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Domino's Pizza (DPZ) is slightly higher after reporting Q2 results. The pizza chain giant missed on EPS, but it also disclosed an unfavorable change of $27.4 mln in losses and gains associated with its investment in DPC Dash. As such, it appears to not be comparable to analyst expectations. Revenue rose 4.3% yr/yr to $1.15 bln, which was in-line. In the US, both delivery and carryout were positive and DPZ drove meaningful market share gains in international.

• Late in Q1, DPZ added one of the biggest new menu items in its history: Parmesan Stuffed Crust Pizza and customers love it. DPZ says the launch has gone extremely well and has met its high expectations. Most importantly, its teams are executing this more complex product very well. Customer praise for this product has been significantly higher than any of its other recent product launches. Stuffed Crust was a gap on DPZ's menu and was a big reason why customers would go elsewhere. That gap is now closed.
• Domino's Rewards was a tailwind in Q2, particularly in the carryout business. Recall that DPZ recently redesigned its loyalty program with a key goal being the growth of its carryout business. DPZ noted it has a strong slate of initiatives ready to go for the rest of the year, inclusive of its Best Deal Ever promotion, which is currently running through early August. Customers want more value in an environment where they remain pressured.
• Let's dig in a bit on US comps. At +3.4%, Q2 comps saw an acceleration from -0.5% in Q1 and that was despite lapping pretty tough +4.8% comps in 2Q24. It also broke its recent trend of declining comps: -0.5% in Q1, +0.4% in Q4, +3.0% in Q3, and +4.8% in Q2. Carryout comps were up +5.8% while delivery was +1.5%. DPZ saw improvement in both its own channel and its aggregator delivery business.
• US comps in Q2 were fueled by the Parmesan Stuffed Crust Pizza launch, which drove positive transaction counts. Also, average ticket benefited from Stuffed Crust, which carries a higher price point. International comps performed decently at +2.4%, although down from +3.7% in Q1. DPZ saw strength in Asia, fueled by continued strong commerce in India and in its Americas region, which was driven by Canada and Mexico.
• In terms of delivery, DPZ recently completed its national rollout with DoorDash (DASH), the largest aggregator in the US. This rollout went extremely well as DPZ was able to apply learnings from its prior launch with Uber (UBER). DPZ will now begin marketing on the platform with investments coming from both sides. Sales on DoorDash will build as awareness and marketing increases. DPZ expects this to be a meaningful driver to its US comp in 2H25.

Overall, this was a decent quarter for Domino's Pizza. The launch of Parmesan Stuffed Crust Pizza was a big driver of US comps, especially on the carryout side. Despite the strong Q2 US comp, DPZ only reaffirmed FY25 US comp guidance at +3%. Investors may be viewing the reaffirm as a bit of a letdown. With that said, we commend DPZ for getting with the times and partnering up with both the major delivery aggregators, this should act as a tailwind in 2H25 especially when year ago comps get easier. This should also help its struggling delivery segment.