JAKKS Pacific (JAKK) investor relations material

Executive summary

• Q3 2025 net sales were $211.2 million, down 34% year-over-year, driven by lower direct-import sales, high tariffs, and fewer new theatrical releases, with Toys/Consumer Products down 41% and Costumes down 4%.

• Q3 adjusted net income attributable to common stockholders was $20.6 million ($1.80 per diluted share), down from $54.0 million ($4.79 per diluted share) in Q3 2024.

• Gross margin for Q3 was 32.0%, down from 33.8% last year, impacted by tariffs and higher royalty expenses.

• Management prioritized margin preservation, lean inventory, and international expansion, with a focus on operational efficiency and product innovation.

• Key product lines like Sonic and Disney's Moana 2 performed well, but lack of major new film tie-ins and delayed launches impacted results.

Financial highlights

• Q3 adjusted EBITDA was $36.5 million, down from $74.4 million in the prior year; trailing 12-month EBITDA is $29 million.

• Q3 gross profit was $67.6 million, down $41.2 million year-over-year.

• Q3 operating income was $29.4 million, compared to $68.1 million in Q3 2024.

• Ended Q3 with $27.8 million in cash, up from $22.3 million last year but down from $70.1 million at year-end 2024.

• Working capital at September 30, 2025, was $133.8 million, up from $119.3 million at year-end 2024.

Outlook and guidance

• Management expects uncertainty to persist through year-end, with a wide range of possible outcomes for the holiday season.

• Focus on operational efficiency, cash generation, and a robust product pipeline extending into 2026 and beyond, including new IP and licensing extensions.

• Anticipates normalization in 2026 as retailers and consumers adjust to new tariff levels and pricing.

• Excitement for upcoming Super Mario Brothers movie tie-in and further collaborations like Sonic x DC.

• The new $70 million revolving credit facility is expected to provide enhanced liquidity and flexibility.