Spin Master (TOY) Q4 2025 earnings summary

Executive summary

• 2025 was challenging for U.S. toy sales due to tariffs and economic uncertainty, with FY 2025 revenue at $2,112.9M, down 6.6% year-over-year, and a net loss of $148.5M; strategic adjustments and investments in digital games and entertainment have positioned the company for a return to profitable growth in 2026.

• Digital games saw over 20% growth in revenues and adjusted operating income, driven by investments in core platforms and expanded brand reach; Q4 2025 digital games revenue grew 15.8% to $53.4M.

• Entertainment focused on expanding PAW Patrol, with new content and a third movie set for 2026; entertainment revenue rose 2.9% in Q4 2025, but operating income declined due to higher amortization and lower PAW Patrol revenue.

• Supply chain diversification and IT investments were prioritized to address tariffs and enable scalable operations.

• Over $80 million was returned to shareholders via dividends and share buybacks in 2025.

Financial highlights

• Toy gross product sales declined 8% in 2025, mainly due to a 12% reduction in retailer inventory levels; FY 2025 toy gross product sales were $2,054.8M, down 7.9%.

• Operating cash flow reached $308 million despite U.S. headwinds; inventory was reduced by 20% year-over-year.

• CapEx was $185 million in 2025, including $24 million for IT upgrades and $33 million for a new L.A. office and showroom.

• Free cash flow for FY 2025 was $123.6M, down from $215.5M in FY 2024; Q4 free cash flow was $128.0M.

• Net debt (excluding leases) was flat year-over-year; net leverage including leases was one turn; year-end cash and cash equivalents stood at $104.6M.

Outlook and guidance

• 2026 revenue is guided to be stable to low single-digit growth, with adjusted EBITDA expected to grow mid to high single digits.

• Entertainment growth will be driven by the PAW Patrol movie, while digital games expect modest growth after a strong 2025.

• Toy revenue is expected to be split 30/70 between H1 and H2, with Q1 facing a significant year-over-year decline due to prior year order shifts.

• Gross margin in Q1 2026 will decline year-over-year due to increased entertainment amortization; full-year depreciation and amortization expected at $160 million.

• CapEx for 2026 is projected at $150 million, with $25 million for enterprise software upgrades and the majority of entertainment spend on PAW Patrol.