This article first appeared on GuruFocus .
Release Date: April 30, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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International business grew by 38% compared to the prior year, indicating strong global demand.
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Gross margin remained robust at 33.4%, reflecting strong product margins from new product introductions.
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The Super Mario Galaxy movie release has generated significant excitement and promotional opportunities.
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The company is launching a large-scale anime, manga, and digital creator platform, positioning itself in a fast-growing entertainment segment.
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Cash reserves increased to $64 million, providing financial flexibility for future investments and initiatives.
Negative Points
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Net sales declined by 6% compared to the previous year, with a notable 16% drop in North American sales.
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The company reported an adjusted EBITDA loss of $371,000 for the quarter, compared to a gain in the previous year.
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Higher U.S. tariffs impacted costs, with $1 to $2 million paid in tariffs during the quarter.
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SG&A expenses decreased by only 4%, not enough to offset the drop in margin dollars.
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The company faces ongoing challenges from cautious U.S. retailers and higher oil prices affecting transportation costs.
Q & A Highlights
Q: Can you give high-level comments on what success could look like for the anime product line, including the relative gross margin and contribution margin for that product versus your other efforts? A: Stephen Berman, CEO: The anime initiative has been in development for over two years, working with major Japanese companies like Anaplex and Viz Media. The focus is on creating authentic products for a strong fan base, with a launch planned for 2027. The products will be available through various retail channels and venue sales. The price point and margins for these products will be slightly higher due to their focus on the kid-adult market.
Q: How should we think about the timing of new product rollouts, and are you holding anything back given the current market challenges? A: Stephen Berman, CEO: Despite market challenges, JAKKS Pacific is accustomed to navigating such environments. The Super Mario movie and other initiatives like Toy Story 5 and Paw Patrol are driving excitement. The company is also focusing on evergreen products like Disney collections. The lineup for 2027 and 2028 is strong, and while cautious due to factors like oil prices, the company is optimistic about the year ahead.
Q: How do you view the potential impact of AI on video content and licensing opportunities? A: Stephen Berman, CEO: AI could accelerate the production of digital animation, offering more opportunities for licensing. JAKKS Pacific is well-positioned to quickly bring products to market, leveraging its scale and expertise to work with large entertainment companies like Disney and Netflix.
Q: How should we think about the normalization of the U.S. market post-disruptions, and what is the strategy for international growth? A: Stephen Berman, CEO: Product quality and price points are crucial, especially in the $10 to $30 range. The company plans ahead with major retailers to enhance margins and market products directly to consumers. International growth is driven by expanding IP in specific territories, with a focus on EMEA, Latin America, and Asia Pacific.
Q: How do you plan to leverage rising cash reserves, and what are your capital allocation strategies? A: Stephen Berman, CEO: The company is investing more in marketing and new initiatives like anime, which require capital. Opportunities for acquisitions are being explored, with a focus on using cash for accretive purposes rather than just spending it. The board regularly reviews capital allocation strategies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
