Executive Summary

Q3 2025 revenue was $1.736B (-6% YoY) and adjusted EPS $0.89; both missed S&P Global consensus ($1.84B revenue, $1.06 EPS)*. Management attributed the shortfall to US retailers shifting from direct import to domestic shipping, pushing orders into Q4 while maintaining demand; adjusted gross margin remained above 50% .
Orders from US retailers “accelerated significantly” since the start of Q4; POS grew in every region, and the company reiterated full-year 2025 guidance (net sales +1–3% cc; adj GM ~50%; AOI $700–$750M; adj EPS $1.54–$1.66; FCF ~$500M) .
Segment mix: Vehicles up 6% in constant currency (Hot Wheels +6% and on track for its eighth consecutive record year); Action Figures/Building Sets/Games +9% cc; Dolls -12%; Infant, Toddler & Preschool -26% cc .
Capital allocation and positioning: $202M repurchased in Q3 (YTD $412M) with $600M targeted for 2025; leverage ratio 2.5x; inventory built ahead of Q4 to support domestic shipping and tariffs .

What Went Well and What Went Wrong

What Went Well

Vehicles momentum and adult engagement: Hot Wheels +6% in Q3; adults are the fastest-growing audience with “over 100 million adults identifying themselves as toy vehicle owners” .
International resilience and share gains: Gross billings grew internationally (+5% cc), with EMEA +3% cc, Asia Pacific +11% cc; management cited share gains in Dolls, Vehicles, and Action Figures .
Strategic progress: New brand-centric organizational structure, expansion into digital games (self-published titles expected in 2026), and content slate advancements (Shani, M. Night Shyamalan’s Magic 8 Ball series); collaboration with OpenAI to embed AI capabilities .

Management quotes:

“We continue to operate with excellence and maintain a gross margin above 50%” .
“Since the beginning of the fourth quarter, orders from retailers in the U.S. have accelerated significantly and POS… continues to grow” .
“Our strategic collaboration with OpenAI is taking shape as we embed AI capabilities across the organization” .

What Went Wrong

US shipment dynamics: North America net sales -12%; billings -11% as retailer ordering shifted from direct import to domestic shipping, delaying revenue recognition into Q4 despite POS growth .
Margin compression: Reported gross margin fell 310 bps to 50.0% (adjusted 50.2%, -290 bps) due to unfavorable FX, inflation, tariff costs, and higher sales adjustments; cost savings only partially offset .
Category pressures: Dolls -12% cc (Barbie, Polly Pocket declines) and Infant/Toddler/Preschool -26% cc (Fisher-Price, Preschool Entertainment, Baby Gear & Power Wheels) .

Financial Results

Core P&L comparison

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Billions)	$1.844	$1.019	$1.736
GAAP EPS ($)	$1.09	$0.16	$0.88
Adjusted EPS ($)	$1.14	$0.19	$0.89
Gross Margin (%)	53.1%	50.9%	50.0%
Adjusted Gross Margin (%)	53.1%	51.2%	50.2%
Operating Income ($USD Millions)	$488.3	$78.5	$379.8
Adjusted Operating Income ($USD Millions)	$504.1	$88.1	$387.3
Net Income ($USD Millions)	$372.4	$53.4	$278.4

Notes: Adjusted figures exclude severance/restructuring and inclined sleeper recall impacts per company reconciliation .

Segment breakdown (Gross Billings)

Category ($USD Millions)	Q3 2024	Q3 2025	YoY Change (CC)
Dolls	$757.1	$674.1	-12%
Infant, Toddler & Preschool	$349.8	$262.5	-26%
Vehicles	$580.0	$626.2	+6%
Action Figures, Building Sets, Games & Other	$364.3	$404.0	+9%
Total Gross Billings	$2,051.1	$1,966.8	-5%

Q3 Actual vs S&P Global Consensus

Metric	Q3 2025 Actual	Q3 2025 Consensus	Surprise
Revenue ($USD)	$1,735,972,000	$1,836,952,290*	Miss ~$100.98M*
Adjusted EPS ($)	$0.89	$1.05868*	Miss ~$0.17*

Values marked with * were retrieved from S&P Global; consensus includes 9 revenue and 11 EPS estimates.*

KPIs and Balance Sheet

KPI	Q2 2025	Q3 2025
Adjusted EBITDA ($USD Millions)	$169.9	$466.1
Free Cash Flow (TTM, $USD Millions)	$529.5	$488.3
Cash & Equivalents ($USD Millions)	$870.5	$691.9
Inventory ($USD Millions)	$867.9	$826.6
Net Debt ($USD Millions)	$1,466.1	$1,645.7
Leverage Ratio (Total Debt/Adj EBITDA)	2.2x	2.5x
Share Repurchases ($USD Millions)	$50	$202; YTD $412

Guidance Changes

Metric	Period	Previous Guidance (Q2 2025)	Current Guidance (Q3 2025)	Change
Net Sales (cc)	FY2025	+2% to +3%	+1% to +3%	Lowered low end
Adjusted Gross Margin	FY2025	~50%	~50%	Maintained
Adjusted Operating Income ($M)	FY2025	$700–$750	$700–$750	Maintained
Adjusted Tax Rate	FY2025	23%–24%	23%–24%	Maintained
Adjusted EPS ($)	FY2025	$1.66–$1.72	$1.54–$1.66	Lowered
Free Cash Flow ($M)	FY2025	~$600	~$500	Lowered
Share Repurchases ($M)	FY2025	$600	$600	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Supply chain & tariffs	Detailed plan to diversify supply (& dual-source), reduce China reliance; mitigating actions aimed to fully offset incremental tariff cost in 2025	Tariff exposure < $100M before mitigation; pricing actions taken; shift from direct import to domestic shipping delaying billings	Margin headwinds from FX/inflation/tariffs; tariff costs still flowing through inventory; impact more visible in Q4	Improving visibility; mitigation ongoing
POS & retailer orders	POS up low single digits; Q2-to-date up double digits (Easter timing)	POS up in all regions; retailers adjusting DI mix; guidance reinstated	POS increased in all regions; US orders accelerated significantly since start of Q4	Positive momentum into holiday
Vehicles/Hot Wheels	Strong growth; F1 presale; adult collectors	Vehicles +10% (Hot Wheels +9%); leadership in category	Vehicles +6% (cc); Hot Wheels +6% and tracking an eighth consecutive record year	Sustained strength
Dolls/Barbie	Barbie comparable YoY; adult collector focus	Dolls -19%; fewer new Barbie launches, lower promo	Dolls -12%; expect improving Barbie trends in Q4 and into next year	Stabilizing with innovation
Entertainment slate	Masters of the Universe; Matchbox; Barbie animated film; broader slate	Continued progress across film/TV/digital games	New live-action TV series (Shani; Magic 8 Ball); K-pop Demon Hunters global licensing with Netflix	Expanding IP monetization
AI/Technology	Strategic collaboration with OpenAI initiated	OpenAI collaboration referenced	Embedding AI capabilities across org	Execution phase
Organization & marketing	—	—	Brand-centric org with integrated marketing to accelerate brand management	Structural enhancement
International demand	Growth across regions; resilient	International gross billings +9% (EMEA, LATAM, APAC)	EMEA 4th consecutive quarter growth; APAC growth; LATAM mixed	Consistent growth

Management Commentary

“Looking into the balance of the year, we expect a good holiday season for Mattel, strong top line growth in the fourth quarter and are reiterating our full year guidance” — Ynon Kreiz, CEO .
“Adjusted gross margin for the quarter was 50.2%. The impacts in the quarter were foreign exchange, inflation, and tariffs…and higher sales adjustments; partially offset by cost savings” — Paul Ruh, CFO .
“Retailers are restocking to meet the expected consumer demand ahead of the holiday season” — Paul Ruh, CFO .
“We continue to gain share in dolls, vehicles and action figures” — Ynon Kreiz, CEO .

Q&A Highlights

Orders & visibility: US retailer orders have “accelerated significantly”; POS is a leading indicator and continues to grow, underpinning Q4 outlook .
Margin drivers & tariffs: Gross margin pressure from FX/inflation/tariffs and higher sales adjustments; tariff costs still flowing through inventory with fuller impact in Q4; pricing actions in place and no additional 2025 price hikes planned .
Barbie trajectory: Management expects improving trends in Q4 and into next year driven by innovation, packaging, segmentation, adult demand, and content roadmap .
Inventory positioning: Owned inventory $827M (+$89M YoY) to support domestic shipping shift; retail inventories modestly lower; combined levels “appropriate” for holiday .
Top-line cadence skepticism addressed: POS strong in Q3 and accelerating in Q4; orders following; close planning with retailers cited .

Estimates Context

Q3 2025 results missed S&P Global consensus: Revenue $1,735.97M vs $1,836.95M*; Adjusted EPS $0.89 vs $1.05868*; 9 revenue and 11 EPS estimates contributed.*
Potential estimate adjustments: Given shipment timing into Q4 and margin headwinds (FX/inflation/tariffs/sales adjustments), consensus models may need to reflect heavier Q4 revenue mix with lower Q3 margins but reiterated FY guidance suggests maintaining FY ranges while adjusting quarterly phasing .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

The quarter’s miss was driven by US ordering pattern shifts, not demand; POS growth and accelerated US orders since Q4 start are constructive for holiday and Q4 top-line setup .
Margin compression reflects FX/inflation/tariffs and sales adjustments; cost savings and pricing actions are in place with no further 2025 price hikes, but expect tariff impacts to be more visible in Q4 via inventory flow-through .
Vehicles (Hot Wheels) and Action Figures provide durable growth; Dolls headwinds easing with Barbie innovation and adult collector expansion into Q4/2026 .
International remains a ballast (EMEA/APAC growth); US shipment timing should normalize as domestic shipping mechanisms mature .
FY guidance reiterated despite Q3 miss; watch Q4 execution, POS trajectory, and retailer reorder cadence as near-term stock catalysts .
Balance sheet flexibility intact (2.5x leverage; TTM FCF $488M) and capital return continues ($202M Q3 buyback; $600M FY target), supporting downside protection .
Strategic optionality expanding via brand-centric organization, AI collaboration, and entertainment licensing (e.g., K-pop Demon Hunters), aiding medium-term IP monetization .

MATTEL INC /DE/ (MAT)·Q3 2025 Earnings Summary