Mattel, Inc.

Second quarter net sales increased 10% as reported and 9% in constant currency. Adjusted gross margin was 48.6%, down year over year, with the decline attributed to 170 basis points from gross incremental tariff costs, 120 basis points from inflation, 110 basis points from higher royalties and 60 basis points from unfavorable FX, partly offset by 120 basis points from Mattel163 and 80 basis points from tariff mitigation and Optimizing for Profitable Growth savings. Adjusted operating income was $39 million versus $96 million a year ago; adjusted EBITDA was $95 million versus $170 million; and adjusted EPS was $0.01 versus $0.21. Mattel163 contributed nearly $49 million of revenue and about $14 million of adjusted operating income in the quarter. Free cash flow on a trailing 12-month basis was $435 million versus $530 million. The company reiterated full-year 2026 guidance for constant-currency net sales growth of 3% to 6%, adjusted gross margin of approximately 50%, adjusted operating income of $580 million to $630 million, and adjusted EPS of $1.27 to $1.39. Management also said full-year 2026 gross billings are expected to show strong growth in Vehicles and Challenger categories combined, Dolls to be comparable, and ITPS to decline.

Ynon Kreiz framed the quarter as proof that Mattel’s IP-driven, brand-centric model is working across toys, digital and film. He highlighted stronger growth in owned and partner IP, gains in key categories, and expanding monetization from entertainment and games, including Masters of the Universe, UNO, Hot Wheels and Barbie. His tone was confident and forward-looking, emphasizing that 2026 is an investment year and that the expected payoff should begin in 2027.

Paul Ruh focused on the mechanics behind the quarter and the outlook. He detailed adjusted gross margin of 48.6%, the $45 million increase in advertising to $124 million, the $38 million increase in adjusted SG&A to $384 million, and the quarter’s $39 million adjusted operating income, while noting Mattel163’s nearly $49 million revenue contribution and $14 million adjusted operating income contribution. He also said free cash flow was $435 million trailing 12 months, cash was $524 million at quarter end, leverage was 3x, and the company repurchased $100 million of shares in the quarter and $300 million year to date, remaining on track for $400 million for the full year. He reiterated that tariff refunds are not included in guidance and that gross margin should improve in the second half.

Analysts focused heavily on whether the full-year guidance still implies a stronger second half, especially on gross margin, and whether tariffs, crude-related input costs and retailer ordering patterns could disrupt the back half. Management said the U.S. ordering mix has largely stabilized, fall resets are returning to the normal August timing, and the company expects sequential gross margin improvement in the second half without a repeat of last year’s heavy promotions. Questions also centered on the $40 million shift in digital performance marketing to 2027; Paul Ruh said the spend will be deployed with the UNO Wild launch and should not affect 2026 guidance. Additional questions covered Barbie, Action Figures, Little People, Thomas & Friends, Masters of the Universe, Hot Wheels, and tariff refunds; management’s answers emphasized content, product launches, partnerships, and the view that 2027 should be a major growth year.