Nasdaq:JAKK
JAKKS PACIFIC INC
A leading US-based toy manufacturer capitalizing on IP licensing to deliver premium collectibles across a wide range of demographics and distribution channels.
Key Metrics
Investment Thesis
Bull Case
Investors may view JAKKS as an attractive value play given its strong positive operating cash flow of $38.9M and a diversified portfolio that allows it to pivot between different toy categories and IP licenses; the company's ability to generate profitability even during periods of revenue decline suggests a resilient cost structure and effective operational leverage.
Bear Case
The sustained multi-year revenue decline from nearly $800M to under $700M indicates potential headwinds in the toy sector or distribution channel erosion; large accounts receivable balances relative to cash on hand could signal collection challenges or aggressive sales tactics that may not be sustainable long-term.
About JAKKS PACIFIC INC
JAKKS Pacific Inc. designs, develops, and markets a diverse portfolio of premium toys and collectibles primarily for the North American market, with significant global distribution through its own retail stores and e-commerce platforms. The company leverages licensed intellectual property from major entertainment franchises to drive revenue growth while maintaining strong operational cash flows despite recent revenue compression.
Analysis
Management Discussion
The company reported a net profit of $34.2M in 2024, reflecting a sequential improvement from the prior year's $38.1M but continuing a multi-year trend of revenue contraction alongside stabilizing earnings; while operating cash flow remains healthy at $38.9M, the substantial drop in revenue and the accumulation of receivables warrant close monitoring of gross margin resilience and inventory turnover efficiency.
Industry Overview
The global toy industry is highly competitive and cyclical, driven by consumer sentiment, parental spending habits, and the constant need for new intellectual property to capture attention; companies must balance manufacturing costs with marketing expenses to maintain margins in a saturated marketplace.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $796.2M | $711.6M | $691.0M |
| Cost of Revenue | $584.9M | $488.2M | $478.0M |
| Gross Profit | $211.3M | $223.4M | $213.0M |
| Operating Expenses | $150.3M | $164.2M | $173.3M |
| Operating Income | $61.0M | $59.1M | $39.7M |
| R&D | — | — | $10.9M |
| G&A | $114.8M | $126.9M | $132.8M |
| Stock-Based Comp | $5.1M | $8.0M | $9.5M |
| D&A | $10.6M | $8.6M | $10.0M |
| Depreciation | $9.6M | $8.6M | $10.0M |
| Amortization | $1.0M | — | — |
| Other OpEx | $35.5M | $37.4M | $29.6M |
| Non-Operating Income | $-10.9M | $-14.2M | $48.0K |
| Interest Expense | $11.2M | $6.5M | $1.1M |
| Interest Income | $127.0K | $1.3M | $841.0K |
| Pre-Tax Income | $50.1M | $44.9M | $39.7M |
| Income Tax | $-41.0M | $6.8M | $5.5M |
| Continuing Ops | $91.1M | $38.1M | $34.2M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $91.1M | $38.1M | $34.2M |
| Minority Interest | $-330.0K | $-293.0K | $280.0K |
| Net to Common | $91.4M | $38.4M | $33.9M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $275.2M | $255.4M | $268.7M |
| Cash & Equivalents | $85.3M | $72.3M | $69.9M |
| Accounts Receivable | $102.8M | $123.8M | $131.6M |
| Inventory | $80.6M | $52.6M | $52.8M |
| Prepaid Expenses | $6.3M | $6.4M | $14.1M |
| Other Current Assets | $193.0K | $204.0K | $201.0K |
| Long-Term Assets | $130.1M | $143.6M | $176.2M |
| PP&E (Net) | $14.9M | $14.6M | $15.6M |
| Goodwill | $35.1M | $35.1M | $35.1M |
| Operating Leases | $19.9M | $23.6M | $53.3M |
| Other LT Assets | $60.3M | $70.3M | $72.2M |
| Total Assets | $405.3M | $399.0M | $444.9M |
| Current Liabilities | $177.8M | $149.2M | $149.4M |
| Accounts Payable | $33.7M | $42.2M | $42.6M |
| Current Leases | $10.7M | $7.4M | $8.1M |
| Deferred Revenue | $922.0K | $701.0K | $247.0K |
| Other Current Liab | $94.5M | $53.9M | $50.1M |
| Long-Term Liabilities | $76.3M | $53.6M | $54.6M |
| LT Operating Leases | $9.9M | $16.7M | $48.4M |
| Other LT Liab | $63.5M | $33.7M | $2.6M |
| Total Liabilities | $254.2M | $202.8M | $204.0M |
| Shareholders' Equity | $151.2M | $196.1M | $240.8M |
| Paid-In Capital | $275.2M | $278.6M | $297.2M |
| Retained Earnings | $-112.0M | $-73.6M | $-39.7M |
| AOCI | $-17.5M | $-15.6M | $-17.2M |
| Total L&E | $405.3M | $399.0M | $444.9M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $91.1M | $38.1M | $34.2M |
| Non-Cash Adjustments | $71.0M | $16.4M | $-14.5M |
| Working Capital Changes | $-76.0M | $11.8M | $19.2M |
| Cash from Operations | $86.1M | $66.4M | $38.9M |
| Capital Expenditures | $10.4M | $8.9M | $11.2M |
| Cash from Investing | $-10.4M | $-8.9M | $-12.9M |
| Debt Issuances | $0 | $0 | — |
| Debt Repayments | — | $0 | — |
| Cash from Financing | $-31.0M | $-72.3M | $-26.9M |
| FX Effect | $-4.5M | $1.9M | $-1.6M |
| Net Change in Cash | $44.7M | $-14.8M | $-860.0K |
| Beginning Cash | $45.3M | $85.5M | $72.6M |
| Ending Cash | $85.5M | $72.6M | $70.1M |
Frequently Asked Questions
How does JAKKS PACIFIC INC make money?
Core revenue streams include branded character toys (e.g., Barbie, Marvel), action figures and collectibles, electronic games, and licensed merchandise sold through retail partners, direct-to-consumer e-commerce, and the company's own JAKKS Pacific retail locations.
What are the main risks for JAKK?
Revenue decline from $796.2M in 2022 to $691.0M in 2024 highlights sensitivity to consumer discretionary spending trends; significant receivables of $131.6M versus payables of $42.6M suggest potential liquidity pressure or aggressive revenue recognition practices; currency fluctuations impacting international sales and the need for ongoing retail store footprint optimization.
What is JAKK's competitive advantage?
Strong relationships with high-value IP holders like Mattel and Hasbro provide exclusive licensing advantages; diversified distribution model mitigates reliance on any single channel; and robust working capital management supports operational flexibility in a cyclical industry.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.