Krispy Kreme Inc (NASDAQ:DNUT) Reports Q3 2025 Earnings Beat, Shares Surge on Profitability Gains

Krispy Kreme Inc (NASDAQ:DNUT) reported its third-quarter 2025 financial results, delivering a critical earnings beat on profitability while revenue fell short of analyst expectations. The market responded positively to the underlying operational improvements, with shares rising over 7% in pre-market trading following the announcement.

Earnings and Revenue Versus Estimates

The doughnut maker's performance presented a mixed but ultimately encouraging picture when measured against Wall Street's forecasts. The company's strategic focus on profitability yielded tangible results, even as top-line revenue contracted.

• Earnings Per Share (EPS): Krispy Kreme reported an adjusted EPS of $0.01 for the quarter. This significantly surpassed the analyst consensus estimate, which had projected a loss of $0.05 per share. This swing to positive adjusted earnings represents a key victory for the company's ongoing turnaround plan.
• Revenue: The company posted net revenue of $375.3 million, which came in below the analyst estimate of $385.9 million. This represents a decline of 1.2% compared to the same quarter last year. The revenue shortfall was primarily attributed to the prior-year sale of a majority stake in Insomnia Cookies, which contributed $10 million in revenue during Q3 2024.

Market Reaction and Price Action

The positive pre-market movement indicates that investors are prioritizing the earnings beat and improved cash flow metrics over the revenue miss. This suggests a market consensus that values the company's progress toward sustainable profitability and financial health more heavily than a slight underperformance on sales. The stock's performance in the recent month, showing an increase of over 8%, had already hinted at building investor optimism leading into the earnings report.

Turnaround Plan Shows Early Progress

The quarterly results provide the first clear evidence that CEO Josh Charlesworth's comprehensive turnaround strategy is gaining traction. The plan is built on four pillars: refranchising international markets, improving return on invested capital, expanding margins through operational efficiency, and driving sustainable, profitable growth in the U.S.

A major highlight from the quarter was the generation of $42.3 million in cash from operating activities and $15.5 million in free cash flow—the first positive free cash flow in three quarters. This is a crucial indicator of improving financial health and operational efficiency.

Key Financial and Operational Highlights

The company's strategic shifts are reflected in several key metrics from the quarter:

• Profitability Improvement: Adjusted EBITDA increased 17% year-over-year to $40.6 million, with the margin expanding 170 basis points to 10.8%.
• Strategic Portfolio Management: Global Points of Access decreased by 6.1% to 14,851, reflecting the deliberate closure of unprofitable locations to enhance the overall health of the network.
• Segment Performance: The International segment was a bright spot, with organic revenue growing 6.2%. The U.S. segment, while seeing a revenue decline, achieved a sequential improvement in average revenue per door per week, increasing 18% as the company exited lower-volume, unprofitable locations.
• Cost Management: The company benefited from the removal of costs associated with its now-terminated McDonald's USA partnership and realized $9.3 million in business interruption insurance recoveries related to a prior cybersecurity incident.

Looking Ahead

While the press release does not provide a specific quantitative financial outlook for the next quarter or full year, management expressed confidence in the trajectory. The company expects "further improvement in adjusted EBITDA and positive free cash flow" for the remainder of 2025 and beyond, alongside progress on refranchising and debt reduction. This qualitative optimism will be measured against analyst estimates for the coming periods, which project specific revenue and earnings targets.

For a detailed breakdown of historical earnings and future analyst estimates for Krispy Kreme, 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 sources and should not be relied upon as the sole basis for an investment decision.