% year-to-date and 64.17% over the past year. The company's market capitalization stands at $288.75 million, with a total debt-to-equity ratio of 35.79.
