Callaway Golf Co
For the period ended Mar 31, 2026. Filed May 8, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
CALY$16.83+5.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0000837465-25-000094
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0000837465-26-000017
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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Tables are not compared: 8 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (48)
Current report
Divestitures of Topgolf and Jack Wolfskin
Current report
In 2025, we executed a strategic realignment to focus on our core Golf Equipment and complementary soft goods businesses, which included the sale of Jack Wolfskin on May 31, 2025, for approximately $290.0 million and the sale of a 60% stake in our Topgolf and Toptracer business (“Topgolf”) based upon an equity value of approximately $1,100.0 million. The Topgolf transaction closed effective January 1, 2026, resulting in net proceeds to us of $818.8 million from the sale and related financing transactions, net of preliminary working capital adjustments and cash retained. Our remaining 40% interest in Topgolf is accounted for under the equity method.
Current report
As a result of these divestitures, the operating results of Jack Wolfskin and Topgolf are reported in discontinued operations for all periods presented in this Form 10-Q. For more information, please refer to Note 3 of this Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2025.
Current report
Segment and Related Information
Current report
Our products and brands are reported under two operating segments: Golf Equipment, which includes the operations of our golf clubs and golf balls business; and Apparel, Gear and Other, which includes the operations of our soft goods business marketed under the Callaway, TravisMathew and OGIO brand names.
Current report
Apparel, Gear, and Other
Current report
Our Apparel, Gear and Other segment is comprised of high quality soft good products which we design, develop and sell under the Callaway, TravisMathew and OGIO brands. These brands deliver a range of premium performance and lifestyle products in the United States and select international markets. We are focused on maintaining strong brand momentum by category and market share growth with key trade partners by enhancing our digital marketing, e-commerce and retail store presence, which we believe will increase direct-to-consumer sales and drive increased profitability over time.
Current report
Our products are discretionary purchases, and demand may be adversely affected by changes in macroeconomic conditions that impact consumer discretionary spending. These conditions include, among other factors, inflationary pressures, interest rate environments, and changes in trade policies or tariffs. While we seek to mitigate the effects of such factors through monitoring consumer spending behavior and implementing strategic initiatives, prolonged or severe adverse economic conditions could negatively impact our operating results.
Current report
In 2025, the U.S. government implemented reciprocal tariffs affecting many countries in which we do business, increasing costs for our products, components, and raw materials, a significant portion of which are sourced from outside the United States, including Asia and other regions, which may adversely affect product availability, pricing, and demand. The U.S. government has subsequently announced and rescinded various tariffs, contributing to continued uncertainty regarding their economic impact. On February 20, 2026, the United States Supreme Court struck down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977. The ruling did not address potential refunds of tariffs previously assessed under that authority, and as of March 31, 2026, we have not recognized an asset related to any potential refund. Following the ruling, additional tariffs were imposed under a separate authority, further contributing to uncertainty regarding tariff levels, duration, and related costs.
Current report
A significant portion of our operations is conducted outside the United States in currencies other than the U.S. dollar. We use foreign currency forward contracts to partially mitigate the short‑term effects of exchange rate fluctuations on our financial results; however, these instruments do not eliminate currency impacts or address long‑term exposure. Foreign currency fluctuations affect our results primarily through the translation of foreign‑currency‑denominated results into U.S. dollars and mark‑to‑market adjustments on certain intercompany balances and foreign currency forward contracts. For thethree months ended March 31, 2026, foreign currency fluctuations had afavorable impact of$7.6 million on international net revenues.
Current report
We have reclassified certain prior-year amounts related to our discontinued operations to conform to the current year’s presentation. Unless otherwise specified, our discussion below reflects continuing operations only and prior period financial information related to discontinued operations has been reclassified and is separately presented in thecondensed consolidated financial statements and accompanying notes.
Current report
Net sales for the three months ended March 31, 2026 increased $57.9 million or 9.2% (8.0% on a constant currency basis) as compared to the three months ended March 31, 2025. Segment operating income increased $32.4 million or 23.6% driven by increases in both our Golf Equipment and Apparel, Gear and Other operating segments.
Current report
The $42.3 million (9.5%) increase in Golf Equipment net sales for the three months ended March 31, 2026 was primarily due to an 11.9% increase in golf club sales due to improved launch execution, strong reception of new product launches, and strong overall market demand, combined with a 1.6% increase in golf ball sales driven by the successful launch of the new Chrome Tour ball, partially offset by SKU rationalization initiatives related to lower margin ball products.
Current report
Operating income
Current report
The $15.8 million increase in Golf Equipment segment operating income for the three months ended March 31, 2026 was primarily driven by the increase in net sales noted above, combined with improved gross margins resulting from favorable pricing and cost savings from gross margin initiatives, which more than offset the unfavorable impact of approximately $12.0 million from incremental tariffs. In addition, operating expenses increased $8.1 million primarily due to the recognition of an $8.2 million lease termination incentive gain in the first quarter of 2025 that did not recur.
Current report
Apparel, Gear and Other
Current report
The $15.6 million (8.4%) increase in Apparel, Gear and Other net sales for the three months ended March 31, 2026, was primarily due to increases in sales of Callaway soft goods and TravisMathew apparel products related to strong overall market demand and improved direct-to-consumer sales in the TravisMathew business.
Current report
Operating income
Current report
The $16.6 million (46.9%)increase in segment operating income for the three months ended March 31, 2026 was primarily driven by the increase in net sales and higher gross margins from favorable pricing and cost savings from gross margin initiatives, which more than offset the unfavorable impact of approximately $3.4 million from incremental tariffs. In addition, operating expenses increased $2.8 million due to the recognition of a $3.8 million lease termination incentive gain in the first quarter of 2025 that did not recur.
Current report
The$32.7 million (7.9%) increase in net sales for the three months ended March 31, 2026 was primarily due to higher sales volumes of golf clubs combined with higher TravisMathew sales.
Current report
The$18.9 million (29.4%) increase in net sales for the three months ended March 31, 2026 was primarily due to increases in golf equipment product sales.
Current report
The$3.2 million (3.0%) decrease in net sales for three months ended March 31, 2026 wasprimarily due to unfavorable foreign currency impacts and soft demand in the Korea apparel market.
Current report
The $9.5 million (22.4%) increase compared tothe three months ended March 31, 2026 was primarily due to higher golf equipment sales in Canada and Australia.
Current report
Gross Profit (in millions, except percentages)
Current report
Cost of sales
Current report
Gross profit and gross margin
Current report
During thethree months ended March 31, 2026, gross profit increased by$43.1 million (15.2%) as compared to the prior year period. Gross profit as a percent of net sales (“gross margin”) increased to 47.5% for the three months ended March 31, 2026 compared to 45.0% for the three months ended March 31, 2025. The improvement in gross margin was due to favorable pricing combined with cost savings from gross margin initiatives, which more than offset the unfavorable impacts of incremental tariffs.
Current report
The $8.7 million (5.3%) increase in SG&A expenses forthe three months ended March 31, 2026 was primarily due to a $12.0 million gain recognized from a lease termination incentive in the first quarter of 2025, which did not recur in 2026, combined with an increase inemployee costs primarily related to cost of living and sales commissions increases, partially offset by lower advertising spend due to the timing of planned advertising activities.
Current report
The $0.7 million (4.4%) decrease in research and development expenses for the three months ended March 31, 2026 was primarily due to a decline in depreciation expense combined with cost savings initiatives.
Current report
Interest expense
Current report
The $9.1 million (61.1%) decrease in interest expense, net for the three months ended March 31, 2026 was primarily due to lower interest expense on our term loan as a result of the partial repayment on January 2, 2026 in connection with completion of the sale of Topgolf.
Current report
Other income
Current report
The $0.5 million (20.8%) increase in other income for the three months ended March 31, 2026 was primarily due to a $4.3 million remeasurement gain on our investment in Five Iron Golf, $2.1 million of higher dividend income on our money market accounts and $1.2 million of income from transition services provided to Topgolf, partially offset by a $7.5 million write-off of unamortized debt issuance fees in connection with the partial repayment of the term loan mentioned above.
Current report
Income (Loss) from Equity Method Investments (in millions, except percentages)
Current report
Income (loss) from equity method investments
Current report
The $27.7 million loss during the three months ended March 31, 2026 represents ourproportionate share of Topgolf’s net losses following the completion of the sale of the business effective January 1, 2026.
Current report
Income Taxes (in millions, except percentages)
Current report
Income tax expense
Current report
GAAP net income from continuing operations
Current report
Net income from continuing operations and diluted earnings per share for thethree months ended March 31, 2026 were $74.9 million and$0.38 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $63.4 million and $0.33 per share, respectively, for the three months ended March 31, 2025. These increases were primarily driven by a $32.4 million increase in segment operating income, in addition to lower interest expense. These increases were partially offset by the loss recognized from our equity method investment in Topgolf.
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Removed paragraphs (55)
Previous report
Intent to Separate into Two Independent Companies
Previous report
In September 2024, we announced a strategic plan to pursue a separation of our business into two independent companies: Callaway, a leader in golf equipment with a highly complementary Active Lifestyle business; and Topgolf, a pure-play venue-based golf entertainment business which we believe has potential for high growth. Our Board of Directors is committed to exploring all opportunities to execute the separation in a manner that maximizes shareholder value, including possible options such as a spin-off, sale, or other transaction. If the spin-off is the ultimate shareholder value maximizing path, it will most likely occur in 2026, after we have a new Topgolf CEO in place. However, there can be no assurance regarding the ultimate timing, terms, or form of the separation, or that the separation will ultimately occur.
Previous report
We believe that creating two companies will result in material benefits to the stand-alone businesses that will maximize shareholder value, including enhanced strategic focus, optimized capital allocation, simplified operating structure and a distinct investment thesis for each company that will allow investors to have the opportunity to support and invest in each business on the basis of its distinct qualities.
Previous report
Sale of Jack Wolfskin
Previous report
On May 31, 2025, we completed the sale of 100% of the outstanding equity interests of Callaway Germany Holdco GmbH, which owns various entities that operate the Jack Wolfskin business, to Anca Holdco GmbH & Co. KG, a subsidiary of ANTA Sports Products Limited, for approximately $290.0 million in cash, adjusted for net working capital and other customary conditions.
Previous report
•Same venue sales, which is defined as sales for the comparable Topgolf venue base, which includes Company-owned and operated venues with 24 or more full fiscal months of operations as of the year of comparison.
Previous report
Operating Segments and Seasonality
Previous report
We are a technology-enabled modern golf company offering golf entertainment, golf equipment, and apparel under our portfolio of global brands which includes Topgolf, Callaway Golf, Odyssey, TravisMathew, OGIO and Toptracer. Our products and brands are reported under our Topgolf, Golf Equipment and Active Lifestyle operating segments.
Previous report
Topgolf
Previous report
Our Topgolf operating segment is primarily comprised of Company-owned and operated domestic and international Topgolf venues, which are equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces. Our Company-owned and operated venues also offer advertising partnerships to corporate sponsors to feature their names and logos at Topgolf venues and on other media platforms. Revenue from Company-owned and operated venues is primarily derived from the sale of food and beverage, gameplay, and events. As of September 30, 2025, we had 102 Company-owned and operated venues, including 98 Topgolf venues throughout the United States, and four Company-operated venues in the United Kingdom. In addition to our Company-owned and operated venues, we also have eight international franchised Topgolf venues from which we receive royalties.
Previous report
Our Topgolf operating segment also includes our Toptracer ball-flight tracking technology, which is used by independent driving ranges and during televised golf broadcasts, as well as in many of our Company-owned and operated and franchised Topgolf venues in order to enhance the Topgolf gaming experience.
Previous report
Operating results for our Topgolf operating segment fluctuate from quarter to quarter due to seasonal factors. Historically, our venues experience nominally higher second and third quarter revenues associated with the spring and summer, while the first and fourth quarters have historically had lower revenues, with the first quarter being the lowest, due to cooler temperatures and fewer corporate events. Adverse weather may impact the results of operations of Topgolf, especially during peak season.
Previous report
Revenue growth and profitability related to our Topgolf venues are also impacted by the opening of new venues and growth at existing venues measured by same venue sales, which is a key performance indicator used within our industry and is indicative of acceptance of our initiatives as well as local economic and consumer trends.
Previous report
Active Lifestyle
Previous report
Our Active Lifestyle operating segment is comprised of soft goods products under our Callaway Golf, TravisMathew, and OGIO brands. The Callaway Golf soft goods brand offers a full line of premium golf apparel, footwear, gear and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. The OGIO brand offers a full line of premium personal storage gear for sport and personal use and accessories. On certain soft goods products, we receive royalties from the licensing of our trademarks and service marks. On May 31, 2025, we completed the sale of the Jack Wolfskin business, which included a full line of premium outdoor apparel, gear and accessories. The results of operations associated with Jack Wolfskin were included within our Active Lifestyle operating segment through the date of the sale.
Previous report
Our products and services are discretionary purchases for consumers. In addition, our Topgolf venues business also depends on corporate discretionary spending relative to its leisure and entertainment-based offerings. As a result, demand for our products and services could be impacted by downturns in the economy and the corresponding impact on discretionary consumer and corporate spending. Macroeconomic factors including sustained inflation and high interest rates continue to put downward pressure on consumer and corporate discretionary spending, in addition to the recent increase in tariffs. While we generally try to mitigate the impact of such macroeconomic factors by closely monitoring changes in consumer retail spending behavior and through the implementation of various strategic initiatives, the persistence of these trends may have an adverse impact on our operating results depending on the severity and length of the changes.
Previous report
In 2025, the U.S. government implemented reciprocal tariffs on many countries, including many jurisdictions in which we do business. The U.S. government has announced and rescinded multiple tariffs on multiple foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of tariffs on economic conditions. The reciprocal tariffs implemented in August 2025 have increased the costs for our products, product components and raw materials, a significant amount of which we source from outside the United States, including Vietnam, Taiwan, Mexico, Bangladesh and other regions. If the U.S. government or other governments levy additional tariffs, or if governments continue to generate uncertainty regarding tariffs, the adverse impacts to the costs for, and availability of, our products, product components and raw materials, may continue to increase. Further, retaliatory tariffs may increase the costs of selling our products in foreign jurisdictions. As a result of tariff costs, we may need to raise our prices to pass costs on to customers, which may not be possible, or may decrease customer demand for our products. The near- and long-term impacts from these tariffs on our business are difficult to predict and depend on the amount, duration, scope and nature of the increases, however, we do expect tariffs to have a negative impact on our business and results of operations in and beyond 2025. We are actively monitoring the impact of any further tariffs that become effective, as well as any potential retaliatory actions by other countries, and are continuing to look for ways to mitigate these higher costs, including continuing to optimize operations and accelerating existing cost reduction and margin improvement programs. Nonetheless, the increases in U.S. and other countries’ tariffs could have a material adverse effect on our financial condition and results of operations, including as a result of higher inflation in the markets in which we operate, an economic slowdown or general economic uncertainty.
Previous report
A significant portion of our business is conducted outside of the United States in currencies other than the U.S. dollar. Therefore, we enter into foreign currency forward contracts to mitigate the effects that changes in foreign currency rates may have on our financial results. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates in the short-term, they do not eliminate those effects, which can be significant, and they do not mitigate their effects over the long-term. These effects include (i) the translation and remeasurement of results denominated in foreign currency into U.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of our foreign currency forward contracts. In general, our overall financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For the three andnine months ended September 30, 2025, foreign currency fluctuations had afavorable impact of $2.2 million and$1.9 million, respectively, on international net revenues.
Previous report
Inflation
Previous report
Sustained inflationary pressure partially contributed to the increase in the cost of our products as well as operating costs. While we were able to partially offset these inflationary pressures by increasing the price of our products and services and through cost management initiatives, the length and severity of these conditions are unpredictable, and could be further exacerbated by the increases in tariffs as discussed above. Should conditions persist and/or worsen, such inflationary pressures may have a further adverse effect on our operating results. Further, we may not be able to offset these increased costs through price increases. As a result, our cash flows and results of operations could be adversely affected.
Previous report
Net revenues for the three months ended September 30, 2025 decreased $78.9 million or 7.8% (8.0% on a constant currency basis) as compared to the three months ended September 30, 2024. Excluding the decrease in net revenues due to the sale of the Jack Wolfskin business in May 2025, net revenues increased $29.1 million or 3.2% due to increases in the Topgolf and Golf Equipment operating segments. Segment operating income decreased $6.5 million or (8.7)% driven by a decrease in our Active Lifestyle operating segment, which includes the impact from the sale of the Jack Wolfskin business, combined with a decrease in our Golf Equipment operating segment, partially offset by an increase in our Topgolf operating segment.
Previous report
Net revenues for the nine months ended September 30, 2025 decreased $178.1 million or 5.4% (5.4% on a constant currency basis) as compared to the nine months ended September 30, 2024. Excluding the decrease in net revenues due to the sale of the Jack Wolfskin business in May 2025, net revenues decreased $33.2 million or (1.1)% resulting from decreases in our Topgolf operating segment and Active Lifestyle operating segment, offset by an increase in net revenues in our Golf Equipment operating segment. Segment operating income increased $8.1 million or 2.4% due to increases in our Golf Equipment operating segment and in the Active Lifestyle operating segment due to a decrease in segment operating losses resulting from the sale of the Jack Wolfskin business in May 2025, partially offset by a decrease in our Topgolf operating segment.
Previous report
Non-GAAP Results From Ongoing Business
Previous report
Topgolf
Previous report
The $19.0 million (4.2%) increase in Topgolf net revenues for thethree months ended September 30, 2025 was primarily due to the opening of new Company-owned and operated venues since the third quarter of 2024 combined with an increase in same venue sales primarily due to improved traffic trends from new value initiatives. The $19.2 million (1.4%) decrease in Topgolf net revenues for the nine months ended September 30, 2025, was primarily due to a decline in same venue sales resulting from lower sales associated with walk-ins combined with a weaker events business, partially offset by the opening of new Company-owned and operated venues since the third quarter of 2024.
Previous report
The $2.8 million (9.9%) increase in segment operating income for thethree months ended September 30, 2025 was primarily due to the increase in net revenues discussed above partially offset by an increase in operating expenses related to employee costs stemming from the opening of new venues since the prior year combined with additional advertising and promotional costs associated with current year marketing campaigns. The$12.7 million (14.5%)decrease in segment operating income for the nine months ended September 30, 2025 was primarily due to the decrease in net revenues discussed above, partially offset by ongoing cost reduction efforts including the continued management of labor costs as well as other operational efficiencies.
Previous report
The $11.8 million (4.0%) increase in Golf Equipment net revenues for thethree months ended September 30, 2025 was primarily due to a 3.5% increase in golf club sales and a 5.6% increase in golf ball sales. The $3.4 million (0.3%) increase in Golf Equipment net revenues for the nine months ended September 30, 2025 was primarily due to increased sales of golf clubs due to strong demand for golf equipment.
Previous report
The $3.6 million decrease in segment operating income for the three months ended September 30, 2025 was primarily due to $8.0 million of incremental tariffs. This decrease was partially offset by the increase in revenue discussed above, combined with favorable pricing and product mix and improved leverage on operating expenses due to cost savings initiatives. The $14.8 million increase in segment operating income for the nine months ended September 30, 2025 was primarily due to higher gross margins as a result of favorable pricing and product mix partially offset by the unfavorable impact from incremental tariffs, combined with the positive impact from cost savings initiatives and the recognition of a lease termination incentive in the first quarter of 2025.
Previous report
Active Lifestyle
Previous report
Net revenues in the Active Lifestyle operating segment decreased $109.7 million (41.2%) and$162.3 million (20.6%) in the three and nine months ended September 30, 2025, respectively. Excluding decreases of $108.0 million and $144.9 million in net revenues resulting from the sale of the Jack Wolfskin business in May 2025, net revenues for the ongoing business were down slightly in the third quarter of 2025 and down $17.4 million in the first nine months of 2025. The decrease in the first nine months of 2025 was due to softness in the apparel market primarily in Asia combined with the timing of wholesale shipments of TravisMathew products.
Previous report
The $5.7 million (29.4%) decrease in segment operating income for thethree months ended September 30, 2025 was primarily due to the unfavorable impact from incremental tariffs for the ongoing business combined with a $2.2 million decrease in segment operating income resulting from the sale of the Jack Wolfskin business in May 2025. The $6.0 million (10.2%)increase in segment operating income for the nine months ended September 30, 2025 was primarily due to a favorable $17.6 million decrease in segment operating loss resulting from the sale of the Jack Wolfskin business in May 2025 combined with the favorable impact from a lease termination incentive recognized during the first quarter of 2025. These increases more than offset the decrease in operating income for the ongoing business due to softness in the apparel market primarily in Asia combined with the unfavorable impact from incremental tariffs, and the timing of wholesale shipments of TravisMathew products.
Previous report
During the three months ended September 30, 2025, net revenues in the United States increased$25.3 million (3.5%) compared tothe three months ended September 30, 2024 due to incremental revenues from the opening of new Company-owned andoperated venues at Topgolf and an increase in sales of Golf Equipment.
Previous report
During the nine months ended September 30, 2025, net revenues in the United States decreased$42.4 million (1.7%) compared to the nine months ended September 30, 2024 due to decreases in Topgolf same venue sales, a decrease in sales of Golf Equipment, and decreases in TravisMathew sales due to the timing of wholesale shipments. These decreases were partially offset by incremental revenues from the opening of new Company-owned andoperated venues at Topgolf.
Previous report
During the three and nine months ended September 30, 2025, net revenues in Europe decreased$68.9 million (50.4%) and$89.0 million (22.7%), respectively, compared tothe three and nine months ended September 30, 2024 primarily due to the sale of the Jack Wolfskin business in the second quarter of 2025. Excluding the impact of Jack Wolfskin, during the three and nine months ended September 30, 2025, net revenues in Europe increased by $5.7 million and $22.5 million, respectively, primarily due to increased sales in the Golf Equipment business.
Previous report
During the three and nine months ended September 30, 2025, net revenues in Asia decreased$36.4 million (28.7%) and$44.5 million (12.2%), respectively, compared tothe three and nine months ended September 30, 2024, primarily due tothe sale of the Jack Wolfskin business in the second quarter of 2025 combined with continued soft market conditions in the golf equipment and apparel markets in Korea and Japan.
Previous report
During the three and nine months ended September 30, 2025, net revenues in Rest of World increased by$1.1 million (4.5%) and decreased by$2.2 million (1.9%), respectively, compared tothe three and nine months ended September 30, 2024.
Previous report
Foreign Currency
Previous report
Forthe three and nine months ended September 30, 2025, foreign currency exchange rates had afavorable impact of$2.2 million and$1.9 million, respectively, on international net revenues.
Previous report
Cost of Products
Previous report
Cost of Services, excluding Depreciation and Amortization
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Reworded paragraphs (26)
Previous wording
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this report, and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 3, 2025. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2025, or any other future periods. See “Important Notice to Investors Regarding Forward-Looking Statements” on page 2 of this report. References to the “Company,” “Topgolf Callaway Brands,” “we,” “our,” or “us” in this report refer to Topgolf Callaway Brands Corp., together with our wholly-owned subsidiaries.
Current wording
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this report, and the condensed consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2026, or any other future periods. See “Important Notice to Investors Regarding Forward-Looking Statements” on page 2 of this report. References to the “Company,” “Callaway Golf Company,” “we,” “our,” or “us” in this report refer to Callaway Golf Company, together with our wholly-owned subsidiaries.
Previous wording
•A constant currency measure on net revenues in order to demonstrate the impact of foreign currency fluctuations on these results. This information represents an estimate for comparative purposes and is calculated by taking current period local currency results and translating them into U.S. dollars based on the foreign currency exchange rates for the applicable comparable prior period.
Current wording
•A constant currency measure on net sales in order to demonstrate the impact of foreign currency fluctuations on these results. This information represents an estimate for comparative purposes and is calculated by taking current period local currency results and translating them into U.S. dollars based on the foreign currency exchange rates for the applicable comparable prior period.
Previous wording
•Net income and diluted earnings per share excluding the non-cash amortization associated with acquired intangible assets, including acquired customer and distributor relationships and acquired developed technology related to our merger with Topgolf, acquisitions of Jack Wolfskin, TravisMathew and OGIO, and distribution rights in the Korea apparel market (collectively, the “Acquisitions”). While the amortization of these assets is excluded from our calculation of non-GAAP net income, the revenue, operating costs and associated acquired assets that contribute to the revenue generation associated with these acquired companies is reflected in our calculation of non-GAAP net income.
Current wording
•Net income and diluted earnings per share from continuing operations excluding the non-cash amortization associated with acquired intangible assets, including acquired customer and distributor relationships and acquired developed technology related to our acquisitions of TravisMathew and OGIO (collectively, the “Acquisitions”). While the amortization of these assets is excluded from our calculation of non-GAAP net income, the revenue, operating costs and associated acquired assets that contribute to the revenue generation associated with these acquired companies is reflected in our calculation of non-GAAP net income from continuing operations.
Previous wording
•Net income and diluted earnings per share excluding certain non-cash and non-recurring charges, as further detailed in “Net Income, Diluted Earnings Per Share and Reconciliation of Non-GAAP Measures” below.
Current wording
•Net income and diluted earnings per share from continuing operations excluding certain non-cash and non-recurring charges, as further detailed below, as well as the income (loss) from our equity method investment in Topgolf. In addition, for periods presented for fiscal year 2025, net income and diluted earnings per share from continuing operations were adjusted to include interest expense associated with term loan debt that was recognized as part of discontinued operations in order to show the full effect of consolidated interest expense from our corporate debt.
Previous wording
Our Golf Equipment operating segment is comprised of Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, and Callaway Golf and Strata-branded golf balls, as well as the sale of pre-owned golf clubs. Our golf equipment products are designed to be technologically advanced for golfers of all skill levels, from beginner to professional.
Current wording
Our Golf Equipment operating segment is comprised of Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, and Callaway Golf branded golf balls, as well as sales of pre-owned golf clubs. Our golf equipment products are designed to be technologically advanced and are for golfers of all skill levels, from beginner to professional.
Previous wording
Sales of Callaway Golf-branded golf apparel and accessories generally follow the same seasonality as golf equipment, and are therefore generally higher during the first half of the year. Sales of TravisMathew-branded products are more evenly spread throughout the year as the product line is generally lifestyle focused and not dependent on the seasonality of golf.
Current wording
Sales of Callaway‑branded golf apparel and accessories generally follow the same seasonal patterns as golf equipment and are therefore typically higher during the first half of the year. Sales of TravisMathew and OGIO branded products, which include golf and lifestyle apparel, accessories, and performance products, are more diversified and therefore are more evenly distributed throughout the year due to broader product offerings and a greater mix of direct‑to‑consumer sales.
Previous wording
Net Revenues and Operating Segment Results (in millions, except percentages)
Current wording
Net sales and operating segment results (in millions, except percentages)
Previous wording
Net revenues by major geographic region for the periods presented below were as follows (in millions, except percentages):
Current wording
Net sales by major geographic region for the periods presented below were as follows (in millions, except percentages):
Previous wording
Net revenues from our Topgolf operations are primarily concentrated in the United States and Europe, with the United States being our principal market. We sell our Golf Equipment products, Callaway Golf and OGIO Active Lifestyle products in the United States and internationally, with our principal international regions being Europe and Asia. Active Lifestyle revenues from our TravisMathew operations are largely concentrated in the United States.
Current wording
We sell our Golf Equipment and Apparel, Gear and Other products in the United States and internationally, with our principal international regions being Europe and Asia. Apparel, Gear and Other product sales for our TravisMathew business are primarily concentrated in the United States.
Previous wording
Cost of products is variable in nature and fluctuates relative to sales volumes. Cost of products includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties and shipping charges, depreciation and amortization, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. During the three and nine months ended September 30, 2025, cost of products decreased $49.4 million (15.0%) and$97.5 million (8.7%), respectively, compared to thethree and nine months ended September 30, 2024. The decreases were primarily due to a decline in sales in our Active Lifestyle operating segment primarily driven by the sale of our Jack Wolfskin business in May 2025, combined with lower product costs in the Golf Equipment operating segment. These decreases were partially offset by the impact from incremental tariffs of$11.8 millionand$21.7 million in thethree and nine months ended September 30, 2025, respectively.
Current wording
Our cost of sales is variable in nature and fluctuates relative to sales volumes. Cost of sales includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties, tariffs and shipping charges, and depreciation and amortization directly related to manufacturing and distribution.
Previous wording
Costs and Expenses (in millions, except percentages)
Current wording
Operating Expenses (in millions, except percentages)
Previous wording
Selling, general and administrative (“SG&A”) expenses primarily consist of non-venue employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation charges (excluding those related to manufacturing, distribution and venue operations), amortization and other miscellaneous expenses. During the three and nine months ended September 30, 2025, SG&A expenses decreased $40.0 million (16.0%) and $72.8 million (9.3%), respectively, compared tothe three and nine months ended September 30, 2024.
Current wording
Selling, general and administrative (“SG&A”) expenses primarily consist of employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation and amortization charges and other miscellaneous expenses.
Previous wording
Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. During the three and nine months ended September 30, 2025, research and development expenses decreased $1.9 million (8.6%) and$11.0 million (15.2%), respectively, compared to thethree and nine months ended September 30, 2024, primarily due toreduced employee costs as a result of the sale of the WGT business in the fourth quarter of 2024 and the sale of the Jack Wolfskin business in the second quarter of 2025, combined with reduced headcount from our restructuring initiatives and an asset impairment charge recognized in the prior year related to the abandonment of the Shankstars media game.
Current wording
Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense.
Previous wording
The provision for income tax increased $39.8 million to $15.7 million for the nine months ended September 30, 2025, compared to a benefit of $24.1 million forthe nine months ended September 30, 2024. As a percentage of pre-tax income, our effective tax rate for the nine months ended September 30, 2025 increased to 67.0% compared to (58.9)% in the comparable period of 2024. The increase in our effective tax rate for the nine months ended September 30, 2025 was primarily associated with the change in jurisdictional mix of income plus the impact associated with the sale of the Jack Wolfskin business in May 2025, partially offset by a benefit from a favorable audit settlement at one of our foreign subsidiaries. Our effective tax rate for the nine months ended September 30, 2024 was impacted by valuation allowances accrued year-to-date associated with the forecasted mix of jurisdictional earnings and forecasted U.S. income tax credits.
Current wording
The $5.5 million increase in income tax expense for the three months ended March 31, 2026 was primarily due to higher pre‑tax earnings. As a percentage of pre-tax income, our effective tax rate for the three months ended March 31, 2026 increased to 30.4% compared to 30.0% in the comparable period of 2025.
Previous wording
On a non-GAAP basis, excluding the items described in the table above, our net loss and diluted loss per share for the three months ended September 30, 2025 would have been $9.2 million and $(0.05) per share, respectively, compared to net income and diluted earnings per share of $4.3 million and $0.02 per share, respectively, for the same period in 2024. The decrease in non-GAAP net income for the three months ended September 30, 2025 was primarily due to a decrease in the income tax benefit combined with a decrease in operating income in our Active Lifestyle and Golf Equipment operating segments, partially offset byincreased foreign currency hedging gains.
Current wording
On a non-GAAP basis, excluding the items described in the table above, our net income from continuing operations and diluted earnings per share for thethree months ended March 31, 2026 would have been $111.8 million and$0.56 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $57.1 million and $0.30 per share, respectively, for the three months ended March 31, 2025. The increase in non-GAAP net income from continuing operations was primarily due to a $32.4 million increase in segment operating income and lower interest expense.
Previous wording
Our cash and cash equivalents, including restricted cash, increased $415.6 million to $865.9 million at September 30, 2025 from $450.3 million at December 31, 2024. The increase in cash and cash equivalents was primarily related to cash provided by operating activities of $270.1 million, cash provided by investing activities of $73.4 million driven by net proceeds received from the sale of the Jack Wolfskin business, and cash provided by financing activities of $65.4 million. During the nine months ended September 30, 2025, we used our cash and cash equivalents in addition to proceeds received from lease financings to fund operations and purchase capital expenditures. We believe that our cash on hand and existing sources of capital are adequate to fund our future operations, as necessary. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.
Current wording
Our cash and cash equivalents decreased $404.0 million to $499.5 million at March 31, 2026 as compared to December 31, 2025 and decreased $182.5 million compared to March 31, 2025. These decreases were primarily driven by cash used in financing activities from continuing operations, largely reflecting the partial repayment of our term loan in January 2026, which was funded by cash proceeds from the sale of Topgolf and cash on hand. In addition, cash used in operating activities from continuing operations increased, which primarily reflects working capital changes associated with normal seasonal fluctuations and the performance of the business. We believe that our cash on hand and existing sources of capital are adequate to fund our future operations, as necessary. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.
Previous wording
Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. Our Active Lifestyle accounts receivable balances have historically been higher during the third and fourth quarters, primarily due to the seasonal concentration of sales for the Jack Wolfskin business during the fall and winter seasons. Our Topgolf venue business primarily records revenue and collects payment at point-of-sale, and therefore, Topgolf’s accounts receivable balance is lower than our other business segments and primarily consists of media partnership receivables. As of September 30, 2025, our consolidated net accounts receivable increased to $218.5 million from $175.7 million at December 31, 2024. The increase primarily reflects the seasonality of Golf Equipment sales. Net accounts receivable as of September 30, 2025 decreased $67.9 million compared to September 30, 2024, primarily due to the sale of the Jack Wolfskin business combined with lower overall net sales.
Current wording
Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. With respect to our Apparel, Gear and Other business, accounts receivable balances for our TravisMathew and OGIO businesses are more evenly distributed throughout the year while accounts receivable balances for our Callaway soft good brand are subject to the same general seasonality as our Golf Equipment business. As of March 31, 2026, our consolidated net accounts receivable increased to $393.8 million from $123.2 million at December 31, 2025. The increase primarily reflects the seasonality of Golf Equipment net sales in the first quarter. Net accounts receivable as of March 31, 2026 increased $33.6 million compared to March 31, 2025, primarily due to higher net sales.
Previous wording
Our inventory balance fluctuates throughout the year as a result of the general seasonality of certain operating segments within our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. Active Lifestyle inventory levels historically started to increase during the second quarter and continue to increase into the third and fourth quarters primarily due to the seasonal nature of the Jack Wolfskin business, whose products are significantly geared towards the fall and winter seasons. Topgolf is primarily a service-based business which maintains lower inventory balances than our other business segments, primarily consisting of food and beverages as well as retail merchandise and Toptracer inventory. As of September 30, 2025, our inventory decreased $188.6 million to $568.7 million, compared to December 31, 2024, which reflects our seasonality in addition to the impact from the sale of the Jack Wolfskin business. Our inventory decreased $97.7 million as of September 30, 2025, compared to September 30, 2024, primarily due to the sale of the Jack Wolfskin business.
Current wording
Our inventory balance fluctuates throughout the year as a result of the general seasonality of our Golf Equipment business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. With respect to our Apparel, Gear and Other business, inventory levels are generally less affected by seasonality due to the diversification of product offerings for these brands. As of March 31, 2026, our inventory decreased $28.9 million to $596.4 million, compared to December 31, 2025, which reflects our seasonality. Our inventory decreased $15.3 million as of March 31, 2026, compared to March 31, 2025, primarily due to higher net sales.
Previous wording
Our principal sources of liquidity consist of our existing cash and cash equivalent balances, funds expected to be generated from operations and available funds from our credit facilities. Based on our current cash balances, estimates of funds expected to be generated from operations, and the current and projected availability under current credit facilities, we believe we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q.
Current wording
Our principal sources of liquidity consist of our existing cash and cash equivalents, funds expected to be generated from operations and funds from our credit facilities. Based upon our current cash balances, our estimates of funds expected to be generated from operations, as well as from current and projected availability under our current credit facilities, we believe that we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q.
Previous wording
Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, tariffs, demand for our products, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024).
Current wording
Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025).
Previous wording
As of September 30, 2025, we had $1,254.2 million in combined cash and availability under our credit facilities, which is an increase of $391.2 million compared to September 30, 2024. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.
Current wording
As of March 31, 2026, we had $996.0 million in combined cash and availability under our credit facilities, which is an increase of $223.7 million compared to March 31, 2025. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.
Previous wording
As of September 30, 2025, approximately 15% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.
Current wording
As of March 31, 2026, approximately 13% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.
Previous wording
During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products or trademarks, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining to the goods or services provided to us or based on the negligence or willful misconduct, and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In addition, we have made contractual commitments to each of our officers and certain other employees providing for severance payments upon the termination of employment. We have also issued guarantees in the form of a standby letter of credit primarily as security for contingent liabilities under certain workers’ compensation insurance policies.
Current wording
During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products or trademarks, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining to the goods or services provided to us or based on the negligence or willful misconduct, and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In addition, we have made contractual commitments to each of our officers and certain other employees providing for severance payments upon the termination of employment. We have also issued guarantees in the form of a standby letter of credit in the amount of $0.4 million primarily as security for contingent liabilities under certain workers’ compensation insurance policies. We have also made certain indemnities under which we may be required to make payments in relation to divestitures of the Topgolf and Jack Wolfskin businesses. These include indemnities against (i) damages arising from certain ongoing litigation matters, (ii) certain exempted claims and (iii) certain pre-closing tax and other liabilities.
Previous wording
The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the nine months ended September 30, 2025 was not material to our financial position, results of operations or cash flows.
Current wording
The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the three months ended March 31, 2026 was not material to our financial position, results of operations or cash flows.
Previous wording
Total estimated capital expenditures, net of reimbursements by third party real estate financing partners, for the year ending December 31, 2025, are expected to be approxim ately $160.0 million, comprised of $40.0 million for our core business and $120.0 million for the Topgolf business.
Current wording
Total estimated capital expenditures for the year ending December 31, 2026, are expected to be approxim ately $35.0 million to $40.0 million.
Previous wording
For the nine months ended September 30, 2025, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 3, 2025.
Current wording
For the three months ended March 31, 2026, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The following table presents a reconciliation of our GAAP results for the nine months ended September 30, 2025 and 2024 to our non-GAAP results for the same periods (in millions, except per share information):