- Spin Master (TSX:TOY) reported 8.9 per cent revenue growth to US$436.4 million and returned to profitability with net income of US$29.7 million, compared with a loss a year earlier
- Growth was led by the toys segment, boosted by strong Paw Patrol product shipments and improved margins, while Entertainment and digital games saw modest revenue declines
- Operating cash flow rose to US$57.8 million and free cash flow turned positive at US$19.2 million, as the company continued share buybacks and reaffirmed its 2026 outlook
- Spin Master stock (TSX:TOY) opened trading at C$20.91
Spin Master (TSX:TOY) the global children’s entertainment company behind brands such as Paw Patrol, reported improved second-quarter 2026 financial results, highlighted by higher revenue, a return to profitability, and stronger cash generation driven primarily by growth in its toys segment.
Following news that its Swedish digital games studio and MINISO are launching the Toca Boca collection next week in more than MINISO stores across the U.S., TOY stock hit a 52-week high of C$25.26, climbing out of a hole from a few months ago, when the stock was at a 52-week low of C$17.14.
Revenue for the quarter ended June 30, 2026, increased 8.9 per cent to US$436.4 million, compared with the same period in 2025. On a constant-currency basis, revenue rose 8.3 per cent to US$434.1 million.
The company reported operating income of US$45.7 million, compared with an operating loss of US$52.4 million a year earlier. Adjusted operating income totaled US$19.2 million, reversing an adjusted operating loss of US$0.9 million in the prior-year period.
Net income reached US$29.7 million, or$0.29 per diluted share, compared with a net loss of US$46.5 million, or $0.46 per diluted share, in the second quarter of 2025. Adjusted net income was US$8.6 million, or $0.08 per diluted share, compared with an adjusted net loss of US$7.4 million, or US$0.07 per diluted share, a year earlier.
Adjusted EBITDA increased by US$22.9 million to US$51.6 million, while adjusted EBITDA margin expanded to 11.8 per cent from 7.2 per cent.
Toys lead growth
The company’s largest business segment, Toys, generated revenue of US$361.1 million, up US$38.8 million from the prior year. Constant-currency toy revenue increased 11.4 per cent.
Toy gross product sales rose 11.5 per cent to US$413.7 million, reflecting shipments ahead of the planned theatrical release of Paw Patrol: The Dino Movie. Results also benefited from easier comparisons, as the prior-year period was affected by slower retailer orders in the United States related to global tariff policies.
Sales allowances increased to US$53.0 million, though they declined as a percentage of gross product sales to 12.8 per cent from 13.2 per cent, aided by changes in customer and geographic mix.
The Toys segment reported operating income of US$34.3 million, compared with an operating loss of US$39.7 million in the year-ago quarter. The improvement was supported by a US$37.9 million tariff refund, higher revenue, and lower marketing expenses, partially offset by increased selling costs.
Adjusted EBITDA for the segment increased to US$24.0 million from a loss of US$0.7 million a year earlier, while adjusted EBITDA margin improved to 6.6 per cent from negative 0.2 per cent.
Entertainment and digital games mixed
Entertainment revenue declined 2.8 per cent to US$31.2 million, primarily due to lower ongoing distribution revenue from Paw Patrol: The Mighty Movie.
Entertainment operating income remained relatively stable at US$15.5 million, while operating margin improved slightly to 49.7 per cent from 48.9 per cent. Adjusted operating income decreased to US$15.8 million from US$17.7 million, reflecting lower distribution revenue and the impact of delivering Vida the Vet during the quarter.
Digital games revenue fell 4.8 per cent to US$44.1 million, as lower in-game purchases in Toca Boca World were only partly offset by revenue from strategic distribution partnerships.
Despite the revenue decline, digital games operating income improved significantly to US$6.2 million, compared with an operating loss of US$15.5 million in the prior year. The improvement was largely attributable to the absence of a prior-year impairment charge on digital game and app development assets, as well as lower administrative expenses.
Adjusted operating income for the segment was relatively unchanged at US$7.6 million, with adjusted operating margin increasing to 17.2 per cent from 16.6 per cent.
Cash flow strengthens
Cash provided by operating activities increased to US$57.8 million, compared with US$26.1 million in the second quarter of 2025, supported by improved earnings performance.
Free cash flow was US$19.2 million, compared with negative US$15.2 million a year earlier.
Cash used in investing activities totaled US$38.6 million, down from US$43.1 million, primarily reflecting lower spending on entertainment content development and leasehold improvements.
Meanwhile, cash used in financing activities increased to US$81.0 million from US$4.2 million, largely due to a US$75 million repayment under the company’s credit facility, lease payments, and share repurchases.
Shareholder returns and outlook
During the quarter, Spin Master repurchased and cancelled 697,358 subordinate voting shares for US$9.3 million under its normal course issuer bid. Following quarter-end, the company repurchased an additional 95,681 shares for approximately US$1.5 million.
The company also declared a quarterly dividend of $0.12 per share, payable on October 9, 2026.
Looking ahead, Spin Master reaffirmed its full-year 2026 outlook, expecting:
- Revenue growth ranging from stable to low single digits versus 2025.
- Adjusted EBITDA growth in the mid- to high-single-digit percentage range.
The outlook reflects management’s expectation that continued strength in the toys business, supported by upcoming entertainment releases and brand momentum, will help offset softer trends in certain digital gaming and entertainment revenue streams.
Leadership insights
“We recorded a strong second quarter, powering our return to profitable growth,” Spin Master’s CEO, Christina Miller, said in a news release. “Our results were driven by solid sales of core brands, including Paw Patrol and Monster Jam, along with compelling new products. Entering the back half of the year, we remain sharply focused on investing in innovation across our creative centers, accelerating growth by expanding into collectibles and strategic trading cards, and unlocking the full value of our brands by bringing them to global audiences in stores, on screen, and online.”
“We generated significant free cash flow in the first half of the year illustrating the cash generating power of our business,” CFO Jonathan Roiter added. “This has enabled us to continue returning significant capital to shareholders while paying down debt. Since the acquisition of Melissa & Doug, we have reduced our gross debt by more than US$350 million while returning almost US$200 million in capital to shareholders.”
From “Paw Patrol” to Rubik’s Cubes, they know kids
Spin Master Corp. is a children’s entertainment company creating play experiences through its three create centres: toys, entertainment and digital games. Its top brands include Paw Patrol (which has generated an estimated US$8 billion in retail sales since 2014), Bakugan and Melissa & Doug, which introduced Blockables, a new collection of wooden snap-and-play building blocks on Tuesday.
Spin Master stock (TSX:TOY) opened trading 0.38 per cent higher at C$20.91 and has risen more than 6 per cent since the year started.
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