Earnings call transcript: Mattel Q1 2026 beats forecasts, stock rises

Mattel Inc. reported its first-quarter 2026 earnings with a mixed performance, surpassing expectations on both revenue and earnings per share (EPS). The company posted an EPS of -$0.20, slightly better than the forecast of -$0.21, and revenue of $862 million, exceeding the anticipated $809.19 million. This positive surprise led to a 1.96% increase in the stock price to $15.08 in after-hours trading. The stock continued to rise in aftermarket sessions, trading at $15.16, up 0.53%.

Mattel’s Q1 2026 results reflect a mixed bag, with top-line growth overshadowed by margin pressures. The company achieved a 4% increase in net sales, driven by strong brand performances and strategic initiatives. However, the gross margin fell by 460 basis points, largely due to tariffs, foreign exchange impacts, and inflation, which eroded profitability.

Mattel’s EPS of -$0.20 beat the forecast of -$0.21, marking a 4.76% positive surprise. Revenue was $862 million, surpassing the expected $809.19 million by 6.53%. This beat is significant as it indicates resilience despite negative earnings.

Following the earnings release, Mattel’s stock price increased by 1.96% to $15.08 in after-hours trading. This positive movement reflects investor confidence in the company’s ability to exceed expectations despite challenges. The stock’s aftermarket price rose further to $15.16.

The current price represents a significant discount according to InvestingPro analysis, which indicates the stock is undervalued relative to its Fair Value. Trading just 6% above its 52-week low of $14.10, Mattel carries a market capitalization of $4.34 billion with a P/E ratio of 9.42. The company maintains a "GOOD" financial health score of 2.77 out of 5, suggesting solid fundamentals despite recent headwinds. For investors seeking value opportunities, Mattel appears on InvestingPro’s most undervalued stocks list, alongside comprehensive analysis available through the platform’s detailed Pro Research Report.

Mattel’s future guidance remains cautious, with a focus on strategic investments in digital gaming and brand expansion. The company aims for continued revenue growth driven by new product launches and digital initiatives. EPS forecasts for upcoming quarters show mixed expectations, with some quarters projected to remain negative.

Wall Street analysts maintain a consensus "Buy" rating on the stock, with price targets ranging from $13 to $28. An InvestingPro tip reveals that 9 analysts have revised their earnings downwards for the upcoming period, reflecting concerns about margin pressures. Those seeking deeper insights can access one of over 1,400 comprehensive Pro Research Reports available exclusively on InvestingPro, transforming complex Wall Street data into clear, actionable intelligence.

CEO Ynon Kreiz stated, "Our strong revenue performance and strategic initiatives are positioning us well for future growth. While margin pressures remain, we are committed to optimizing our operations and expanding our digital footprint."

During the earnings call, analysts focused on the company’s margin challenges and strategic investments. Questions were raised about the impact of tariffs and the company’s plans to enhance profitability amidst rising costs. Executives highlighted ongoing efforts to mitigate these issues through strategic initiatives and cost-saving measures.

Jennifer Tan, Investor Relations, Mattel, Inc.: Thank you operator, good afternoon, everyone. Joining me today are Ynon Kreiz, Mattel’s Chairman and Chief Executive Officer, and Paul Ruh, Mattel’s Chief Financial Officer. This afternoon, we reported Mattel’s Q1 of 2026 financial results. We will begin today’s call with Ynon and Paul providing commentary on our results, after which we will provide some time for questions. Please note that during the question and answer session, we respectfully ask that you limit to one question and one follow-up so that we can get to as many analysts and questions as possible today.

Today’s discussion, earnings release, and slide presentation may reference certain non-GAAP financial measures and key performance indicators, which are defined in the slide presentation and earnings release appendices. Please note that gross billings figures referenced on this call will be stated in constant currency unless stated otherwise.

Our earnings release, slide presentation, and supplemental non-GAAP information can be accessed through the Investors section of our corporate website, corporate.mattel.com, and the information required by Regulation G regarding non-GAAP financial measures, as well as information regarding our key performance indicators, is included in those documents. The preliminary financial results included in the earnings release and slide presentation represent the most current information available to management.

The company’s actual results, when disclosed in its Form 10-Q, may differ as a result of the completion of the company’s financial closing procedures, final adjustments, completion of the review by the company’s independent registered public accounting firm, and other developments that may arise between now and the disclosure of the final results.

Before we begin, I’d like to remind you that certain statements made during the call may include forward-looking statements related to the future performance of our business, brands, categories, and product lines. Any statements we make about the future are, by their nature, uncertain. These statements are based on currently available information and assumptions, and they are subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected in the forward-looking statements.

We describe some of these uncertainties in the Risk Factors section of our latest Form 10-K annual report, our Form 10-Q quarterly reports, our most recent earnings release and slide presentation, and other filings we make with the SEC from time to time, as well as in other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so except as required by law.

Now I’d like to turn the call over to Ynon.

Arpine Kocharian, Analyst, UBS Investment3: Thanks, Jen. Good afternoon. Thank you for joining Mattel’s Q1 of 2026 earnings call. We are off to a good start to the year with growth in net sales and positive consumer demand for our products in the Q1. We continue to make progress on our strategy to grow our IP-driven Play and Family Entertainment business and are seeing top line acceleration in the Q2 to date. Key financial highlights for the quarter as compared to the prior year. Gross billings grew 2% in constant currency with increase in vehicles and challenging categories overall, partly offset by a decrease in dolls and infant, toddler, and preschool. Net sales grew 4% as reported and 1% in constant currency and adjusted earnings per share declined $0.18.

Per Circana, Mattel was number 1 globally in our leading categories, dolls, vehicles, and infant, toddler, and preschool, and gained share in vehicles and action figures. We also executed on our capital allocation priorities, including closing the acquisition of full ownership of Mattel163 mobile game studio and repurchasing $200 million of shares in the quarter while maintaining a strong balance sheet. The toy industry grew in the Q1, and we continue to expect it to grow in 2026 with the benefit of a toyetic theatrical slate and further expansion of adult consumers.

As it relates to current geopolitical events, including the war in the Middle East, there has been minimal impact on our business to date, but we continue to monitor the situation and hope for a swift resolution and peaceful days ahead. Turning back to our portfolio performance in the quarter.

Several standout brands grew double digits or higher across own brands, including Hot Wheels, UNO, and Monster High, partner brands such as Toy Story and WWE, relaunched franchises like Masters of the Universe, and innovative new product lines like Mattel Brick Shop. We’re making strong progress on our digital strategy, including the integration of Mattel163, as well as the upcoming launch of our first two self-published mobile games. Acquiring full control of Mattel163 meaningfully strengthens our digital games business and adds significant development, publishing, and digital customer acquisition expertise.

As it relates to self-published mobile games, our first game is based on Masters of the Universe and currently in soft launch ahead of the theatrical movie premiere on June fifth. The second game is in advanced development and targeted for release later this year. We plan to share more details soon.

We are also expanding our presence on creative platforms. UNO branded digital game experiences were launched on Roblox and Fortnite with strong reach and engagement, and our Barbie DreamHouse Tycoon Roblox game continues to rank in the top 10 among hundreds of branded games on the platform. Our digital game licensing business contributed to overall growth in the quarter and benefited from partnerships including Pictionary with Netflix and Scrabble with Scopely. The upcoming Masters of the Universe movie will be released with wide distribution in thousands of theaters globally.

A robust multi-platform marketing campaign spanning digital, out-of-home, and strategic brand partnerships is underway, led by Amazon MGM and Mattel. A full cross-category product line across toys, adult collectibles, apparel, publishing, and more began rolling out this past weekend.

We are very excited to bring this classic mythology to life on the big screen and reimagine the franchise for original fans and a whole new generation. We are also gearing up for the Matchbox movie in October and have a robust slate of films in development, including Hot Wheels, Polly Pocket, Barney, and Rock ’Em Sock ’Em Robots, among others. As w