Spin Master Corp.

Ladies and gentlemen, thank you for standing by, and welcome to the SPIN Master Q1 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ms. Sophia. Thank you. Please go ahead, ma'am.

Thank you, Cara. Good morning, everybody, and welcome to Spin Master's financial results conference call for the first quarter ended March 31st, 2021. I am joined this morning by Renan Harari, Spin Master's co-founder and director, Max Rangel, Spin Master's global president and CEO, and Mark Siegel, Spin Master's chief financial officer. For your convenience, the press release, MD&A, and financial statements for the first quarter 2021 are available on the investor relations section of our website at spinmaster.com. 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, or any other future events or developments. Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result, SpinMaster cannot guarantee that any forward-looking statements will materialize. and you are cautioned not to place undue reliance on these forward-looking statements. Except as may be required by law, Spin Master has no obligation to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. For additional information on these assumptions and risks, please consult the cautionary statements regarding forward-looking information contained in the earnings release dated May 5th, 2021. Please note that Spin Master reports in US dollars and all dollar amounts to be expressed today are in US currency. I would now like to turn the conference call over to Renan.

Thank you, Sophia. Good morning, and thanks for joining us today. I want to begin by recognizing the amazing work our team across the globe has accomplished. Together, they rallied to drive the strong results we achieved this quarter. We're managing through the complexities of the pandemic, and I am continually amazed and impressed by the effort and dedication of our employees. SpinMaster is in a very different position relative to where we were at the same time last year. In May last year, Mark and I had to deliver the most challenging Q1 results in our history. I want to compliment the team on getting the turnaround done in such a quick and efficient manner. Our toy business grew nearly 22% in the quarter, and our lineup for this fall is broad, innovative, and deep. Our performance this quarter is a clear demonstration that our operational remediation efforts are delivering results and our commitment to creating exceptional play experiences and engaging children's entertainment through our three creative centers is working. There is still more to be done, but we are now back on track to resume our growth trajectory with new operational rigor and a simplified supply chain to meet the challenging demands of the retail environment. Not only did we transform our toy supply chain, but we reorganized ourselves with our three creative centers in a way that provides clarity, structure, and a strong platform for future organic and acquisition-driven growth. This structure is another step in our journey to transform Spin Master from a traditional toy company into the leading global children's entertainment company. We have many exciting opportunities in the toy, entertainment, and digital games universe with which to grow. and I'm excited as I've ever been about our prospects. I'll address our leadership transition shortly, but before I do, I want to talk about both digital games and entertainment. One of the standout areas of performance for Spin Master over the last nine months has been our very strong performance of our digital games creative center. In Q4, we saw strong revenue growth. We saw revenue growth fourfold year over year, and it continued and the growth continued in Q1 with revenue up 394% compared to last year. Kids continue to engage with digital games as an outlet for creativity, exploration, and social connection. With kids spending more time at home and parents being more flexible with screen time, we grew our digital games revenue primarily due to the growth of Toka Life World platform. Toka Life World is a game that regularly evolves with new content and play sets, as well as creator tools that allow kids to express themselves and personalize their experience. Kids are playing games, videoing themselves, streaming the videos onto platforms such as TikTok, Twitch, and YouTube for others to watch. Toca Boca has seen explosive growth in consumer engagement, and we believe this is a major factor behind Toca Life World's growth. According to the gameindustry.biz, during the period Q2 to Q4 2020, Tokalike World was the number two downloaded mobile game in the U.S., behind Among Us, but ahead of Roblox. The Tokaboka hashtag has now generated over 6 billion views on TikTok, and Tokalike World now has well over 30 million monthly active users. In total, the Tokaboka ecosystem currently has over 50 million monthly active users, compared to 25 million last year. In addition, we saw strong growth in our SagoMini subscription business where we had over 285,000 subscribers across SagoMini World, SagoMini School, and SagoMini Box compared to 150,000 last year. This large monthly active user and subscriber base is a tremendous asset for us to develop a direct relationship with the consumer and to which we can market and sell new digital games as we expand our digital games offerings. We're now working hard on our first ever multiplayer 3D game, TOCA Days, planned to go live in Q4 2021, which expands TOCA's market to a wider and slightly older audience with deeper and more complex experiences. Kids will be able to play and socialize together from multiple locations at the same time. TOCA Days leverages the trend of kids using digital games as far more than entertainment alone, but as a key part of their social lives. continuing to make progress on the opening of noid our new studio in stockholm that will focus on developing digital games leveraging our own id this studio should be operational by end of this year finally we are actively looking for digital games acquisitions to complement and expand our current offering and further grow our presence in this space turning to entertainment At the heart of this creative center is our commitment to exceptional storytelling and engaging, enduring characters that resonate with kids around the world. I'm constantly impressed by our team's ability to create original and compelling content for screens of all types, from short-form content on YouTube to long-form series for streaming platforms and traditional broadcasts, all the way to theatrical film releases. We're taking a multifaceted approach to content creation to engage with kids. The team also has a rich slate of new TV shows and feature films in development and are staying true to our commitment of introducing once-a-new entertainment properties a year. We're on the brink of one of our most exciting milestones in our history with the much-anticipated launch of our first feature film produced in-house. Paw Patrol, the movie, will be unleashed in theaters on August 20th, distributed by Paramount. The tops are complemented by a star-studded voice cast and dynamic music. This past Monday, it was announced that Adam Levine will be writing and performing an original song for the movie. Watch for the trailer dropping on May 17th. Earlier this month, we completed our leadership transition plan. Max, who joined us as our global president in January, has now expanded his role to global president and CEO. You will hear from him shortly. I've shared with you before the many strengths and experiences Max brings to Spinmaster, from his ability to mobilize teams and harness the potential of individuals to his leadership of complex global businesses. We are already witnessing the impact Max is having across Spin Master's business and have full confidence in his ability to lead and deliver on the business priorities for 2021 and beyond. We are highly energized by our vision for the future, focused around becoming the leading global children's entertainment company. What makes our growth story so compelling is our vision underpinned by a solid operating financial platform, our deep creative talent, a robust content and product pipeline, driving our franchise and brands, and an exceptional leadership team. We believe that the three creative centers can work together to create holistic play experiences for kids wherever they are and to deliver significant long-term value to shareholders. Thank you for your continued support. Let me hand over to Max. Max?