What is the impact of APA tariff rollback on the year, how much wiggle room does it provide, and an update on the digital strategy investment cadence and expected returns.

Guidance assumes 2025 actions fully offset 2026 annualized tariff costs. The refund process is fluid and not factored into current guidance due to uncertainty. Digital strategy integration is on track, with the first self-published game in soft launch and a second in advanced development, expected to drive accelerated growth and profitability. “our guidance does not factor in a refund given the uncertainty at this point in time. [...] The game is now in soft launch, and all the metrics are where we want to see them.”

How quickly can Mattel Brick Shop ramp up to be a meaningful contributor, and why is Mattel entering the competitive mobile gaming market given its maturity and high scaling costs?

Mattel Brick Shop is chasing demand, growing double-digit, and has significant runway due to its unique product quality and Mattel's expertise in vehicles. For mobile gaming, Mattel's strong brands reduce user acquisition costs, making their economic equation different from traditional players, allowing for asymmetric returns. “The consumer demand is stronger than we can accommodate. We are chasing demand. It's growing double digit, and we believe there's significant runway ahead of us [...] Because of that, our economic equation is different in terms of demand creation and user acquisition.”

How should investors think about the lift to earnings from the Masters of the Universe movie, and if current commodity/freight prices persist, does 2026 guidance remain intact?

The Masters of the Universe movie is already a "big win" driving awareness and product sales (double-digit growth), regardless of box office. It's expected to be a significant driver for toy sales. Regarding costs, guidance remains intact with current assumptions, but they are not immune to prolonged disruption. “Masters of the Universe movie is already a big win for Mattel. The movie or even the buildup towards the movie is driving awareness, it's strengthening relationship with fans. [...] At this point, the guidance remains intact with those assumptions in mind.”

MAT

Mattel (MAT) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Apr 29, 2026

Source: earnings call transcript

Executive summary

Mattel Q1 FY26 — Strong Start with Net Sales Growth and Strategic Investments

Mattel began FY26 with net sales growth driven by strong brand performance and strategic investments in digital games and building sets. Despite gross margin compression from tariffs and FX, the company reiterated its full-year guidance, anticipating sequential improvements and top-line acceleration in Q2, while continuing to execute its IP-driven growth strategy.

Highlights

Net sales grew 4% as reported and 1% in constant currency to $862 million, ahead of expectations.
Gross billings grew 2% in constant currency, driven by Vehicles (up 13%) and Challenger categories (up 17%).
Acquired full ownership of Mattel163 Mobile Game Studio and repurchased $200 million of shares.
Hot Wheels, UNO, Monster High, Masters of the Universe, and Mattel Brick Shop showed double-digit growth.
Global POS was up mid-single digits, indicating positive consumer demand.

Concerns

Adjusted gross margin declined 450 basis points to 45.1%, primarily due to tariff costs (240 bps), unfavorable FX (140 bps), and inflation (90 bps).
Adjusted EPS declined $0.18 to a loss of $0.20.
Dolls declined 11% (due to Barbie) and Infant, Toddler, and Preschool declined 18% (primarily Fisher-Price).
Free cash flow on a TTM basis declined to $335 million from $582 million in the prior year.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Net Sales Growth	3% to 6% high materiality	FY26 · 2026	High
Full-year 2026 FX Impact on Reported Net Sales	1 to 2 percentage points tailwind medium materiality	FY26 · 2026	Medium
Full-year 2026 Adjusted Gross Margin	approximately 50% high materiality	FY26 · 2026	High
Full-year 2026 Adjusted Operating Income	$580 million to $630 million high materiality	FY26 · 2026	High
Full-year 2026 Adjusted EPS	$1.27 to $1.39 high materiality	FY26 · 2026	High
Full-year 2027 Revenue Growth	mid- to high single-digit growth high materiality	FY27 · 2027	Medium
Full-year 2027 Adjusted Operating Income Growth	strong double-digit growth high materiality	FY27 · 2027	Medium
Share Repurchase Authorization	$1.5 billion high materiality	by end of 2028	High
Optimizing for Profitable Growth Program Savings	approximately $50 million medium materiality	FY26 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Vehicles Continued momentum in the category, with key brands showing strong double-digit growth. Hot Wheels growth: double digitsDisney and Pixar Cars growth: double digits	—	13%	—	—
Dolls Decline primarily due to Barbie, partially offset by growth in Monster High. Barbie performance: declinedMonster High growth: positiveAmerican Girl performance: comparable	—	-11%	—	—
Infant, Toddler and Preschool (ITPS) Decline primarily due to Fisher-Price, though Little People showed strong growth driven by new partnerships. Fisher-Price performance: primary driver of declineLittle People growth: double digits	—	-18%	—	—
Challenger Categories Strong collective growth, with UNO, Action Figures, and Mattel Brick Shop as key drivers. Games growth: positive (led by UNO, including Mattel163 contribution)Action Figures growth: positive (driven by owned and partner properties)Mattel Brick Shop performance: exceptionally well	—	17%	—	—
International Growth across all sub-regions. EMEA growth: positiveLatin America growth: positiveAsia Pacific growth: positive	—	8%	—	—
North America Decline includes the impact of a shift in U.S. retailer ordering patterns from direct import to domestic shipping. Ordering patterns are stabilizing, and growth is expected in Q2.	—	-4%	—	—

Product announcements

Product	Type	Timeline
Masters of the Universe Mobile Game	launch	soft launch ahead of June 5 movie premiere
Second Self-Published Mobile Game	launch	later this year
UNO Digital Game Experiences	launch	Q1 FY26
Barbie Dreamhouse Tycoon Roblox Game	milestone	Q1 FY26
Masters of the Universe Movie	launch	June 5
Matchbox Movie	roadmap	October
Hot Wheels, Polly Pocket, Barney, Rock 'Em Sock 'Em Robots Movies	roadmap	in development
Thomas & Friends Relaunch	roadmap	second half of the year

Deals & partnerships

Mattel163 Mobile Game Studio Acquired remaining 50% interest in the mobile game studio $75 million cash

Acquired remaining 50% interest for $75 million cash, net of cash acquired. Integration is tracking according to plan.

Netflix Digital game licensing for Pictionary

Partnership for Pictionary branded digital game experience.

Scopely Digital game licensing for Scrabble

Partnership for Scrabble branded digital game experience.

Nintendo Partnership for Little People brand

New partnership for the Little People brand.

Disney Partnership for Little People brand (Toy Story, Mickey and Friends)

New partnership for the Little People brand across Toy Story and Mickey and Friends.

Risks & headwinds

Geopolitical events (Middle East conflict) ongoing

minimal impact to date

Mitigation:monitoring the situation, experienced team on the ground managing

Rising commodity (resin) and freight costs current

moved significantly higher

Mitigation:guidance includes range of assumptions, not immune but too early to speculate on long-term impact

Unfavorable foreign exchange Q1 FY26

140 basis points impact on gross margin

Mitigation:FX expected to be a 1-2 percentage point tailwind on full year reported net sales

Inflation Q1 FY26

90 basis points impact on gross margin

Mitigation:gross margin guidance of ~50% for FY26 includes these puts and takes

Decline in Dolls category (Barbie) Q1 FY26

declined 11%

Mitigation:partially offset by growth in Monster High

Decline in Infant, Toddler and Preschool category (Fisher-Price) Q1 FY26

declined 18%

Mitigation:Little People grew double digits, relaunching Thomas in H2 FY26, assessing business for potential

Shift in U.S. retailer ordering patterns Q1 FY26

4% decline in North America gross billings

Mitigation:ordering patterns stabilizing, North America expected to grow in Q2

What to watch in Q2 FY26

North America Gross Billings Growth

Q2 FY26

Current declined 4% in Q1 FY26

Target growth

Why it matters

Indicates stabilization of U.S. retailer ordering patterns, a significant headwind in prior quarters.

Based on what we are seeing today, we believe U.S. retailer ordering patterns are stabilizing and expect our North America region to grow in Q2.

Find out whether MAT delivers this. Inve re-checks your case every morning.

Q&A highlights

How is Mattel exposed to rising resin and freight costs due to Middle East events, what are hedging strategies, and how is this factored into current guidance?

Management stated minimal impact to date, reiterated guidance includes a range of assumptions, and it's too early to speculate on long-term effects. They have an experienced team managing the situation and are reiterating the ~50% full-year gross margin guidance.

“We are not immune, but it's too early to speculate. And it depends, particularly on how long the disruption last and also how long the oil prices remain elevated.”

asked by Megan Christine Alexander · answered by Paul Ruh

2 min read 6 chapters

Detailed narrative

Q1 Performance Highlights

Mattel reported a strong start to 2026, with net sales up 4% (1% constant currency) to $862 million, exceeding expectations. Gross billings increased 2% in constant currency, driven by Vehicles (up 13%) and Challenger categories (up 17%), while Dolls and Infant, Toddler, and Preschool declined. The company noted positive consumer demand and global POS up mid-single digits.

Strategic Investments & Digital Growth

Mattel is making strategic investments totaling approximately $150 million in 2026 to accelerate growth and profitability, focusing on self-published mobile games, building sets, D2C, first-party data, and technology. The acquisition of Mattel163 Mobile Game Studio was completed, and the first self-published mobile game based on Masters of the Universe is in soft launch, with a second game targeted for later this year.

Brand Momentum & Theatrical Slate

Several key brands, including Hot Wheels, UNO, Monster High, Masters of the Universe, and Mattel Brick Shop, achieved double-digit growth. The upcoming Masters of the Universe movie, set for wide global release, is expected to drive significant product sales and brand awareness, with a full cross-category product line already rolling out.

Gross Margin Headwinds

Adjusted gross margin declined 450 basis points to 45.1%, primarily due to a 240 basis point impact from tariffs, 140 basis points from unfavorable foreign exchange, and 90 basis points from inflation. Management expects sequential improvement in gross margin throughout the year, reaching approximately 50% for the full year.

North America Ordering Patterns & Inventory

North America gross billings declined 4% due to a shift in U.S. retailer ordering patterns from direct import to domestic shipping. However, management believes these patterns are stabilizing and expects the North America region to grow in Q2. Retailer inventories declined low double digits, positioning the company well for Q2.

Infant, Toddler, and Preschool (ITPS) Performance

The ITPS segment declined 18%, primarily due to Fisher-Price, and is expected to be a 2-3% headwind for the full year. However, Little People within Fisher-Price grew double digits, driven by new partnerships. The company is assessing the business to maximize its potential.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.