Krispy Kreme, Inc. (NASDAQ: DNUT) reported third‑quarter 2025 results before the bell, showing early progress on its turnaround: revenue softened year over year, but margins, cash generation and adjusted profitability improved. Shares jumped in early trading after the company posted a surprise positive adjusted EPS and reiterated expectations for stronger cash flow into year‑end. 1
Key numbers at a glance (Q3 FY2025)
- Net revenue:$375.3M, –1.2% YoY (organic revenue +0.6%).
- GAAP net loss:$20.1M; GAAP diluted EPS –$0.11.
- Adjusted EPS:$0.01 (vs. a loss expected by consensus).
- Adjusted EBITDA:$40.6M, +17% YoY; adjusted EBITDA margin 10.8% (+170 bps).
- Operating cash flow:$42.3M; free cash flow:$15.5M.
- Global Points of Access:14,851 (down 6.1%) reflecting closure of underperforming doors. 1
Context on EPS figures: The Associated Press notes a $19.4M net loss attributable to shareholders (–$0.11 per share GAAP) and $0.01 in adjusted earnings per share, aligning with the company’s non‑GAAP presentation. 2
Why the stock is up today
- Positive surprise: Adjusted EPS of $0.01 topped expectations for a quarterly loss; revenue was a touch light versus estimates. Shares rose ~10–11% in pre‑market trading before stabilizing intraday. 3
- Cash flow matters: Management generated positive free cash flow and said it expects another quarter of positive free cash flow and higher adjusted EBITDA in Q4, a view echoed in outside coverage today. 1
What changed under the turnaround
Krispy Kreme is reshaping its U.S. distribution after ending its U.S. partnership with McDonald’s in July. The company is prioritizing high‑volume retail partners (e.g., club and grocery) and trimming low‑performing points of access to improve unit economics and margins. Today’s press release also cites cost removals tied to the McDonald’s exit as a tailwind to Q3 profitability. 4
Four focus areas of the plan reiterated today:
- Refranchising select international markets and restructuring the Western U.S. joint venture (targeting a minority stake by 2026).
- Improving ROIC by leveraging existing capacity vs. new builds.
- Expanding margins via operational efficiency and outsourced U.S. logistics.
- Sustainable growth through profitable U.S. channels. 1
Note: Q3 adjusted EBITDA benefited in part from $9.3M of business interruption insurance recoveries linked to a late‑2024 cyber incident—an item investors should strip out when assessing underlying run‑rate profitability. 1
Segment performance highlights
- U.S.: Revenue $216.2M (–5.3% YoY), reflecting the Insomnia Cookies deconsolidation and strategic door closures; average revenue per door per week rose 18% sequentially as weaker doors came out of the base. Adjusted EBITDA improved year over year, aided by the insurance recoveries. 1
- International:Organic revenue +6.2% on strength in Canada, Japan and Mexico, with ongoing UK recovery efforts; Adjusted EBITDA up modestly. 1
- Market Development: Revenue $18.9M (–9.2%); Adjusted EBITDA margin 63.5% on mix. 1
Management’s message & outlook
CEO Josh Charlesworth said Q3 marked a “significant pivot” with lower leverage, positive free cash flow, and higher adjusted EBITDA, and he anticipates further improvement in Q4 while reducing capex and paying down debt. Bloomberg’s coverage similarly notes the company expects adjusted EBITDA to rise again next quarter alongside another period of positive free cash flow. 1
How to interpret today’s print
- Mixed top line, cleaner bottom line: A modest revenue miss paired with a margin and cash‑flow beat is a constructive combination for a turnaround—especially following the costly McDonald’s exit and footprint optimization. 5
- Watch the quality of earnings: The insurance recovery helped Q3 adjusted EBITDA; sustained improvement will depend on distribution mix, logistics outsourcing, and refranchising execution. 1
- Distribution reset is key: Industry reporting today underscores a shift toward large retailers (e.g., Walmart, Costco) to drive volume at better economics. Execution here is central to 2026 targets. 6
What’s next
- Earnings call (today): Management hosts the Q3 call at 8:30 a.m. ET with slides on the IR site. Expect color on outsourced U.S. logistics, refranchising milestones, and 2025–26 capital allocation. 7
- Network changes: The press release notes a Minneapolis Hot Light Theater Shop and production hub opening this month, illustrating the pivot to hubs that support profitable fresh delivery. 1
Disclosure
This article is for informational purposes only and not investment advice. Always do your own research before making investment decisions.
