Spin Master Delivers Strong Revenue And Profit Growth In 1Q; Shares Pop 10%

Shares of Spin Master (TOY) rose by more than 10% on Thursday morning after the children’s entertainment company reported strong first-quarter results. Revenue increased nearly 40% compared to the same quarter last year. A strong showing by Digital games contributed to the successful quarter.

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Indeed, Spin Master’s total revenue for 1Q 2021 came in at $316.6 million, up from a revenue of $227.3 million reported in 1Q 2020. Digital games revenue increased 394.2% to $34.1 million, driven by the Toca Life World platform and a growing Sago Mini subscription user base.

Meanwhile, the company reported a profit of $3.2 million ($0.03 per share) in 1Q 2021, compared to a loss of $26.7 million ($0.26 per share) in 1Q 2020.

On an adjusted basis, Spin Master earned $0.08 per share for its most recent quarter compared with an adjusted loss of $0.46 per share in the prior-year period.

Spin Master’s CFO Mark Segal said, “We delivered very strong margins and profitability in the first quarter and are particularly pleased with the broad nature of our performance improvements compared to Q1 2020. Revenue grew as a result of higher Gross Product Sales and growth in digital games led by Toca Life World. Our operational improvements continued to allow us to execute more efficiently and effectively this quarter. Our solid financial position with cash on hand of over $260 million, gives us increasing opportunities to leverage our diverse and global platform for organic growth and acquisitions. We expect many of the trends that drove this performance in the first quarter to continue and we are raising our outlook for 2021.”

The company now expects total revenue for 2021 to increase low double digits from 2020, compared to the mid to high single digits previously announced on March 3, 2021. (See Spin Master stock analysis on TipRanks)

Today, National Bank analyst Adam Shine reiterated a Buy rating on TOY. He raised its price target to C$53.00 from C$49.00 for a 17% upside potential.

Overall, TOY scores a Moderate Buy consensus rating among analysts based on 6 Buys and 3 Holds. The average analyst price target of C$44.47 implies a 1.7% downside potential from current levels.