10-K – 2026-02-23 – dpz-20251228.htm

Part II
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
As of February 16, 2026, Domino’s Pizza, Inc. had 170,000,000 authorized shares of common stock, par value $0.01 per share, of which 33,628,897 were issued and outstanding. As of February 16, 2026, there were 1,440 registered holders of record of Domino’s Pizza, Inc.’s common stock. Domino’s Pizza, Inc.’s common stock is traded on The Nasdaq Stock Market LLC (“Nasdaq”) under the ticker symbol “DPZ.”
 
Our Board of Directors declared a quarterly dividend of $1.99 per common share on February 18, 2026 payable on March 30, 2026 to shareholders of record at the close of business on March 13, 2026.
 
We currently anticipate continuing the payment of quarterly cash dividends. The actual amount of such dividends, if any, will depend upon future earnings, results of operations, capital requirements, our financial condition and certain other factors. There can be no assurance as to the amount of free cash flow that we will generate in future years and, accordingly, dividends will be considered after reviewing returns to shareholders, profitability expectations and financing needs and will be declared at the discretion of our Board of Directors.
 
As of December 28, 2025, we had $459.7 million remaining under the $1.0 billion share repurchase authorization approved by our Board of Directors on February 21, 2024, for repurchases of shares of our common stock. Any future purchases of our common stock would be funded by current cash amounts, available borrowings or future excess cash flow. The following table summarizes our repurchase activity during the fourth quarter ended December 28, 2025:
 

Period

 

Total
Number
of Shares
Purchased
(1)

 

 

Average
Price Paid
per Share

 

 

Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Program
(2)

 

 

Maximum
Approximate
Dollar Value
of Shares
that May Yet
Be Purchased
Under the
Program
(in thousands)

 

Period #10 (September 8, 2025 to October 5, 2025)

 

 

1,196

 

 

$

428.35

 

 

 

—

 

 

$

539,681

 

Period #11 (October 6, 2025 to November 2, 2025)

 

 

1,708

 

 

 

396.69

 

 

 

—

 

 

 

539,681

 

Period #12 (November 3, 2025 to November 30, 2025)

 

 

58,595

 

 

 

415.70

 

 

 

57,519

 

 

 

515,776

 

Period #13 (December 1, 2025 to December 28, 2025)

 

 

131,007

 

 

 

428.18

 

 

 

131,007

 

 

 

459,681

 

Total

 

 

192,506

 

 

$

424.10

 

 

 

188,526

 

 

$

459,681

 

 
(1) 3,980 shares were purchased as part of the Company’s employee stock purchase discount plan. During the fourth quarter, the shares were purchased at an average price of $412.71.

 
(2) Authorization for the repurchase program may be modified, suspended, or discontinued at any time. The repurchase of shares in any particular period and the actual amount of such purchases remain at the discretion of the Board of Directors, and no assurance can be given that shares will be repurchased in the future.

 
33

 

The following comparative stock performance line graph compares the cumulative shareholder return of the common stock of Domino’s Pizza, Inc. (Nasdaq: DPZ) for the five-year period between January 3, 2021, and December 28, 2025, with the cumulative total return of (i) the Standard & Poor’s 500 Index (the “S&P 500”) and (ii) the Company’s peer group, the Standard & Poor’s Composite 1500 Restaurant Index (the “S&P 1500 Restaurant Index”). The cumulative total return computations set forth in the performance graph assume the investment of $100 in each of the Company’s common stock, the S&P 500 and the S&P 1500 Restaurant Index on January 3, 2021.
 

 
Item 6. [ R eserved].

 
34

 

Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.
(Unaudited; tabular amounts in millions, except percentages and store data)
 
Overview
 
Our fiscal year typically includes 52 weeks, comprised of three twelve-week quarters and one sixteen-week quarter.
 
In this section, we discuss the results of our operations for the fiscal year ended December 28, 2025 compared to the fiscal year ended December 29, 2024. For a discussion of the fiscal year ended December 29, 2024 compared to the fiscal year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
 
Description of the Business
 
Domino’s is the largest pizza company in the world with more than 22,100 locations in over 90 markets around the world as of December 28, 2025, and operates two distinct service models within its stores, with a significant business in both delivery and carryout. We are a highly recognized global brand, and we focus on value while serving neighborhoods locally through our large worldwide network of franchise owners and U.S. Company-owned stores through both the delivery and carryout service models. We have been selling quality, affordable food to our customers since 1960. We became “Domino’s Pizza” in 1965 and opened our first franchised store in 1967. Over the past 65 years, we have built Domino’s into one of the most widely-recognized consumer brands in the world. We believe our commitment to value, convenience, quality and new products continues to keep consumers engaged with the brand.
 
We are primarily a franchisor, with approximately 99% of Domino’s global stores owned and operated by our independent franchisees as of December 28, 2025. Franchising enables an individual to be a business owner and maintain control over all employment-related matters and pricing decisions, while also benefiting from the strength of the Domino’s global brand and operating system with limited capital investment by us.
 
Domino’s business model is straightforward: Domino’s stores handcraft and serve quality food at a competitive price, with easy ordering access and efficient service, enhanced by our technological innovations. Our hand-tossed dough is made fresh and distributed to stores around the world by us and our franchisees.
 
Domino’s generates revenues and earnings by charging royalties and fees to our franchisees. Royalties are ongoing percent-of-sales fees for use of the Domino’s ® brand marks. We also generate revenues and earnings by selling food and other products to franchisees through our supply chain operations primarily in the U.S. and Canada and by operating a number of Company-owned stores in the U.S. Franchisees profit by selling pizza and other complementary items to their local customers. In our international markets, we generally grant geographical rights to the Domino’s Pizza ® brand to master franchisees. These master franchisees are charged with developing their geographical area, and they may profit by sub-franchising and selling food, and to a lesser extent, other products to those sub-franchisees, as well as by running pizza stores. We believe that everyone in the system can benefit from the franchise model, including the end consumer, who can purchase Domino’s menu items for themselves and their family conveniently and economically.
 
Domino’s business model can yield strong returns for our franchise owners and our Company-owned stores. It can also yield significant cash flows to us, through consistent franchise royalty and supply chain revenue streams, all within an asset-light model. We have historically returned cash to shareholders through dividend payments and share repurchases. Domino’s financial results are driven largely by retail sales at our franchised and Company-owned stores. Changes in retail sales are primarily driven by same store sales growth and net store growth. We actively monitor both of these metrics, as they directly impact our revenues and profits, and we strive to consistently increase both metrics. Retail sales drive royalty payments from franchisees, as well as Company-owned store and supply chain revenues.
 

 
35

 

At Domino’s, we believe we have a proven business model for success that has historically driven strong returns for our shareholders. Our Hungry for MORE strategy aims to generate MORE sales, MORE stores and MORE profits. The strategic imperatives of our Hungry for MORE strategy are as follows:

Most Delicious Food: We believe we have the best pizza in the industry, and our menu has even more mouthwatering options beyond pizza. We will continue to showcase the breadth of our menu, while highlighting the deliciousness of our food through our innovative marketing promotions.

Operational Excellence: We are relentless in our focus on convenience, consistency and efficiency for our customers.

Renowned Value: We are committed to continuing to offer competitive pricing and personalized value for our customers that is innovative and memorable.

Enhanced by Best-in-Class Franchisees: Our franchisees play a vital role in driving results and excitement across the more than 90 markets in which we operate.
 
Critical accounting estimates

The following discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, our management evaluates its estimates, including those related to long-lived assets, casualty insurance reserves and income taxes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates, and changes in estimates could materially affect our results of operations and financial condition for any particular period.
We believe that our most critical accounting estimates are:
 
Long-lived assets
 
We record long-lived assets, including property, plant and equipment and capitalized software, at cost. For acquisitions of franchise operations, we estimate the fair values of the assets and liabilities acquired based on physical inspection of assets, historical experience and other information available to us regarding the acquisition. We depreciate and amortize long-lived assets using useful lives determined by us based on historical experience and other information available to us. We evaluate long-lived assets, including property, plant, equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Our periodic evaluation is based on various analyses including the projection of undiscounted cash flows. If we determine that the carrying amount of an asset (or asset group) may not be recoverable, we compare the net carrying value of the asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group.
 
For Company-owned stores, we perform related impairment tests on an operating market basis, which we have determined to be the lowest level for which identifiable cash flows are largely independent of other cash flows. If the carrying amount of a long-lived asset exceeds the amount of the expected future undiscounted cash flows of that asset, we estimate the fair value of the asset. If the carrying amount of the asset exceeds the estimated fair value of the asset, an impairment loss is recognized, and the asset is written down to its estimated fair value. We have not made any significant changes in the methodology used to project the future market cash flows of Company-owned stores during the years presented. Same store sales fluctuations and the rates at which operating costs will fluctuate in the future are key factors in determining projected cash flows used to evaluate recoverability of the related assets. If our same store sales significantly decline or if operating costs increase and we are unable to recover these costs, the carrying value of our Company-owned stores, by market, may not be recoverable and we may be required to recognize an impairment charge.
 
We did not record any impairment losses on long-lived assets in 2025, 2024 and 2023.
 

 
36

 

Casualty insurance reserves
 
For certain periods prior to December 1998 and for periods after December 2001, we maintain insurance coverage for workers’ compensation, general liability and owned and non-owned automobile liabilities. We are generally responsible for up to $1.0 million per occurrence under these retention programs for workers’ compensation and up to $2.0 million per occurrence under these retention programs for general liability, depending on policy year and line of coverage. We are generally responsible for up to between $2.0 million and $5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities, depending on policy year and line of coverage. Casualty insurance reserves are based on undiscounted actuarial estimates. These estimates are based on historical information and on certain assumptions about future events. There is inherent uncertainty in the ultimate cost for known claims under our insurance coverages, and for incidents that have occurred that will be subject to a claim, but have yet to be reported to us. Analyses of historical trends and actuarial valuation methods are utilized to estimate the ultimate claim costs for claims incurred as of the balance sheet date and for claims incurred but not yet reported. When estimating these liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation.
 
Our methodology for determining our exposure has remained consistent throughout the years presented. Management believes that the various assumptions developed, and actuarial methods used to determine our casualty insurance reserves are reasonable and provide meaningful data that management uses to make its best estimate of our exposure to these risks. Changes in assumptions for such factors as medical costs and legal actions, as well as changes in actual experience, could cause our estimates to change in the near term which could result in an increase or decrease in the related expense in future periods. A 10% change in our casualty insurance liability at December 28, 2025 would have affected our income before provision for income taxes by approximately $5.1 million in 2025. We had accruals for casualty insurance reserves of $51.2 million and $50.7 million at December 28, 2025 and December 29, 2024, respectively.
 
Income taxes
 
The U.S. Federal statutory income tax rate was 21% in each of 2025, 2024 and 2023. Our Federal income tax provision calculated based on the Federal statutory rate was $161.8 million, $151.7 million and $137.0 million in 2025, 2024 and 2023, respectively.
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. We measure deferred taxes using current enacted tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid. Judgment is required in determining the provision for income taxes, related reserves and deferred taxes. These include establishing a valuation allowance related to the ability to realize certain deferred tax assets, if necessary. On an ongoing basis, management will assess whether it remains more likely than not that the deferred tax assets will be realized. Our accounting for deferred taxes represents our best estimate of future events. Except with respect to certain foreign tax credits and interest deductibility in separately filed states, our deferred tax assets assume that we will generate sufficient taxable income in specific tax jurisdictions, based on our estimates and assumptions. As of December 28, 2025 and December 29, 2024, we had total foreign tax credits of $25.1 million and $21.0 million, respectively, each of which were fully offset with a corresponding valuation allowance. We also had valuation allowances related to interest deductibility in separately filed states of $1.2 million and $1.4 million as of December 28, 2025 and December 29, 2024, respectively. We believe our remaining deferred tax assets will be realized. Changes in our current estimates due to unanticipated events could have a material impact on our financial condition and results of operations.
 

 
37

 

Fiscal 2025 Highlights
 
Our Hungry for MORE strategy aims to generate MORE sales, MORE stores and MORE profits.
 
• MORE Sales: Global retail sales, excluding foreign currency impact (which includes total retail sales at Company-owned and franchised stores worldwide), increased 5.4% as compared to 2024. U.S. retail sales increased 4.8% and international retail sales, excluding foreign currency impact, increased 5.9% as compared to 2024. Same store sales increased 3.0% in our U.S. stores and increased 1.9% in our international stores (excluding foreign currency impact).

• MORE Stores: Global net store growth of 776 stores, including 172 net store openings in the U.S. and 604 net store openings internationally.

• MORE Profits: Income from operations increased 8.5%.

 
Excluding the negative impact of foreign currency, Domino’s experienced global retail sales growth during 2025, driven by same store sales growth and net store growth in both our U.S. and international businesses. These factors, as well as gross margin dollar improvement within supply chain, also contributed to an increase in income from operations. Overall, we believe our global retail sales growth, excluding foreign currency impact, marketing initiatives, operations and emphasis on technology have combined to strengthen our brand. These financial and statistical measures are described in additional detail below.
 
Statistical Measures
 
The tables below outline certain statistical measures we utilize to analyze our performance. This historical data is not necessarily indicative of results to be expected for any future period.
 
Global Retail Sales
 
Global retail sales is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales refers to total worldwide retail sales at Company-owned and franchised stores. We believe global retail sales information is useful in analyzing revenues because franchisees pay royalties and, in the U.S., advertising fees that are based on a percentage of franchise retail sales. We review comparable industry global retail sales information to assess business trends and to track the growth of the Domino’s Pizza brand, and we believe they are indicative of the financial health of our franchisee base. In addition, supply chain revenues are directly impacted by changes in franchise retail sales in the U.S. and Canada. As a result, sales by Domino’s franchisees have a direct effect on our profitability. Retail sales for franchised stores are reported to us by our franchisees and are not included in our revenues. The amounts below are presented in millions of U.S. dollars.
 

 

 

2025

 

 

2024

 

 

2023

 

U.S. stores

 

$

9,952.9

 

 

$

9,500.1

 

 

$

9,026.1

 

International stores

 

 

10,173.9

 

 

 

9,624.1

 

 

 

9,249.7

 

Total

 

$

20,126.8

 

 

$

19,124.2

 

 

$

18,275.8

 

 
Global Retail Sales Growth, Excluding Foreign Currency Impact
 
Global retail sales growth, excluding foreign currency impact is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Global retail sales growth, excluding foreign currency impact, is calculated as the change of international local currency global retail sales against the comparable period of the prior year. Changes in global retail sales growth, excluding foreign currency impact are primarily driven by same store sales growth and net store growth.
 

 

 

2025

 

 

2024

 

 

2023

 

U.S. stores

 

 

+ 4.8%

 

 

 

+ 5.3%

 

 

 

+ 3.1%

 

International stores (excluding foreign currency impact)

 

 

+ 5.9%

 

 

 

+ 6.5%

 

 

 

+ 7.7%

 

Total (excluding foreign currency impact)

 

 

+ 5.4%

 

 

 

+ 5.9%

 

 

 

+ 5.4%

 

 
 

 
38

 

Same Store Sales Growth
 
Same store sales growth is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Same store sales growth is calculated for a given period by including only sales from stores that also had sales in the comparable weeks of both periods. International same store sales growth is calculated similarly to U.S. same store sales growth. Changes in international same store sales are reported on a constant dollar basis, which reflects changes in international local currency sales. Same store sales growth for transferred stores is reflected in their current classification.
 

 

 

2025

 

2024

 

2023

U.S. Company-owned stores

 

+ 1.5%

 

+ 3.5%

 

+ 5.4%

U.S. franchise stores

 

+ 3.0%

 

+ 3.2%

 

+ 1.4%

U.S. stores

 

+ 3.0%

 

+ 3.2%

 

+ 1.6%

International stores (excluding foreign currency impact)

 

+ 1.9%

 

+ 1.6%

 

+ 1.7%

 
U.S. same store sales increased 3.0% during 2025, rolling over an increase in U.S. same store sales of 3.2% in 2024. The increase in U.S. same store sales was primarily driven by both higher customer transaction counts and higher average ticket, each driven in part by the launch of our Parmesan Stuffed Crust pizza. Multiple windows of our “Best Deal Ever” promotion also drove higher customer transaction counts during 2025. International same store sales (excluding foreign currency impact) increased 1.9% during 2025, rolling over an increase in international same store sales (excluding foreign currency impact) of 1.6% in 2024. The increase in international same store sales was attributable to higher customer transaction counts.
 
Net Store Growth
 
Net store growth is a commonly used statistical measure in the quick-service restaurant industry that is important to understanding performance. Net store growth is calculated by netting gross store openings with gross store closures during the period. Transfers between Company-owned stores and franchised stores are excluded from the calculation of net store growth.
 

 

 

U.S.
Company-
owned
 Stores

 

 

U.S.
Franchise
Stores

 

 

Total
U.S.
Stores

 

 

International Stores

 

 

Total

 

Store count at January 1, 2023

 

 

286

 

 

 

6,400

 

 

 

6,686

 

 

 

13,194

 

 

 

19,880

 

Openings

 

 

4

 

 

 

174

 

 

 

178

 

 

 

892

 

 

 

1,070

 

Closings

 

 

(1

)

 

 

(9

)

 

 

(10

)

 

 

(349

)

 

 

(359

)

Transfers

 

 

(1

)

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

Store count at December 31, 2023

 

 

288

 

 

 

6,566

 

 

 

6,854

 

 

 

13,737

 

 

 

20,591

 

Openings

 

 

7

 

 

 

159

 

 

 

166

 

 

 

868

 

 

 

1,034

 

Closings

 

 

(1

)

 

 

(5

)

 

 

(6

)

 

 

(253

)

 

 

(259

)

Transfers

 

 

(2

)

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

Store count at December 29, 2024

 

 

292

 

 

 

6,722

 

 

 

7,014

 

 

 

14,352

 

 

 

21,366

 

Openings

 

 

5

 

 

 

174

 

 

 

179

 

 

 

953

 

 

 

1,132

 

Closings

 

 

—

 

 

 

(7

)

 

 

(7

)

 

 

(349

)

 

 

(356

)

Transfers

 

 

(35

)

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

Store count at December 28, 2025

 

 

262

 

 

 

6,924

 

 

 

7,186

 

 

 

14,956

 

 

 

22,142

 

Fiscal 2025 net store growth

 

 

5

 

 

 

167

 

 

 

172

 

 

 

604

 

 

 

776

 

 

 
39

 

Income Statement Data
 

 

 

2025

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Company-owned stores

 

$

375.2

 

 

 

 

 

$

393.9

 

 

 

 

 

$

376.2

 

 

 

 

U.S. franchise royalties and fees

 

 

677.1

 

 

 

 

 

 

638.2

 

 

 

 

 

 

604.9

 

 

 

 

Supply chain

 

 

2,989.5

 

 

 

 

 

 

2,845.8

 

 

 

 

 

 

2,715.0

 

 

 

 

International franchise royalties and fees

 

 

338.7

 

 

 

 

 

 

318.7

 

 

 

 

 

 

310.1

 

 

 

 

U.S. franchise advertising

 

 

559.5

 

 

 

 

 

 

509.9

 

 

 

 

 

 

473.2

 

 

 

 

Total revenues

 

 

4,940.0

 

 

 

100.0

%

 

 

4,706.4

 

 

 

100.0

%

 

 

4,479.4

 

 

 

100.0

%

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Company-owned stores

 

 

321.6

 

 

 

 

 

 

328.0

 

 

 

 

 

 

314.7

 

 

 

 

Supply chain

 

 

2,644.8

 

 

 

 

 

 

2,529.9

 

 

 

 

 

 

2,437.3

 

 

 

 

Total cost of sales

 

 

2,966.4

 

 

 

60.0

%

 

 

2,857.9

 

 

 

60.7

%

 

 

2,751.9

 

 

 

61.4

%

Gross margin

 

 

1,973.6

 

 

 

40.0

%

 

 

1,848.5

 

 

 

39.3

%

 

 

1,727.4

 

 

 

38.6

%

General and administrative

 

 

464.1

 

 

 

9.4

%

 

 

459.5

 

 

 

9.8

%

 

 

434.6

 

 

 

9.7

%

U.S. franchise advertising

 

 

559.5

 

 

 

11.3

%

 

 

509.9

 

 

 

10.8

%

 

 

473.2

 

 

 

10.6

%

Refranchising (gain) loss

 

 

(4.0

)

 

 

0.0

%

 

 

0.2

 

 

 

0.0

%

 

 

0.1

 

 

 

0.0

%

Income from operations

 

 

954.0

 

 

 

19.3

%

 

 

879.0

 

 

 

18.7

%

 

 

819.5

 

 

 

18.3

%

Other (expense) income

 

 

(2.5

)

 

 

0.0

%

 

 

22.1

 

 

 

0.5

%

 

 

17.7

 

 

 

0.4

%

Interest expense, net

 

 

(181.1

)

 

 

(3.7

)%

 

 

(178.8

)

 

 

(3.9

)%

 

 

(184.8

)

 

 

(4.1

)%

Income before provision for income taxes

 

 

770.3

 

 

 

15.6

%

 

 

722.2

 

 

 

15.3

%

 

 

652.4

 

 

 

14.6

%

Provision for income taxes

 

 

168.6

 

 

 

3.4

%

 

 

138.0

 

 

 

2.9

%

 

 

133.3

 

 

 

3.0

%

Net income

 

$

601.7

 

 

 

12.2

%

 

$

584.2

 

 

 

12.4

%

 

$

519.1

 

 

 

11.6

%

 
2025 compared to 2024
 
Revenues
 

 

 

2025

 

 

2024

 

U.S. Company-owned stores

 

$

375.2

 

 

 

7.6

%

 

$

393.9

 

 

 

8.4

%

U.S. franchise royalties and fees

 

 

677.1

 

 

 

13.7

%

 

 

638.2

 

 

 

13.6

%

Supply chain

 

 

2,989.5

 

 

 

60.5

%

 

 

2,845.8

 

 

 

60.4

%

International franchise royalties and fees

 

 

338.7

 

 

 

6.9

%

 

 

318.7

 

 

 

6.8

%

U.S. franchise advertising

 

 

559.5

 

 

 

11.3

%

 

 

509.9

 

 

 

10.8

%

Total revenues

 

$

4,940.0

 

 

 

100.0

%

 

$

4,706.4

 

 

 

100.0

%

 
Revenues primarily consist of retail sales from our Company-owned stores, royalties and fees and advertising contributions from our U.S. franchised stores, royalties and fees from our international franchised stores and sales of food and, to a lesser extent, other products from our supply chain centers to substantially all of our U.S. franchised stores and certain international franchised stores. Company-owned store and franchised store revenues may vary from period to period due to changes in store count mix. Supply chain revenues may vary significantly from period to period as a result of fluctuations in commodity prices as well as the mix of products we sell.
 
Consolidated revenues increased $233.6 million, or 5.0%, in 2025 primarily due to higher supply chain revenues, higher U.S. franchise advertising revenues and higher U.S. franchise royalties and fees. The increase in supply chain revenues was primarily attributable to higher order volumes and an increase in our food basket pricing to stores, but these increases were partially offset by a shift in the relative mix of products we sell and the transition of our equipment and supplies business to a third-party supplier in 2024. The increases in U.S. franchise advertising revenues and U.S. franchise royalties and fees were driven primarily by same store sales growth and net store growth. U.S. franchise advertising revenues also increased as a result of a decrease in advertising incentives and the increase in the advertising contribution rate. These changes in revenues are described in more detail below.
 

 
40

 

U.S. Stores
 

 

 

2025

 

 

2024

 

U.S. Company-owned stores

 

$

375.2

 

 

 

23.3

%

 

$

393.9

 

 

 

25.5

%

U.S. franchise royalties and fees

 

 

677.1

 

 

 

42.0

%

 

 

638.2

 

 

 

41.4

%

U.S. franchise advertising

 

 

559.5

 

 

 

34.7

%

 

 

509.9

 

 

 

33.1

%

Total U.S. stores revenues

 

$

1,611.8

 

 

 

100.0

%

 

$

1,541.9

 

 

 

100.0

%

 
U.S. Company-owned Stores
 
Revenues from U.S. Company-owned store operations decreased $18.7 million, or 4.8%, in 2025 primarily driven by the refranchising of the Maryland market in May 2025, but this decrease was partially offset by higher same store sales.
 
U.S. Company-owned same store sales increased 1.5% in 2025 and increased 3.5% in 2024.
 
U.S. Franchise Royalties and Fees
 
Revenues from U.S. franchise royalties and fees increased $38.9 million, or 6.1%, in 2025 primarily due to higher same store sales and an increase in the average number of U.S. franchised stores open during the period resulting from net store growth.
 
U.S. franchise same store sales increased 3.0% in 2025 and increased 3.2% in 2024.
 
U.S. Franchise Advertising
 
Revenues from U.S. franchise advertising increased $49.6 million, or 9.7%, in 2025 primarily due to a decrease in advertising incentives, higher same store sales, an increase in the average number of U.S. franchised stores open during the period resulting from net store growth and the return to the standard 6.0% advertising contribution rate at the beginning of the second quarter of 2024 following the end of the temporary reduction to 5.75%.
 
Supply Chain
 
Supply chain revenues increased $143.7 million, or 5.1%, in 2025 due primarily to an increase in our food basket pricing to stores and higher order volumes. These increases were partially offset by a shift in the relative mix of products we sell and the transition of our equipment and supplies business to a third-party supplier in 2024. Our food basket pricing to stores increased 3.5% during 2025, which resulted in an estimated $142 million increase in supply chain revenues. The food basket pricing change, a statistical measure utilized by management, is calculated as the percentage change of the food basket (including both food and cardboard products) purchased by an average U.S. store (based on average weekly unit sales) from our U.S. supply chain centers against the comparable period of the prior year. We believe this measure is important to understanding Company performance because as our food basket prices fluctuate, our revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate.
 
International Franchise Royalties and Fees
 
Revenues from international franchise royalties and fees increased $20.0 million, or 6.3%, in 2025 primarily due to an increase in the average number of international franchised stores open during the period resulting from net store growth and higher same store sales (excluding foreign currency impact). These increases were partially offset by the negative impact of changes in foreign currency exchange rates of approximately $0.6 million in 2025. The impact of changes in foreign currency exchange rates on international franchise royalty revenues, a statistical measure utilized by management, is calculated as the difference in international franchise royalty revenues resulting from translating current year local currency results to U.S. dollars at current year exchange rates as compared to prior year exchange rates. We believe this measure is important to understanding Company performance given the significant variability in international franchise royalty revenues that can be driven by changes in foreign currency exchange rates.
 
International franchise same store sales, excluding the impact of changes in foreign currency exchange rates, increased 1.9% in 2025 and increased 1.6% in 2024.
 

 
41

 

Cost of Sales / Gross Margin
 

 

 

2025

 

 

2024

 

Total revenues

 

$

4,940.0

 

 

 

100.0

%

 

$

4,706.4

 

 

 

100.0

%

Total cost of sales

 

 

2,966.4

 

 

 

60.0

%

 

 

2,857.9

 

 

 

60.7

%

Gross margin

 

$

1,973.6

 

 

 

40.0

%

 

$

1,848.5

 

 

 

39.3

%

 
Consolidated cost of sales consists of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food and labor costs, as well as other costs including delivery, occupancy costs (including rent, telephone, utilities and depreciation), insurance expense and other. Consolidated gross margin (which we define as revenues less cost of sales) increased $125.1 million, or 6.8%, in 2025 due primarily to higher U.S. franchise advertising, royalties and fees revenues, as well as gross margin dollar growth within supply chain discussed herein. Franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on gross margin. We generally update our supply chain gross margin structure on an annual basis. However, as food basket prices fluctuate, revenues, cost of sales and gross margin percentages in our supply chain segment also fluctuate, and further, cost of sales, gross margins and gross margin percentages for our U.S. Company-owned stores also fluctuate.
 
Consolidated gross margin as a percentage of revenues increased 0.7 percentage points to 40.0% in 2025 from 39.3% in 2024. U.S. Company-owned store gross margin decreased 2.4 percentage points in 2025 and supply chain gross margin increased 0.4 percentage points in 2025. Changes in the significant components of gross margin are described in more detail below.
U.S. Company-Owned Stores Gross Margin
 

 

 

2025

 

 

2024

 

Revenues

 

$

375.2

 

 

 

100.0

%

 

$

393.9

 

 

 

100.0

%

Cost of sales

 

 

321.6

 

 

 

85.7

%

 

 

328.0

 

 

 

83.3

%

Store gross margin

 

$

53.5

 

 

 

14.3

%

 

$

65.9

 

 

 

16.7

%

 
U.S. Company-owned store gross margin (which does not include certain store-level costs such as royalties and advertising) decreased $12.4 million, or 18.8%, in 2025. As a percentage of store revenues, U.S. Company-owned store gross margin decreased 2.4 percentage points in 2025. These changes in gross margin as a percentage of revenues are discussed in additional detail below.
 
• Food costs increased 0.9 percentage points to 29.9% in 2025 driven by the increase in the food basket pricing to stores.

 
• Labor costs were 31.3% in both 2025 and 2024.

 
• Higher insurance costs drove the remaining decrease in U.S. Company-owned store gross margin as a percentage of revenues in 2025.

 
Supply Chain Gross Margin
 

 

 

2025

 

 

2024

 

Revenues

 

$

2,989.5

 

 

 

100.0

%

 

$

2,845.8

 

 

 

100.0

%

Cost of sales

 

 

2,644.8

 

 

 

88.5

%

 

 

2,529.9

 

 

 

88.9

%

Supply chain gross margin

 

$

344.7

 

 

 

11.5

%

 

$

315.9

 

 

 

11.1

%

 
Supply chain gross margin increased $28.9 million, or 9.1%, in 2025. As a percentage of supply chain revenues, supply chain gross margin increased 0.4 percentage points in 2025. These changes in gross margin as a percentage of revenues are discussed in additional detail below.
• Food costs decreased 0.4 percentage points to 70.9% in 2025 driven primarily by procurement productivity, partially offset by the increase in the cost of our food basket.

• Labor costs decreased 0.3 percentage points to 8.9% in 2025 due primarily to higher sales leverage and labor efficiency.

• Higher insurance costs partially offset these improvements in supply chain gross margin as a percentage of revenues in 2025.

 
42

 

General and Administrative Expenses
General and administrative expenses increased $4.6 million, or 1.0%, in 2025, primarily due to approximately $5 million in severance expenses associated with an organizational realignment that took place in the first quarter of 2025, as well as higher computer and insurance expenses. These increases were partially offset by expenses related to our Worldwide Rally in the second quarter of 2024, which takes place every two years and did not reoccur in 2025.
 
U.S. Franchise Advertising Expenses
 
U.S. franchise advertising expenses increased $49.6 million, or 9.7%, in 2025, consistent with the increase in U.S. franchise advertising revenues, as discussed above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as our consolidated not-for-profit advertising fund is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand, and these revenues cannot be used for general corporate purposes.
 
Refranchising Gain
 
During 2025, we refranchised 37 U.S. Company-owned stores, primarily in Maryland, for net proceeds of $8.6 million. The pre-tax refranchising gain associated with the sale of the related assets and liabilities, including a $1.4 million reduction in goodwill, was $4.0 million and was recorded in refranchising gain in our consolidated statements of income.
 
Other (Expense) Income
 
Other expense was $2.5 million in 2025, while other income was $22.1 million in 2024, each representing the net realized and unrealized losses and gains on our investment in DPC Dash. The recorded amount of our investment is based on the active exchange quoted price for the equity security. Additional information related to our investment in DPC Dash is included in Note 1 and Note 4 to our consolidated financial statements.
Interest Expense, Net
 
Interest expense, net, increased $2.2 million, or 1.3%, in 2025, due to lower interest income on our cash equivalents. Our weighted average borrowing rate was 3.8% in both 2025 and 2024.
 
Provision for Income Taxes
 
Provision for income taxes increased $30.6 million, or 22.2%, in 2025 due to a higher effective tax rate, as well as an increase in income before provision for income taxes. The effective tax rate increased to 21.9% during 2025, as compared to 19.1% in 2024. The increase in the effective tax rate was driven by a 2.7 percentage point unfavorable change in the impact of excess tax benefits from equity-based compensation, which is recorded as a reduction to the provision for income taxes.
We applied the relevant provisions of the One Big Beautiful Bill Act following its enactment on July 4, 2025, including provisions related to bonus depreciation, research and development and foreign derived intangible income and it did not have a material impact on our effective tax rate.
 

 
43

 

Segment Income
 
We evaluate the performance of our reportable segments and allocate resources to them based on earnings before interest, taxes, depreciation, amortization and other, referred to as Segment Income. Segment Income for each of our reportable segments is summarized in the table below.
 

 

 

2025

2024

 

U.S. Stores

 

$

575.3

 

 

$

565.4

 

Supply Chain

 

 

320.1

 

 

 

280.6

 

International Franchise

 

 

288.5

 

 

 

260.7

 

 
U.S. Stores
U.S. stores Segment Income increased $10.0 million, or 1.8%, in 2025, primarily due to higher U.S. franchise royalties and fees revenues as discussed above, but this increase was partially offset by the decrease in U.S. Company-owned store gross margin as discussed above, as well as a shift in the relative mix of labor cost associated with internally developed software. U.S. franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on U.S. stores Segment Income. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized and had no impact on U.S. stores Segment Income.
 
Supply Chain
 
Supply chain Segment Income increased $39.5 million, or 14.1%, in 2025, primarily due to the increase in supply chain gross margin as discussed above.
 
International Franchise
 
International franchise Segment Income increased $27.9 million, or 10.7%, in 2025, primarily due to higher international franchise royalties and fees revenues as discussed above. In addition, lower general and administrative expenses also contributed to the increase in international franchise Segment Income in 2025. The decrease in general and administrative expenses primarily related to our Worldwide Rally in the second quarter of 2024, which did not reoccur in 2025 as discussed above. International franchise revenues do not have a cost of sales component, so changes in these revenues have a disproportionate effect on international franchise Segment Income.
 
 
 

 
44

 

New Accounting Pronouncements
 
The impact of new accounting pronouncements adopted and the estimated impact of new accounting pronouncements that we will adopt in future years is included in Note 1 to the consolidated financial statements.
 
Liquidity and Capital Resources
 
Historically, our receivable collection periods and inventory turn rates are faster than the normal payment terms on our current liabilities resulting in efficient deployment of working capital. We generally collect our receivables within three weeks from the date of the related sale and we generally experience multiple inventory turns per month. In addition, our sales are not typically seasonal, which further limits variations in our working capital requirements. As of December 28, 2025, we had working capital of $134.4 million, excluding restricted cash and cash equivalents of $216.1 million, advertising fund assets, restricted of $117.5 million and advertising fund liabilities of $115.4 million. Working capital includes total unrestricted cash and cash equivalents of $125.7 million.
 
Our primary sources of liquidity are cash flows from operations and availability of borrowings under our variable funding notes. During 2025, we experienced an increase in both U.S. and international retail sales (excluding foreign currency impact). Additionally, both our U.S. and international businesses grew store counts during 2025. These factors contributed to our continued ability to generate positive operating cash flows. In addition to our cash flows from operations, we have a variable funding note facility. Our Series 2025-1 Variable Funding Senior Secured Notes, Class A-1 Notes (the “2025 Variable Funding Notes”), allows for advances of up to $320.0 million and issuance of certain other credit instruments, including letters of credit. The letters of credit primarily relate to our casualty insurance programs. As of December 28, 2025, we had no outstanding borrowings and $263.6 million of available borrowing capacity under our 2025 Variable Funding Notes, net of letters of credit issued of $56.4 million.
 
Our primary sources of liquidity could be adversely affected by the occurrence of any of the events described in Item 1A. Risk Factors. There can be no assurance that our business will generate sufficient cash flows from operations or that future borrowings will be available under our 2025 Variable Funding Notes or otherwise to enable us to service our indebtedness, or to make anticipated capital expenditures. Our future operating performance and our ability to service, extend or refinance our Notes (defined below) and to service, extend or refinance our 2025 Variable Funding Notes will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.
 
Restricted Cash
 
As of December 28, 2025, we had $165.8 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of our asset-backed securitization structure, $50.1 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $0.2 million of other restricted cash for a total of $216.1 million of restricted cash and cash equivalents. As of December 28, 2025, we also held $92.2 million of advertising fund restricted cash and cash equivalents which can only be used for activities that promote the Domino’s brand.
 
Long-Term Debt
 
2025 Refinancing
On September 5, 2025, we completed a refinancing transaction (the “2025 Refinancing”) in which certain of our subsidiaries issued new notes pursuant to an asset-backed securitization. The notes consist of $500.0 million Series 2025-1 4.930% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated repayment date of July 2030 (the “2025 Five-Year Notes”) and $500.0 million Series 2025-1 5.217% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated repayment date of July 2032 (the “2025 Seven-Year Notes,” and collectively with the 2025 Five-Year Notes, the “2025 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended.
The proceeds from the issuance of the 2025 Notes, as well as $160.0 million of our unrestricted cash and cash equivalents, were used to (i) repay the remaining $742.0 million in outstanding principal under our 2015 Ten-Year Notes and the remaining $402.7 million in outstanding principal under the Company’s 2018 7.5-Year Notes, (ii) prefund a portion of the interest payable on the 2025 Notes and (iii) pay transaction fees and expenses. In connection with the 2025 Refinancing, we capitalized $15.4 million of debt issuance costs, which are being amortized into interest expense over the five and seven-year expected terms of the 2025 Notes. Additional information related to the 2025 Refinancing is included in Note 3 to our consolidated financial statements.
 

 
45

 

2021 Recapitalization
 
On April 16, 2021, we completed the 2021 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $850.0 million Series 2021-1 2.662% Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2021 7.5-Year Notes”) and $1.0 billion Series 2021-1 3.151% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 10 years (the “2021 Ten-Year Notes”, and, collectively with the 2021 7.5-Year Notes, the “2021 Notes”). Additional information related to the 2021 Recapitalization is included in Note 3 to our consolidated financial statements.
 
2019 Recapitalization
 
On November 19, 2019, we completed the 2019 Recapitalization in which certain of our subsidiaries issued $675.0 million Series 2019-1 3.668% Fixed Rate Senior Secured Notes, Class A-2 with an anticipated term of 10 years (the “2019 Notes”) pursuant to an asset-backed securitization. Gross proceeds from the issuance of the 2019 Notes were $675.0 million. Additional information related to the 2019 Recapitalization is included in Note 3 to our consolidated financial statements.
 
2018 Recapitalization
 
On April 24, 2018, we completed the 2018 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $425.0 million Series 2018-1 4.116% Fixed Rate Senior Secured Notes, Class A-2-I with a term of 7.5 years (the “2018 7.5-Year Notes”), and $400.0 million Series 2018-1 4.328% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 9.25 years (the “2018 9.25-Year Notes”). The 2018 7.5-Year Notes were repaid in connection with the 2025 Refinancing. Additional information related to the 2018 Recapitalization is included in Note 3 to our consolidated financial statements.
 
2017 Recapitalization
 
On July 24, 2017, we completed the 2017 Recapitalization in which certain of our subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $300.0 million Series 2017-1 Floating Rate Senior Secured Notes, Class A-2-I with an anticipated term of five years (the “2017 Floating Rate Notes”), $600.0 million Series 2017-1 3.082% Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of five years (the “2017 Five-Year Notes”), and $1.0 billion Series 2017-1 4.118% Fixed Rate Senior Secured Notes, Class A-2-III with an anticipated term of 10 years (the “2017 Ten-Year Notes”). The 2017 Floating Rate Notes and the 2017 Five-Year Notes were repaid in connection with the 2021 Recapitalization. Additional information related to the 2017 Recapitalization is included in Note 3 to our consolidated financial statements.

2025 Variable Funding Notes
 
In connection with the 2025 Refinancing, certain of our subsidiaries issued the 2025 Variable Funding Notes. In connection with the issuance of the 2025 Variable Funding Notes, our previous $200.0 million Series 2021-1 and $120.0 million Series 2022-1 variable funding note facilities were canceled. Additional information related to the 2025 Variable Funding Notes is included in Note 3 to our consolidated financial statements.
 
Fixed-Rate Notes
 
The 2025 Notes, 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Ten-Year Notes are collectively referred to as the “Notes.”
 
The Notes have original scheduled principal payments of $49.3 million in 2026, $1.34 billion in 2027, $836.4 million in 2028, $647.8 million in 2029, $495.0 million in 2030, $927.5 million in 2031 and $470.0 million in 2032. However, in accordance with our debt agreements, the payment of principal on the 2025 Notes may be suspended if either the Holdco Leverage Ratio or Senior Leverage Ratio is less than or equal to 5.5x total debt to either Consolidated Adjusted EBITDA or Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. Further, in accordance with our debt agreements, the payment of principal on the 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Ten-Year Notes may be suspended if the Holdco Leverage Ratio is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. As of the end of the fourth quarter of 2025 and the end of the fourth quarter of 2024, we satisfied the non-amortization tests for each respective series of notes, and accordingly, the outstanding principal amounts of the notes have been classified as long-term debt in the consolidated balance sheet as of December 28, 2025. As of December 29, 2024, current portion of long-term debt included the outstanding principal amounts under the 2015 Ten-Year Notes and the 2018 7.5-Year Notes for which the anticipated repayment date was October 2025.
 

 
46

 

The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation. The covenant requires a minimum coverage ratio of 1.75x total debt service to Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt. In the event that certain covenants are not met, the Notes may become due and payable on an accelerated schedule.
 
Leases
 
We lease certain retail store and supply chain center locations, supply chain vehicles, various equipment and our World Resource Center under leases with expiration dates through 2045. Refer to Note 5 to the consolidated financial statements for additional information regarding our leases, including future minimum rental commitments.
Capital Expenditures and Other Material Cash Requirements
 
In the past three years, we have spent approximately $338.8 million on capital expenditures. In 2025, we spent $120.6 million on capital expenditures which primarily related to investments in our consumer and store technology, supply chain centers, corporate store operations and other corporate capital expenditures. We plan to continue investing in consumer and store technology, supply chain centers and corporate store operations, and we expect that our capital expenditures will be approximately $120 million in 2026. We expect to continue to use our unrestricted cash and cash equivalents, cash flows from operations, any excess cash from our refinancing and recapitalization transactions and available borrowings under our 2025 Variable Funding Notes to, among other things, fund working capital requirements, invest in our core business and other strategic opportunities, repay outstanding borrowings under our securitized debt, pay dividends and repurchase and retire shares of our common stock.
Investments
 
We hold a non-controlling interest in DPC Dash, our master franchisee in China that owns and operates Domino’s Pizza stores in that market.
 
As of December 28, 2025 and December 29, 2024, the fair value of our investment in DPC Dash was $36.1 million and $82.7 million, respectively. The fair value of our investment in DPC Dash was based on the active exchange quoted price for the equity security of HK$71.90 per share as of December 28, 2025 and HK$79.25 per share as of December 29, 2024. We owned 3,901,019 and 8,101,019 ordinary shares as of December 28, 2025 and December 29, 2024, representing 3.0% and 6.2% of DPC Dash’s ordinary shares as of the respective dates. We sold 4,200,000 ordinary shares of our investment in DPC Dash in the second quarter of 2025 for net proceeds of $44.1 million. We sold 10,000,000 ordinary shares of our investment in DPC Dash in the fourth quarter of 2024 for $82.9 million. We recorded total net negative and positive adjustments to the carrying amount of our investment in DPC Dash of $2.5 million and $22.1 million in 2025 and 2024, respectively, with the net realized and unrealized losses and gains recorded in other expense and other income in our consolidated statements of income, respectively.
 
Share Repurchase Programs
 
Our share repurchase programs have historically been funded by excess operating cash flows, excess proceeds from our recapitalization transactions and borrowings under our variable funding notes. We used cash of $354.7 million in 2025, $327.0 million in 2024 and $269.0 million in 2023 for share repurchases.
 
As of December 28, 2025, we had $459.7 million remaining under the $1.0 billion share repurchase authorization approved by our Board of Directors on February 21, 2024 for repurchases of shares of our common stock.
 
Dividends
 
We declared dividends of $237.3 million (or $6.96 per share) in 2025, $210.7 million (or $6.04 per share) in 2024 and $170.4 million (or $4.84 per share) in 2023. We paid dividends of $236.9 million, $209.9 million and $169.8 million in 2025, 2024 and 2023, respectively.
 
Subsequent to the end of fiscal 2025, on February 18, 2026, our Board of Directors declared a quarterly dividend of $1.99 per common share payable on March 30, 2026 to shareholders of record at the close of business on March 13, 2026.
 

 
47

 

Sources and Uses of Cash
 
The following table illustrates the main components of our cash flows:

 

 

Fiscal Year Ended

 

(In millions)

 

December 28, 2025

 

 

December 29, 2024

 

Cash flows provided by (used in):

 

 

 

 

 

 

Net cash provided by operating activities

 

$

792.1

 

 

$

624.9

 

Net cash used in investing activities

 

 

(70.2

)

 

 

(31.2

)

Net cash used in financing activities

 

 

(752.1

)

 

 

(532.2

)

Effect of exchange rate changes on cash

 

 

1.8

 

 

 

(2.2

)

Change in cash and cash equivalents, restricted cash and cash equivalents

 

$

(28.4

)

 

$

59.3

 

 
Operating Activities
 
Cash provided by operating activities increased $167.2 million in 2025 primarily as a result of the positive impact of changes in operating assets and liabilities of $98.2 million, primarily related to the timing of vendor payments in 2025 as compared to 2024. Additionally, net income increased $17.5 million and non-cash adjustments increased $33.8 million (primarily representing the changes in the total net realized and unrealized losses and gains associated with the remeasurement of the Company’s investment in DPC Dash and changes in deferred income taxes), resulting in an overall increase to cash provided by operating activities in 2025 as compared to 2024 of $51.3 million. The positive change in advertising fund assets and liabilities, restricted of $17.7 million in 2025 as compared to 2024 also contributed to the increase in cash provided by operating activities and was driven by receipts for advertising contributions outpacing payments for advertising activities.
 
Investing Activities
 
Cash used in investing activities was $70.2 million in 2025, which consisted primarily of capital expenditures of $120.6 million (driven primarily by investments in consumer and store technology, supply chain centers, corporate store operations and other corporate capital expenditures). These investing cash outflows were partially offset by the net proceeds from the sale of 4,200,000 ordinary shares of our investment in DPC Dash for $44.1 million and the net proceeds of $8.6 million for the refranchising of 37 U.S. Company-owned stores primarily in the Maryland market.
 
Cash used in investing activities was $31.2 million in 2024, which consisted primarily of capital expenditures of $112.9 million (driven primarily by investments in consumer and store technology, supply chain centers and corporate store operations). These investing cash outflows were partially offset by the net proceeds from the sale of 10,000,000 ordinary shares of our investment in DPC Dash for $82.9 million.
 
Financing Activities
 
Cash used in financing activities was $752.1 million in 2025. In connection with the 2025 Refinancing, we issued $1.00 billion of new notes including $500.0 million 2025 Five-Year Notes and $500.0 million 2025 Seven-Year Notes. We used the proceeds from the issuance of the 2025 Notes, as well as $160.0 million of our unrestricted cash and cash equivalents, to repay the remaining $742.0 million in outstanding principal under our 2015 Ten-Year Notes and the remaining $402.7 million in outstanding principal under our 2018 7.5-Year Notes and to pay $15.4 million in debt issuance costs. We repurchased and retired $354.7 million in shares of our common stock under our Board of Directors-approved share repurchase program, as well as made $3.0 million in excise tax payments related to our share repurchase programs. We also made dividend payments to our shareholders of $236.9 million, had tax payments for the vesting of restricted stock of $11.4 million and made repayments of principal amounts related to our finance leases and other financing obligations of $4.8 million. These uses of cash were partially offset by proceeds from the exercise of stock options of $18.8 million.
 
Cash used in financing activities was $532.2 million in 2024. We repurchased and retired $327.0 million in shares of our common stock under our Board of Directors-approved share repurchase program, as well as made $2.6 million in excise tax payments related to our share repurchase programs. We also made dividend payments to our shareholders of $209.9 million. We also made repayments of long-term debt and principal amounts related to our finance leases and other financing obligations of $17.6 million and had tax payments for the vesting of restricted stock of $11.1 million. These uses of cash were partially offset by proceeds from the exercise of stock options of $36.0 million.

 
48

 

Impact of Inflation
 
Given the inflation rates in recent years, there have been and may continue to be increases in food, labor, insurance and occupancy costs which have and could further impact our profitability and that of our franchisees and which could impact the opening of new U.S. and international franchised stores and adversely affect our operating results. Factors such as inflation, increased food costs, increased labor and employee health and benefit costs, increased rent costs, increased insurance costs and increased energy costs may adversely affect our operating costs and profitability and those of our franchisees and could result in menu price increases. The impact of inflation is described with respect to our food basket pricing to stores and our labor and insurance cost, in the discussion of supply chain revenues and U.S. Company-owned store and supply chain gross margins, above. Severe increases in inflation could affect the global and U.S. economies and could have an adverse impact on our business, financial condition and results of operations. Further discussion on the impact of commodities and other cost pressures is included above, as well as in Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 

 
49

 

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
 
This Form 10-K includes various forward-looking statements about the Company within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) that are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act.
 
These forward-looking statements generally can be identified by the use of words such as “anticipate,” “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “may,” “will,” “plan,” “predict,” “project,” “seek,” “approximately,” “potential,” “outlook” and similar terms and phrases that concern our strategy, plans or intentions, including references to assumptions. These forward-looking statements address various matters including information concerning future results of operations and business strategy, the expected demand for future pizza delivery and carryout, our expectation that we will meet the terms of our agreement with our third-party supplier of pizza cheese, our belief that alternative third-party suppliers are available for our key ingredients in the event we are required to replace any of our supply partners, our intention to continue to enhance and grow online ordering, digital marketing and technological capabilities, our expectation that there will be no material environmental compliance-related capital expenditures, our plans to expand U.S. and international operations in many of the markets where we currently operate and in selected new markets, our expectation that the obligation for advertising fees payable to DNAF will remain in place for the foreseeable future, and the availability of our borrowings under the 2025 Variable Funding Notes for, among other things, funding working capital requirements, paying capital expenditures and funding other general corporate purposes, including payment of dividends.
 
Forward-looking statements relating to our anticipated profitability, estimates in same store sales growth, store growth and the growth of our U.S. and international business in general, ability to service our indebtedness, our future cash flows, our operating performance, trends in our business and other descriptions of future events reflect management’s expectations based upon currently available information and data. While we believe these expectations and projections are based on reasonable assumptions, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about us, including the risk factors listed under Item 1A. Risk Factors, as well as other cautionary language in this Form 10-K.
 
Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of various factors, including but not limited to, the following:
 
• our substantial indebtedness and our ability to incur additional indebtedness or refinance or renegotiate key terms of that indebtedness in the future;

• the impact a downgrade in our credit rating may have on our business, financial condition and results of operations;

• our future financial performance and our ability to pay principal and interest on our indebtedness;

• the strength of our brand, including our ability to compete in the U.S. and internationally in our intensely competitive industry, including the food service and food delivery markets;

• our ability to successfully implement our growth strategy, including through our participation in the third-party order aggregation marketplace;

• labor shortages or changes in operating expenses resulting from increases in prices of food (particularly cheese), fuel and other commodity costs, labor, utilities, insurance, employee benefits and other operating costs or negative economic conditions;

• the effectiveness of our advertising, operations and promotional initiatives;

• shortages, interruptions or disruptions in the supply or delivery of fresh food products and store equipment;

• the additional risks our international operations subject us to, which may differ in each country in which we and our franchisees do business;

• the dependence of our earnings and business growth strategy on the success of our franchisees;

• our ability and that of our franchisees to successfully operate in the current and future credit environment;

• the impact of social media, the rise of AI-generated content, or a boycott on our business, brand and reputation;

• the impact of new or improved technologies, including AI, and alternative methods of delivery on consumer behavior;

 
50

 

• new product, digital ordering and concept developments by us, and other food-industry competitors;

• our ability to maintain good relationships with and attract new franchisees and franchisees’ ability to successfully manage their operations without negatively impacting our royalty payments and fees or our brand’s reputation;

• our ability to successfully implement cost-saving strategies;

• changes in the level of consumer spending given general economic conditions, including interest rates, energy prices and consumer confidence or negative economic conditions in general;

• our ability and that of our franchisees to open new restaurants and keep existing restaurants in operation and maintain demand for new stores;

• the impact that widespread illness, health epidemics or general health concerns, severe weather conditions and natural disasters may have on our business and the economies of the countries where we operate;

• changes in foreign currency exchange rates;

• changes in income tax rates;

• our ability to retain or replace our executive officers and other key members of management and our ability to adequately staff our stores and supply chain centers with qualified personnel;

• our ability to find and/or retain suitable real estate for our stores and supply chain centers;

• changes in government legislation or regulation, including changes in laws and regulations regarding information privacy, payment methods, advertising and consumer protection and social media;

• adverse legal judgments or settlements;

• food-borne illness or contamination of products or food tampering or other events that may impact our reputation;

• data breaches, power loss, technological failures, user error or other cyber risks threatening us or our franchisees;

• the impact that environmental, social and governance matters may have on our business and reputation;

• the effect of war, terrorism, catastrophic events, geopolitical or reputational considerations or climate change;

• our ability to pay dividends and repurchase shares;

• changes in consumer taste, spending and traffic patterns and demographic trends;

• changes in accounting policies; and

• adequacy of our insurance coverage.

 
In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-K might not occur. All forward-looking statements speak only as of the date of this Form 10-K and should be evaluated with an understanding of their inherent uncertainty. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission, we will not undertake, and specifically disclaim any obligation to publicly update or revise any forward-looking statements to reflect events or circumstances arising after the date of this Form 10-K, whether as a result of new information, future events or otherwise.
 
Readers are cautioned not to place undue reliance on the forward-looking statements included in this Form 10-K or that may be made elsewhere from time to time by, or on behalf of, us. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

 
51

 

Item 7A. Qua ntitative and Qualitative Disclosures About Market Risk.

Market risk

We do not engage in speculative transactions, nor do we hold or issue financial instruments for trading purposes. In connection with the refinancings and recapitalizations of our business, we have issued fixed rate notes and entered into variable funding notes, and, at December 28, 2025, we are exposed to interest rate risk on borrowings under our 2025 Variable Funding Notes. As of December 28, 2025, we did not have any outstanding borrowings under our 2025 Variable Funding Notes.
 
Our 2025 Variable Funding Notes bear interest at fluctuating interest rates based on the Secured Overnight Financing Rate (“Term SOFR”), plus a spread adjustment. Accordingly, a rising interest rate environment could result in higher interest expense due on borrowings under our 2025 Variable Funding Notes, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected.
 
Our fixed-rate debt exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that the Company may need to refinance maturing debt with new debt at a higher rate.
 
We are exposed to market risks from changes in food and commodity prices. During the normal course of business, we purchase cheese and certain other food products that are affected by changes in commodity prices and, as a result, we are subject to volatility in our food costs. Severe increases in commodity prices or food costs, including as a result of inflation, could affect the global and U.S. economies and could also adversely impact our business, financial condition or results of operations. We may periodically enter into financial instruments to manage this risk, although we have not done so historically. We do not engage in speculative transactions or hold or issue financial instruments for trading purposes. In instances when we use fixed pricing agreements with our suppliers, these agreements cover our physical commodity needs, are not net-settled and are accounted for as normal purchases.
 
Foreign currency exchange rate risk
 
We have exposure to various foreign currency exchange rate fluctuations for revenues generated by our operations outside the U.S., which can adversely impact our net income and cash flows. Approximately 6.9% of our total revenues in 2025, 6.8% of our total revenues in 2024 and 6.9% of our total revenues in 2023 were derived from our international franchise segment, a majority of which were denominated in foreign currencies. We also operate dough manufacturing and distribution facilities in Canada, which generate revenues denominated in Canadian dollars. We do not enter into financial instruments to manage this foreign currency exchange risk. A hypothetical 10% adverse change in the foreign currency rates for our international markets would have resulted in a negative impact on international franchise royalty and fee revenues of approximately $30.0 million in 2025.

 
52

 

Item 8. Financial S tatements and Supplementary Data.
 
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of Domino’s Pizza, Inc.
 
Opinions on the Financial Statements and Internal Control over Financial Reporting
 
We have audited the accompanying consolidated balance sheets of Domino’s Pizza, Inc. and its subsidiaries (the “Company”) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ deficit and of cash flows for each of the three years in the period ended December 28, 2025, including the related notes and schedule of condensed financial information as of December 28, 2025 and December 29, 2024 and for each of the three years in the period ended December 28, 2025 appearing under Item 15 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

 
Basis for Opinions
 
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
 
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
 

 
53

 

Definition and Limitations of Internal Control over Financial Reporting
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Critical Audit Matters
 
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 
Valuation of Casualty Insurance Reserves
 
As described in Note 1 to the consolidated financial statements, the Company has retention programs for workers’ compensation, general liability, and owned and non-owned automobile liabilities for certain periods prior to December 1998 and for periods after December 2001. As of December 28, 2025, the Company had accruals for these casualty insurance matters of $51.2 million. Casualty insurance reserves are based on undiscounted actuarial estimates. These estimates are based on historical information and on certain assumptions about future events. As disclosed by management, analyses of historical trends and actuarial valuation methods are utilized to estimate the ultimate claim costs for claims incurred as of the balance sheet date and for claims incurred but not yet reported. When estimating these liabilities, several factors are considered, including the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation.
 
The principal considerations for our determination that performing procedures relating to the valuation of casualty insurance reserves is a critical audit matter are (i) the significant judgment by management when developing the casualty insurance reserves; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures relating to the actuarial valuation methods used to estimate the ultimate claim costs and in evaluating management's significant assumptions related to the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
 
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of casualty insurance reserves. These procedures also included, among others (i) reading the Company’s casualty insurance retention program documents and (ii) testing the completeness and accuracy of the underlying historical claims data used in the actuarial valuation methods. Professionals with specialized skill and knowledge were used to assist in testing management’s process for developing the casualty insurance reserves, including evaluating (i) the appropriateness of the actuarial valuation methods and (ii) the reasonableness of the significant assumptions related to the severity, duration and frequency of claims, legal cost associated with claims, healthcare trends and projected inflation.
 
/s/ PricewaterhouseCoopers LLP
 
Detroit, Michigan
February 23, 2026
 
We have served as the Company’s auditor since 2002.

 
54

 

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

 

 

December 28,

 

 

December 29,

 

 

 

2025

 

 

2024

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

125,675

 

 

$

186,126

 

Restricted cash and cash equivalents

 

 

216,110

 

 

 

195,370

 

Accounts receivable, net of reserves of $ 5,805  in 2025 and $ 5,834  in 2024

 

 

315,958

 

 

 

309,104

 

Inventories

 

 

79,189

 

 

 

70,919

 

Prepaid expenses and other

 

 

39,767

 

 

 

40,363

 

Advertising fund assets, restricted

 

 

117,502

 

 

 

103,396

 

Total current assets

 

 

894,201

 

 

 

905,278

 

Property, plant and equipment:

 

 

 

 

 

 

Land and buildings

 

 

105,559

 

 

 

104,793

 

Leasehold and other improvements

 

 

193,673

 

 

 

191,718

 

Equipment

 

 

413,303

 

 

 

390,542

 

Construction in progress

 

 

46,184

 

 

 

22,717

 

 

 

758,719

 

 

 

709,770

 

Accumulated depreciation and amortization

 

 

( 434,697

)

 

 

( 408,591

)

Property, plant and equipment, net

 

 

324,022

 

 

 

301,179

 

Other assets:

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

219,485

 

 

 

210,302

 

Investments in marketable securities, restricted

 

 

24,971

 

 

 

20,638

 

Goodwill

 

 

10,726

 

 

 

11,578

 

Capitalized software, net of accumulated amortization of $ 201,120  in 2025
   and $ 193,854  in 2024

 

 

159,256

 

 

 

155,025

 

Investment in DPC Dash

 

 

36,070

 

 

 

82,699

 

Other assets

 

 

25,627

 

 

 

26,882

 

Deferred income tax assets, net

 

 

22,101

 

 

 

23,432

 

Total other assets

 

 

498,236

 

 

 

530,556

 

Total assets

 

$

1,716,459

 

 

$

1,737,013

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

6,131

 

 

$

1,149,679

 

Accounts payable

 

 

135,029

 

 

 

85,898

 

Accrued compensation

 

 

53,204

 

 

 

58,203

 

Accrued interest

 

 

32,322

 

 

 

32,783

 

Operating lease liabilities

 

 

47,553

 

 

 

39,920

 

Insurance reserves

 

 

26,169

 

 

 

25,658

 

Advertising fund liabilities

 

 

115,412

 

 

 

101,567

 

Other accrued liabilities

 

 

125,801

 

 

 

118,754

 

Total current liabilities

 

 

541,621

 

 

 

1,612,462

 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt, less current portion

 

 

4,810,683

 

 

 

3,825,659

 

Operating lease liabilities

 

 

183,917

 

 

 

181,983

 

Insurance reserves

 

 

32,959

 

 

 

33,229

 

Other accrued liabilities

 

 

48,421

 

 

 

45,971

 

Total long-term liabilities

 

 

5,075,980

 

 

 

4,086,842

 

Total liabilities

 

 

5,617,601

 

 

 

5,699,304

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

Common stock, par value $ 0.01  per share; 170,000,000  shares authorized;
    33,627,992  in 2025 and 34,281,927  in 2024 issued and outstanding

 

 

336

 

 

 

343

 

Preferred stock, par value $ 0.01  per share; 5,000,000  shares authorized, no ne issued

 

 

—

 

 

 

—

 

Additional paid-in capital

 

 

1,910

 

 

 

1,272

 

Retained deficit

 

 

( 3,898,622

)

 

 

( 3,956,474

)

Accumulated other comprehensive loss

 

 

( 4,766

)

 

 

( 7,432

)

Total stockholders’ deficit

 

 

( 3,901,142

)

 

 

( 3,962,291

)

Total liabilities and stockholders’ deficit

 

$

1,716,459

 

 

$

1,737,013

 

The accompanying notes are an integral part of these consolidated financial statements.

 
55

 

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
 

 

 

For the Years Ended

 

 

 

December 28,

 

 

December 29,

 

 

December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

 

U.S. Company-owned stores

 

$

375,153

 

 

$

393,898

 

 

$

376,180

 

U.S. franchise royalties and fees

 

 

677,114

 

 

 

638,193

 

 

 

604,897

 

Supply chain

 

 

2,989,529

 

 

 

2,845,781

 

 

 

2,715,009

 

International franchise royalties and fees

 

 

338,704

 

 

 

318,691

 

 

 

310,077

 

U.S. franchise advertising

 

 

559,494

 

 

 

509,853

 

 

 

473,195

 

Total revenues

 

 

4,939,994

 

 

 

4,706,416

 

 

 

4,479,358

 

Cost of sales:

 

 

 

 

 

 

 

 

 

U.S. Company-owned stores

 

 

321,646

 

 

 

327,986

 

 

 

314,673

 

Supply chain

 

 

2,644,788

 

 

 

2,529,928

 

 

 

2,437,268

 

Total cost of sales

 

 

2,966,434

 

 

 

2,857,914

 

 

 

2,751,941

 

Gross margin

 

 

1,973,560

 

 

 

1,848,502

 

 

 

1,727,417

 

General and administrative

 

 

464,120

 

 

 

459,492

 

 

 

434,554

 

U.S. franchise advertising

 

 

559,494

 

 

 

509,853

 

 

 

473,195

 

Refranchising (gain) loss

 

 

( 4,028

)

 

 

158

 

 

 

149

 

Income from operations

 

 

953,974

 

 

 

878,999

 

 

 

819,519

 

Other (expense) income

 

 

( 2,544

)

 

 

22,064

 

 

 

17,713

 

Interest income

 

 

14,880

 

 

 

17,022

 

 

 

11,683

 

Interest expense

 

 

( 195,972

)

 

 

( 195,870

)

 

 

( 196,475

)

Income before provision for income taxes

 

 

770,338

 

 

 

722,215

 

 

 

652,440

 

Provision for income taxes

 

 

168,634

 

 

 

138,045

 

 

 

133,322

 

Net income

 

$

601,704

 

 

$

584,170

 

 

$

519,118

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Common Stock – basic

 

$

17.69

 

 

$

16.83

 

 

$

14.80

 

Common Stock – diluted

 

$

17.57

 

 

$

16.69

 

 

$

14.66

 

 
The accompanying notes are an integral part of these consolidated financial statements.

 
56

 

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
 

 

 

For the Years Ended

 

 

 

December 28,

 

 

December 29,

 

 

December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Net income

 

$

601,704

 

 

$

584,170

 

 

$

519,118

 

Currency translation adjustment

 

 

2,666

 

 

 

( 3,565

)

 

 

827

 

Comprehensive income

 

$

604,370

 

 

$

580,605

 

 

$

519,945

 

 
The accompanying notes are an integral part of these consolidated financial statements.

 
57

 

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(In thousands, except share and per share amounts)
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Paid-in

 

 

Retained

 

 

Comprehensive

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

Balance at January 1, 2023

 

 

35,419,718

 

 

$

354

 

 

$

9,693

 

 

$

( 4,194,418

)

 

$

( 4,694

)

  Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

519,118

 

 

 

—

 

  Dividends declared on common stock and equivalents
  ($ 4.84  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 170,419

)

 

 

—

 

  Issuance and cancellation of stock awards, net

 

 

33,947

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

  Tax payments for restricted stock upon vesting

 

 

( 16,038

)

 

 

—

 

 

 

( 5,410

)

 

 

—

 

 

 

—

 

  Purchases of common stock

 

 

( 789,977

)

 

 

( 8

)

 

 

( 47,651

)

 

 

( 223,929

)

 

 

—

 

  Exercises of stock options

 

 

78,532

 

 

 

1

 

 

 

8,655

 

 

 

—

 

 

 

—

 

  Non-cash equity-based compensation expense

 

 

—

 

 

 

—

 

 

 

37,514

 

 

 

—

 

 

 

—

 

  Currency translation adjustment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

827

 

Balance at December 31, 2023

 

 

34,726,182

 

 

 

347

 

 

 

2,801

 

 

 

( 4,069,648

)

 

 

( 3,867

)

  Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

584,170

 

 

 

—

 

  Dividends declared on common stock and equivalents
  ($ 6.04  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 210,676

)

 

 

—

 

  Issuance and cancellation of stock awards, net

 

 

67,869

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

  Tax payments for restricted stock upon vesting

 

 

( 24,306

)

 

 

—

 

 

 

( 11,098

)

 

 

—

 

 

 

—

 

  Purchases of common stock

 

 

( 758,242

)

 

 

( 8

)

 

 

( 69,707

)

 

 

( 260,320

)

 

 

—

 

  Exercises of stock options

 

 

270,424

 

 

 

3

 

 

 

36,021

 

 

 

—

 

 

 

—

 

  Non-cash equity-based compensation expense

 

 

—

 

 

 

—

 

 

 

43,255

 

 

 

—

 

 

 

—

 

  Currency translation adjustment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 3,565

)

Balance at December 29, 2024

 

 

34,281,927

 

 

 

343

 

 

 

1,272

 

 

 

( 3,956,474

)

 

 

( 7,432

)

  Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

601,704

 

 

 

—

 

  Dividends declared on common stock and equivalents
  ($ 6.96  per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 237,330

)

 

 

—

 

  Issuance and cancellation of stock awards, net

 

 

79,668

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

  Tax payments for restricted stock upon vesting

 

 

( 25,738

)

 

 

—

 

 

 

( 11,360

)

 

 

—

 

 

 

—

 

  Purchases of common stock

 

 

( 785,280

)

 

 

( 8

)

 

 

( 51,434

)

 

 

( 306,522

)

 

 

—

 

  Exercises of stock options

 

 

77,415

 

 

 

—

 

 

 

18,792

 

 

 

—

 

 

 

—

 

  Non-cash equity-based compensation expense

 

 

—

 

 

 

—

 

 

 

44,640

 

 

 

—

 

 

 

—

 

  Currency translation adjustment

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,666

 

Balance at December 28, 2025

 

 

33,627,992

 

 

$

336

 

 

$

1,910

 

 

$

( 3,898,622

)

 

$

( 4,766

)

 
The accompanying notes are an integral part of these consolidated financial statements.

 
58

 

Domino’s Pizza, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 

 

For the Years Ended

 

 

 

December 28,

 

 

December 29,

 

 

December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

601,704

 

 

$

584,170

 

 

$

519,118

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

88,827

 

 

 

87,732

 

 

 

80,640

 

Refranchising (gain) loss

 

 

( 4,028

)

 

 

158

 

 

 

149

 

Loss on sale/disposal of assets

 

 

1,855

 

 

 

1,527

 

 

 

1,299

 

Amortization of debt issuance costs

 

 

5,748

 

 

 

5,298

 

 

 

5,535

 

Provision (benefit) for deferred income taxes

 

 

1,288

 

 

 

( 9,117

)

 

 

( 19,509

)

Non-cash equity-based compensation expense

 

 

44,640

 

 

 

43,255

 

 

 

37,514

 

Excess tax benefits from equity-based compensation

 

 

( 3,158

)

 

 

( 22,241

)

 

 

( 3,397

)

(Benefit) provision for losses on accounts and notes receivable

 

 

( 109

)

 

 

191

 

 

 

1,472

 

Unrealized and realized losses (gains) on investments, net

 

 

2,544

 

 

 

( 22,064

)

 

 

( 17,713

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

          Accounts receivable

 

 

( 6,149

)

 

 

( 27,353

)

 

 

( 26,515

)

          Inventories, prepaid expenses and other

 

 

( 6,700

)

 

 

6,651

 

 

 

160

 

          Accounts payable and accrued liabilities

 

 

53,637

 

 

 

( 10,218

)

 

 

69,373

 

          Insurance reserves

 

 

536

 

 

 

( 5,557

)

 

 

( 5,163

)

          Operating lease assets and liabilities

 

 

691

 

 

 

( 558

)

 

 

632

 

          Advertising fund assets and liabilities, restricted

 

 

10,736

 

 

 

( 6,977

)

 

 

( 52,731

)

Net cash provided by operating activities

 

 

792,062

 

 

 

624,897

 

 

 

590,864

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

( 120,558

)

 

 

( 112,885

)

 

 

( 105,396

)

Sale of investments

 

 

44,085

 

 

 

82,918

 

 

 

—

 

Proceeds from sale of assets

 

 

8,558

 

 

 

74

 

 

 

161

 

Other

 

 

( 2,275

)

 

 

( 1,336

)

 

 

( 1,682

)

Net cash used in investing activities

 

 

( 70,190

)

 

 

( 31,229

)

 

 

( 106,917

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

1,000,000

 

 

 

—

 

 

 

14,898

 

Repayments of long-term debt and finance lease obligations

 

 

( 1,149,528

)

 

 

( 17,647

)

 

 

( 55,705

)

Proceeds from exercise of stock options

 

 

18,792

 

 

 

36,024

 

 

 

8,656

 

Purchases of common stock

 

 

( 357,697

)

 

 

( 329,557

)

 

 

( 269,025

)

Tax payments for restricted stock upon vesting

 

 

( 11,360

)

 

 

( 11,098

)

 

 

( 5,410

)

Payments of common stock dividends and equivalents

 

 

( 236,861

)

 

 

( 209,945

)

 

 

( 169,772

)

Cash paid for financing costs

 

 

( 15,439

)

 

 

—

 

 

 

—

 

Net cash used in financing activities

 

 

( 752,093

)

 

 

( 532,223

)

 

 

( 476,358

)

Effect of exchange rate changes on cash

 

 

1,782

 

 

 

( 2,154

)

 

 

340

 

Change in cash and cash equivalents, restricted cash and cash equivalents

 

 

( 28,439

)

 

 

59,291

 

 

 

7,929

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

186,126

 

 

 

114,098

 

 

 

60,356

 

Restricted cash and cash equivalents, beginning of period

 

 

195,370

 

 

 

200,870

 

 

 

191,289

 

Cash and cash equivalents included in advertising fund assets, restricted,
   beginning of period

 

 

80,928

 

 

 

88,165

 

 

 

143,559

 

Cash and cash equivalents, restricted cash and cash equivalents and cash
   and cash equivalents included in advertising fund assets, restricted,
   beginning of period

 

 

462,424

 

 

 

403,133

 

 

 

395,204

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

 

125,675

 

 

 

186,126

 

 

 

114,098

 

Restricted cash and cash equivalents, end of period

 

 

216,110

 

 

 

195,370

 

 

 

200,870

 

Cash and cash equivalents included in advertising fund assets, restricted,
   end of period

 

 

92,200

 

 

 

80,928

 

 

 

88,165

 

Cash and cash equivalents, restricted cash and cash equivalents and cash
   and cash equivalents included in advertising fund assets, restricted,
   end of period

 

$

433,985

 

 

$

462,424

 

 

$

403,133

 

 
The accompanying notes are an integral part of these consolidated financial statements.

 
59

 

Domino’s Pizza, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular amounts in thousands, except percentages, share and per share amounts)
(1) Description of Business and Summary of Significant Accounting Policies

Description of Business
 
Domino’s Pizza, Inc. (“DPI”), a Delaware corporation, conducts its operations and derives substantially all of its income from operations and cash provided by operating activities through its wholly-owned subsidiary, Domino’s, Inc. (“Domino’s”) and Domino’s wholly-owned subsidiary, Domino’s Pizza LLC. DPI and its wholly-owned subsidiaries (collectively, the “Company”) are primarily engaged in the following business activities: (i) retail sales of food through Company-owned Domino’s Pizza stores; (ii) sales of food and other products to franchised Domino’s Pizza stores through Company-owned supply chain centers in the U.S. and Canada; (iii) receipt of royalties, advertising contributions and fees from U.S. Domino’s Pizza franchisees; and (iv) receipt of royalties and fees from international Domino’s Pizza franchisees.

 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of DPI and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 
Fiscal Year
 
The Company’s fiscal year ends on the Sunday closest to December 31. The 2025 fiscal year ended on December 28, 2025, the 2024 fiscal year ended on December 29, 2024 and the 2023 fiscal year ended on December 31, 2023. The 2025, 2024 and 2023 fiscal years each consisted of fifty-two weeks.

 
Cash and Cash Equivalents
 
Cash equivalents consist of highly liquid investments with original maturities of three months or less at the date of purchase. These investments are carried at cost, which approximates fair value.

 
Restricted Cash and Cash Equivalents
 
Restricted cash and cash equivalents at December 28, 2025 included $ 165.8 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of the Company’s asset-backed securitization structure, $ 50.1 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $ 0.2 million of other restricted cash. As of December 28, 2025, the Company also held $ 92.2 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s Pizza brand.
 
Restricted cash and cash equivalents at December 29, 2024 included $ 144.0 million of restricted cash and cash equivalents held for future principal and interest payments and other working capital requirements of the Company’s asset-backed securitization structure, $ 51.2 million of restricted cash equivalents held in a three-month interest reserve as required by the related debt agreements and $ 0.2 million of other restricted cash. As of December 29, 2024, the Company also held $ 80.9 million of advertising fund restricted cash and cash equivalents, which can only be used for activities that promote the Domino’s Pizza brand.

 
Allowances for Credit Losses
 
The Company closely monitors accounts and notes receivable balances and estimates the allowance for credit losses. These estimates are based on historical collection experience and other factors, including those related to current market conditions and events. The Company’s allowances for accounts and notes receivable have not historically been material.
 
The Company also monitors its off-balance sheet exposures under its letters of credit (Note 3), lease guarantees (Note 5) and surety bonds. Total conditional commitments under surety bonds were $ 25.1 million at December 28, 2025 and $ 11.8 million at December 29, 2024 . None of these arrangements has had or is likely to have a material effect on the Company’s results of operations, financial condition, revenues, expenses or liquidity.

 
Inventories
 
Inventories include food and other products and are valued at the lower of cost (on a first-in, first-out basis) or net realizable value.

60

 

Other Assets
 
Current and long-term other assets primarily include prepaid expenses such as insurance, taxes, deposits, notes receivable, software licenses, implementation costs for cloud-based computing arrangements, covenants not-to-compete and other intangible assets primarily arising from franchise acquisitions.
 
Other long-term assets included implementation costs for cloud-based computing arrangements (primarily related to certain enterprise systems and other infrastructure assets) of $ 16.2 million and $ 14.5 million , net of accumulated amortization of $ 14.5 million and $ 9.7 million as of December 28, 2025 and December 29, 2024 , respectively. Amortization expense for implementation costs for cloud-based computing arrangements was $ 4.8 million, $ 3.5 million and $ 2.7 million in 2025, 2024 and 2023 , respectively.

 
Property, Plant and Equipment
 
Additions to property, plant and equipment are recorded at cost. Repair and maintenance costs are expensed as incurred. Depreciation and amortization expense are recorded using the straight-line method over the estimated useful lives of the related assets.
 
Estimated useful lives are generally as follows (in years):
 

Buildings

 

20

Leasehold and other improvements

 

5 – 15

Equipment

 

3 – 15

 
Depreciation and amortization expense on property, plant and equipment was $ 54.2 million , $ 55.8 million and $ 52.4 million in 2025, 2024 and 2023 , respectively.

 
Impairments of Long-Lived Assets
 
The Company evaluates long-lived assets, including property, plant, equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the Company determines that the carrying amount of an asset (or asset group) may not be recoverable, the Company compares the net carrying value of the asset group to the undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. For Company-owned stores, the Company performs this evaluation on an operating market basis, which the Company has determined to be the lowest level for which identifiable cash flows are largely independent of other cash flows. If the carrying amount of a long-lived asset exceeds the amount of the expected future undiscounted cash flows of that asset, the Company estimates the fair value of the assets. If the carrying amount of the asset exceeds the estimated fair value of the asset, an impairment loss is recognized, and the asset is written down to its estimated fair value. The Company did not record any impairment losses on long-lived assets in 2025, 2024 and 2023 .

 
Investments in Marketable Securities
 
Investments in marketable securities consist of investments in various mutual funds made by eligible individuals as part of the Company’s deferred compensation plan (Note 8). These investments are stated at aggregate fair value, are restricted and have been placed in a rabbi trust whereby the amounts are irrevocably set aside to fund the Company’s obligations under the deferred compensation plan. The Company classifies and accounts for these investments in marketable securities as trading securities.

 
Goodwill
 
The Company’s goodwill amounts primarily relate to franchise store acquisitions. The Company performs its required impairment tests in the fourth quarter of each fiscal year and did not recognize any goodwill impairment charges in 2025, 2024 and 2023 .

 

61

 

Capitalized Software
 
Capitalized software is recorded at cost and includes purchased, internally-developed and externally-developed software used in the Company’s operations. Amortization expense is provided using the straight-line method over the estimated useful lives of the software, which range from one to fifteen years. Customer-facing software is typically amortized over a shorter useful life, while back office and corporate systems may have a longer useful life. Capitalized software and other intangible asset amortization expense was $ 34.6 million , $ 31.9 million and $ 28.2 million in 2025, 2024 and 2023, respectively.
 
As of December 28, 2025, scheduled amortization for capitalized software that had been placed in service as of December 28, 2025 is as follows in the table below. As of December 28, 2025, the Company also had $ 32.7 million of capitalized software that had not yet been placed in service.
 

2026

 

$

27,334

 

2027

 

 

19,115

 

2028

 

 

13,858

 

2029

 

 

10,776

 

2030

 

 

10,772

 

Thereafter

 

 

44,739

 

 

$

126,594

 

 
Investment in DPC Dash
 
The Company holds a non-controlling interest in DPC Dash Ltd (“DPC Dash”), the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. DPC Dash is listed on the Hong Kong Exchange (HK: 1405) and the Company accounts for its investment as a trading security and records it at fair value at the end of each reporting period, with gains and losses recorded in other income or expense in its consolidated statements of income. Refer to Note 4 for fair value disclosures related to the Company’s investment in DPC Dash .

 
Debt Issuance Costs
 
Debt issuance costs are recorded as a reduction to the Company’s debt balance and primarily include the expenses incurred by the Company as part of the 2025, 2021, 2019, 2018, and 2017 recapitalization and refinancing transactions (Note 3). Amortization is recorded on a straight-line basis (which is materially consistent with the effective interest method) over the expected terms of the respective debt instrument to which the costs relate and is included in interest expense. Debt issuance cost amortization expense was $ 5.7 million , $ 5.3 million and $ 5.5 million in 2025, 2024 and 2023 , respectively.

 
Insurance Reserves
 
The Company has retention programs for workers’ compensation, general liability and owned and non-owned automobile liabilities for certain periods prior to December 1998 and for periods after December 2001. The Company is generally responsible for up to $ 1.0 million per occurrence under these retention programs for workers’ compensation and up to $ 2.0 million per occurrence under these retention programs for general liability, depending on policy year and line of coverage. The Company is also generally responsible for between $ 2.0 million and $ 5.5 million per occurrence under these retention programs for owned and non-owned automobile liabilities depending on the year. Total insurance limits under these retention programs vary depending on the year covered and range up to $ 112.5 million per occurrence for general liability and owned and non-owned automobile liabilities and up to the applicable statutory limits for workers’ compensation.
 
Casualty insurance reserves relating to the Company's retention programs are based on undiscounted actuarial estimates. These estimates are based on historical information and on certain assumptions about future events. Changes in assumptions for such factors as medical costs and legal actions, as well as changes in actual experience, could cause these estimates to change in the near term. The Company generally receives estimates of outstanding casualty insurance exposures from its independent actuary twice per year and differences between these estimated actuarial exposures and the Company’s recorded amounts are adjusted accordingly. The Company had reserves for these programs of $ 51.2 million and $ 50.7 million as of December 28, 2025 and December 29, 2024, respectively.
 
In addition, the Company maintains reserves for its share of employee health costs as part of the health care benefits offered to its employees. Reserves are based on undiscounted actuarial estimates based on underlying claims, including estimated claims incurred that have not yet been paid.

62

 

Contract Liabilities
 
Contract liabilities consist primarily of deferred franchise fees and deferred development fees. Deferred franchise fees and deferred development fees of $ 4.8 million and $ 5.1 million were included in current other accrued liabilities as of December 28, 2025 and December 29, 2024, respectively. Deferred franchise fees and deferred development fees of $ 12.5 million and $ 15.8 million were included in long-term other accrued liabilities as of December 28, 2025 and December 29, 2024, respectively.
 
Changes in deferred franchise fees and deferred development fees in 2025 and 2024 were as follows:
 

Fiscal Year Ended

 

 

December 28,
2025

 

 

December 29,
2024

 

Deferred franchise fees and deferred development fees, beginning of period

$

20,946

 

 

$

25,195

 

Revenue recognized during the period

 

( 6,121

)

 

 

( 6,098

)

New deferrals due to cash received and other

 

2,493

 

 

 

1,849

 

Deferred franchise fees and deferred development fees, end of period

$

17,318

 

 

$

20,946

 

 
The Company expects to recognize revenue associated with deferred franchise fees and deferred development fees as follows in the table below. The Company has applied the sales-based royalty exemption which permits exclusion of variable consideration in the form of sales-based royalties from the disclosure of remaining performance obligations.
 

2026

 

$

4,815

 

2027

 

 

3,574

 

2028

 

 

2,154

 

2029

 

 

1,831

 

2030

 

 

1,524

 

Thereafter

 

 

3,420

 

 

$

17,318

 

 
Other Accrued Liabilities
 
Current and long-term other accrued liabilities primarily include accruals for income, sales, property and other taxes, legal reserves, operating expenses, dividends payable, deferred compensation, unredeemed gift cards and contract liabilities. The Company had $ 44.3 million and $ 42.6 million included in other current accrued liabilities related to unredeemed gift cards as of December 28, 2025 and December 29, 2024 , respectively.

Foreign Currency Translation
 
The Company’ s foreign entities use their local currency as the functional currency. For these entities, the Company translates net assets into U.S. dollars at year end exchange rates, while income and expense accounts are translated at average annual exchange rates. Currency translation adjustments are included in accumulated other comprehensive income (loss) and foreign currency transaction gains and losses are included in determining net income.

 
Revenue Recognition
U.S. Company-owned stores revenues are comprised of retail sales of food through Company-owned Domino’s Pizza stores located in the U.S. and are recognized when the items are delivered to or carried out by customers. Customer payments are generally due at the time of sale. Sales taxes related to these sales are collected from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated statements of income as revenue.
U.S. franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza franchisees with operations in the U.S. Each franchisee is generally required to pay a 5.5 % royalty fee on sales. In certain instances, the Company will collect lower rates based on area development agreements, sales initiatives, store relocation incentives and new store incentives. Royalty revenues are based on a percentage of franchise retail sales and are recognized when the items are delivered to or carried out by franchisees’ customers. U.S. franchise fee revenue primarily relates to per-transaction technology fees that are recognized as the related sales occur and was $ 0.375 per digital transaction in fiscal 2025. Payments for U.S. royalties and fees are generally due within seven days of the prior week end date.

63

 

Supply chain revenues are primarily comprised of sales of food and other products to franchised Domino’s Pizza stores located in the U.S. and Canada. Revenues from the sale of food are recognized upon delivery of the food to franchisees and payments for food purchases are generally due within 30 days of the shipping date. The Company also offers profit sharing rebates and volume discounts to its franchisees. Obligations for profit sharing rebates are calculated based on actual results of its supply chain centers and are recognized as a reduction to revenue. Volume discounts are based on annual sales. The Company estimates the amount that will be earned and records a reduction to revenue throughout the year.
International franchise royalties and fees are primarily comprised of royalties and fees from Domino’s Pizza franchisees outside of the U.S. Royalty revenues are recognized when the items are delivered to or carried out by franchisees’ customers. Royalty rates vary among international markets and may also differ based on certain incentives and concessions and averaged approximately 3.0 % in 2025. Franchise fees received from international franchisees are recognized as revenue on a straight-line basis over the term of each respective franchise store agreement, which is typically ten years. Development fees received from international master franchisees are also deferred when amounts are received and are recognized as revenue on a straight-line basis over the term of the respective master franchise agreement, which is typically ten years. International franchise fee revenues primarily relate to per-transaction technology fees that are recognized as the related sales occur. International franchise royalties and fees are invoiced at least quarterly, and payments are generally due within 60 days.
U.S. franchise advertising revenues are comprised of contributions from Domino’s Pizza franchisees with operations in the U.S. to the Domino’s National Advertising Fund Inc. (“DNAF”), the Company’s consolidated not-for-profit subsidiary that administers the Domino’s Pizza system’s national and market level advertising activities in the U.S. Each franchisee is generally required to contribute 6.0 % of their retail sales to fund national marketing and advertising campaigns (subject, in certain instances, to lower rates based on certain incentives and waivers). These revenues are recognized when items are delivered to or carried out by franchisees’ customers. Payments for U.S. franchise advertising revenues are generally due within seven days of the prior week end date. Although these revenues are restricted to be used only for advertising and promotional activities to benefit franchised stores, the Company has determined there are not performance obligations associated with the franchise advertising contributions received by DNAF that are separate from the U.S. royalty payment stream and as a result, these franchise contributions and the related expenses are presented gross in the Company’s consolidated statements of income.
 
Disaggregation of Revenue
Current accounting standards require that companies disaggregate revenue from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company has included its revenues disaggregated in its consolidated statements of income to satisfy this requirement.

Supply Chain Profit-Sharing Arrangements
 
The Company enters into profit-sharing arrangements with U.S. and Canadian franchisees that purchase all of their food from the Company’s supply chain centers. These profit-sharing arrangements generally offer Company-owned stores and participating franchisees 50 % of the pre-tax profit from the Company’s supply chain center operations. Profit-sharing obligations are recorded as a reduction to supply chain revenues in the same period as the related revenues and costs are recorded, and were $ 193.0 million , $ 164.0 million and $ 138.7 million in 2025, 2024 and 2023 , respectively.

 
Cost of Sales
 
Cost of sales consists primarily of U.S. Company-owned store and supply chain costs incurred to generate related revenues. Components of consolidated cost of sales primarily include food and labor costs, as well as other costs including delivery, occupancy costs (including rent, telephone, utilities and depreciation), insurance expense and other.

 
General and Administrative
 
General and administrative expense consists primarily of labor cost (including variable performance-based compensation expense and non-cash equity-based compensation expense), depreciation and amortization, computer expenses, professional fees, travel and entertainment, rent, insurance expense and other corporate administrative costs.

 

64

 

Advertising
 
U.S. stores are generally required to contribute a percentage of retail sales to DNAF, as described in the revenue recognition section above. U.S. franchise advertising costs are accrued and expensed when the related U.S. franchise advertising revenues are recognized, as DNAF is obligated to expend such revenues on advertising and other activities that promote the Domino’s brand. U.S. franchise advertising costs expended by DNAF are included in U.S. franchise advertising expenses in the Company’s consolidated statements of income. Advertising costs funded by Company-owned stores are generally expensed as incurred and are included in general and administrative expense. Contributions from Company-owned stores that have not yet been expended are included in advertising fund assets, restricted on the Company’s consolidated balance sheets.
Advertising expense included $ 559.5 million , $ 509.9 million and $ 473.2 million of U.S. franchise advertising expense in 2025, 2024 and 2023, respectively. Advertising expense also included $ 32.3 million , $ 33.4 million and $ 33.5 million in 2025, 2024 and 2023, respectively, primarily related to advertising costs funded by U.S. Company-owned stores and other general marketing expenses which are included in general and administrative expense in the consolidated statements of income.
 
As of December 28, 2025, advertising fund assets, restricted of $ 117.5 million consisted of $ 92.2 million of cash and cash equivalents, $ 18.4 million of accounts receivable and $ 6.9 million of prepaid expenses. As of December 28, 2025, advertising fund cash and cash equivalents included $ 2.1 million of cash contributed from U.S. Company-owned stores that had not yet been expended.
 
As of December 29, 2024, advertising fund assets, restricted of $ 103.4 million consisted of $ 80.9 million of cash and cash equivalents, $ 14.3 million of accounts receivable and $ 8.2 million of prepaid expenses. As of December 29, 2024, advertising fund cash and cash equivalents included $ 1.8 million of cash contributed from U.S. Company-owned stores that had not yet been expended.

 
Leases
 
The Company leases certain retail store and supply chain center locations, vehicles, equipment and its corporate headquarters. The Company determines whether an arrangement is or contains a lease at contract inception. The majority of the Company’s leases are classified as operating leases, which are included in operating lease right-of-use assets and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt on the Company’s consolidated balance sheets.
Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. Minimum lease payments include only the fixed lease component of the agreement, as well as any variable rate payments that depend on an index, initially measured using the index at the lease commencement date. Lease terms may include options to renew when it is reasonably certain that the Company will exercise that option.
The Company estimates its incremental borrowing rate for each lease using a portfolio approach based on the respective weighted average term of the agreements. This estimation considers the market rates of the Company’s outstanding collateralized borrowings and interpolations of rates outside of the terms of the outstanding borrowings, including comparisons to comparable borrowings of similarly rated companies with longer term borrowings.
Operating lease expense is recognized on a straight-line basis over the lease term and is included in cost of sales or general and administrative expense. Amortization expense for finance leases is recognized on a straight-line basis over the lease term and is included in cost of sales or general and administrative expense. Interest expense for finance leases is recognized using the effective interest method. Variable lease payments that do not depend on a rate or index, payments associated with non-lease components and short-term rentals (leases with terms less than 12 months) are expensed as incurred.

 

65

 

Common Stock Dividends
 
The Company declared dividends of $ 237.3 million (or $ 6.96 per share) in 2025, $ 210.7 million (or $ 6.04 per share) in 2024 and $ 170.4 million (or $ 4.84 per share) in 2023. The Company paid dividends of $ 236.9 million , $ 209.9 million , and $ 169.8 million in 2025, 2024 and 2023, respectively.
Subsequent to the end of fiscal 2025, o n February 18, 2026 , the Company’s Board of Directors declared a quarterly dividend of $ 1.99 per common share payable on March 30, 2026 to shareholders of record at the close of business on March 13, 2026 .

Stock Options and Other Equity-Based Compensation Arrangements
 
The cost of all of the Company’s stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated financial statements based on the estimated fair value of the awards (Note 9).

 
Earnings Per Share
 
The Company discloses two calculations of earnings per share (“EPS”): basic EPS and diluted EPS (Note 2). The numerator in calculating common stock basic and diluted EPS is consolidated net income. The denominator in calculating common stock basic EPS is the weighted average shares outstanding. The denominator in calculating common stock diluted EPS includes the additional dilutive effect of outstanding stock options, unvested restricted stock units and unvested performance-based restricted stock units.

 
Supplemental Disclosures of Cash Flow Information
 
Cash payments for interest and income taxes in 2025, 2024 and 2023 were as follows:
 

 

 

2025

 

 

2024

 

 

2023

 

Cash paid for interest on Notes (Note 3)

 

$

185,020

 

 

$

184,996

 

 

$

186,810

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes, net of refunds

 

 

 

 

 

 

 

 

 

Federal

 

$

103,500

 

 

$

105,015

 

 

$

89,017

 

Aggregated state and local jurisdictions

 

 

29,914

 

 

 

28,796

 

 

 

24,183

 

Foreign

 

 

28,479

 

 

 

27,228

 

 

 

23,090

 

Net cash paid for income taxes

 

$

161,893

 

 

$

161,039

 

 

$

136,290

 

The Company had non-cash investing activities related to accruals for capital expenditures of $ 2.4 million , $ 3.1 million and $ 6.7 million at December 28, 2025, December 29, 2024 and December 31, 2023, respectively. The Company had non-cash financing activities related to accruals for excise taxes on share repurchases of $ 3.3 million , $ 3.0 million and $ 2.6 million at December 28, 2025, December 29, 2024 and December 31, 2023, respectively. The Company paid $ 3.0 million and $ 2.6 million in excise taxes on share repurchases in 2025 and 2024, respectively.

 
New Accounting Pronouncements
 
Recently Adopted Accounting Standards
 
The Company has considered all new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and adopted the following accounting standard.
Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) , which requires disclosure on an annual basis, a tabular reconciliation, including both amount and percentage of specific categories of the effective tax rate reconciliation, including state and local income taxes (net of Federal taxes), foreign taxes, effects of changes in tax laws, regulations or rates enacted in the current period, effects of cross-border tax laws, tax credits, changes in valuation allowances, nontaxable and nondeductible items and changes in unrecognized tax benefits. Additional disclosures are required for certain items exceeding five percent of pre-tax income from continuing operations multiplied by the statutory income tax rate. The standard also requires disclosure of income taxes paid, net of refunds received, between Federal, state and foreign jurisdictions, including further disaggregation of those payments exceeding five percent of the total income taxes paid.
 
On December 28, 2025, the end of the 2025 fiscal year, the Company adopted ASU 2023-09 and included the relevant rate reconciliation disclosures within Note 7, Income Taxes , and included the relevant disclosures of income taxes paid in the table above . The Company has presented the disclosures on a retrospective basis for all periods presented in the consolidated financial statements.

66

 

Accounting Standards Not Yet Adopted
 
The Company has considered all new accounting standards issued by the FASB. The Company has not yet adopted the following standards:
ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”) , which requires disclosure in the notes to the consolidated financial statements on an annual and interim basis, amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization for all expense captions presented on the face of the consolidated statements of income. The standard also requires a qualitative description of the amounts remaining in those expense captions that are not separately disaggregated. The standard also requires disclosure of the composition and amount of selling expenses.
 
ASU 2024-03 is effective for annual reporting fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, and early adoption is permitted. The standard may be adopted either prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
 
ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
 
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), to modernize the accounting guidance for the costs to develop software for internal use. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new standard also supersedes the guidance related to costs incurred to develop a website.
 
ASU 2025-06 guidance is effective for annual periods beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects or on a retrospective basis. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.

 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

67

 

(2) Earnings per Share

The computation of basic and diluted earnings per common share for 2025, 2024 and 2023 is as follows:
 

 

 

2025

 

 

2024

 

 

2023

 

Net income available to common stockholders – basic and diluted

 

$

601,704

 

 

$

584,170

 

 

$

519,118

 

Weighted average number of common shares

 

 

34,007,071

 

 

 

34,707,298

 

 

 

35,081,779

 

Earnings per common share – basic

 

$

17.69

 

 

$

16.83

 

 

$

14.80

 

Diluted weighted average number of common shares

 

 

34,237,646

 

 

 

34,991,484

 

 

 

35,401,313

 

Earnings per common share – diluted

 

$

17.57

 

 

$

16.69

 

 

$

14.66

 

 
The denominators used in calculating diluted earnings per share for common stock for 2025, 2024 and 2023 do not include the following because the effect of including these shares would be anti-dilutive or because the performance targets for these awards had not yet been met:
 

 

 

2025

 

 

2024

 

 

2023

 

Anti-dilutive shares underlying stock-based awards

 

 

 

 

 

 

 

 

 

   Stock options

 

 

91,423

 

 

 

46,277

 

 

 

216,128

 

   Restricted stock units

 

 

659

 

 

 

4,223

 

 

 

7,060

 

Performance condition not met

 

 

 

 

 

 

 

 

 

   Restricted stock units

 

 

19,022

 

 

 

23,430

 

 

 

44,750

 

 
(3) Financing Arrangements

 
The 2025 Notes, 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Notes (each, as defined below) are collectively referred to as the “Notes.” The Company made payments of $ 1.14 billion, $ 12.9 million and $ 51.5 million in 2025, 2024 and 2023, respectively on its senior notes.
 
2025 Refinancing
On September 5, 2025 (the “closing date”), the Company completed a refinancing transaction (the “2025 Refinancing”) in which certain of the Company’s subsidiaries issued new notes pursuant to an asset-backed securitization. The notes consist of $ 500.0 million Series 2025-1 4.930 % Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated repayment date of July 2030 (the “2025 Five-Year Notes”) and $ 500.0 million Series 2025-1 5.217 % Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated repayment date of July 2032 (the “2025 Seven-Year Notes,” and collectively with the 2025 Five-Year Notes, the “2025 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. Gross proceeds from the issuance of the 2025 Notes were $ 1.00 billion.
 
The proceeds from the issuance of the 2025 Notes, as well as $ 160.0 million of the Company’s unrestricted cash and cash equivalents, were used to (i) repay the remaining $ 742.0 million in outstanding principal under the Company’s 2015 Ten-Year Notes and the remaining $ 402.7 million in outstanding principal under the Company’s 2018 7.5 -Year Notes, (ii) prefund a portion of the interest payable on the 2025 Notes and (iii) pay transaction fees and expenses. During 2025 and in connection with the issuance of the 2025 Refinancing and the issuance of the 2025 Variable Funding Notes, the Company capitalized $ 15.4 million of debt issuance costs, which are being amortized into interest expense over the five and seven-year expected terms of the 2025 Notes.
 
2021 Recapitalization
On April 16, 2021, the Company completed a recapitalization transaction (the “2021 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $ 850.0 million Series 2021-1 2.662 % Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2021 7.5-Year Notes”) and $ 1.0 billion Series 2021-1 3.151 % Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 10 years (the “2021 Ten-Year Notes”, and, collectively with the 2021 7.5-Year Notes, the “2021 Notes”). Gross proceeds from the issuance of the 2021 Notes were $ 1.85 billion.

68

 

2019 Recapitalization
 
On November 19, 2019, the Company completed a recapitalization transaction (the “2019 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consist of $ 675.0 million Series 2019-1 3.668 % Fixed Rate Senior Secured Notes, Class A-2 with an anticipated term of 10 years (the “2019 Notes”). Gross proceeds from the issuance of the 2019 Notes were $ 675.0 million.
 
2018 Recapitalization
 
On April 24, 2018, the Company completed a recapitalization transaction (the “2018 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $ 425.0 million Series 2018-1 4.116 % Fixed Rate Senior Secured Notes, Class A-2-I with an anticipated term of 7.5 years (the “2018 7.5-Year Notes”), and $ 400.0 million Series 2018-1 4.328 % Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of 9.25 years (the “2018 9.25-Year Notes”). Gross proceeds from the issuance of the 2018 7.5-Year Notes and the 2018 9.25-Year Notes were $ 825.0 million. The 2018 7.5-Year Notes were repaid in connection with the 2025 Refinancing.
 
2017 Recapitalization
 
On July 24, 2017, the Company completed a recapitalization transaction (the “2017 Recapitalization”) in which certain of the Company’s subsidiaries issued notes pursuant to an asset-backed securitization. The notes consisted of $ 300.0 million Series 2017-1 Floating Rate Senior Secured Notes, Class A-2-I with an anticipated term of five years (the “2017 Floating Rate Notes”), $ 600.0 million Series 2017-1 3.082 % Fixed Rate Senior Secured Notes, Class A-2-II with an anticipated term of five years (the “2017 Five-Year Notes”) and $ 1.0 billion Series 2017-1 4.118 % Fixed Rate Senior Secured Notes, Class A-2-III with an anticipated term of ten years (the “2017 Ten-Year Notes”). Gross proceeds from the issuance of the 2017 Floating Rate Notes, 2017 Five-Year Notes and 2017 Ten-Year Notes were $ 1.9 billion. The 2017 Floating Rate Notes and 2017 Five-Year Notes were repaid in connection with the 2021 Recapitalization.
 
Variable Funding Notes
Concurrent with the 2025 Refinancing, certain of the Company’s subsidiaries also issued a new variable funding note facility which allows for advances of up to $ 320.0 million of Series 2025-1 Variable Funding Senior Secured Notes, Class A-1 and certain other credit instruments, including letters of credit (the “2025 Variable Funding Notes”). The 2025 Variable Funding Notes were undrawn on the closing date. In connection with the issuance of the 2025 Variable Funding Notes, the Company’s previous $ 200.0 million Series 2021-1 and $ 120.0 million Series 2022-1 variable funding note facilities were canceled.
Interest on the 2025 Variable Funding Notes is payable at a rate equal to the Secured Overnight Financing Rate (“Term SOFR”) plus 150 basis points. The unused portion of the 2025 Variable Funding Notes is subject to a commitment fee of 50 basis points. It is anticipated that any amounts outstanding under the 2025 Variable Funding Notes will be repaid in full on or prior to July 2030, subject to two additional one-year extensions at the option of the Company, subject to certain conditions. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the 2025 Variable Funding Notes equal to 5 % per annum.
As of December 28, 2025 , the Company had no outstanding borrowings and $ 263.6 million of available borrowing capacity under its 2025 Variable Funding Notes, net of letters of credit issued of $ 56.4 million .
As of December 29, 2024 , the Company had no outstanding borrowings and $ 120.0 million of available borrowing capacity under its Series 2022-1 variable funding note facility. As of December 29, 2024 , the Company had no outstanding borrowings and $ 143.6 million of available borrowing capacity under its $ 200.0 million Series 2021-1 variable funding note facility, net of letters of credit issued of $ 56.4 million .
2025 Notes
 
The 2025 Five-Year Notes have original remaining scheduled principal payments of $ 5.0 million in each of 2026 through 2029 and $ 480.0 million in 2030. The 2025 Seven-Year Notes have original remaining scheduled principal payments of $ 5.0 million in each of 2026 through 2031 and $ 470.0 million in 2032. Refer to the leverage ratio and debt classification disclosure below for additional information.
 
The legal final maturity date of the 2025 Notes is July 2055, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2025 Five-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2030, and the 2025 Seven-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2032. If the Company has not repaid or refinanced the 2025 Notes prior to the applicable anticipated repayment dates, additional interest of at least 5 % per annum will accrue, as defined in the related agreements.

69

 

2021 Notes
 
The 2021 7.5-Year Notes have original remaining scheduled principal payments of $ 8.5 million in each of 2026 and 2027 and $ 809.6 million in 2028. The 2021 Ten-Year Notes have original remaining scheduled principal payments of $ 10.0 million in each of 2026 through 2030 and $ 922.5 million in 2031. Refer to the leverage ratio and debt classification disclosure below for additional information.
 
The legal final maturity date of the 2021 Notes is April 2051, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2021 7.5-Year Notes will be repaid on or prior to the anticipated repayment date occurring in October 2028, and the 2021 Ten-Year Notes will be repaid on or prior to the anticipated repayment date occurring in April 2031. If the Company has not repaid or refinanced the 2021 Notes prior to the applicable anticipated repayment dates, additional interest of at least 5 % per annum will accrue, as defined in the related agreements.
 
2019 Notes
 
The 2019 Notes have original remaining scheduled principal payments of $ 6.8 million in each of 2026 through 2028 and $ 627.8 million in 2029. Refer to the leverage ratio and debt classification disclosure below for additional information.
 
The legal final maturity date of the 2019 Notes is October 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2019 Notes will be repaid on or prior to the anticipated repayment date occurring in October 2029. If the Company has not repaid or refinanced the 2019 Notes prior to the applicable anticipated repayment date, additional interest of at least 5 % per annum will accrue, as defined in the related agreements.
 
2018 9.25-Year Notes
 
The 2018 9.25-Year Notes have original remaining scheduled principal payments of $ 4.0 million in 2026 and $ 375.0 million in 2027. Refer to the leverage ratio and debt classification disclosure below for additional information.
 
The legal final maturity date of the 2018 9.25-Year Notes is July 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2018 9.25-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2027. If the Company has not repaid or refinanced the 2018 9.25-Year Notes prior to the applicable anticipated repayment dates, additional interest of at least 5 % per annum will accrue, as defined in the related agreements.
 
2017 Ten-Year Notes
 
The 2017 Ten-Year Notes have original remaining scheduled principal payments of $ 10.0 million in 2026 and $ 930.0 million in 2027. Refer to the leverage ratio and debt classification disclosure below for additional information.
The legal final maturity date of the 2017 Ten-Year Notes is October 2047, but it is anticipated that, unless earlier prepaid to the extent permitted under the related debt agreements, the 2017 Ten-Year Notes will be repaid on or prior to the anticipated repayment date occurring in July 2027. If the Company has not repaid or refinanced the 2017 Ten-Year Notes prior to the applicable anticipated repayment dates, additional interest of at least 5 % per annum will accrue, as defined in the related agreements.
 
Guarantees and Covenants of the Notes
 
The Notes are guaranteed by certain subsidiaries of the Company and secured by an interest in certain assets of the Company as specified in the indenture governing the securitized debt, including franchise royalty income from all U.S. and international stores, U.S. supply chain income and intellectual property. The restrictions placed on the Company’s subsidiaries require that the Company’s principal and interest obligations have first priority and amounts are segregated weekly to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of weekly cash flow that exceeds the required weekly principal and interest reserve is generally remitted to the Company in the form of a dividend. However, once the required obligations are satisfied, there are no further restrictions, including payment of dividends, on the cash flows of the subsidiaries. If the Company has not repaid or refinanced the respective note series prior to the applicable anticipated repayment dates, additional interest of at least 5 % per annum will accrue, and the Company’s cash flows other than a weekly management fee to cover certain operating expenses would be directed to the repayment of the securitized debt.
 

70

 

The Notes are subject to certain financial and non-financial covenants, including a debt service coverage ratio calculation. The covenant requires a minimum coverage ratio of 1.75 x total debt service to Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt. The covenants, among other things, may limit the ability of certain of the Company’s subsidiaries to declare dividends, make loans or advances or enter into transactions with affiliates. In the event that certain covenants are not met, the Notes may become partially or fully due and payable on an accelerated schedule. In addition, the Company may voluntarily prepay, in part or in full, the Notes at any time, subject to certain make-whole interest obligations.
Leverage Ratio and Debt Classification
 
While the Notes are outstanding, scheduled payments of principal and interest are required to be made on a quarterly basis. In accordance with the Company’s debt agreements, the payment of principal on the 2025 Notes may be suspended if either the Holdco Leverage Ratio or Senior Leverage Ratio is less than or equal to 5.5x total debt to either Consolidated Adjusted EBITDA or Securitized Net Cash Flow, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. In accordance with the Company’s debt agreements, the payment of principal on the 2021 Notes, 2019 Notes, 2018 9.25-Year Notes and 2017 Ten-Year Notes may be suspended if the Holdco Leverage Ratio is less than or equal to 5.0x total debt to Consolidated Adjusted EBITDA, each as defined in the indenture governing the securitized debt, and no catch-up provisions are applicable. As of the end of the fourth quarter of 2025 and the end of the fourth quarter of 2024, the Company satisfied the non-amortization tests for each respective series of notes, and accordingly, the outstanding principal amounts of the notes have been classified as long-term debt in the consolidated balance sheet as of December 28, 2025. As of December 29, 2024, current portion of long-term debt included the outstanding principal amounts under the 2015 Ten-Year Notes and the 2018 7.5-Year Notes for which the anticipated repayment date was October 2025.
Consolidated Long-Term Debt
 
At December 28, 2025 and December 29, 2024, consolidated long-term debt consisted of the following:
 

 

 

December 28,
2025

 

 

December 29,
2024

 

2015 Ten-Year Notes

 

$

—

 

 

$

742,000

 

2017 Ten-Year Notes

 

 

940,000

 

 

 

940,000

 

2018 7.5-Year Notes

 

 

—

 

 

 

402,688

 

2018 9.25-Year Notes

 

 

379,000

 

 

 

379,000

 

2019 Ten-Year Notes

 

 

648,000

 

 

 

648,000

 

2021 7.5-Year Notes

 

 

826,625

 

 

 

826,625

 

2021 Ten-Year Notes

 

 

972,500

 

 

 

972,500

 

2025 Five-Year Notes

 

 

500,000

 

 

 

—

 

2025 Seven-Year Notes

 

 

500,000

 

 

 

—

 

Finance lease obligations

 

 

62,008

 

 

 

66,058

 

Financing obligation from sale leaseback

 

 

14,693

 

 

 

14,788

 

Debt issuance costs, net of accumulated amortization
   of $25.3 million in 2025 and $34.5 million in 2024

 

 

( 26,012

)

 

 

( 16,321

)

Total debt

 

 

4,816,814

 

 

 

4,975,338

 

Current portion of long-term debt

 

 

( 6,131

)

 

 

( 1,149,679

)

Long-term debt, less current portion

 

$

4,810,683

 

 

$

3,825,659

 

 
At December 28, 2025, maturities of long-term debt, finance leases and other financing obligations were as follows below and reflect the total amounts due for each of the Notes on their respective anticipated repayment dates assuming the non-amortization tests for each respective series of notes continues to be satisfied.
 

2026

 

$

6,131

 

2027

 

 

1,324,384

 

2028

 

 

831,218

 

2029

 

 

652,958

 

2030

 

 

505,337

 

Thereafter

 

 

1,522,798

 

 

$

4,842,826

 

 

71

 

(4) Fair Value Measurements

 
Fair value measurements enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Company classifies and discloses assets and liabilities carried at fair value in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
 
Fair Value of Cash Equivalents and Marketable Securities
 
The fair values of the Company’s cash equivalents and investments in marketable securities are based on quoted prices in active markets for identical assets.
 
Fair Value of Investments
The Company holds a non-controlling interest in DPC Dash, the Company’s master franchisee in China that owns and operates Domino’s Pizza stores in that market. As of December 28, 2025 and December 29, 2024, the fair value of the Company’s investment in DPC Dash is based on the active exchange quoted price for the equity security (HK$ 71.90 per share as of December 28, 2025 and HK$ 79.25 per share as of December 29, 2024) . The Company owned 3,901,019 and 8,101,019 ordinary shares as of December 28, 2025 and December 29, 2024 , representing 3.0 % and 6.2 % of DPC Dash’s ordinary shares as of the respective dates. The Company sold 4,200,000 ordinary shares of its investment in DPC Dash in the second quarter of 2025 for net proceeds of $ 44.1 million . The Company sold 10,000,000 ordinary shares of its investment in DPC Dash in the fourth quarter of 2024 for net proceeds of $ 82.9 million .
 
The Company recorded a total net negative adjustment of $ 2.5 million in 2025, and total net positive adjustments to the net carrying amount of its investment in DPC Dash of $ 22.1 million and $ 17.7 million in 2024 and 2023, respectively, with the net realized and unrealized losses and gains recorded in other expense and other income in its consolidated statements of income.
 
The following table summarizes the carrying amounts and fair values of certain assets at December 28, 2025:
 

 

 

At December 28, 2025

 

 

 

 

 

 

Fair Value Estimated Using

 

 

 

Carrying

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

Amount

 

 

Inputs

 

 

Inputs

 

 

Inputs

 

Cash equivalents

 

$

54,306

 

 

$

54,306

 

 

$

—

 

 

$

—

 

Restricted cash equivalents

 

 

146,517

 

 

 

146,517

 

 

 

—

 

 

 

—

 

Investments in marketable securities

 

 

24,971

 

 

 

24,971

 

 

 

—

 

 

 

—

 

Advertising fund cash equivalents, restricted

 

 

65,604

 

 

 

65,604

 

 

 

—

 

 

 

—

 

Investment in DPC Dash

 

 

36,070

 

 

 

36,070

 

 

 

—

 

 

 

—

 

The following table summarizes the carrying amounts and fair values of certain assets at December 29, 2024:
 

 

 

At December 29, 2024

 

 

 

 

 

 

Fair Value Estimated Using

 

 

 

Carrying

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

Amount

 

 

Inputs

 

 

Inputs

 

 

Inputs

 

Cash equivalents

 

$

127,074

 

 

$

127,074

 

 

$

—

 

 

$

—

 

Restricted cash equivalents

 

 

140,669

 

 

 

140,669

 

 

 

—

 

 

 

—

 

Investments in marketable securities

 

 

20,638

 

 

 

20,638

 

 

 

—

 

 

 

—

 

Advertising fund cash equivalents, restricted

 

 

70,350

 

 

 

70,350

 

 

 

—

 

 

 

—

 

Investment in DPC Dash

 

 

82,699

 

 

 

82,699

 

 

 

—

 

 

 

—

 

 

72

 

Fair Value of Debt

The estimated fair values of the Company’s Notes (Note 3) are classified as Level 2 measurements, as the Company estimates the fair value amount by using available market information. The Company obtained quotes from two separate brokerage firms that are knowledgeable about the Company’s Notes and, at times, trade these Notes. The Company also performed its own internal analysis based on the information gathered from public markets, including information on notes that are similar to those of the Company. However, considerable judgment is required to interpret market data to estimate fair value. Accordingly, the fair value estimates presented are not necessarily indicative of the amount that the Company or the noteholders could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values stated below.
 
Management estimated the approximate fair values of the Notes as follows:
 

 

 

December 28, 2025

 

 

December 29, 2024

 

 

 

Principal
Amount

 

 

Fair Value

 

 

Principal
Amount

 

 

Fair Value

 

2015 Ten-Year Notes

 

$

—

 

 

 

—

 

 

$

742,000

 

 

$

739,032

 

2017 Ten-Year Notes

 

 

940,000

 

 

 

934,360

 

 

 

940,000

 

 

 

915,560

 

2018 7.5-Year Notes

 

 

—

 

 

 

—

 

 

 

402,688

 

 

 

399,869

 

2018 9.25-Year Notes

 

 

379,000

 

 

 

377,863

 

 

 

379,000

 

 

 

370,662

 

2019 Ten-Year Notes

 

 

648,000

 

 

 

624,024

 

 

 

648,000

 

 

 

599,400

 

2021 7.5-Year Notes

 

 

826,625

 

 

 

785,294

 

 

 

826,625

 

 

 

750,576

 

2021 Ten-Year Notes

 

 

972,500

 

 

 

893,728

 

 

 

972,500

 

 

 

850,938

 

2025 Five-Year Notes

 

 

500,000

 

 

 

503,000

 

 

 

—

 

 

 

—

 

2025 Seven-Year Notes

 

 

500,000

 

 

 

506,000

 

 

 

—

 

 

 

—

 

 

The Company had no outstanding borrowings under its variable funding notes at December 28, 2025 or December 29, 2024 .
 
(5) Leases

 
The Company leases certain retail store and supply chain center locations, vehicles, equipment and its corporate headquarters with expiration dates through 2045.
The components of operating and finance lease cost for 2025, 2024 and 2023 were as follows:

 

 

2025

 

 

2024

 

 

2023

 

Operating lease cost

 

$

52,160

 

 

$

50,058

 

 

$

47,579

 

 

 

 

 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

5,385

 

 

 

5,644

 

 

 

5,545

 

Interest on lease liabilities

 

 

3,673

 

 

 

4,090

 

 

 

4,340

 

Total finance lease cost

 

$

9,058

 

 

$

9,734

 

 

$

9,885

 

 
Rent expense totaled $ 95.9 million , $ 91.2 million and $ 85.6 million in 2025, 2024 and 2023, respectively. Rent expense includes operating lease cost, as well as expense for non-lease components including common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Rent expense also includes the variable rate per mile driven and fixed maintenance charges for the Company’s supply chain center tractors and trailers and expense for short-term rentals. Rent expense for certain short-term supply chain center tractor and trailer rentals was $ 6.5 million , $ 7.5 million and $ 5.4 million in 2025, 2024 and 2023, respectively. Variable rent expense and rent expense for other short-term leases were immaterial for 2025, 2024 and 2023.
 

73

 

Supplemental balance sheet information related to the Company’s finance leases as of December 28, 2025 and December 29, 2024 was as follows:

 

 

December 28,
2025

 

 

December 29,
2024

 

Land and buildings

 

$

80,457

 

 

$

79,966

 

Equipment

 

 

4,225

 

 

 

4,640

 

Finance lease assets

 

 

84,682

 

 

 

84,606

 

Accumulated depreciation and amortization

 

 

( 32,908

)

 

 

( 28,148

)

Finance lease assets, net

 

$

51,774

 

 

$

56,458

 

 

 

 

 

 

 

 

Current portion  of long-term debt

 

$

6,017

 

 

$

4,895

 

Long-term debt , less current portion

 

 

55,991

 

 

 

61,163

 

Total principal payable on finance leases

 

$

62,008

 

 

$

66,058

 

 
As of December 28, 2025 and December 29, 2024, the weighted average remaining lease term and weighted average discount rate for the Company’s operating and finance leases were as follows:

 

 

2025

 

 

2024

 

 

 

Operating

 

 

Finance

 

 

Operating

 

 

Finance

 

 

 

Leases

 

 

Leases

 

 

Leases

 

 

Leases

 

Weighted average remaining lease term

 

6 years

 

 

11 years

 

 

7 years

 

 

12 years

 

Weighted average discount rate

 

 

4.8

%

 

 

6.1

%

 

 

4.6

%

 

 

6.1

%

 
Supplemental cash flow information related to leases for 2025, 2024 and 2023 was as follows:

 

 

2025

 

 

2024

 

 

2023

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

51,552

 

 

$

50,636

 

 

$

46,936

 

Operating cash flows from finance leases

 

 

3,673

 

 

 

4,090

 

 

 

4,340

 

Financing cash flows from finance leases

 

 

4,744

 

 

 

4,683

 

 

 

4,184

 

Cash paid for amounts included in the measurement of
   financing obligation from sale leaseback:

 

 

 

 

 

 

 

 

 

Operating cash flows from sale leaseback

 

 

1,186

 

 

 

1,293

 

 

 

201

 

Financing cash flows from sale leaseback

 

 

96

 

 

 

89

 

 

 

21

 

Right-of-use assets obtained in exchange for new lease obligations:

 

 

 

 

 

 

 

 

 

Operating leases

 

 

55,511

 

 

 

53,076

 

 

 

34,313

 

Finance leases

 

 

842

 

 

 

1,442

 

 

 

3,842

 

 
Maturities of lease liabilities as of December 28, 2025 were as follows:
 

 

 

Operating

 

 

Finance

 

 

 

Leases

 

 

Leases

 

2026

 

$

57,778

 

 

$

9,402

 

2027

 

 

49,212

 

 

 

8,350

 

2028

 

 

41,316

 

 

 

7,277

 

2029

 

 

37,230

 

 

 

7,352

 

2030

 

 

26,756

 

 

 

7,399

 

Thereafter

 

 

59,108

 

 

 

43,416

 

Total future minimum rental commitments

 

 

271,400

 

 

 

83,196

 

Less, amounts representing interest

 

 

( 39,930

)

 

 

( 21,188

)

Total lease liabilities

 

$

231,470

 

 

$

62,008

 

 

74

 

In the fourth quarter of 2023, a subsidiary of the Company entered into a purchase and sale agreement with a developer to sell one of the Company’s owned supply chain center buildings and the associated land for $ 14.9 million. Concurrently, a separate subsidiary of the Company entered into a lease agreement with the developer to construct a new supply chain center which includes both the existing building as well as an adjoined new construction on the adjacent properties owned by the developer.
The leaseback of the Company’s building on a standalone basis for the construction period plus the 20-year term using the discount rate implicit in the lease resulted in a finance lease classification, and therefore, the transaction was accounted for as a failed sale leaseback. The Company retained the existing land and buildings on its consolidated balance sheet which are included in property, plant and equipment and the Company continues to depreciate the building as if it owned it. The $ 14.9 million cash proceeds from the transaction was recorded as a financing obligation and is being amortized over the term of the financing agreement. As of December 28, 2025, $ 0.1 million is classified as current portion of long-term debt and $ 14.6 million is classified as long-term debt in the Company’s consolidated balance sheet. As of December 29, 2024, $ 0.1 million is classified as current portion of long-term debt and $ 14.7 million is classified as long-term debt in the Company’s consolidated balance sheet. The $ 119.5 million of future minimum rent payments associated with the new construction on a standalone basis is included in the disclosure for material leases not yet commenced, below.
As of December 28, 2025 , in addition to the lease for the new supply chain construction on a standalone basis discussed above, the Company also had additional leases for certain supply chain real estate and certain supply chain vehicles that had not yet commenced. The total estimated future minimum rental commitments for all of these arrangements is $ 161.6 million. These leases are expected to commence in 2026 with lease terms of up to 20 years. These undiscounted amounts are not included in the table above.
The Company has guaranteed lease payments related to certain franchisees’ lease arrangements. The maximum amount of potential future payments under these guarantees was $ 12.6 million and $ 12.8 million as of December 28, 2025 and December 29, 2024 , respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues or expenses, capital expenditures or liquidity.

 
(6) Commitments and Contingencies

 
The Company is a party to lawsuits, revenue agent reviews by taxing authorities and legal proceedings, of which the majority involve workers’ compensation, employment practices liability, general liability and automobile and franchisee claims arising in the ordinary course of business. The Company records legal fees associated with loss contingencies when they are probable and reasonably estimable. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is unpredictable. These matters could be decided unfavorably and could require the Company to pay damages or make other expenditures in amounts or a range of amounts that cannot be estimated with accuracy. However, the Company does not believe these matters, individually or in the aggregate, will have a material adverse effect on the business or financial condition of the Company, and the Company expects that the established accruals adequately provide for the estimated resolution of such claims.

75

 

(7) Income Taxes

 
Income before provision for income taxes in 2025, 2024 and 2023 consisted of the following:
 

 

 

2025

 

 

2024

 

 

2023

 

U.S.

 

$

753,085

 

 

$

707,705

 

 

$

640,255

 

Foreign

 

 

17,253

 

 

 

14,510

 

 

 

12,185

 

Income before provision for income taxes

 

$

770,338

 

 

$

722,215

 

 

$

652,440

 

 
The components of the Company’s provision for income taxes and the effective tax rate for 2025, 2024 and 2023 are summarized as follows in the table below. The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in the fourth quarter of 2025. The Company has included the relevant disclosures retrospectively for all periods presented in the consolidated financial statements.
 

 

 

2025

 

 

2024

 

 

2023

 

U.S. Federal income tax provision,
   based on the statutory rate

 

$

161,771

 

 

 

21.0

%

 

$

151,665

 

 

 

21.0

%

 

$

137,012

 

 

 

21.0

%

State and local income taxes,
   net of related Federal income tax effects (1)

 

 

23,501

 

 

 

3.1

%

 

 

22,546

 

 

 

3.1

%

 

 

19,473

 

 

 

3.0

%

Foreign tax effects

 

 

29,558

 

 

 

3.8

%

 

 

26,600

 

 

 

3.7

%

 

 

25,301

 

 

 

3.9

%

Nontaxable or nondeductible items

 

 

7,307

 

 

 

0.9

%

 

 

6,107

 

 

 

0.8

%

 

 

5,040

 

 

 

0.8

%

Changes in valuation allowances

 

 

4,142

 

 

 

0.5

%

 

 

3,918

 

 

 

0.5

%

 

 

3,334

 

 

 

0.5

%

Changes in unrecognized tax benefits

 

 

( 46

)

 

 

0.0

%

 

 

616

 

 

 

0.1

%

 

 

16

 

 

 

0.0

%

Effect of cross-border tax laws

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign derived intangible income deduction

 

 

( 16,800

)

 

 

( 2.2

)%

 

 

( 16,380

)

 

 

( 2.3

)%

 

 

( 17,850

)

 

 

( 2.7

)%

Tax credits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign tax credits

 

 

( 29,558

)

 

 

( 3.8

)%

 

 

( 26,600

)

 

 

( 3.7

)%

 

 

( 23,582

)

 

 

( 3.6

)%

Other credits

 

 

( 3,887

)

 

 

( 0.5

)%

 

 

( 5,856

)

 

 

( 0.8

)%

 

 

( 5,440

)

 

 

( 0.8

)%

Other adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits from equity-based compensation

 

 

( 3,158

)

 

 

( 0.4

)%

 

 

( 22,241

)

 

 

( 3.1

)%

 

 

( 3,397

)

 

 

( 0.5

)%

Other

 

 

( 4,196

)

 

 

( 0.5

)%

 

 

( 2,330

)

 

 

( 0.2

)%

 

 

( 6,585

)

 

 

( 1.2

)%

Provision for income taxes

 

$

168,634

 

 

 

21.9

%

 

$

138,045

 

 

 

19.1

%

 

$

133,322

 

 

 

20.4

%

 

(1)

 

California, New York, Florida, Illinois, New Jersey, Minnesota and New York City made up the majority (greater than 50%) of this category in each of the years presented, with the addition of Oregon for 2025.

Excess tax benefits from equity-based compensation activity resulted in a decrease in the Company’s provision for income taxes of $ 3.2 million , $ 22.2 million and $ 3.4 million in 2025, 2024 and 2023, respectively, primarily due to the recognition of excess tax benefits for options exercised and the vesting of equity awards.
 
The components of the 2025, 2024 and 2023 consolidated provision for income taxes were as follows:
 

 

 

2025

 

 

2024

 

 

2023

 

Provision for Federal income taxes

 

 

 

 

 

 

 

 

 

Current provision

 

$

107,796

 

 

$

95,376

 

 

$

100,287

 

Deferred provision (benefit)

 

 

1,503

 

 

 

( 8,816

)

 

 

( 16,467

)

Total provision for Federal income taxes

 

 

109,299

 

 

 

86,560

 

 

 

83,820

 

Provision for state and local income taxes

 

 

 

 

 

 

 

 

 

Current provision

 

 

29,992

 

 

 

25,186

 

 

 

27,243

 

Deferred benefit

 

 

( 215

)

 

 

( 301

)

 

 

( 2,991

)

Total provision for state and local income taxes

 

 

29,777

 

 

 

24,885

 

 

 

24,252

 

Provision for non-resident withholding and foreign income taxes

 

 

 

 

 

 

 

 

 

Current provision

 

 

29,558

 

 

 

26,600

 

 

 

25,301

 

Deferred benefit

 

 

—

 

 

 

—

 

 

 

( 51

)

Total provision for non-resident withholding and foreign income taxes

 

 

29,558

 

 

 

26,600

 

 

 

25,250

 

Provision for income taxes

 

$

168,634

 

 

$

138,045

 

 

$

133,322

 

 

76

 

As of December 28, 2025 and December 29, 2024, the significant components of net deferred income taxes were as follows in the table below. Certain prior period disclosure amounts have been reclassified to conform to the current presentation.
 

 

 

December 28,
2025

 

 

December 29,
2024

 

Deferred income tax assets

 

 

 

 

 

 

Operating lease liabilities

 

$

56,880

 

 

$

55,538

 

Foreign tax credit

 

 

25,112

 

 

 

20,970

 

Insurance reserves

 

 

12,005

 

 

 

11,800

 

Accrued compensation

 

 

11,129

 

 

 

11,918

 

Non-cash equity-based compensation expense

 

 

9,803

 

 

 

10,354

 

Contract liabilities

 

 

7,065

 

 

 

6,760

 

Accruals and reserves

 

 

4,563

 

 

 

4,276

 

Other

 

 

6,847

 

 

 

4,385

 

Deferred income tax assets before valuation allowance

 

 

133,404

 

 

 

126,001

 

Less, valuation allowance

 

 

( 26,348

)

 

 

( 22,359

)

Deferred income tax assets, net

 

 

107,056

 

 

 

103,642

 

Deferred income tax liabilities

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

53,935

 

 

 

52,684

 

Capitalized software

 

 

17,948

 

 

 

8,535

 

Depreciation, amortization and asset basis differences

 

 

9,585

 

 

 

9,103

 

Unrealized gain on investments

 

 

3,487

 

 

 

9,888

 

Deferred income tax liabilities

 

 

84,955

 

 

 

80,210

 

Net deferred income taxes

 

$

22,101

 

 

$

23,432

 

 

Realization of the Company ’ s deferred tax assets is dependent upon many factors, including, but not limited to, the Company ’ s ability to generate sufficient taxable income. Although realization of the Company ’ s deferred tax assets is not assured, on an ongoing basis, management assesses whether it remains more likely than not the deferred tax assets will be realized.
 
As of December 28, 2025 and December 29, 2024, the Company had total foreign tax credits of $ 25.1 million and $ 21.0 million , respectively, which were fully offset with a corresponding valuation allowance. As of December 28, 2025 and December 29, 2024, the Company also had valuation allowances related to interest deductibility in separately filed states of $ 1.2 million and $ 1.4 million , respectively. Management believes the remaining deferred tax assets will be realized. For financial reporting purposes, the Company ’ s investment in foreign subsidiaries does not exceed its tax basis. Therefore, no deferred income taxes have been provided.
 
The Company recognizes the financial statement benefit of a tax position if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities widely understood administrative practices and precedents. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and recognizes penalties in income tax expense.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 28, 2025, December 29, 2024 and December 31, 2023 is as follows:
 

 

 

December 28,
2025

 

 

December 29,
2024

 

 

December 31,
2023

 

 

 

 

 

 

 

 

 

 

 

Unrecognized tax benefits at beginning of period

 

$

4,534

 

 

$

3,918

 

 

$

3,902

 

Additions for tax positions of current year

 

 

649

 

 

 

1,039

 

 

 

961

 

Additions for tax positions of prior years

 

 

193

 

 

 

241

 

 

 

503

 

Reductions for changes in prior year tax positions

 

 

—

 

 

 

—

 

 

 

( 551

)

Reductions for lapses of applicable statute of limitations

 

 

( 888

)

 

 

( 664

)

 

 

( 897

)

Unrecognized tax benefits at end of period

 

$

4,488

 

 

$

4,534

 

 

$

3,918

 

 

77

 

As of December 28, 2025 , the amount of unrecognized tax benefits was $ 4.5 million of which, if ultimately recognized, $ 4.5 million would be recognized as an income tax benefit and reduce the Company ’ s effective tax rate. As of December 28, 2025 , the Company had $ 0.7 million of accrued interest and no accrued penalties.
 
As of December 29, 2024 , the amount of unrecognized tax benefits was $ 4.5 million of which, if ultimately recognized, $ 4.5 million would be recognized as an income tax benefit and reduce the Company ’ s effective tax rate. As of December 29, 2024 , the Company had $ 0.6 million of accrued interest and no accrued penalties.
 
There are currently no Internal Revenue Service audits in progress for the Company. The Company continues to be under examination by certain states. The Company ’ s Federal statute of limitation has expired for years prior to 2022, but it varies for state and foreign locations. The Company believes appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.

(8) Employee Benefits

 
The Company has a retirement savings plan which qualifies under Internal Revenue Code Section 401(k). All employees of the Company who have completed 60 days of service and are at least 18 years of age are eligible to participate in the plan . The plan requires the Company to match 100 % of the first 5 % of each employee’s elective deferrals contributed on a per paycheck basis . The Company’s matching contributions are made in the form of cash and vest immediately. The expenses incurred for Company contributions to the plan were $ 14.2 million , $ 14.1 million and $ 12.5 million in 2025, 2024 and 2023, respectively.
 
The Company has established a non-qualified deferred compensation plan available for certain key employees. Under this self-funding plan, the participants may defer up to 50 % of their base salary and up to 80 % of their bonus compensation. The participants direct the investment of their deferred compensation within several investment funds. The Company is not required to contribute and did no t contribute to this plan during 2025, 2024 and 2023.
 
The Company has an employee stock payroll deduction plan (the “ESPDP”). Under the ESPDP, eligible employees may deduct up to 15 % of their eligible wages to purchase common stock at 85 % of the market price of the stock on the purchase date. The ESPDP requires employees to hold their purchased common stock for at least one year. The Company purchases common stock on the open market for the ESPDP at the current market price. There were 17,487 shares, 15,935 shares and 18,439 shares of common stock in 2025, 2024 and 2023 , respectively, purchased on the open market for participating employees at a weighted-average price of $ 456.21 in 2025 , $ 450.59 in 2024 and $ 341.76 in 2023 . The expenses incurred under the ESPDP were $ 1.2 million, $ 1.0 million, and $ 0.9 million in 2025, 2024 and 2023 , respectively.

(9) Equity Incentive Plans

 
The Company’s current equity incentive plan, named the Domino’s Pizza, Inc. 2004 Equity Incentive Plan (the “2004 Equity Incentive Plan”), benefits certain of the Company’s employees and members of the Company’s Board of Directors. As of December 28, 2025 , the maximum number of shares that may be granted under the 2004 Equity Incentive Plan is 15,600,000 shares of voting common stock of which 2,004,315 shares were authorized for grant but have not been granted.
 
The cost of all employee stock options, as well as other equity-based compensation arrangements, is reflected in the consolidated statements of income based on the estimated fair value of the awards and is amortized over the requisite service period of each award. All non-cash equity-based compensation expense amounts are recorded in general and administrative expense. The Company accounts for forfeitures as they occur.
 
The Company recorded total non-cash equity-based compensation expense of $ 44.6 million , $ 43.3 million and $ 37.5 million in 2025, 2024 and 2023 , respectively. The Company recorded a deferred tax benefit related to non-cash equity-based compensation expense of $ 6.1 million, $ 6.8 million and $ 6.3 million in 2025, 2024 and 2023, respectively.

78

 

Stock Options
 
As of December 28, 2025, the number of stock options granted and outstanding under the 2004 Equity Incentive Plan was 424,286 options. Stock options granted in fiscal 2016 through fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vested over four years from the date of grant, generally subject to the holder’s continued employment. Stock options granted after fiscal 2020 were granted with an exercise price equal to the market price at the date of the grant, expire ten years from the date of grant and generally vest over three years from the date of grant, generally subject to the holder’s continued employment. Additionally, all stock options granted become fully exercisable upon vesting. These awards also contain provisions for accelerated vesting upon the retirement of the holders that have achieved specific service and age requirements.
 
Stock option activity related to the 2004 Equity Incentive Plan is summarized as follows:
 

 

 

Common Stock Options

 

 

 

Outstanding

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Life

 

 

Aggregate
Intrinsic
Value

 

 

 

 

 

 

 

 

 

(Years)

 

 

(In thousands)

 

Stock options at January 1, 2023

 

 

672,142

 

 

$

206.69

 

 

 

 

 

 

 

Stock options granted

 

 

104,711

 

 

 

300.16

 

 

 

 

 

 

 

Stock options forfeited or expired

 

 

( 11,973

)

 

 

351.89

 

 

 

 

 

 

 

Stock options exercised

 

 

( 78,532

)

 

 

110.22

 

 

 

 

 

 

 

Stock options at December 31, 2023

 

 

686,348

 

 

$

229.45

 

 

 

 

 

 

 

Stock options granted

 

 

46,098

 

 

 

443.90

 

 

 

 

 

 

 

Stock options forfeited or expired

 

 

( 3,728

)

 

 

348.25

 

 

 

 

 

 

 

Stock options exercised

 

 

( 270,424

)

 

 

133.21

 

 

 

 

 

 

 

Stock options at December 29, 2024

 

 

458,294

 

 

$

306.85

 

 

 

 

 

 

 

Stock options granted

 

 

51,430

 

 

 

438.71

 

 

 

 

 

 

 

Stock options forfeited or expired

 

 

( 8,023

)

 

 

374.94

 

 

 

 

 

 

 

Stock options exercised

 

 

( 77,415

)

 

 

242.76

 

 

 

 

 

 

 

Stock options at December 28, 2025

 

 

424,286

 

 

$

333.24

 

 

 

5.4

 

 

$

40,586

 

Exercisable at December 28, 2025

 

 

321,280

 

 

$

310.57

 

 

 

4.4

 

 

$

37,225

 

 
The total intrinsic value of stock options exercised was $ 16.4 million, $ 93.5 m illion and $ 19.6 million in 2025, 2024 and 2023, respectively. Cash received from the exercise of stock options was $ 18.8 million , $ 36.0 million and $ 8.7 million in 2025, 2024 and 2023 , respectively. The tax benefit realized from stock options exercised was $ 1.9 million, $ 20.8 million and $ 4.2 million in 2025, 2024 and 2023, respectively.
 
The Company recorded total non-cash equity-based compensation expense of $ 7.8 million, $ 6.7 million and $ 5.8 million in 2025, 2024 and 2023, respectively, related to stock option awards. As of December 28, 2025 , there was $ 6.2 million of total unrecognized compensation cost related to unvested stock options granted under the 2004 Equity Incentive Plan which will be recognized on a straight-line basis over the related vesting period. This unrecognized compensation cost is expected to be recognized over a weighted average period of 1.7 years.

Management estimated the fair value of each option grant made during 2025, 2024 and 2023 as of the date of the grant using the Black-Scholes option pricing method. The risk-free interest rate is based on the estimated expected life and is estimated based on U.S. Treasury Bond rates as of the grant date. The expected life is based on several factors, including, among other things, the vesting term and contractual term as well as historical experience. The expected volatility is based principally on the historical volatility of the Company’s share price. Option valuation models require the input of highly subjective assumptions and changes in assumptions can significantly affect the estimated fair value of the Company ’ s stock options.

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The weighted average assumptions used in estimating the fair value of each stock option granted in 2025, 2024 and 2023 using the Black-Scholes option pricing method are presented in the following table:
 

 

 

2025

 

 

2024

 

 

2023

 

Risk-free interest rate

 

 

4.1

%

 

 

4.1

%

 

 

4.0

%

Expected life

 

5.25  years

 

 

5.25  years

 

 

5.25 years

 

Expected volatility

 

 

32.0

%

 

 

32.0

%

 

 

32.0

%

Expected dividend yield

 

 

1.6

%

 

 

1.4

%

 

 

1.6

%

Weighted average fair value per stock option

 

$

134.99

 

 

$

139.87

 

 

$

91.25

 

Other Equity-Based Compensation Arrangements