Toy industry earnings are a roller coaster.
Spin Master Corp., the international company behind PAW Patrol and Rubik’s Cube says that third quarter revenue dropped 12.7% to $624 million versus $714.5 million during Q3 2021. The upside is that Spin Master, which reports in three segments dubbed “creative centers,” says that its core toy business grew 12.7% in the first nine months of the year as total revenue of $1.5 billion is a 9.3% spike over the same period last year.
“While our year-to-date growth has outpaced the toy industry globally, our revenue this quarter was affected by the pull forward of toy shipments into the second quarter, and by the challenging macroeconomic factors affecting consumers, comments Spin Master’s Global President and CEO Max Rangel. “Our team is excited to bring our magical experiences to children and their families this holiday season and we firmly believe that the power of our innovative toy portfolio, diversified entertainment pipeline, and suite of digital games will drive solid results.”
Entertainment revenue took an 18.4% hit from January to September due to hard comps running up against last year’s successful PAW Patrol: The Movie. With a sequel headed to theaters next year timed with the PAW Patrol brand’s 10th anniversary, those numbers should see an upswing in 2023.
In Q3, toy sales dipped 9.1% while entertainment and digital games took big hits of 30.1% and 35.7%, respectively. As such, Spin Master has issued updated guidance for the full year.
“Despite this revenue decline, gross margin across our creative centers was up. We will continue to balance investments designed to deliver on our long-term strategy while also effectively managing our costs,” says Spin Master’s Chief Financial Officer Mark Segal. “Despite our lowered expectations for the year, we remain confident in our ability to execute with high levels of operational discipline and navigate retailer and consumer dynamics to deliver profitable growth for 2022. Our balance sheet and liquidity position remain very strong and we are pleased to announce a quarterly dividend, following our inaugural dividend last quarter.”
In Q3, Spin Master acquired certain assets from SolidRoots for its gaming portfolio (reported under the toys segment) and acquired Nørdlight Games AB, a digital game studio based in Sweden that is reported in the digital games segment.
