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MI

MATTEL INC /DE/ (MAT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was mixed: revenue declined 6% YoY to $1.02B with North America -16% offset by International +7%, but gross margin expanded 170 bps to 50.9% and adjusted EPS held flat YoY at $0.19 despite trade/timing headwinds .
  • Against heightened tariff uncertainty and retailer order timing (shift from direct import to domestic), management reinstated 2025 guidance but lowered the ranges: net sales +1–3% CC (from +2–3%), adjusted OI $700–$750M (from $740–$765M), adjusted EPS $1.54–$1.66 (from $1.66–$1.72), and FCF ~$500M (from ~$600M) .
  • S&P Global consensus for Q2: EPS $0.157 vs actual $0.19 (beat), revenue $1.05B vs $1.02B (miss), EBITDA $158M vs $142M (miss)*; management emphasized gross margin expansion, share buybacks ($50M in Q2; $210M YTD), and International strength as offsets to U.S. trade headwinds .
  • Key stock narrative catalysts: guidance reset tied to tariffs and ordering patterns, confirmation of < $100M 2025 tariff exposure before mitigation, continued gross margin strength, resilient brands (Hot Wheels +9% brand billings; Vehicles +10%), and entertainment/AI initiatives that can sustain multi-year IP monetization .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded 170 bps YoY to 50.9% (adjusted +200 bps to 51.2%) driven by OPG savings, lower inventory costs, and favorable mix; management called it “operational excellence” .
    • International momentum: Net sales +7% with EMEA +11%, Asia Pacific +16%; Vehicles +10% and Challenger categories (Action Figures/Games/Other) +16% led growth .
    • Shareholder returns and balance sheet: $50M buyback in Q2 ($210M YTD) and leverage at 2.2x on TTM adjusted EBITDA .

  • What Went Wrong

    • North America softness: Net sales -16% YoY on trade uncertainty and shift from direct import to domestic shipping; Dolls -19% (Barbie -25%), Infant/Toddler/Preschool -25% .
    • Guidance trimmed across revenue, EPS, OI, and FCF due to macro/tariff uncertainty and need for incremental promo/sales adjustments in 2H to drive top line .
    • EBITDA leverage: Q2 EBITDA $141.5M and adjusted EBITDA $169.9M were roughly flat/lower YoY, below consensus; management cited tariff timing flowing through Q3–Q4 .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,079.7 $826.6 $1,018.6
Gross Margin % (GAAP)49.2% 49.4% 50.9%
Adjusted Gross Margin %49.2% 49.6% 51.2%
Operating Income ($M)$83.2 $(53.0) $78.5
Adjusted Operating Income ($M)$96.2 $(15.8) $88.1
Diluted EPS (GAAP)$0.17 $(0.12) $0.16
Adjusted EPS$0.19 $(0.03) $0.19
EBITDA ($M)$138.0 $0.1 $141.5
Adjusted EBITDA ($M)$170.8 $57.2 $169.9
  • Estimates vs. Actual (Q2 2025)
    • EPS: Consensus $0.1569* vs Actual $0.19
    • Revenue: Consensus $1,052.6M* vs Actual $1,018.6M
    • EBITDA: Consensus $158.3M* vs Actual $141.5M
    • Notes: Asterisks denote S&P Global consensus; values retrieved from S&P Global.
Segment/CategoryQ2 2024Q2 2025
North America Net Sales ($M)$606.5 $510.8
International Net Sales ($M)$473.2 $507.8
Dolls Gross Billings ($M)$414.0 $335.2
Infant, Toddler & Preschool ($M)$190.3 $143.4
Vehicles ($M)$369.7 $407.5
AF/Building Sets/Games/Other ($M)$227.3 $264.5
Top Brands (Gross Billings)Q2 2024Q2 2025
Barbie ($M)$266.1 $200.7
Hot Wheels ($M)$327.4 $357.3
Fisher-Price ($M)$135.9 $107.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (CC)FY 2025+2% to +3% +1% to +3% Lowered low end
Adjusted Gross MarginFY 2025Comparable to 2024 (50.9%) Approx. 50% Slightly softer language
Adjusted Operating IncomeFY 2025$740–$765M $700–$750M Lowered
Adjusted Tax RateFY 202523%–24% 23%–24% Maintained
Adjusted EPSFY 2025$1.66–$1.72 $1.54–$1.66 Lowered
Free Cash FlowFY 2025~ $600M ~ $500M Lowered
Share RepurchasesFY 2025Target $600M Reaffirm $600M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
AI/TechnologyScaling digital games; entertainment pipeline Strategic collaboration with OpenAI to enable AI-powered play; more to come later 2025 Expanding
Supply Chain/Tariffs2025 guide included tariffs + mitigation (supply chain, pricing) Tariff exposure now “< $100M” before mitigation; pricing actions implemented; major timing shift DI→domestic in U.S. Clarified/lower exposure
Retailer Ordering & POSRetail inventory slightly elevated into 2025 ; POS up LSD YTD POS up across all regions; shipments lag due to timing shifts POS improving; shipment timing
Category PerformanceHot Wheels strength; games momentum Vehicles +10%; AF/Games/Other +16%; Dolls -19% (Barbie -25%); ITP -25% Mixed: strength in Vehicles/Action Figures
Regional PerformanceQ4’24 NA +1%, APAC +10% NA -16% vs International +7% (EMEA +11%, APAC +16%) International outperformance
Entertainment SlateMasters/Matchbox films; Netflix series Formation of Mattel Studios; continued film/TV momentum (Jurassic, Minecraft tie-ins) Building pipeline
Digital GamesSelf-publishing targeted for 2026 On track; broader expansion with partners incl. Netflix Steady progress

Management Commentary

  • CEO Ynon Kreiz: “We achieved meaningful gross margin expansion, grew internationally, and further progressed our entertainment slate… collaborating with world-class partners to bring our iconic brands to life in new ways” .
  • CFO Paul Ruh: “Adjusted EPS was the same as last year, despite global trade dynamics and timing shifts in retailer ordering patterns impacting our U.S. business… We are confident in the power of our brand portfolio” .
  • On tariffs and pricing: “We have already implemented pricing actions… At this stage… we do not expect any additional price increases this year” .
  • On magnitude/timing of tariff impact: “Tariff exposure this year… before any mitigating actions is less than $100 million… majority of impact flows through inventory into our P&L starting in Q3” .
  • On category trends: Vehicles continued “exceptional trajectory with double digit growth driven by outstanding performance from Hot Wheels,” while Dolls declined on fewer new Barbie launches and lower promo vs prior year .

Q&A Highlights

  • Guidance bridge: Lowered top-line range with 2H uncertainty and potential incremental promo/sales adjustments; OPG savings and supply-chain efficiencies partially offset tariffs .
  • Pricing: Necessary U.S. price actions taken; no further increases planned in 2025; 40–50% of U.S. products remain priced below $20 to preserve value .
  • Tariffs: Exposure revised to < $100M before mitigation vs Q1 scenario planning that referenced ~$270M incremental exposure; mitigation includes supply-chain diversification, sourcing mix, and pricing .
  • Ordering patterns: Shift from direct import to domestic pushed revenue recognition later; majority expected to catch up in balance of year .
  • Inventory & POS: Retail inventories “appropriate” with minimal shelf disruption expected; POS up while sell-in lagged due to timing .

Estimates Context

  • Q2 results vs S&P Global consensus: EPS beat ($0.19 vs $0.157*), revenue miss ($1.02B vs $1.05B*), EBITDA miss ($141.5M vs $158.3M*) .
  • Forward look (consensus): Q3 2025 EPS $1.059* and revenue $1.837B*; Q4 2025 EPS $0.542* and revenue $1.848B*; Q1 2026 EPS -$0.084* and revenue $0.845B* (company did not update quarterly guidance) . Values retrieved from S&P Global.
MetricQ2 2025 Consensus*Q2 2025 Actual
Primary EPS0.1569*0.19
Revenue ($M)1,052.6*1,018.6
EBITDA ($M)158.3*141.5

Notes: Asterisks denote S&P Global consensus; values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix of revenue softness and margin strength: U.S. sell-in was pressured by tariff-driven ordering shifts, but International growth and cost discipline expanded margins and preserved adjusted EPS .
  • Guidance reset largely demand/tariff-driven: Lowered FY ranges reflect macro uncertainty and the tariff timing flowing through 2H; management expects mitigating actions (supply chain, mix, pricing) to offset most impacts .
  • Category bifurcation persists: Vehicles/Action Figures momentum (Hot Wheels +9% brand billings; Vehicles +10%) offsets weakness in Dolls (Barbie -25%) and ITP; watch Barbie innovation and Fisher-Price distribution in 2H .
  • Structural advantages: Diversified supply chain with flexibility to re-route production and dual-source, supporting competitive pricing and resilience in volatile trade environments .
  • Capital returns intact: $600M buyback target reaffirmed despite FCF guide reduction, signaling confidence in cash generation and balance sheet capacity .
  • Multi-year IP optionality: Entertainment pipeline (films/series), digital games self-publishing (2026 target), and OpenAI collaboration can broaden monetization beyond the toy aisle .
  • Near-term trading setup: Potential 2H catch-up in shipments from DI→domestic shift, but monitor U.S. consumer elasticity and promotional cadence; consensus revisions likely skew lower on revenue/EBITDA while EPS resilience hinges on margin discipline and buybacks* .

Citations:

  • Q2 2025 press release:
  • Q2 2025 8-K and furnished press release:
  • Q2 2025 earnings call transcript:
  • Q1 2025 press release and call:
  • Q4 2024 press release and call:
  • Other Q2 2025 relevant press releases: OpenAI collaboration , Q2 results call notice , CFO appointment

Notes:

  • Asterisks indicate values retrieved from S&P Global (consensus estimates).