European Wax Center delivered third quarter results that exceeded Wall Street expectations, prompting a strong positive market reaction. Management highlighted disciplined cost control, improved operational efficiency, and a stable core guest base as critical contributors to the quarter’s outperformance. CEO Chris Morris emphasized, “Retention is stable quarter over quarter, fewer guests are lapsing, and engagement in our Wax Pass program remains strong, which is an enduring source of strength for us.” Enhanced data-driven marketing and ongoing efforts to optimize franchisee operations underpinned the company’s improved profitability.
Is now the time to buy EWCZ? Find out in our full research report (it’s free for active Edge members).
European Wax Center (EWCZ) Q3 CY2025 Highlights:
- Revenue: $54.19 million vs analyst estimates of $52.75 million (2.2% year-on-year decline, 2.7% beat)
- Adjusted EPS: $0.16 vs analyst estimates of $0.10 (60% beat)
- Adjusted EBITDA: $20.17 million vs analyst estimates of $15.76 million (37.2% margin, 28% beat)
- The company reconfirmed its revenue guidance for the full year of $207 million at the midpoint
- EBITDA guidance for the full year is $70 million at the midpoint, below analyst estimates of $71.23 million
- Operating Margin: 25.6%, up from 17.1% in the same quarter last year
- Locations: 1,053 at quarter end, down from 1,064 in the same quarter last year
- Same-Store Sales were flat year on year, in line with the same quarter last year
- Market Capitalization: $160.8 million
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 European Wax Center’s Q3 Earnings Call
- Josh Young (Truist): asked about the quantifiable lift from revamped marketing efforts in re-engaging less frequent guests. CEO Chris Morris noted improved ability to contact and engage guests, with meaningful progress in visit frequency, though he declined to share specific frequency numbers.
- Dana Telsey (Telsey Advisory Group): inquired about core consumer trends and regional performance, as well as Wax Pass sales. Morris responded that the core guest base remains stable with slight growth in Wax Pass sales, and highlighted relative regional consistency, with improvement seen in California and continued softness in New York, Philadelphia, and DC.
- Dana Telsey (Telsey Advisory Group): also questioned future center closures and openings, including differences in cost or configuration. Morris explained closures are being narrowed and are mostly tied to low-volume units, while new center growth is expected to resume toward the end of next year.
- Alex Conway (Baird): asked about the main reasons behind unit closures and confidence in reducing closure pressures next year. Morris cited primarily low-volume units and improved franchisee partnerships, with growing confidence due to increased visibility into center health and operational alignment.
- Simeon Goodman (Morgan Stanley): pressed for insight into ongoing new guest acquisition challenges and whether traffic or ticket growth is more critical. Morris attributed acquisition difficulties to the need for better analytics and marketing execution, and emphasized that long-term sustainable growth will require both increased traffic and smart ticket growth through targeted marketing and add-ons.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be monitoring (1) progress in scaling new guest acquisition and effectiveness of influencer and brand marketing initiatives, (2) improvements in franchisee unit economics and reduced closure rates, and (3) consistent execution of operational strategies that drive visit frequency among existing guests. Additionally, we will watch for signs of margin stability despite ongoing cost pressures and indicators that development momentum is building toward positive net center growth.
European Wax Center currently trades at $3.68, in line with $3.65 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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