Topgolf Callaway’s driving range business is soaring

Topgolf Callaway Brands Corp’s 2023 Q1 earnings report suggests its driving range and entertainment business is soaring while golf equipment sales are slowing.

The company’s golf equipment segment decreased by a large $24.3 million (5.2 percent) year-over-year for the quarter, meaning its shares fell by 13 percent.

Topgolf. Image from Twitter

However, revenue for its Topgolf business soared by a far greater amount – $81.5 million – a 25.3 percent year-over-year increase.

The company reduced its profit forecast for this year, which is what led to the 13 percent stock plunge. Callaway also lowered its 2023 projection for same venue sales growth, but said it is still on track to open 11 new Topgolf venues this year.

“With the March banking crisis and what we believe is a trend towards many companies further reducing corporate spend, we viewed it as prudent to lower our balance of year corporate sales expectations versus our original budget,” said Topgolf Callaway Brands CEO and president Chip Brewer.

Callaway bought Topgolf for $2.6 billion in March 2021, and rebranded its corporate name to emphasise the high-tech golf entertainment company.

Despite the market’s negative reaction to Callaway’s earning report, the company remains well-positioned to capitalise on the growing participation of golf in the US. A recent study found 41.1 million Americans played golf in 2022, nearly 10 million more than 2016’s golf participation total, with more people now playing golf off-course than on it.