European Wax Center (NASDAQ: EWCZ) reported third‑quarter 2025 results that included a revenue of $54.2 million, up 3.71% versus the consensus estimate of $52.26 million, and a GAAP net income of $5.4 million, a 164.4% year‑over‑year increase. Adjusted EBITDA rose to $20.2 million, up 9.6% from $18.4 million in Q3 2024, and the adjusted EBITDA margin expanded to 37.2% from 33.8% in the prior year. The company’s earnings per share were $0.09, missing the consensus estimate of $0.12 by $0.03, a 25% miss.
The quarter’s revenue decline of 2.2% year‑over‑year was driven by a 1.0% reduction in total centers, reflecting a modest contraction in the company’s franchise footprint. Despite the revenue dip, the company’s operating leverage and disciplined cost management lifted net income and adjusted EBITDA, with margin expansion reflecting higher mix of high‑margin services and improved operational efficiency. The EPS miss can be attributed to the revenue shortfall and a modest increase in operating expenses relative to revenue, which outweighed the benefits of cost controls.
Revenue beat expectations largely because demand in core waxing services remained resilient, offsetting the headwind from a slightly smaller center count. The company’s pricing strategy and the continued focus on traffic growth helped maintain top‑line momentum, while the higher adjusted EBITDA margin indicates that the company is successfully translating revenue into profitability. The EPS miss, however, signals that the revenue decline and the relative cost structure still exert pressure on earnings, underscoring the need for continued focus on revenue growth.
Management reiterated its fiscal 2025 outlook, projecting system‑wide sales of $940 million to $950 million and total revenue of $205 million to $209 million. Full‑year EBITDA guidance of $70 million at the midpoint remains slightly below the analyst consensus of $71.06 million, suggesting a cautious stance on future profitability. The guidance reflects confidence in maintaining margin expansion while acknowledging the need to manage growth in a competitive market.
"European Wax Center delivered a solid third quarter performance as we continued to strengthen the fundamentals that power our business model. Our new leadership team is executing with discipline and remains focused on our three strategic priorities: driving sales through traffic growth, improving four‑wall profitability for our franchisees, and pursuing disciplined, profitable expansion," said Chairman and CEO Christopher Morris. The company’s high gross margin of 74.02% and a debt‑to‑equity ratio of 4.98 underscore its strong operating base and the importance of disciplined capital management as it pursues growth across its 1,000‑plus centers in 44 states.
The market reacted positively to the results, reflecting confidence in the company’s cost‑control initiatives and margin expansion, while acknowledging the EPS miss and the modest revenue decline. Investors view the company’s strategic focus on traffic growth, franchisee profitability, and disciplined expansion as key drivers of future performance.
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