Krispy Kreme (NASDAQ: DNUT) reported fiscal Q2 2026 net revenue of $331.0 million, down 12.8% from $379.8 million, while its diluted GAAP loss narrowed to $0.12 per share from $2.55. Adjusted EBITDA rose 43.2% and its margin expanded 340 basis points as productivity initiatives, SG&A savings, and the removal of McDonald’s USA-related costs offset the effect of a smaller reported revenue base.
Core earnings data
Reported revenue fell much more sharply than organic revenue because refranchising and strategic door closures changed Krispy Kreme’s ownership structure and operating footprint. Organic revenue declined only 0.3%, compared with a 12.8% decrease in reported net revenue.
The magnitude of the GAAP loss improvement was heavily influenced by unusual prior-year expenses. Q2 2025 included $406.9 million of goodwill and other asset impairments and an $11.5 million loss related to the Insomnia Cookies divestiture, compared with $4.2 million of impairments in the current quarter.
| Metric | Q2 2026 | Q2 2025 | YoY change |
|---|---|---|---|
| Net revenue | $331.0 million | $379.8 million | -12.8% |
| Organic revenue growth | -0.3% | -0.9% | +60 bps |
| GAAP net loss | $(19.8) million | $(441.1) million | Improved by $421.3 million |
| Diluted GAAP EPS | $(0.12) | $(2.55) | Improved by $2.43 |
| Adjusted net loss | $(5.4) million | $(25.3) million | Improved by $19.9 million |
| Adjusted EPS | $(0.03) | $(0.15) | Improved by $0.12 |
| Adjusted EBITDA | $28.8 million | $20.1 million | +43.2% |
| Adjusted EBITDA margin | 8.7% | 5.3% | +340 bps |
Business and segment performance
The U.S. segment delivered the largest margin improvement, while International results were pressured by the Japan refranchising and weaker performance in the U.K. and Australia. Market Development expanded rapidly as more sales shifted into franchised operations, although its regional and channel mix reduced the segment’s margin.
| Segment | Revenue and YoY change | Organic growth | Adjusted EBITDA and YoY change | Adjusted EBITDA margin |
|---|---|---|---|---|
| U.S. | $172.7 million, -25.0% | +0.1%; +4.4% excluding McDonald’s USA | $13.8 million, +38.5% | 8.0%, +370 bps |
| International | $117.3 million, -11.6% | -5.1% | $14.2 million, -22.2% | 12.1%, -160 bps |
| Market Development | $41.0 million, +142.3% | +14.4% | $19.4 million, +116.7% | 47.3%, -560 bps |
U.S. revenue was reduced by refranchising and strategic door closures, but retail and digital channels and higher average revenue per fresh-delivery door supported underlying growth. International organic revenue declined as weakness in the U.K. and Australia outweighed growth in Canada. Market Development benefited from higher royalty revenue in the Middle East, Japan, and Brazil.
A smaller owned footprint lowered revenue while cost actions lifted margins
Krispy Kreme’s Q2 results show the different effects of its turnaround on reported revenue and underlying brand sales. Global points of access fell by 2,448, or 13.5%, including approximately 2,400 doors connected to the ended McDonald’s USA partnership. Refranchising Japan and the western U.S. joint venture also removed revenue from consolidated results.
Systemwide sales nevertheless reached $497.3 million and increased 1.1% in constant currency. Excluding prior-year sales from McDonald’s USA doors, systemwide sales rose 2.6%. In the U.S., average revenue per door per week increased 33.2% to approximately $697, while 448 fresh-delivery doors were added with strategic partners during the first half.
At the same time, productivity measures, SG&A savings, outsourced U.S. logistics, and the removal of McDonald’s-related costs lifted consolidated adjusted EBITDA margin to 8.7%. The proportion of systemwide sales generated by franchise-operated locations has risen from approximately 25% in fiscal 2025 to about 42%, with a company goal of approximately 50% beginning in fiscal 2027.
Profitability, cash flow, and the balance sheet
Cash generation improved substantially during the first half, although free cash flow remained negative. Year-to-date operating cash flow was $10.0 million, an improvement of $63.3 million from approximately negative $53.3 million in the first half of 2025. Free cash flow improved by $101.3 million to negative $6.1 million from approximately negative $107.4 million.
Lower capital intensity was an important contributor. First-half capital expenditures fell 70.2% to $16.1 million from $54.1 million as Krispy Kreme focused primarily on maintaining existing infrastructure, using available capacity, and opening shops through franchisees.
The net leverage ratio was 5.4 times at the end of Q2, down 1.3 times from the fourth quarter of 2025. Available liquidity was $263.9 million as of June 27, consisting of $21.8 million in cash and cash equivalents and $242.1 million of undrawn credit capacity. The company reported compliance with its financial covenants as of June 28.
2026 guidance
Krispy Kreme maintained its previously issued full-year guidance. The outlook includes the completed refranchising transactions but excludes any additional transactions during 2026.
| Metric | Latest guidance | Previous guidance | Change |
|---|---|---|---|
| Net revenue | $1.25 billion-$1.35 billion | $1.25 billion-$1.35 billion | Maintained |
| Systemwide sales growth | 2%-4% in constant currency | 2%-4% in constant currency | Maintained |
| Shop openings | At least 100, nearly all franchised | At least 100, nearly all franchised | Maintained |
| Adjusted EBITDA | $140 million-$150 million | $140 million-$150 million | Maintained |
| Capital expenditures | $50 million-$60 million | $50 million-$60 million | Maintained |
| Free cash flow | More than $15 million | More than $15 million | Maintained |
| Net leverage ratio | Below 5.5x | Below 5.5x | Maintained |
The leverage ratio was already below the year-end guidance threshold at quarter-end. Cash flow remains a more demanding second-half objective: moving from negative $6.1 million in first-half free cash flow to more than $15 million for the full year would require over approximately $21.1 million in the second half.
Risks investors need to watch
- International weakness: International organic revenue declined 5.1%, while adjusted EBITDA fell 22.2% and margin contracted 160 basis points. Continued pressure in the U.K. and Australia could offset growth elsewhere.
- Turnaround execution: The company is relying more heavily on franchisees and strategic partners as it reduces capital intensity. Market Development’s 560-basis-point margin contraction illustrates that rapid franchise-related growth can still carry an unfavorable regional or channel mix.
- Cash flow and leverage: Free cash flow remained negative for the first half, and the net leverage ratio was still 5.4 times despite its improvement. Delivering the full-year cash target is important for further balance-sheet progress.
- Footprint transition: Global points of access declined 13.5%. Higher productivity per remaining door and new franchised openings must continue to compensate for closed and deconsolidated locations.
Summary
Krispy Kreme’s Q2 2026 reported revenue declined as refranchising and strategic closures reduced its consolidated footprint, but adjusted profitability improved as the company removed costs and operated more efficiently. The next test is whether stronger unit productivity, franchise-led development, and lower capital spending can produce sustained positive free cash flow while stabilizing organic growth, particularly in international markets.
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