JAKKS Pacific (JAKK) Q2 2025 earnings summary

Executive summary

• Q2 2025 net sales declined 20% year-over-year to $119.1M, with U.S. sales down 31% and international sales up 41%, partially offsetting North American weakness.

• Gross margin improved to 32.8% from 32.0% last year, driven by new product launches and strong international performance.

• Operating loss was $2.8M versus operating income of $7.6M in Q2 2024; adjusted net income for Q2 was $0.4M ($0.03/share), down from $7.3M ($0.65/share) last year.

• Adjusted EBITDA for Q2 was $2.3M, down from $12.3M last year; first-half adjusted EBITDA was $2.7M, up from a $4.9M loss in H1 2024.

• Management remains focused on flexibility, margin optimization, and cash generation amid ongoing uncertainty and tariff-driven volatility.

Financial highlights

• Q2 2025 net sales: $119.1M (Q2 2024: $148.6M); first-half net sales: $232.3M, down 3% year-over-year.

• Q2 gross profit: $39.0M (32.8% margin); SG&A expenses: $41.8M (35.1% of sales).

• Q2 adjusted EBITDA: $2.3M (1.9% margin), down from $12.3M (8.3% margin) last year.

• Cash and equivalents at June 30, 2025: $43.1M, up from $17.9M a year ago.

• Inventory rose to $71.8M from $51.3M last year, mainly due to international growth.

Outlook and guidance

• Management is taking a cautious approach to H2, prioritizing profitability and cash generation over sales growth.

• No formal guidance provided, but Q3 is expected to be the largest quarter, contingent on customer confidence and market stability.

• New $70M credit facility provides enhanced liquidity and flexibility for working capital and growth.

• Management expects continued unpredictability in U.S. sales until tariff clarity emerges.

• Recent US tax code changes will be reflected in Q3 2025 results.