DINE BRANDS GLOBAL INC (NYSE:DIN) Q3 2025 Earnings Miss Estimates, Shares Drop

Dine Brands Global Inc (NYSE:DIN) reported financial results for the third quarter of fiscal year 2025, revealing a performance that fell short of analyst expectations on profitability despite a year-over-year increase in total revenue. The market reaction was immediately negative, with shares trading down approximately 4.5% in pre-market activity following the announcement.

Earnings and Revenue Versus Estimates

The company's top-line revenue showed growth but failed to meet the market's forecast, while its bottom-line earnings presented a more significant deviation from expectations.

• Reported Revenue: $216.2 million
• Estimated Revenue: $221.9 million
• Reported Adjusted EPS: $0.73
• Estimated Adjusted EPS: $1.08

The revenue miss of approximately 2.6% indicates that while the company is growing, it did so at a pace slower than analysts had projected. The more substantial concern for investors appears to be the earnings performance, with adjusted EPS coming in 32% below estimates. This significant earnings shortfall is the primary driver behind the negative market sentiment observed in the pre-market trading session.

Quarterly Performance Summary

The third-quarter results painted a mixed picture, with growth in certain areas being offset by increased costs and a decline in profitability. The company's strategic shift towards owning more restaurants contributed to the revenue increase but also introduced new operational expenses.

• Total Revenues: Increased to $216.2 million from $195.0 million in the prior year quarter, largely driven by the acquisition of 59 Applebee’s and 10 IHOP restaurants.
• GAAP Net Income: Decreased to $7.0 million, or $0.48 per diluted share, down from $18.5 million, or $1.24 per share, in Q3 2024.
• Adjusted EBITDA: Fell to $49.0 million from $61.9 million in the same period last year.
• General & Administrative Expenses: Rose to $50.2 million from $45.4 million, attributed to higher compensation, travel, and professional service costs.

The company highlighted strong cash flow generation, with cash from operating activities for the first nine months reaching $83.3 million, up from $77.7 million in the prior year.

Brand Performance and Strategic Initiatives

The performance of Dine Brands' two main brands diverged during the quarter. Applebee's demonstrated strength, while IHOP faced challenges.

• Applebee's: Domestic comparable same-restaurant sales increased 3.1%. Off-premise sales remained a significant contributor, representing 22.9% of the sales mix.
• IHOP: Domestic comparable same-restaurant sales decreased 1.5%. Off-premise sales accounted for 20.4% of its sales mix.

Management expressed enthusiasm for the company's dual-brand concept, announcing they are on pace to exceed their initial 2025 domestic target with about 30 locations opened or under construction by year-end. The company also repurchased $22.5 million of its common stock during the quarter and announced an updated capital return framework, committing to repurchase at least $50 million of shares over the next two quarters while declaring a quarterly cash dividend of $0.19 per share.

Outlook and Analyst Estimates

While the press release did not provide a specific quantitative financial outlook for the coming periods, the company's commentary expressed confidence in its strategic plan. This will be weighed against analyst expectations for the future.

• Full-Year 2025 Analyst Estimates: Revenue of $903.9 million and EPS of $4.42.
• Q4 2025 Analyst Estimates: Revenue of $227.3 million and EPS of $1.03.

The company's ability to meet these future estimates will be a key focus for investors, especially in light of the current quarter's earnings miss and the headwinds from increased operational costs.

Conclusion

Dine Brands Global's third-quarter results reflect a company in a transitional phase. Strategic acquisitions have boosted revenue but also compressed margins, leading to a significant earnings miss. The market's negative reaction underscores investor concern over profitability despite top-line growth and a confident shareholder return strategy. The path forward will depend on the company's ability to integrate its newly acquired restaurants efficiently, manage rising costs, and reignite growth at its IHOP brand.

For a detailed look at historical earnings and future analyst estimates for Dine Brands Global Inc, you can review the data here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The information presented is based on publicly available data and should not be relied upon as the sole basis for making an investment decision.