Jakks Pacific (JAKK) Q3 2026 earnings review
Jakks sells 20% more toys, but its overseas sales shrink
Jakks Pacific sold far more toys in the Halloween quarter without a new film behind them, but its overseas business went into reverse. Sales rose 20% from a year ago, and everyday lines did the work rather than movie tie-ins. By our math, the February plan now allows a fourth-quarter drop of about 29%, which this quarter makes hard to believe.
| Sales | $254.2M +20% from a year ago |
|---|---|
| Sales against two years ago | −21% Q3 2024: $321.6M |
| Profit per share, excluding one-offs | $2.68 $1.80 a year ago |
| 2026 sales outlook | Not updated February plan: 2–5% growth; nine months so far +13% |
⚖️ Verdict: 🟢 Bullish
The story got better because the main worry about the second half, no new film to sell toys against, did not hurt the quarter. The plan Jakks set in February now looks far too cautious. The bad news: international sales fell 4% while chief executive Stephen Berman described them as expanding.
The question now is whether the fourth quarter can grow without a film. Either retailers keep ordering everyday lines, and by our math the year ends near 10% growth. Or they ordered early, and the recovery is one good quarter. February's fourth-quarter report will settle it.
🐂 Bull Case
Everyday Toy Lines Grew 31% Without a Movie
Jakks sells two kinds of toys: lines that ride a film or game release, and everyday lines such as Disney Princess dolls. It shipped its Super Mario Galaxy Movie products in the spring and has no toy-supported film this autumn. The worry was that sales would sag once those products reached shelves.
That did not happen. Jakks calls products "branded to support a theatrical, television, streaming film/TV or video game release" content-led and the rest of its dolls and action figures evergreen. The evergreen lines reached $153 million, and the company headed its own slide "Q3 evergreen rebounding".
- Evergreen dolls and action figures: $153 million, up 31% from a year ago
- Movie- and game-tied lines: $29 million, unchanged from a year ago
- Dolls, Role-Play and Dress-Up division: up 29%
- Action Play & Collectibles division: up 19% with no new film
Chief executive Stephen Berman said Jakks has "great placement this holiday season". This quarter supports him, because retailers took more everyday product with nothing new to advertise. But the holiday sell-in lands in the fourth quarter, and the next toy-supported film, Sonic the Hedgehog 4, arrives only in spring 2027.
What to watch: fourth-quarter sales against last year's $127 million, due in February. A figure above that would show the everyday lines can carry a holiday season without a film behind them.
Overheads Grew Slower Than Sales, Lifting Profit
Jakks earned more on each dollar of sales because overheads grew more slowly than revenue. Gross margin hardly moved at 32.1%, so the gain came below it, from spreading office costs over a bigger quarter.
- Operating profit: $37.4 million, up 27%
- Operating margin: 14.7%, up 0.8 percentage points
- General and administrative expenses, the office overhead: 14.3% of sales, down 0.9 points
- Cost of goods: 50.2% of sales, up 0.6 points, offset by lower tooling amortization
- Tax rate: 20.5%, down from 33.1%
The lower tax rate explains why net profit grew 50% while operating profit rose 27%, and that part may not repeat. The overhead saving can, so long as sales hold, because the office cost base changed little in dollars while shipments climbed a fifth.
What to watch: the fourth-quarter operating loss, which was $8.6 million last year. A smaller loss would confirm that the overhead base is lower, not merely better covered by one big quarter.
The February Plan Is Already Out of Date
On the February call, chief executive Stephen Berman described 2026 as a year of low-to-mid-single-digit sales growth. Jakks has never put that figure in a press release. Nine months in, sales are up 13%, and the third-quarter release does not mention the plan at all.
By our math the middle of that plan leaves about $90 million for the fourth quarter, a drop of 29% from last year. Nothing in the quarter points to a fall of that size. If the fourth quarter merely matches last year, the full year grows about 10% by our math.
The quarter says the plan was cautious. It does not say demand is safe, because Jakks has not said what it now expects for the year, and Berman spoke of 2027 only as "the line-up we recently shared with the trade for 2027".
What to watch: whether Jakks replaces the February figure on the call or with the fourth-quarter report, and whether it gives a 2027 outlook. A new 2026 figure near 10% would mean the old plan was set before holiday orders arrived.
🐻 Bear Case
International Sales Fell Despite Berman's Expansion Claim
Jakks has spent two years building sales outside North America, with new warehouses in the European Union and, in Berman's words this quarter, a push to "open new accounts". Berman said "our international business continues to steadily expand". The quarter's numbers say otherwise.
- International sales: $45.4 million, down 4% from a year ago
- Latin America: down 23%, a third straight quarterly decline
- Canada: down 35%
- Europe: up 1%
- Trailing twelve months: $136 million, down from $138 million at June
Because the first quarter was strong, the nine-month figure is still up 7%, and that is the figure Jakks puts first. But growth slowed in the second quarter and turned negative in the third, so the direction matters more than the total. The toy maker now has three quarters of a worsening trend.
What to watch: fourth-quarter international sales against last year's $37.9 million, the strongest fourth quarter in recent years. Another decline would mean the warehouses and new offices are not yet paying for themselves.
Sales Remain a Fifth Below Two Years Ago
A 20% rise sounds like a recovery, but it laps a quarter that fell 34% when tariffs made retailers cancel direct-import orders. Measured against the same quarter two years ago, sales are still 21% lower. Jakks prints the two-year figure itself, as an annual decline of 11%.
- Action Play & Collectibles: 36% below the third quarter of 2024
- Dolls, Role-Play and Dress-Up: 19% below
- Outdoor/Seasonal toys: 48% below, and still falling
- Costumes: 9% above
- Total: 21% below
The gap sits in the divisions a film drives, so closing it depends on the 2027 slate rather than on everyday lines alone. Costumes, which need no film, are the only division above their 2024 level, and the outdoor toys keep shrinking.
What to watch: the 2027 product plan, which Jakks has shown to retailers but not yet to investors. A line-up with more than one toy-supported film would show a path back to 2024 sales levels.
Risks This Quarter Didn't Answer
Five standing concerns got no new numbers in the release or the slides, so the quarterly filing and the call will have to answer them. None of them moved this quarter, but none of them went away either.
- Costume profit: sales rose 13% in the Halloween quarter, but the segment lost money in the first half; the filing shows whether the third quarter fixed that.
- Customer concentration: Walmart and Target took 58% of second-quarter sales; the filing shows the third-quarter share.
- Sell-through at the top US accounts: double-digit in the second quarter by Jakks's own account, not mentioned this time; the call will say whether it held.
- Tariff refund in inventory: part of the refund reduced inventory cost in the second quarter, yet cost of goods rose 0.6 points of sales; the filing shows how much flowed through.
- Minimum royalty guarantees: about $185 million owed to licensors per the last filing, with $61 million due within a year; a shortfall on any licence would show in cost of sales.
👓 Other Themes
Doll Haus Sells Collector Dolls Straight to Adults
Jakks has opened Doll Haus, a web shop at dollhaushq.com that sells fashion dolls to adult collectors: a horror line it calls "Doll Haus of Dread", DC super-villains, Scooby-Doo and Friends characters. The slides show the shop and its Instagram account but no sales figure, so there is no revenue read yet.
Tariff Refunds Are Booked; Tariff Risk Remains
Berman said: "Having successfully navigated the high tariff turmoil, we are driving our business forward." The refund of duties is largely booked, at $6.8 million for nine months but only $29,000 in the third quarter. Replacement tariffs on China-made toys remain the main outside risk, and the release's own cautionary language lists "tariff policy and pricing".
💲 Other KPIs
Inventory fell 11% from a year ago while sales rose 20%. Jakks is turning stock faster: 34 days of inventory against 46 last September, and down from 82 days at June 2025. Goods in transit make up $11.6 million of the total, so the warehouse stock itself is leaner than the headline.
Receivables grew 23% from a year ago, a little faster than sales. Days sales outstanding, the time customers take to pay, stretched to 87 from 85. Most of that is seasonal, because the toy maker ships Halloween and holiday goods in the quarter and collects in the next, so fourth-quarter cash depends on these invoices.
Cash ended the quarter 63% above a year ago, though $15.5 million below June because receivables absorbed the quarter's profit. Operating cash flow over the past twelve months rose to $50.7 million from $29.4 million. Jakks spent $13.2 million on capital projects in nine months, up from $7.9 million.
🔮 Guidance
Unchanged. The board kept the dividend at $0.25 a share for an eighth straight quarter, about $2.9 million a quarter by our math. Third-quarter profit of $2.68 a share excluding one-offs covers it many times over, but the other three quarters of the year ran at a loss or near break-even. Trailing free cash flow of $35.7 million covers a year of dividends three times.
❓ Key Questions
Will Jakks replace its February sales plan for 2026?
Nine-month sales are up 13%, and by our math the old plan now implies a fourth-quarter drop of 22–36%. Investors need a current figure, and a first look at 2027.
Did sell-through at the top US accounts stay positive?
Jakks reported double-digit sell-through at its two largest US customers for the second quarter. The release says nothing about the third, and sell-through decides holiday reorders.
How much tariff refund still sits in inventory cost?
Part of the refund reduced inventory cost in the second quarter. Cost of goods still rose 0.6 points of sales, so the size of the credit decides whether underlying margin fell.
Why did Latin America and Canada fall again?
Latin America is down 23% in the quarter and 21% for nine months, with no explanation, while Berman describes international as expanding.
Did the costume business make money this Halloween?
Costumes grew 13% in their biggest quarter, but the segment lost money in the first half. Only the quarterly filing shows whether higher sales turned into profit.