MATTEL INC /DE/ (MAT): Results of Operations and Financial Condition
MATTEL INC /DE/ (MAT) filed an SEC Form 8-K — Results of Operations and Financial Condition. EX-99.1 2 matq22026earningsrelease.htm EX-99.1 Document NEWS RELEASE Exhibit 99.1 MATTEL REPORTS SECOND QUARTER 2026 FINANCIAL RESULTS Second Quarter 2026 Highlights Versus Prior Year • Net Sales of $1,125 million, up 10% as reported, and 9% in constant currency • Gross Margin of
How this was made
The 30-second read
Why it matters
Traders can update expectations for 2H profitability given the disclosed margin drivers and the reaffirmed FY2026 targets, while also tracking capital return via the reiterated $400 million repurchase plan.
Market read
Q2 shows strong top-line growth but significant profitability deterioration, with management reaffirming guidance and continuing buybacks, setting up a debate between sales momentum and margin headwinds.
What to watch
Gross margin decline is attributed to specific drivers (tariffs, inflation, royalties, FX) and partially offset by Mattel163 contribution and cost savings, so the market may be over-weighting the headline margin drop versus the stated mitigation path.
MATTEL REPORTS SECOND QUARTER 2026 FINANCIAL RESULTS
Net Sales increased 10% as reported, but gross margin declined and Mattel reported a Net Loss of $18 million compared to Net Income of $53 million.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net SalesGAAP | $1,125 million | – | up 10% as reported |
| Net Sales constant currency growthother | 9% | – | – |
| Reported Gross MarginGAAP | 48.2% | – | a decrease of 270 basis points |
| Adjusted Gross Marginnon-GAAP | 48.6% | – | a decrease of 260 basis points |
| Reported Operating IncomeGAAP | $11 million | – | a decrease of $68 million |
| Adjusted Operating Incomenon-GAAP | $39 million | – | a decrease of $57 million |
| Net LossGAAP | $18 million | – | – |
| Reported Earnings Per ShareGAAP | a loss of $0.06 | – | – |
| Adjusted Earnings Per Sharenon-GAAP | $0.01 | – | – |
| Shares outstandingother | 285.7 million | – | – |
| Cash Flows Used for Operating Activities for the six months ended June 30, 2026GAAP | $202 million | – | – |
| Cash Flows Used for Investing Activities for the six months ended June 30, 2026GAAP | $195 million | – | – |
| Cash Flows Used for Financing Activities and Other for the six months ended June 30, 2026GAAP | $322 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Worldwide Gross Billings for Dollsprimarily due to a decline in Barbie | $318 million | – | down 5% as reported, or 7% in constant currency |
| Worldwide Gross Billings for Vehiclesprimarily driven by growth in Hot Wheels | $463 million | – | up 14% as reported, or 11% in constant currency |
| Worldwide Gross Billings for Infant, Toddler, and Preschoolprimarily due to a decline in Fisher-Price | $128 million | – | down 11% as reported, or 13% in constant currency |
| Worldwide Gross Billings for Action Figures, Building Sets, Games, and Otherprimarily driven by growth in Games (including the contribution of Digital Games, following the full acquisition of Mattel163) and Action Figures, driven by theatrical releases | $358 million | – | up 35% as reported, or 33% in constant currency |
FY2026 outlook
- Revenue+3% to 6% in Constant Currency
- Gross marginApprox. 50%
- Tax rateApprox. 24%
- NoteAdjusted Operating Income $580 - $630
- NoteAdjusted EPS $1.27 - $1.39
- Noteshare repurchase target of $400 million
- NoteGuidance does not include any potential impact of tariff refunds.
Capital returns
- repurchased another $100 million of shares in the quarter
- bringing the year-to-date total to $300 million of shares
- continue to expect repurchases of $400 million in total this year
What drove it
- Net Sales as reported increased due to a 12% increase in North America and a 9% increase in International.
- Net Sales in constant currency increased due to a 12% increase in North America and a 5% increase in International.
- Growth in Games included the contribution of Digital Games following the full acquisition of Mattel163.
- Action Figures growth was driven by theatrical releases.
- Cash Flows Used for Operating Activities improved primarily due to favorable working capital usage.
Concerns
- Reported Gross Margin decreased primarily due to the gross incremental cost of tariffs, inflation, higher royalties, and unfavorable foreign exchange.
- Reported and Adjusted Operating Income declined primarily due to higher Advertising and SG&A expenses and lower gross margin.
- Dolls billings declined primarily due to Barbie, and Infant, Toddler, and Preschool billings declined primarily due to Fisher-Price.
- Cash Flows Used for Investing Activities increased primarily due to cash paid in connection with the acquisition of Mattel163 net of cash acquired and higher capital expenditures.
- Guidance remains subject to market volatility, unexpected disruptions, and other macro-economic risks and uncertainties, including further developments in the Middle East and regulatory actions impacting global trade.
What to watch
- Growth has continued in the third quarter.
- The full year 2026 Net Sales guidance of +3% to 6% in Constant Currency.
- The full year 2026 Adjusted Gross Margin guidance of Approx. 50%.
- The Optimizing for Profitable Growth program is on track to achieve $225 million of savings by year-end.
- Mattel expects repurchases of $400 million in total this year.
- The launch progress of the second game in soft launch and the integration of Mattel163 mobile games studio.
Balance sheet and cash flow
- As of June 30, 2026, shares outstanding totaled 285.7 million.
- For the six months ended June 30, 2026, Cash Flows Used for Operating Activities were $202 million, as compared to a use of $275 million.
- Cash Flows Used for Investing Activities were $195 million, compared to a use of $55 million.
- Cash Flows Used for Financing Activities and Other were $322 million, as compared to a use of $188 million.
Analysis
Mattel delivered $1,125 million of Net Sales, up 10% as reported and 9% in constant currency versus the prior-year second quarter. The reported growth was driven by a 12% increase in North America and a 9% increase in International. Management also stated that consumer demand was positive year-to-date and that growth continued in the third quarter.
Category performance was uneven. Vehicles billings increased 14% as reported, primarily driven by Hot Wheels, while Action Figures, Building Sets, Games, and Other billings increased 35% as reported, led by Games and Action Figures. Dolls billings fell 5% as reported because of Barbie, while Infant, Toddler, and Preschool declined 11% as reported because of Fisher-Price.
Profitability weakened despite sales growth. Reported Gross Margin was 48.2%, versus 50.9%, and Adjusted Gross Margin was 48.6%, versus 51.2%. Mattel attributed the declines primarily to tariffs, inflation, higher royalties, and unfavorable foreign exchange, partly offset by Mattel163, tariff mitigation actions, and cost savings. Reported Operating Income was $11 million and Adjusted Operating Income was $39 million, reflecting higher Advertising and SG&A expenses as well as lower gross margin.
The quarter produced a Net Loss of $18 million compared with Net Income of $53 million, while reported Earnings Per Share was a loss of $0.06 compared with income of $0.16. Adjusted Earnings Per Share was $0.01 compared with $0.21. For the six months ended June 30, 2026, operating cash use improved to $202 million from $275 million, but investing cash use increased to $195 million due to the Mattel163 acquisition and higher capital expenditures.
Capital allocation remained active, with $100 million of shares repurchased in the quarter and $300 million repurchased year-to-date. Mattel reiterated its full-year 2026 outlook, including Net Sales growth of +3% to 6% in Constant Currency, Approx. 50% Adjusted Gross Margin, $580 - $630 of Adjusted Operating Income, and Adjusted EPS of $1.27 - $1.39. The company also reaffirmed its $400 million full-year share repurchase target, while noting that guidance excludes potential tariff refunds.
Management, verbatim
We continued to execute our multi-year strategy to grow our IP-driven play and family entertainment business in the second quarter with strong growth in Net Sales. Growth has continued in the third quarter, and we expect to achieve our full year 2026 guidance. Our world-class brand portfolio and product offering, driven by our brand-centric operating model and global capabilities, position us well for the second half of the year.
Ynon Kreiz, Chairman and CEO
Mattel achieved further savings from our three-year Optimizing for Profitable Growth program, which is on track to achieve $225 million of savings by year-end. In line with our capital allocation priorities, we are making strategic investments to accelerate growth and repurchased another $100 million of shares in the quarter, bringing the year-to-date total to $300 million of shares, and we continue to expect repurchases of $400 million in total this year, while maintaining a strong balance sheet.
Paul Ruh, CFO
Not in the filing
stated, not guessed- Prior-year Net Sales amount
- Prior-quarter comparisons for all reported quarterly metrics
- Prior-year amounts for Reported Operating Income and Adjusted Operating Income
- Free cash flow
- Cash balance
- Debt balance
- Dividend amount or dividend declaration
- Reported operating expenses
- Adjusted operating expenses
- Segment Net Sales amounts
- Forward guidance for operating expenses
- Forward guidance for free cash flow
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Mattel’s SEC Form 8-K with its Q2 2026 earnings release (Item 2.02) and related exhibit 99.1, including financial highlights, segment/category billings, and full-year guidance.
Ticker impact
Mattel reported Q2 2026 results with Net Sales up 10% but Operating Income down $68 million and a net loss of $18 million.
Near-term downside risk as investors focus on weaker profitability and EPS, partially offset by reaffirmed guidance and ongoing repurchases.
The filing provides concrete profitability deterioration (gross margin down 270 bps, operating income down $68m) alongside a reaffirmation of full-year targets and continued buybacks, which can limit downside but does not negate the earnings quality issue.
Market effects
Toy and consumer IP licensing peers may face read-across on tariff and royalty-driven margin sensitivity, especially for brands with similar cost structures.
North America and International both grew in constant currency, but margin compression suggests cost headwinds are broad rather than region-specific.
Tariff and FX references tie the results to global trade conditions, which can influence broader consumer discretionary sentiment.
Counterpoint
Sales growth and reaffirmed 2026 guidance, plus $400 million buybacks, could support the stock despite margin declines if cost mitigation and tariff mitigation actions take hold in 2H.
Key entities
- companyMattel, Inc.
Reported Q2 2026 financial results, margin compression drivers, and reaffirmed FY2026 guidance plus a $400 million share repurchase target.
- business_unitMattel163 mobile games studio
Cited as contributing to gross margin and progressing with integration, supporting the digital growth narrative.
- programOptimizing for Profitable Growth program
Three-year savings program on track to achieve $225 million of savings by year-end, cited as a profitability support.
