10-Q · May 7, 2026
Callaway Golf Company reported a strong Q1 2026, with net sales of $687.5 million, reflecting a 9.2% increase year-over-year, driven mainly by the Golf Equipment segment. The company also posted EPS of $0.56, exceeding…
Earnings analysis · 10-Q
CALY earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Callaway delivered Q2 revenue of $612.2 million, up 2.0% year over year, while continuing-operations diluted EPS increased to $0.40 from $0.24. Profitability was the central strength: gross margin rose 620 basis points…
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Callaway delivered Q2 revenue of $612.2 million, up 2.0% year over year, while continuing-operations diluted EPS increased to $0.40 from $0.24. Profitability was the central strength: gross margin rose 620 basis points to 50.1% and operating income rose 54.5% to $114.8 million, though the margin gain included $10.8 million of tariff refunds. Golf Equipment growth and term-loan repayment supported results, while soft-goods revenue declined and the retained Topgolf stake recorded a $28.7 million six-month equity-method loss. Operating cash flow and reported free cash flow were not provided in the extracted filing text.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.4
What stood out
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Revenue grew despite seasonal sequential decline
Q2 net sales were $612.2 million, up $11.8 million (2.0%) year over year, although down from $688 million in Q1 2026 due to the seasonal cadence of Golf Equipment sales. Six-month revenue increased $69.7 million (5.7%) to $1.300 billion.
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Gross margin expanded materially
Gross margin expanded 620 basis points year over year to 50.1% from 43.9%, and increased from 47.5% in Q1 2026. Gross profit increased $43.3 million (16.4%) to $306.7 million, aided by pricing, mix, cost savings, and $10.8 million of tariff refunds.
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Profit and EPS rose sharply year over year
Operating income rose $40.5 million (54.5%) year over year to $114.8 million, implying an 18.8% operating margin versus 12.4% a year ago; this was below Q1 2026's 20.1% operating margin. Diluted continuing-operations EPS increased to $0.40 from $0.24, while declining from $0.47 in Q1.
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Golf Equipment drove earnings growth
Golf Equipment revenue grew $18.5 million (4.5%) to $430.3 million and segment operating income increased $24.1 million (31.6%) to $100.3 million. Golf-ball sales rose $14.7 million (14.8%) on Chrome-family demand and market-share gains.
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Soft-goods margin offset sales pressure
Apparel, Gear and Other segment operating income grew $4.1 million (14.0%) to $33.4 million despite revenue declining $6.7 million (3.6%) to $181.9 million, reflecting favorable pricing and cost savings.
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Term-loan repayment improved interest burden
The company fully repaid its term loan in May 2026, reducing quarterly net interest expense by $10.7 million to $4.6 million. It reported $774.7 million of combined cash and credit-facility availability at June 30, 2026.
What to watch
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Tariff benefit may not recur
The 50.1% gross margin included $10.8 million of recognized tariff refunds; the company has filed approximately $49.5 million of claims, but says the amount and timing of additional refunds remain uncertain amid potential new tariffs and ongoing proceedings.
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Soft-goods sales contracted
Apparel, Gear and Other sales fell $6.7 million (3.6%) in Q2 to $181.9 million, driven by Callaway soft-goods shipment timing and adverse Asia currency effects. Gear, accessories and other revenue declined $7.6 million (9.0%).
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Topgolf stake creates earnings and tax drag
The remaining Topgolf equity-method investment generated a $28.7 million loss in the first six months of 2026, including a $1.0 million loss in Q2, and also contributed to a 31.5% Q2 effective tax rate versus 22.4% a year earlier.
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Cash declined and seasonal working capital rose
Cash and equivalents declined $625.1 million from year-end to $278.1 million after debt repayment and share repurchases. Accounts receivable increased $192.5 million from December 31 to $315.7 million, reflecting first-half golf seasonality.
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No formal risk-factor updates; FX exposure remains
The filing states there were no material changes to the risk factors disclosed in the 2025 Form 10-K. Nonetheless, a hypothetical 10% unfavorable movement in exposed foreign currencies implies a $23.4 million estimated loss on foreign-currency forward contracts before offsets from hedged transactions.
Management's outlook
The 10-Q provides no formal revenue or EPS guidance. Management expects approximately $40.0 million of capital expenditures for full-year 2026 and states it believes its liquidity can fund requirements for at least the next 12 months.
Earlier filings 4
10-K · February 27, 2026
Callaway has materially refocused to a pure‑play golf company: it sold 100% of Jack Wolfskin on May 31, 2025 and completed the sale of a 60% ownership interest in Topgolf/Toptracer effective January 1, 2026 while…
10-Q · November 6, 2025
Topgolf Callaway Brands reported Q3 (period ended 2025-09-30) consolidated net revenue of $934.0 million, down $78.9 million (-7.8%) versus $1,012.9 million in Q3 2024, and recorded a GAAP loss per diluted share of…
10-K · March 3, 2025
Topgolf Callaway Brands announced a strategic separation in September 2024 to spin off the Topgolf business into an independent company, which the company expects to execute in the second half of 2025. The company is…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.