Spin Master has witnessed major increases across its digital gaming segment that soared by a full 404.8 per cent in revenue to $38.1 million in the company’s fourth quarter and year end 2020 financial results.
The segment has been led by the success of the Toca Life World platform, as well as growth in the Sago Mini subscription user base, and has helped firm up a “clear vision for the company’s future,” according to co-CEO Ronnen Harary citing its three pillars in toys, entertainment, and digital gaming.
Elsewhere, it was a mixed bag of results that falls in line with the current industry narrative. Total Q4 2020 revenue for Spin Master hit $490.6 million, an increase of 3.6 per cent, while gross product sales dropped by 7.1 per cent to $511.8 million. A decline in RC and Interactive Characters was partially off-set by increases across Activities, Games & Puzzles and Plush, Boys Action and Construction, and Pre-school and Girls.
In Europe, gross product sales increased by 2.3 per cent by decreased by 11.8 per cent in North America and 8.1 per cent in Rest of World.
Other revenue grew by 76.5 per cent to $56.3 million. Growth was driven by an increase in digital games and entertainment and licensing revenue.
“We’re proud of the significant operational improvements and cost efficiencies our team delivered in 2020, while simultaneously navigating the complexities of the global pandemic,” said Harary.
“At the outset, we were committed to resolving the operational challenges we faced in 2019. I am pleased to say that we achieved our goal through significantly improved focus and execution in every function across Spin Master globally.
“We are particularly excited with the strong growth we saw in our digital games business led by Toca Life World. With a clear vision for our future, a solid operating platform with three thriving creative centres encompassing toys, entertainment and digital games and an exceptional leadership team in place, fortified by the appointment of Max Rangel as Global President and with him assuming the position of CEO in April, we are now poised for our next stage of growth.
“We are well positioned to grow in 2021 as we continue to navigate through Covid-19, based on our diversified brand portfolio, award-winning entertainment franchises and innovative digital games, all driving towards generating strong long term growth and shareholder value.”
Mark Segal, Spin Master’s chief financial officer, added: “We are pleased to see the results of the operational improvement initiatives we put into place throughout 2020, solidify in the fourth quarter.
“By Q4 2020 we completed most of the work necessary to remediate the operational issues arising in Q4 2019. We were able to streamline our distribution and warehousing structure, considerably reduce inventory levels, lower our costs and expand our gross margins. This allowed us to generate nearly US$124 million in free cash flow for the quarter and US$232 million for 2020, allowing us to end 2020 with the strongest net cash position in our history of just over US$320 million.
“Our solid financial position together with the achievement of our targeted run-rates on key expenses related to our operational improvement initiatives, supports the growth potential of our global platform. As we look to 2021, despite some continuing lockdowns and retail disruptions, 2021 is starting with strong momentum.”