Topgolf, which was recently acquired by Callaway, has over 50 locations contributing $1.1 billion in annual revenue.
The part you didn't know?
They're quietly building another $200M+ business.
Time for a thread 👇👇👇
The part you didn't know?
They're quietly building another $200M+ business.
Time for a thread 👇👇👇
1) First, let's set the stage...
Despite the US population increasing from 298M to 331M from 2006 to 2020—an 11% increase—the number of golf participants in the United States hasn’t followed suit.
There has been a ~20% decline in golf participation during the same time period.
Despite the US population increasing from 298M to 331M from 2006 to 2020—an 11% increase—the number of golf participants in the United States hasn’t followed suit.
There has been a ~20% decline in golf participation during the same time period.
2) As participation has declined, legacy golf companies like Callaway have searched for ways to diversify their business beyond traditional golf.
The solution?
Acquisitions.
Since 2015, Callaway has spent ~$750M on premium brands like Jack Wolfskin, TravisMathew & Ogio.
The solution?
Acquisitions.
Since 2015, Callaway has spent ~$750M on premium brands like Jack Wolfskin, TravisMathew & Ogio.
3) By diversifying their business into premium categories, Callaway saw their revenue explode.
Revenue
2007-2015: $1.1B to $843M
————
2015-2019: $843M to $1.7B
After seeing success through diversification, Callaway decided to double down on a previous investment — Topgolf.
Revenue
2007-2015: $1.1B to $843M
————
2015-2019: $843M to $1.7B
After seeing success through diversification, Callaway decided to double down on a previous investment — Topgolf.
4) In October 2020, after building up a 14% ownership stake through 2 previous investments, Callaway agreed to acquire the remaining 86% of Topgolf.
The valuation?
$2 billion
Even better, the merger awarded us an inside look at Topgolf's fascinating business model...
The valuation?
$2 billion
Even better, the merger awarded us an inside look at Topgolf's fascinating business model...
5) Topgolf, which was founded in 2000, has reinvented the game of golf.
They've created destination style venues for professionals & novices alike to play technology-enabled games accompanied by music, food & drinks.
And it has been a smash hit.
They've created destination style venues for professionals & novices alike to play technology-enabled games accompanied by music, food & drinks.
And it has been a smash hit.
6) Of the 23M Topgolf visitors in 2019, 51% of them identified as non-golfers.
Even better for a legacy brand like Callaway....
75% of the 11.5 million non-golfers who visited Topgolf now say they are interested in playing on a course.
But does interest lead to revenue?
Even better for a legacy brand like Callaway....
75% of the 11.5 million non-golfers who visited Topgolf now say they are interested in playing on a course.
But does interest lead to revenue?
7) From a financial perspective, Topgolf did $1.1B in revenue last year & is growing at a 30% CAGR since 2017.
Revenue
2017: $630M
2018: $862M
2019: $1.1B
The majority of Topgolf’s revenue comes from physical locations, but they also have a growing technology business.
Revenue
2017: $630M
2018: $862M
2019: $1.1B
The majority of Topgolf’s revenue comes from physical locations, but they also have a growing technology business.
8) From a venue standpoint, Topgolf has 58 U.S. locations, 5 international locations and 33 more venues currently under construction.
Economics:
— Cost $10M-$40M to build
— Target $17M in annual revenue
— Over 90% of revenue comes from venues
Next up — their tech business.
Economics:
— Cost $10M-$40M to build
— Target $17M in annual revenue
— Over 90% of revenue comes from venues
Next up — their tech business.
9) In addition to physical locations, Topgolf is also building out a technology component.
What is it?
Toptracer Range, a proprietary ball-tracking technology used by TV networks & driving ranges across the country.
Ex: the line tracks a players shot during a tournament.
What is it?
Toptracer Range, a proprietary ball-tracking technology used by TV networks & driving ranges across the country.
Ex: the line tracks a players shot during a tournament.
10) Here's a breakdown on where Topgolf is today with their Toptracer Range Techonology:
— Licensed to 140+ TV broadcasts in 2019
— Active in ~7,500 driving ranges across the world
— $15M in annual revenue, growing 230% since 2017
Next up — expansion.
— Licensed to 140+ TV broadcasts in 2019
— Active in ~7,500 driving ranges across the world
— $15M in annual revenue, growing 230% since 2017
Next up — expansion.
11) Callaway & Topgolf plan to increase revenue from Toptracer Range from $15M to $200M over the next 10-15 years.
Here's the plan:
— Charge $2,000 annually for licensing
— They've added 3,500 bays this year
— They plan to add 8,000 bays annually starting in 2022
Here's the plan:
— Charge $2,000 annually for licensing
— They've added 3,500 bays this year
— They plan to add 8,000 bays annually starting in 2022
12) Only time will tell if Callaway's bet on diversification will pay off, but the market has responded well.
After dropping 20% on the news, Callaway's stock has increased over 50% since.
Some of that increase is Callaway performing well, but some is Topgolf's outlook too.
After dropping 20% on the news, Callaway's stock has increased over 50% since.
Some of that increase is Callaway performing well, but some is Topgolf's outlook too.
13) While Callaway is making a big bet on Topgolf, the real question becomes:
Will Callaway be able to funnel recreational golfers into legitimate customers for their existing brand?
Only time will tell, but given Topgolf's customer demographic — I wouldn't bet against them.
Will Callaway be able to funnel recreational golfers into legitimate customers for their existing brand?
Only time will tell, but given Topgolf's customer demographic — I wouldn't bet against them.
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