Coffeehouse chain Starbucks (NASDAQ: SBUX) announced better-than-expected revenue in Q4 CY2025, with sales up 5.5% year on year to $9.92 billion. Its non-GAAP profit of $0.56 per share was 4.6% below analysts’ consensus estimates.
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Starbucks (SBUX) Q4 CY2025 Highlights:
- Revenue: $9.92 billion vs analyst estimates of $9.66 billion (5.5% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.56 vs analyst expectations of $0.59 (4.6% miss)
- Adjusted EBITDA: $1.45 billion vs analyst estimates of $1.41 billion (14.6% margin, 2.6% beat)
- Operating Margin: 9%, down from 11.9% in the same quarter last year
- Free Cash Flow Margin: 12.8%, down from 14.7% in the same quarter last year
- Locations: 41,118 at quarter end, up from 40,576 in the same quarter last year
- Same-Store Sales rose 4% year on year (-4% in the same quarter last year)
- Market Capitalization: $109.1 billion
Company Overview
Started by three friends in Seattle’s historic Pike Place Market, Starbucks (NASDAQ: SBUX) is a globally-renowned coffeehouse chain that offers a wide selection of high-quality coffee, beverages, and food items.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $37.7 billion in revenue over the past 12 months, Starbucks is one of the most widely recognized restaurant chains and benefits from customer loyalty, a luxury many don’t have. Its scale also gives it negotiating leverage with suppliers, enabling it to source its ingredients at a lower cost. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing restaurant banners have penetrated most of the market. To accelerate system-wide sales, Starbucks likely needs to optimize its pricing or lean into new chains and international expansion.
As you can see below, Starbucks’s 5.7% annualized revenue growth over the last six years was tepid.
This quarter, Starbucks reported year-on-year revenue growth of 5.5%, and its $9.92 billion of revenue exceeded Wall Street’s estimates by 2.6%.
Looking ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months, a slight deceleration versus the last six years. This projection is underwhelming and implies its menu offerings will see some demand headwinds.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations often determines how much revenue it can generate.
Starbucks sported 41,118 locations in the latest quarter. Over the last two years, it has opened new restaurants at a rapid clip by averaging 4.4% annual growth, among the fastest in the restaurant sector.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at restaurants open for at least a year.
Starbucks’s demand has been shrinking over the last two years as its same-store sales have averaged 2% annual declines. This performance is concerning - it shows Starbucks artificially boosts its revenue by building new restaurants. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its restaurant base.
In the latest quarter, Starbucks’s same-store sales rose 4% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Starbucks’s Q4 Results
We were impressed by how significantly Starbucks blew past analysts’ same-store sales expectations this quarter, showing a revival in demand. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Zooming out, we think this quarter featured some important positives to show that a turnaround is afoot. The stock traded up 9.6% to $104.88 immediately following the results.
Starbucks had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
