Callaway Golf Company’s latest quarter was met with a negative market reaction, as revenue significantly missed Wall Street’s expectations. Management attributed the underperformance primarily to the impact of major business divestitures, including the sale of Jack Wolfskin and the majority stake in Topgolf, as well as ongoing pressures from incremental tariffs. CEO Chip Brewer acknowledged that “incremental tariff expense of approximately $40 million in 2026 on top of approximately $35 million last year is driving higher than historical price points in several categories,” which contributed to softer sales.
Is now the time to buy CALY? Find out in our full research report (it’s free for active Edge members).
Callaway Golf Company (CALY) Q4 CY2025 Highlights:
- Revenue: $367.5 million vs analyst estimates of $790.5 million (60.2% year-on-year decline, 53.5% miss)
- Adjusted EPS: -$0.25 vs analyst estimates of -$0.31 (20.5% beat)
- Adjusted EBITDA: -$25.1 million vs analyst estimates of $2.25 million (-6.8% margin, significant miss)
- Revenue Guidance for Q1 CY2026 is $650 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the upcoming financial year 2026 is $182.5 million at the midpoint, below analyst estimates of $198.1 million
- Operating Margin: -14.7%, up from -158% in the same quarter last year
- Market Capitalization: $2.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Callaway Golf Company’s Q4 Earnings Call
- Simeon Gutman (Morgan Stanley) asked whether guidance assumes strong or moderate success for new product launches. CEO Chip Brewer replied that guidance is based on a moderate outlook and expressed cautious optimism, noting it is too early in the season to judge demand.
- Anna Glaessgen (B. Riley) questioned the specifics of the exit from lower-margin businesses. Brewer clarified that the company is scaling back on range balls and certain off-price and second-year products, with launch timing changes affecting the second half.
- Arpine Kocharyan (UBS) inquired about pricing power to offset tariffs and the impact on EBITDA. CFO Brian Lynch explained that while some selective pricing was taken, it is not sufficient to fully offset tariff costs, which are a significant drag on margins.
- Casey Alexander (Compass Point Research & Trading) pressed on the lower EBITDA margin compared to previous years and how management plans to close the gap. Brewer pointed to structural changes, including product mix shifts and life cycle adjustments, as drivers for margin recovery.
- Noah Zatzkin (KeyBanc Capital Markets) asked about the ability to offset $75 million in tariffs and the implications for structural profitability. Brewer responded that a combination of pricing, product redesign, and cost measures are being pursued, but confirmed tariffs remain a substantial challenge.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will focus on (1) execution of product launches like Quantum woods and Chrome Tour balls during the peak selling season, (2) evidence that product and channel rationalization is stabilizing or improving gross margins, and (3) the company’s ability to maintain cash flow discipline while navigating ongoing tariff pressures. Progress on these fronts will be key indicators of the effectiveness of Callaway Golf’s transformation.
Callaway Golf Company currently trades at $13.66, down from $14.82 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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