Stock Updates: JAKK & THRY

Jakks Pacific (JAKK) Update

Jakks Pacific reported outstanding Q1 2025 results. Here is the link to my initial pitch for those who haven’t read it. I continue to hold my position.

Results were far above my expectations and street estimates. Revenue was $133.3m, +26% YoY versus estimates of $92.9m. Gross margins expanded to 34.4%, up 1100 bps, and EBITDA came in at $0.4m, up from -$17.2m last year, and versus estimates of -$14.2m. This is the second Q1 positive EBITDA in the last 15 years for the company. Cash balance remains exceptionally high, at $60m or ~$5.40/share. The dividend remains in place, which now yields 5.34%

Unfortunately, this got totally overshadowed by the retaliatory moves against China. But at a crazy 145%, even if a lot of toys are affected, it really puts the industry at a disadvantage compared to other consumer products. I wouldn’t be shocked if retailers start giving more shelf space to other categories. Like the president mentioned, these tariff levels can't stick around for long and will probably drop soon. So, I’m sticking with my position.

For now, the tariffs likely have very little impact on the business, given that we are in the lull of the toy industry (Until September). However, if the tariffs were to stick until August, there is a significant risk that 2025 is a write-off. While Rosen, their largest shareholder, might provide some US manufacturing capacity for Jakks, it is likely too small to matter. Any plans to move factories outside the US would likely take 18-24 months, but that’s just my best guess.

Given its solid balance sheet and phenomenal 3-year setup, I am happy to ride out the noise.

Thryv (THRY) Update

Thryv reported Q1 2025 Results on May 1st. Here is the link to my initial pitch for those who haven’t read it. I continue to hold my position.

It was another solid quarter, but with one small caveat to keep track of, which I’ll discuss later.

Revenue was $181.4 m, -22% YoY, versus estimates of $174m. EBITDA was $20.9m, versus estimates of $18.9m. SaaS revenue came in at $111m, +50% YoY and +24% organically vs estimates of $108m and now represents 61% of revenue:

The company guided to Q2 SaaS revenue of $113-115m, slightly above estimates of $114m. However, due to macro concerns, they decreased full-year SaaS guidance from $464.5 - $474.0m to $460.5 - $471.0m. On the call, the CEO clarified that he has not seen any degradation in the trends so far, but wanted to be conservative, thus the Q2 guidance above estimates. This is consistent with many other public companies that have taken a prudent approach to guidance.

One area of concern is that the user count decreased sequentially from 99,000 to 96,000:

The decline in users is partly driven by the company’s strategic pivot in late 2024 to move slightly upmarket and focus more on multi-center adoption instead of converting customers away from their marketing service platform. This pivot also explains the increase in ARPU from $324 in Q4 to $335 in Q1 and seasoned NRR of 103%. At the end of 2024, the company had 38,000 SaaS customers that came directly from its Marketing Services. This dropped to 34,000 in Q1:

‘During 2024, we converted approximately 46,000 clients from our digital Marketing Services to our Thryv Platform, generating a $37.1 million increase in SaaS revenue during 2024. As of December 31, 2024, approximately 38,000 of these clients remained as active SaaS clients. As of March 31, 2025, approximately 34,000 of these clients remained as active SaaS clients.’

This means the company added 1,000 customers outside of the zoo in Q1. While I am not too concerned, it could become worrisome if it’s the start of a trend.

Overall, my model, assumptions, and upside are unchanged:

As I said in my write-up, this is a pitch for those happy to ride out potentially bumpy quarters but are okay with holding the stock today, given the substantial 3-5-year upside. This quarter changed nothing about that thesis; the story keeps chugging along.

Disclaimer: I am long NASDAQ:JAKK, & NASDAQ:THRY. The information contained above is not and should not be construed as investment advice, and does not purport to be and does not express any opinion as to the price at which the securities of any company may trade at any time