Good morning ladies and gentlemen, and welcome to the Spin Master Corporation third quarter 2025 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session for covering analysts. If at any time during this call you require immediate assistance, please press star zero for an operator. This call is being recorded on Thursday, October 30th, 2025. I would now like to turn the conference over to Tim Foran, Vice President, Investor Relations. Please go ahead. Thank you. Good morning everyone and thank you for joining our call. With me here today are our CEO, Christina Miller, and our CFO, Jonathan Reuter. For your convenience, the press release, MDA, and consolidated financial statements are available on the Investor Relations section of our website, spinmaster.com, and on SEDAR Plus. Before we begin, please note that remarks on this conference call may contain forward-looking statements about Spin Master 's current and future plans, expectations, intentions, results, levels of activity, performance goals or achievements, and any other future events or developments. Forward-looking statements are based on currently available information and assumptions that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such assumptions will prove to be correct, and many factors could cause actual results to differ materially from those expected or implied by the forward-looking statements. As a result, you're cautioned not to place undue reliance on these forward-looking statements. For additional information on these assumptions and risks, please consult the cautionary statements regarding forward-looking information in our earnings release dated today, October 30th, 2025. Except as may be required by law, Spin Master disclaims any intention to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Please note that Spin Master reports in U.S. Dollars and all dollar amounts today are expressed in U.S. currency unless otherwise noted. Also note that unless noted otherwise, all percentage growth rates refer to the three months ending September 30th, 2025, relative to the same period in 2024. I would now like to turn the conference call over to Christina. Thank you, Tim. Good morning to everyone who is joining us today. In terms of an agenda for the call, I will start with a review of the quarter and how things are shaping up for the holiday season. I will provide a high-level overview of our strategy and priorities before passing it to Jonathan to provide a financial review of the quarter. This quarter, toys, entertainment, and digital games once again captured the imagination of kids and parents, reflecting our focus on innovation and storytelling. However, underlying performance was not matched in our financial results, but this was anticipated. Toy revenues have been negatively impacted this year by the shift in retailer buying patterns stemming from tariffs at the POS level. We performed significantly better in toys in Q3 than our revenues reflect. Based on Circana, we grew our market share within key categories. Globally, our overall POS was down 1% compared to an industry decline of 2.5% in our TAM. As consumer demand declined in the U.S., notably in September, Spin Master Toys recorded positive POS. This was offset by a decline in Melissa & Doug. We grew our market share within Preschool, Infant, Toddler, and Plush, driven by performance from Ms. Rachel and GUND. We were number one in Preschool, where PAW Patrol remains a top property. Within Wheels in Action, our POS growth was seven times higher than the rest of the industry, driven by Monster Jam and Vehicles and How to Train Your Dragon in Action. Turning to Entertainment, we continue to create new and original IP. We delivered our first of five new PAW Patrol specials this quarter, and we greenlit our first original IP film. This is a major milestone for our entertainment studio. The animated four-quadrant film is directed by David Soren. This adds to our upcoming feature film slate, including PAW Patrol: Dino Movie next summer and the live-action Bakugan movie in development. Within Digital Games, we had a strong quarter with growth in Toca Boca and Picnic, driven by improved monetization of our platforms. Toca Boca conversion and average revenue per paying user were on track. Monthly active users were down. This was due to competition and our focus on higher spending markets. Picnic subscribers were up, as was retention and ARPPU. We also benefited in the quarter from the delivery of Toca Boca Junior classic games to a third-party platform. Looking ahead to Q4 across our three creative centers, we are well positioned going into the holiday season. Within toys in Q3, we were the only manufacturer to have three new toys leading their super category in the U.S. per Circana. We also have a broad range of brands featured on the Retailer Shop Toys list. In terms of consumer demand, Circana expects the 2025 holiday shopping season to be less predictable and more spread out this year than ever before. Now turning to entertainment, we're celebrating the holiday season with our PAW Patrol Christmas Special. It is set to air in the U.S. on Paramount Plus, Nickelodeon, and for the first time ever on CBS Primetime on Black Friday. We've also secured international distribution on streaming platforms and other major networks. There will also be a theatrical screening in 3,600 theaters across 17 countries and territories. In Digital Games, we have a robust lineup planned for Q4 of new features, content releases, and strategic partnerships including the recent collaboration with Sanrio. Looking into 2026 and beyond, I believe we have a sound strategy focused on monetizing our core brands and franchises and developing new IP across our three creative centers. However, to date our execution has not met our ambition. I see an opportunity to increase our baseline of success by focusing on consistent foundational improvements, applying greater executional discipline, and never forgetting that innovation is core to our DNA. Beginning with toys, we have fantastic core brands including PAW Patrol, Melissa & Doug, Gund, and Kinetic Sand. We are investing to grow these brands through creativity and innovation. A great example is how we created an all-new brand with our digital pets Bitsy. We have since extended the brand to Bitsy Hamsterball and licensed versions with Harry Potter, Jurassic World, and Disney with more to come. This approach to brand innovation and extensions drives recurring revenues and ultimately helps us grow market share. We are taking the same approach with Melissa & Doug, the market leader in early learning. The business is primarily evergreen, which is complementary to Spin Master 's core toys. Melissa & Doug was in line with expectations in 2024, but it faced challenges in 2025 due to the impact of tariffs and competitive pressure. We are executing on a plan to return to growth by driving more innovation and new introductions in 2026 in core categories where we have leadership share, including developmental toys, puzzles, and pretend play. We are also moving M & D into adjacent categories, leveraging its strong brand trust with parents. This includes new extensions like Sticker Wow, which has performed very well, as well as extending into partnerships and licenses including Disney and Ms. Rachel. We have begun international distribution of M &D, using our global infrastructure and expertise to provide retailers with a curated line. Beyond our core brands, we are partnering with the leading entertainment companies and continuing to maximize existing long-term relationships. Our current TAM is $50 billion, and we still only have 4% of it, so there is a tremendous opportunity for growth. When we look further out, we are exploring opportunities to move into adjacent high-growth categories, focus on areas where we have the right to win, and be an innovation leader. Within entertainment, our focus is simple: develop and own our IP, be platform agnostic, and meet kids where they watch, play, and engage. We're continuing to invest in PAW Patrol as a priority franchise and expand its universe. 2026 will see the release of the biggest movie yet. We're taking advantage of this across all business lines, including an amazing line of toys and products around the Dino Movie theme, a series of specials, and new seasons of PAW Patrol and Rubble & Crew to build excitement for the movie release and a new digital PAW Patrol game. We're also building the next wave of original IP, including a big year for Unicorn Academy content in 2026 and a reinvention of Bakugan within digital games. We have taken deliberate actions to sharpen our focus and concentrate resources on our core two platforms, Toca Boca and Piknik. In Toca Boca World, we are strengthening the overall experience through investing in our tech stack, more frequent features and content drops, and more timely strategic collaboration. This year we've delivered more content features than ever before, and as a result, we're seeing strength in the bottom of our funnel, specifically in ARPPU, and we're bringing Toca Boca to retail, including a collaboration with Miniso in 2026. This is the first step in fully realizing the brand within Piknik. Our efforts are centered on subscriber growth and retention. We are continuing to improve the user experience and adding more value to our bundle for parents, soon to include a new app in the Reading category. We are diversifying and growing revenue by licensing games to third parties. In summary, our focus across Spin Master will be ensuring creativity, storytelling, and innovation return to being the core of our business. We'll support this by prioritizing funding for product development, innovation, and the overall creative pipeline, being disciplined in our investments and putting engagement of kids and families at the forefront. We've been successful in establishing a presence everywhere kids are through our three creative centers: Toys, Entertainment, and Digital Games. Now it's time to unlock the value across all three and realize the full potential of our brands. With that, I turn it over to Jonathan. Thank you, Christina, and good morning, everyone. As Christina noted, our toy POS was down only 1% in the third quarter. However, in large part due to the continued shift in retail behavior stemming from tariffs, we saw a more negative impact on our reported toy sales in the third quarter. Specifically, toy gross product sales, or GPS, declined 20% or $180 million. The primary drivers of the delta between our POS and our GPS performance were, first, we saw a decline of $160 million in FOB orders as retailers moved more orders to domestic replenishment primarily due to tariffs, and, two, retailers globally have been managing their inventory tightly, which reduced domestic replenishment orders. This also applied to distributors in countries where we use third parties in certain cases due to not wanting to carry high inventory in the current economic and geopolitical climate. Now, some of this shift in retailer ordering is timing. We expect to recapture some of these orders in coming quarters via domestic replenishment, assuming the current FOB to domestic ordering proportions remain in place. However, as I noted in our second quarter, a portion could be considered as lost sales as opposed to timing unless we were to see a restocking benefit next year. Positively, our belief is that retailers are now at a lean inventory level, so the industry should have a relatively healthy setup going into 2026. Our own inventory has declined versus a year ago due to sell-through efforts, which reduced our inventory excluding tariffs by $36 million. Our reduced days inventory outstanding combined with improved working capital management helped us decrease our consolidated cash conversion cycle by 11 days. We've also continued to make strides in our supply chain diversification for the U.S. market. We expect China to represent approximately 30% of our U.S. cost of goods sold in 2026 compared to 64% in 2024. Melissa & Doug will still have a high proportion due to high quality wood products as a premium brand in a price competitive market. Quality and cost are the most important factors, and further diversification will occur as these two can be maintained. Turning to our revenues, the decline of 17% was driven by the decline in toy for the same reasons impacting GPS. This was partially offset by strong increase in digital games for the reasons Christina mentioned. We recorded an incremental $10 million in partnership revenue in digital games in the quarter. The actual games launch is happening in the fourth quarter, but delivery and revenue recognition came through this quarter as there's no associated platform cost with this revenue. This drove an increase in our gross profit margin. Below that, adjusted SG&A was stable versus last year with efficiency initiatives offsetting general inflation and higher royalties and IT costs. Adjusted EBITDA, operating income, and net income declined due to the reduction in toy revenues, with margin compression reflecting negative operating leverage. We recorded strong operating cash flows driven in part by improved working capital management. CapEx increased by $11 million due to leasehold improvements, IT investments, and an acquisition of student toy assets. On a year-to-date basis, CapEx has increased by $33 million, primarily due to leasehold improvements, IT investments, and investments in entertainment content. CapEx includes our new Los Angeles office and a toy showroom. We anticipate approximately $7 million in CapEx related to this in both 2025 and 2026. Additionally, following the acquisition of Melissa & Doug, we are upgrading our enterprise software across our global organization. We expect to spend $20 million- $25 million in CapEx this year and a similar amount next year related to this. In both cases, these initiatives are already in the capital intensity expectations we outlined earlier in the year. CapEx for these will complete next year, freeing up cash in 2027 as it relates to IT investments. We expect this to help us improve our demand forecasting and planning, operate more efficiently including within our supply chain, scale our business without adding incremental costs, and lastly optimize our cost structure. Our free cash in the quarter was focused on buying back our shares. Post quarter, we completed an acquisition of a digital reading and storytelling company for preliminary total considerations of $20 million, which includes significant contingent considerations. This is consistent with our focus on building core learning skills in our Picnic bundle to drive acquisition and retention. Reading is a critical learning skill and their technology will be a valuable addition to Piknik. It is also an acquihire of a talented development team for our digital games business. We'll be able to provide more color on plans for this in the coming year. Looking ahead to the fourth quarter, due to the unresolved tariff situation, we have not reinstituted guidance for the year. However, as I noted, due to the timing of our orders, we're aiming for an improvement in our year-over-year financial results in the fourth quarter compared to what we saw in this quarter. Our adjusted SG&A is anticipated to be approximately $60 million less this year than what we had originally planned at the beginning of the year or what was reflected at the high end of our originally provided guidance range. This stems from efficiency initiatives we have undertaken including M &D synergies, as well as avoiding new headcount costs and reducing discretionary costs. Similarly, our CapEx is anticipated to be $40 million less than our originally budgeted plans for the year. This reflects our focus on returning to profitable growth, which enables us to invest in creativity and innovation while driving higher returns on our investment and delivering attractive shareholder return. With that, operator, please open the line for questions. Thank you, Jonathan. Ladies and gentlemen, we will now begin the question- and- answer session for covering analysts. Should you have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Just a moment for your first question. Your first question comes from Kylie Cohu with Jefferies. Please go ahead. Hey, good morning everyone and thank you. Thank you for taking my question. You know, you mentioned that this holiday. Season is going to be unpredictable. I'm just kind of curious what you've. Seen from retail ordering so far as. As consumer demand. You mentioned this Q3 POS, what we're seeing so far quarter to date, and then also how you're adjusting your marketing and promotional strategies to these shifts. Thank you. Good morning, Kylie. Thanks for the question. I think early on what we're seeing in Q4 is strong POS in our key categories. As we talked about in Q3, we're up significantly in Wheels and Action. We took some market share there, and that POS is not necessarily the gauge for our toy performance at the moment. In Preschool Infant Toddler, we continue to take market share. The category was down a little bit, but we continue to be the market leader there. In Activities, we're seeing a POS decline due to some underperformance in Games and our Arts and Crafts, though Melissa & Doug has actually done well in the latter category. Sticker Wow has been a really top performer for us. I think in the current environment what we're seeing is there's some lower-priced competition that's doing well in the wooden toy category. For M &D, we're improving our position in this category through innovation, and we're seeing that across the Spin Master products. It's really where we are driving innovation that we're seeing good performance in top new toys. Our Stacked Bracelet Studio is another good example of that. As it relates to marketing, I think you see a couple of things right across the top toys. All of the materials that have gone out by retailers were included in all of that. In some cases, we have more top toys than most of the other manufacturers. I think that that's a great starting point as it relates to the marketing shift from Q3 to Q4. I think our spending is increasing in Q4 against our toys as the retailers continue to set. Thank you, Christina. Maybe I would just add a couple of comments here. Certainly, it's too early in the quarter to shape up how the consumer is going to turn up. This next 10 weeks are critical in the year. We're certainly targeting an improvement in our year-over-year results versus Q3, and we have, you know, we think we have the products, the right products, the right price points. More than 50% of our products are below that $20 mark. As Christina mentioned in her introductory comments, the industry believes this is going to be a little bit choppier. Seasons are kind of saying that the consumer sentiment and intentions could be a less predictable and more spread out season than we've recently seen. While we think we have the right products, we know we have the right products, we're showing up at the right places. We have more products on the top retailer top list, toy list, than in recent memory. We have more new products leading super categories, as Christina mentioned, than any other manufacturer. We're also recognizing that this is a unique Q4 and that Q4 will be an important part of our year. Gotcha. All that color is super helpful, and I hate to be so short sighted, but I guess just one follow-up from that would be how are your average selling prices relative to last year, and kind of your assortment? How do you feel about your assortment? In that lower price category? I'd say that we feel comfortable at this point that we have about, we have more than 50% of our price points below the $19.99 price point. Even some of the higher, more giftable price points, such as Primal Hatch and the new Gabby Dollhouse, we're seeing early signs of good POS around that. That again, some great innovation and some great marketing around those items definitely create a real giftable moment while we make sure we maintain that price point that is below $19.99 for a lot of items as well. We feel good about the mix. Great. Thank you so much, and best of luck this holiday. Thank you. Thank you. Your next question comes from Martin Landry with Stifel. Please go ahead. Hi. Good morning, guys. I'd like to touch on Melissa & Doug quickly. The sales were down this quarter. I think they've been down year to date as well. I'm just wondering, is it a function. of losing shelf space at retail, or is it a function of more slower velocities at retail? I think it's more than one thing, Martin. I think it's, you know, again, we are, I think we're seeing that the tariffs have impacted Melissa & Doug a little more than our core brands, just given that more of our toys were coming out of China through the course of the year. I think that's one of the reasons. The other is that there has been lots of competition, lower price point competition in the marketplace that has on the lower end taken some of our share. You see us, you know, we look at POS going into the fourth quarter and we're seeing signs of recovery and we're really confident about what's to come in 2026. Those two things, between the tariffs and the lower priced competition, ate some market share from us this quarter. Yeah. What that lets you see is that if you bifurcate M & D and if you bifurcate the legacy Spin. Legacy Spin POS, we're very pleased with that POS, and Christina kind of laid out the issues that we're facing with M& D this year. When we look forward into next year, we're really confident in the plan that we have to address the issues we're seeing in some of the shelf space that we're in. Higher productivity, in fact, than we had last year. The innovation that's coming for next year, the new product categories, the new lines, there's a lot of excitement from the retailer perspective because it's different than what's been the competitive landscape that's out there. Okay, that's helpful. I'd like to hear a little. Bit about Black Friday coming up. Black Friday is bigger and bigger in terms of dollar spends for the holidays. What is your strategy? How are you preparing for Black Friday? Are you intending to be a bit more promotional than previous years? Just a little bit about your strategy. Ahead of that would be great. Yeah, Martin, I would say that I wouldn't put it all on Black Friday either. I think Cyber Monday becomes bigger and bigger as well. I think ultimately, yes, that entire weekend will be a big moment across retail sales. As we see the uncertainty, meaning when people are going to start buying, there's lots of reason to believe that it will happen around that window. I think one of the things you'll notice is really how we have a solid plan in place around PAW Patrol in particular around that window with our new Christmas special airing. It will be airing on Black Friday in the U.S. on CBS, the first time it's in broadcast. We will also be in theaters and from a promotional standpoint. I think you see us lining up all of the content marketing around these windows. It's not targeted towards one specific day. We're working with all of our retail partners globally to make sure that we are part of all of the initiatives that are ongoing. We're lining up our media around that, both from an organic social standpoint as well as a traditional media standpoint. I feel good about our plans for that window. I'd say the extra special for this year about that day in particular would be the PAW Patrol Christmas Special airing in broadcast. Super. Thank you, and best of luck. Thanks, Martin. Your next question comes from Luke Hannan with Canaccord. Please go ahead. Thanks. Good morning, Jonathan. I wanted to follow up on something you had mentioned in your prepared remarks. Talking about the digital games business, I believe you had mentioned that there was an increase of $10 million of revenue that you recognized during the quarter from partnership revenue. If you could confirm that and then, how much of that fell to the bottom line and what are the opportunities that you have in digital games for future partnerships going forward? Yeah, sure. Thank you, Luke. As you know, our digital game strategy really centers around two core platforms. Within one of those platforms, within the Piknik platform, we are developing apps that continue to drive up our subscriber base and driving revenue growth. In addition to monetizing the value through our own platform, we have the ability to partner with others and we'll announce who that is in the fourth quarter when it actually goes live. We sold it in Q3, we revenue recognized it in Q3. Ultimately, it goes live in mid November. We can obviously talk to you about that then. We like these opportunities. We continue to believe there's more of these opportunities. Why we like it is not only is it incredibly accretive to the point that I think you're asking where most of that revenue flows to the bottom line, there is some support costs that you have on a year over year basis for it. Another reason we like it is that it actually drives the awareness higher on our core Piknik platform. We see a correlation when we launch these. This is not our first and it won't be our last. We see a correlation with increasing subscribers. It really supports the whole ecosystem and allows us to reply some of those incremental dollars back into development of more apps that then makes Piknik even more attractive, et cetera. It becomes this kind of virtuous circle. Got it. Thanks. I wanted to ask also about the entertainment segment as well, and specifically L and M opportunities. I think this will probably be a topic that's more relevant when we get to the latter portion of next year and the third PAW movie is going to be released. I just want to get a better understanding of. I know historically it's a pretty lumpy line item to model, but you do have quite a bit in the entertainment pipeline. I mean, just broadly speaking, how should we think, how should we be thinking about L and M opportunities over the course of at least the next couple of quarters? Yeah, I mean, look, it's a good question, a fair question. It's one where, without the fact that we're not giving guidance, it kind of limits my hand to give a huge amount of detail around it, except to say that as we release content, as there's more content being released. As you know, we entered beginning of the year, we announced re-entering into a heightened investment in additional content, and we're seeing it as an example on Black Friday, the PAW show coming out on CBS as well as in, I think, 3,600 theaters worldwide. As we have more and more content being released, you naturally have L and M, which is obviously incredibly accretive, an important part of the entertainment revenue stream and profit stream. You can imagine that over time that should increase or that should correlate with the increased distribution revenue that we have as we release more and more content. Of course, there's some choppiness to it, and what we will do is really call out so it's really clear for you when there are these one-time benefits so that you're able to build that into your model. Okay, thanks. Last one for me and then I'll pass the line. I just wanted to follow up on the commentary earlier on there being lower price competition in the wooden toy category. Is that from the other large player in the category, or is that from other competitors? That's been from a lot of private label. You're seeing at retail that some lower cost private label competitors were coming in on some key items that were causing some pricing pressure. Got it. Okay, thanks. Your next question comes from Adam Shine with National Bank. Please go ahead. Thanks a lot. Good morning. Maybe for you, Jonathan, if we look at last week, we heard Mattel maintaining the guidance and certainly implying a big lift to their toy sales in Q4. I think even Hasbro followed up saying that even they're expecting some growth out of their toy business. I think ex licensing in Q4. Can you give us a little bit of help in terms of I know it's going to be an improvement on Q3 as you said. I think the question is how big an improvement is maybe Melissa & Doug a bit of a gatekeeper in terms of a little more optimism around growth, any color around the cadence of toys in Q4. Also, if you don't mind, maybe also for Christina, how U.S. retailers have come back to you in terms of orders because certainly Mattel and Hasbro acknowledged an acceleration of retail orders following some of the timing issues in Q3. Thanks. Thank you, Adam. Good morning. Maybe I start with it. Look, I think you're really trying to set out kind of how does Q4 shape up. You know, we have to kind of recognize that we're not giving specific guidance and that we are still in a time of great, significant uncertainty in the market. You know, being careful of how we manage expectations and how we set those expectations, I think that's just prudence on our part in terms of the statements that we made versus some of those peers that you've laid out. What I can tell you is when we look at the year-over-year total reserves compared to Q3, we certainly are targeting improvement. You recall that I think in Q2 I mentioned that GPS for Q3 was going to be around 36% of our GPS. I think that's still, we're still comfortable with that. From an adjusted SGA perspective, we certainly think those costs will be stable to slightly down as we look into the fourth quarter. Seeing a clear path to operating leverage in the fourth quarter, going back to kind of the initial question from Kylie, we believe we have the right product at the right price point. We're hearing that from our retail partners. We're seeing in some cases higher productivity on shelf space than we saw earlier in the year. Now we have to wait and see how this ultimately plays out over the next two months. Yeah, Adam, I go back to I believe we're well positioned. Right. When I look through the POS week on week, I see there being growth week on week on our POS. I see some key items moving through the register, and I'm confident that we have the ability to get product to shelf. We have to see how the uncertainty plays out, but I still believe we're well positioned. Okay, I appreciate that. Maybe one follow up. Jonathan, you know, you talked about the additional investments. I think you had talked about that frankly a few months back. Going into next year and the savings that will come. A number of questions that came up last week on those other calls spoke to obviously ongoing concerns about how the tariff implications go into next year. Are they a 2x to reflect upon in terms of the full year? I think the commentary from other management teams has been, no, don't think of it that way and acknowledge that we're continuing to push on our mitigation actions. From your perspective, Spin Master has never been very aggressive on annual cost cutting. Can you maybe speak to, you already talked about the progress on SG&A earlier in this call, but can you speak to further initiatives as you get more comfortable in this seat in terms of pursuing as a regular cadence going forward. Sorry, we're just moving the phone. We need to invest in a more conducive conference call. Adam, I think how I would look at it is, one thing we called out on prepared remarks is there are investments in our internal tech stack to help us be not only more effective around, say, supply chain planning, around our forecasting, but also be more efficient in how we operate internally. You're going to start seeing some of that heightened CapEx roll off at the end of next year, and then we'll ultimately leverage that benefit. There will be some benefits that we'll be able to leverage into the business. My philosophy, and I think our philosophy as a wider management team, is that we grow the top line and we deliver operating leverage. We make the right capital decisions to get the right returns and ultimately we drive TSR. It all goes together, Adam. I think there's an opportunity to continue. We know there's an opportunity to keep driving operating leverage in the business. That's going to come through multiple levers that, as we head into next year, we'll keep on executing again. Okay, I appreciate that. I'll circle back into the queue. Thank you. Your next question comes from Jamie Katz with Morningstar. Please go ahead. Hi, good morning. I guess I have a theoretical sort of follow up to that last question and the opportunity for operating leverage. If we could think about next year, and I know this is early. As. Maybe a flat sales year, given that we know ordering patterns a little bit better now, would we still be able to think about capturing EBITDA expansion, or do we need to have top line growth to really offset the incremental tariffs we're looking at next year? Hey, good morning, Jamie. Let me break that down in a couple different ways. The first way is that this business just structurally has operating leverage, right? As you grow structurally, we have a fixed cost base. I talked about in the last question some of the things that we're doing to take even more effective with the current cost base that we have to grow to support a higher growth, higher top line. This business fundamentally has a structure that has fixed cost leverage and therefore operating leverage. When we look into next year again, there's certainly not any guidance this year. We're not giving guidance now for 2026. When we look at next year, having operating leverage is something that I think this management team feels confident that we can deliver. When I look at my past life, I used to say a business should be able to deliver 50- 100 basis points in any given year. Some years more, some years less. I think that's kind of the range, that there's no reason why this business doesn't do the same. Okay, do you guys have any internal data that you want to share on what you expect the PAW Patrol contribution to be from the October and the holiday specials embedded in the fourth quarter? Yeah, I mean, I could take. The special itself is not a huge entertainment revenue driver. What it is, it's a phenomenal marketing tool to keep PAW central in the hearts and minds of our consumer base. You know, we believe that, you know, there's a way to kind of replicate this on an annual basis as well. This becomes a perennial event. It's more next year, Jamie, to think about how, you know, the release of the movie that happens in the third quarter, as, you know, like, if I take the PAW movie 2, when we released it, there was a $20 million production revenue release that we would have. It's really a Q3 story next year that continues in Q3, Q4, and then into a little bit into. Yeah. The one thing I would add to that is that, you know, when you think about the movie and even our Netflix distribution, it really becomes about wider awareness for the brand and bringing brand health to the brand, just to make sure that gross viewing minutes are up across the brand and that we're bringing more and more people into it on a regular basis. It is really almost top of funnel for the entertainment. Great, thank you. Your next question comes from Ty Collin with CIBC. Please go ahead. Hey, good morning. Thanks for the questions. Maybe just first one, I'm wondering if we could drill down a little bit more on the POS performance in Q3 by geography, just maybe the difference between North America and the U.S. versus international. Could you also just maybe clarify the comments made at the top of the call about how POS trends were in September? Yeah, why don't I start off with that? I might have missed your second part of the question, Ty, so please don't hesitate to ask it again. Let's kind of bifurcate POS into, as you said, international and the U.S. We certainly took share in the U.S. from a POS perspective, and as I think, either in the prepared comments or in one of the questions we talked about, there's a little bit of bifurcation between M& D and what I'll call legacy Spin, where Spin the POS was. We're quite pleased with it in the third quarter, and we laid out how we're addressing the M & D situation as we head into next year. Internationally, that POS was not as strong as an overall share overall versus the North American market. I missed your second part of your question. I apologize. Sorry, the second part. I just wanted to clarify the comments made on how POS trended in September specifically. I think there was a comment. I wasn't sure if I heard accelerating or decelerating in September specifically. Hey Ty, it's Tim here. We just called out that in September, consumer demand in the U.S. specifically weakened. As you probably would have seen, macroeconomic uncertainties weighed on the consumer sentiment in Q3. As we indicated at your conference in July and August, I think our POS was kind of the market wasn't down as much, but it ended up being down about 2.5% for the quarter. That was primarily due to deceleration for the TAM in September specifically. Okay, got it, thanks. Thanks, Tim. Just for my follow up, circling back to digital games. Some pretty decent top line improvement, even excluding the $10 million in partnership revenues that you recognized in the quarter. Was that driven by any specific changes or adjustments at the product level or to the approach around promotion and monetization? Anything to call out there in terms of how you've approached that creative center? Yes, absolutely. I think one of the things is you see us really being focused this year on ensuring profitability as we go forward in digital games and being focused on subscriptions and Piknik and on monthly active users and ARPPU in Toca. What was different I think is that our users, we had more releases of features, collaboration and collaborations in that particular product than we've had before, and just recently we had a great collaboration with Sanrio. We're seeing that the bottom of the funnel is performing really, really well, and we've had some focus on that as opposed to higher spending markets. We're really happy with the team place. We're seeing an acceleration of growth obviously from last year. When I look at H2, certainly expect that double digit growth for H2 as a whole, and when we look into next year, really excited. From the content, the examples that accelerating our content and our partnership within Toca and then within Piknik, even adding more apps that will just drive a higher subscriber base, keep them longer, have a longer TAM, and provide more value ultimately to the consumer. We're really excited with the Digital Creative Center and the team that we have there. Great, thanks for the answers. Your next question comes from David McFadgen with Cormark. Please go ahead. Yeah, hi, great. A couple of questions. I was just wondering what drove the digital games revenue up despite the fact that MAUs were down. How did you drive that increased monetization? There is more than one lever, right? If we take digital, there is more than one lever. There is top of funnel, and then ultimately if you use Toca, the conversion. You have 50+ million monthly active users. How many of those are actively participating in buying content, and then ultimately what's the purchase price that they're buying? There is more than one lever to play within Toca. Our focus this year has been very much, to be frank, focusing on that bottom part of the funnel. We're obviously going to shift towards having a more balanced approach in 2026. In Piknik, there is subscriber growth and the same thing, you keep customers longer and then there is ultimately a higher ARPPU that you would have with those individual customers. The last piece is around the ability to further monetize the apps that we develop, not just from a one-time revenue base, but more from the ecosystem supporting the overall ecosystem of Picnic and driving attention to it that would then ultimately feed into subscriber growth. Multiple levers to play. This year we've been very focused on ensuring the monetization and unit economics are working. Focus on that and then next year continue to drive that top of funnel. Yeah, I think we've been really levering up on our conversion for average revenue per paying user and we're seeing the results of that. That's very much coming through the content deliveries, the feature deliveries, and the collaboration. Giving more relevant content to our fans more frequently that we know that they want, we're seeing that performance. As Jonathan was just saying, we very much focused on the bottom of the funnel to make sure that we're seeing that conversion. The same thing, you know, with Piknik, we're seeing both retention and ARPPU up, and we're also benefiting from diversifying our revenue, as mentioned earlier in the call, by selling some of our games to a third-party gaming platform. Last quarter we talked a little bit about the benefit of having focus in these key areas. Here you see us executing. Based on those comments, it would seem that what we've seen in Q3 should continue into Q4 and into 2026. Right? I think yes, on the underlying elements of the unit economics, remember that partnership revenue is about $10 million. When we were thinking about our internal planning, the ability for the revenue recognition happened in Q3 versus Q4. I think you have to just keep that in mind as you're thinking about the overall growth for digital. I would just stand by my previous comment, which is that we would continue to expect double-digit growth in H2, but Q4, because that partnership revenue materialized in Q3 versus Q4, is probably more like single-digit. That doesn't take away our bullishness as we head into the long term with our digital creative center. Okay, that's helpful. Just looking at the preschool segment, given the comments you made about Melissa & Doug, you know, you lost some share, increased competition and so on, is it safe to assume that Melissa & Doug's revenue performance or the decline was greater than the overall preschool segment? The POS. Yeah, we indicated that Melissa & Doug's POS was down and Spin Master Toys was up. I'm just talking, I'm just. I'm just talking about revenue in the quarter. I'm just wondering if Melissa & Doug's revenue decline was greater than the overall segment for preschool. I would answer it this way. I would say that, you know, I would take a step back from the infant toddler preschool category. We, you know, per se, continue to be very stable in terms of our share. That's at the macro because we always see more than one brand that we have and we have multiple levers to play within that category. That's how we look at it. We look at it from a portfolio approach. Some years, some will be up, some years will be down. Specifically with M & D, the narrative that we shared is that yes, this year there is heightened, there's multiple factors at play and this year the revenue performance is not at the, you know, at the levels that we would like it to have. We believe that we have the plan in place that, you know, there's a new management team here. Quite frankly, the leader of M & D has been with the organization for about a year. She's doing a phenomenal job. We have, she has a great plan and we have a great plan to execute next year to ultimately return that brand to growth. Okay. You called out a couple of buckets of CapEx or various CapEx initiatives. Can you just give us what you expect the total CapEx to be for 2025, including the spend on intangibles? I think we gave the number that we said. We think it's going to be around $70 million less than we initially expected. Tim, right, that's what I think we said, or $60 or $70 million. Somewhere around $175, thinking about it, it's kind of ballpark. Okay. Is less than what we initially thought, about $175 million this year. Okay. All right. Thanks a lot, guys. Your next question comes from Brian Morrison with TD Cowen. Please go ahead. Thanks very much. Lots of good color on the call here. That's to be digested. I appreciate that. I do want a point of clarification, Jonathan. In the prepared remarks it says we're aiming for improvement in our year over year financial results in the fourth quarter compared to what we saw in this quarter. Can you just clarify for me because I haven't really digested. Does that mean that you think you're going to have better results relative to Q4 last year or Q3 this year? When I said that, what I mean here was my thinking. We were down year over year revenue in Q3 by 17%. When I look at Q4, I see a marked improvement of that number. Okay. Okay. I hope that, Larry, Brian. I'll play with the math. I now understand it. Thank you. I guess just bigger picture. A lot of the questions have been answered here, but bigger picture I guess Christina and or Jonathan, you've been in this seat for quite a year or half a year to a year for depending on. No, four months. I like that you think four months, six months. Yes. Okay, half a year. You're making progress on core properties, your capital allocation, your cost efficiency. It seems like things are really starting to go the right way here. I'm just curious to put you on the spot. Do you have a North Star here in terms of financial performance or like mid cycle EBITDA? We get back to a normalized industry environment. What is reasonable in your view? You threw out prior to you arriving, the prior management team threw up $500 million in the ballpark. Is that the achievable number in a normalized cycle for the industry? Of course $500 million is an achievable number. The question is timeframe. I don't know what this, I don't know what was that. I would have to go back and look. To answer your question directly, yes. It then becomes timeframe. We will obviously next year in February or March when we have our fourth quarter call, we'll be able to provide more insights into 2026 and how we see the long, and perhaps how we see kind of the long term trends in this business. Going back to what we said before, we fundamentally believe we can return this business to profitable growth. As we're starting to shape up our plans for 2026, specifically seeing the phenomenal products that we have, seeing how this organization is coming together around everything related to PAW, supported by the movie, seeing the plan for M& D's turnaround, seeing the trajectory of the digital games business, and seeing the focus on ensuring that we're really effective with both our OpEx and our CapEx, we can only say we're really excited about the future and believe that we can provide attractive TSR to our shareholders. That's very helpful. Thank you. Your next question comes from Drew McReynolds with RBC. Please go ahead. Yeah, thanks very much and good morning. Two for me. First on back to the digital games, Christina, you alluded to, and you've done so in prior quarters, competition on the Toca Boca world side. Is that just generally a generic comment with respect to, you know, all the proliferation platforms out there, or is there something more nuanced in that competitive dynamic? Second question, I guess for you, Jonathan, on the IT investments into the kind of better demand forecasting and planning, can you give us a sense of, I guess, how much this can move the needle in terms of your ability to, you know, essentially forecast and predict what is, you know, obviously a seasonal and somewhat lumpy business. Just want to see kind of where the yardsticks are currently and where they're going. Thank you. Sure. Thanks for the question. I think on Toca Boca, what you hear us saying is, of course there's what you alluded to, the macro environment where we're always fighting for attention and there's lots of other games and platforms that are out there. There are specifically some games that are giving away an awful lot of free content on a regular basis that are driving some competition in MAU, and we are definitely focusing on both driving MAU, as well as converting that. I think our strategy is a little bit different, but there are competitors in the space definitely competing with us for that top of funnel attention on a more free basis. Drew on the IT side, I think one of the catalysts to looking at our IT stack certainly was the M &D acquisition and seeing the benefits of having one platform and a more up-to-date platform. We can't ever get away from this business being an H2 business. You know that is an underlying factor. What this will do, though, is allow us to make better and quicker decisions. I think that's the key here, to be able to better adapt to that H2 and quicken in a more, in a quicker manner. Adapt to the trends in the second half, whether it be chasing inventory, hot products, or whether it be adapting to a slowdown in any given product. It also allows the organization as a whole to work as one team. We talked a little bit in our first call where we saw an opportunity of bringing the three creative centers to work stronger together and really unleashing the full potential of our owned IP by leveraging the three creative centers. This actually also will help bring the team together by bringing clearer information so we can make better decisions at a holistic enterprise level. It can also help drive that top line, which is ever so important. That's helpful. Just the time frame for getting all of that done where you internally begin to see a big difference on what you described, is that all kind of kicking off in 2026 or is the real kind of flow through benefits? I know it's ongoing, but is that a 2027 thing? Yeah. The CapEx and some heightened OpEx that we have is this year and next year. You would imagine the benefits really start flowing through after that. Okay, thanks very much. There are no further questions at this time. I would like to turn the call over to Christina Miller. Thank you. Thank you everyone for joining us. We appreciate your interest in Spin Master, and we look forward to speaking with you again in the new year. Thanks. Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.