Domino's Pizza Inc. 2026 Q3 Earnings Call

Thank you for joining us today for our third quarter conference call. Today's call will begin with remarks from our Executive Chairman Designate, Russell Weiner, followed by our Chief Executive Officer, Joe Jordan, and our Chief Financial Officer, Sandeep Reddy. We will then open the line for Q&A. Please note that Russell will be joining only for the prepared remarks. Joe and Sandeep will take your questions. The notices regarding forward-looking statements in this morning's earnings release and 10-Q, both of which are available on our IR website, also apply to our comments on the call today. Actual results or trends could differ materially from our forecasts. For more information, please refer to the risk factors discussed in our filings with the SEC.

In addition, please refer to the 8-K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This conference call is being webcast and recorded for replay via our website. We want to do our best this morning to accommodate as many of your questions as time permits. As such, we encourage you to ask one question only. With that, I'd like to turn the call over to Russell.

Thanks, Greg, and good morning, everybody. Before we get started, I want to take a moment to say what an incredible privilege it has been to lead this company. I'm so deeply grateful to our franchisees, team members, board, and shareholders for the trust and support you've given me over the years. Serving as CEO has been the honor of a lifetime, and I'm excited to become executive chairman at our annual shareholder meeting in April. I also want to thank Dave Brandon, who hired me in 2008 and has been an incredible mentor throughout my career at Domino's. When I joined Domino's, we were a very different company. Since then, we've reinvented the brand, become a technology leader, opened thousands of stores around the world, and built Domino's into the number one pizza company on the planet.

What I'm most proud of, though, isn't what we've accomplished, it's how we've accomplished it. Time and again, when others said Domino's couldn't, our franchisees and team members proved we could. That's the Domino's Effect. Always hungry for more, always getting better, and never satisfied with where we are today. It's also why I'm so optimistic about our future. Our franchisees and team members, they're our competitive moat. Competitors can try and copy aspects of our products, promotions, and technology. They can't copy the people who make Domino's so special. That's why I have so much confidence in Joe Jordan. I've worked alongside Joe for more than 15 years at Domino's, and there is nobody I trust more to lead the company forward. Joe loves this brand and our franchisees, knows the business inside and out, and firmly believes that our people are our greatest competitive advantage.

Domino's has never been stronger, and I couldn't be more excited about what comes next and the person who's going to lead us there. With that, let me turn it over to our CEO, Joe Jordan.

Thank you for the kind words, Russell, and good morning, everyone. It is an honor to speak with you today for the first time as CEO of Domino's. After 15 years with the brand, one thing has become clear to me. When we're firing on all cylinders, we cannot be beat. We have enormous strengths to build on, including a best-in-class franchise system, an iconic brand, an outstanding global business with significant scale and operating capabilities that set us apart. We also have an opportunity to operate as an even more connected global system, moving winning ideas faster across markets and ensuring the entire system benefits from our best thinking. My job isn't to reinvent what makes Domino's great. It's to accelerate it with clarity, prioritization, faster decisions, and relentless execution. The fundamentals of our category, while mature, remain strong.

As consumer expectations evolve, growth will come from understanding those changes, meeting customers where they are, and earning more of their occasions more often. As I begin this role, my philosophy is simple. We will build trust through action, earn credibility through results, and stay focused on helping our customers, franchisees, and stores succeed. That starts with two priorities, getting closer to the customer and continuing to drive strong four-wall profitability for our franchisees. Together, they provide a simple lens for how we will prioritize the business. My focus will be on turning our best performance into our everyday performance through stronger execution, continued value leadership, and a franchisee-first mindset. Domino's has always been at its best when we are a step ahead. Our newest innovation, the Domino, is a great example of that mindset in action.

It is an ownable product and name that are uniquely Domino's, built around an emerging customer need we call the me/we occasion, the desire to enjoy pizza together without giving up individual choice. That is how we will continue to lead, by anticipating where customers are going and using the unique strengths of our brand to meet them there.

Staying a step ahead has helped us set the pace for the industry before, and it's how we'll push ourselves to do it again. I have tremendous confidence in our people, our franchisees, and the foundation we have built, and I believe our next chapter will be our strongest yet. Let me now turn to our third quarter performance. Underlying demand for Domino's remained incredibly strong. We continue to drive order count growth, with orders increasing in both our delivery and carryout businesses. We also continue to gain share within the QSR pizza category. I believe growing orders is the most important thing a brand can do in the current environment. Consumers remain under pressure, but they continue to choose Domino's. More orders bring more customers into our system, support our franchisees, and create opportunities to drive greater frequency over time.

This has been a consistent focus for Domino's, and it will remain one under my leadership. Looking ahead to the remainder of 2026, we expect the macro environment to remain an overhang on the consumer through the balance of the year. However, we have a strong calendar for the fourth quarter and believe we are well-positioned to compete. One of the things I am most excited about is The Domino. The primary insight was that customers wanted to enjoy pizza together without having to compromise. As previously mentioned, we call this the me/we occasion. People ordering as a group while still having the ability to choose something for themselves. Across QSR, consumers increasingly expect individual options, even when eating as part of a group. The Domino allows us to meet that need with a product designed for individual choice while still preserving the shared occasion that makes pizza so special.

We also believe this innovation creates an opportunity to compete for more occasions than ever before. That is particularly relevant on aggregator platforms, where customers are often looking for a meal of their own. This product gives them another compelling reason to choose our brand. If you haven't had one yet, I highly recommend that you do. As I close, having just stepped into the CEO role, I look forward to sharing more of my perspective on Domino's and our long-term opportunities when we report our fourth quarter results early next year. What I can tell you today is that my confidence in the long-term potential of this business is very high. We have an iconic brand, a world-class franchise system, proven operating capabilities, and talented people across the globe.

My focus is simple: build on those strengths, help our franchisees grow their profits, and ensure we're consistently performing at our very best. We have tremendous opportunities ahead of us, and I believe the future of Domino's is incredibly bright. With that, I'll turn the call over to Sandeep.

Thank you, Joe, and once again, a huge congratulations to both you and Russell as you step into your new roles. Let's review the results. Income from operations increased 8.5% in Q3, excluding the impact of foreign currency and minor refranchising true-up impacts related to the sale of certain U.S. company-owned store markets. This increase in operating income, which came in slightly above expectations, was primarily driven by higher U.S. and international franchise royalties and fees. It also benefited from gross margin dollar growth within supply chain that was fueled by strong U.S. order count growth and procurement productivity. Excluding the impact of foreign currency, global retail sales grew 3.2% in the quarter. This was due to global net store growth of more than 950 stores over the past 12 months.