Spin Master (TOY) Q3 2025 earnings summary

Executive summary

• Q3 2025 revenue was $734.7M, down 17% year-over-year, mainly due to lower Toy sales amid macroeconomic and tariff impacts, but market share grew in key categories and Digital Games delivered strong growth.

• Net income for Q3 was $106.8M, with adjusted net income at $115.2M; adjusted EBITDA was $195.5M (margin 26.6%).

• Entertainment delivered new PAW Patrol specials and greenlit its first original IP film, while Digital Games saw growth in Toca Boca and Picnic from improved monetization and partnerships.

• Strategy focuses on monetizing core brands, developing new IP, expanding into adjacent categories, and maintaining innovation and executional discipline.

• The company repurchased 482,362 shares for $7.9M and declared a quarterly dividend of C$0.12 per share.

Financial highlights

• Toy gross product sales declined 19.5%–20% in Q3, with entertainment revenue down 11.6% and digital games revenue up 36.6%.

• Revenue fell 17% year-over-year, mainly from toy declines, partially offset by strong digital games growth and $10M in partnership revenue.

• Adjusted EBITDA was $195.5M, margin 26.6%, down from 31.3% year-over-year.

• Free cash flow was $21.6M in Q3, down from $44.7M; operating cash flow was strong, aided by improved working capital.

• Gross margin improved to 56.0% in Q3, up 300bps year-over-year.

Outlook and guidance

• No formal guidance reinstated due to tariff uncertainty, but Q4 is expected to show year-over-year improvement versus Q3.

• Management expects continued macroeconomic and tariff-related headwinds, but is optimistic about the holiday season and new content launches.

• Adjusted SG&A anticipated to be $60M less than original plan; CapEx expected to be $40M below budget.

• Tariff mitigation strategies include shifting production, pricing adjustments, and supply chain optimization.

• Retailer inventories are lean, setting up a healthier industry environment for 2026.