Good day, and thank you for standing by. Welcome to the Q3 2024 JAKKS Pacific's Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephen Berman, Chairman and CEO.

Good afternoon, and thank you for joining us today. It's an exciting time for the year here, as Q3 is always the highest sales quarter and by extension, generates a lot of activity. The end of the year is in sight with less than 60 shipping days remaining, and our goals for the full year are starting to feel like they're more within reach. Our teams around the world were collaborating across offices extensively last quarter to ensure we are fulfilling orders and not taking no for any answer when obstacles appeared whether driven by East Coast port issues or otherwise. We always try to deliver as much of our second half volume in Q3 to mitigate full year risk and to ensure customers and shelves are set for the holidays. In Q4, we pivoted a lot of our attention to execution of preplanned retail programs and consumer marketing to generate strong sell-through. We are executing against the game plan this year with some great programs in place across a wide range of accounts in all of our major markets. As highlighted in our press release, all three of our toy Consumer Products divisions delivered year-over-year sales increases in third quarter. That includes our outdoor seasonal business, which has been challenged in recent years, improved listings in some of our core businesses and the timing of the shipments are leading to the improvements. It's still early days, but it's great to see some of the positive trends emerging there. Although we are selective about what we discuss during any given quarter, as a reminder, portfolio management is an essential part of our operation. We are actively managing over 30 different businesses within the toy and consumer products alone this year, whether it's property-driven businesses like various IPs from the Walt Disney Company, IP from Nintendo, Daniel Tiger Neighborhood, Black + Decker or many others, or category-driven ones like Play Tents or Ride-Ons, each product line has its own dynamics. There are differences in customer base, retail placement, competitive set, manufacturing issues, costing and pricing, product innovation and brand relevance. I could go on and on. And every country is a distinct market regarding most of those points. Those drivers are independent of whatever broader trends might be impacting our customers and consumers, which tend to get most of the attention and discussion, but the success of any of these businesses is really driven from the bottom up starting with the unique product line and the consumer and customer value proposition. The portfolio approach is essential to maintaining and growing a healthy business over time, especially given that our end consumers will naturally age out of our offerings in most instances. This reality forces us to constantly change ourselves when it comes to product freshness and innovation while maintaining sensitivity to retail margin requirements and consumer price considerations. Our dolls, role-play, dress-up business was up 6% in the quarter and is up 2% year-to-date. Our Action Play & Collectibles business was up 5% in the quarter, but down 9% year-to-date as the timing of the Sonic 3 film in December this year doesn't compare well with the Super Mario Bros. movie film, which was released in April 2023, independent of other aspects of that business. But great quarters for both divisions regardless, really exciting things happening in each one, but now looking forward. We are also continuing to fight for business internationally and keep up with customer demand. Latin America continues to be our biggest asset story. We shipped $22.6 million in the quarter, up 48% compared to the prior year and currently up 23% year-to-date in the region. Our European region continues to open up new accounts and build out its infrastructure, but it's a battle that's taking place customer by customer and market by market as we knew it would be. As a region, it benefited significantly from the strength of the Super Mario Bros. movie last year. Nonetheless, down 3.8% in a big quarter is a good sign and improvement over Q2. Asia Pacific is relatively small for us and is also down 3.4% in the quarter. Canada is down over $4 million in the quarter due to a combination of timing and some challenging trade dynamics there. Turning to what we see at retail, I'd say the consumer is constantly showing up and acting when novelty and newness appears on the shelf, but they're not filling the cart with everything they see. A lot of our aggregate year-over-year POS trends are dominated by retailers actively destocking last year and, by extension, pushing through the channel content-led properties from recent years. But several of our new fall introductions have received great consumer reactions and have left retailers scrambling to pull products from their warehouses and backrooms into the front of the store. With our strong sell-in this quarter, the meaningful cash register ring is starting to happen now, particularly in November and December as our media and promotional campaigns kick in. Obviously, Halloween shopping is continuing as we speak. As we have communicated all year, retail is still feeling out where the consumer is, and we've known we were looking at a down shipping year. This is a holiday that famously shows up extremely late, even more so than Christmas. So despite today's date, it's hard for us to say definitively how the year will end up. Early reads on POS from syndicated data suggest that sell-through is soft across the industry. The good news is that we are doing better than most everyone else and potentially picking up a bit more market share in the process. But again, that's really just an early read from earlier this month. Our 2025 lineup is largely developed and the team will soon be pivoting to closing the books on 2024 and refocusing towards what will hopefully be a stronger 2025. It is worth noting that outside the US, our costume business was up in the quarter, which is a 7% increase versus the prior year. The UK, in particular, has seen some costume companies reorganize and there remains a lot of disruption happening there. But our company-wide efforts in Europe are designed to support our toy and consumer products and costume businesses in a more integrated manner than how we go to market in the US. So we remain both hopeful and confident we continue to build the quality of volume there. Moving over to the balance sheet. We remain extremely disciplined with $63.5 million in net inventory at the end of the quarter, inclusive of in-transit product compared to $68.8 million at this time last year. We are lower despite our continuing to build out an EU, hub-and-spoke warehouse system to be more responsive to customers with faster replenishment times. We're also taking advantage of our financial strength and resilience to scrutinize our trading terms to maximize margins and ultimately cash. This approach is prompting receivables to grow meaningfully versus the prior year as we had anticipated. Our approach is working, and our accounts receivable has been turning back into cash such that we had no drawdown on our credit line by the end of the quarter. By extension, I'm extremely happy to reiterate that we remain debt-free as a company. In a world of uncertainties and volatility around interest rates, it's just great to operate from this position of strength as we prepare for the next year and evaluate new business opportunities for 2026 and beyond. Another noteworthy element of our business is the extensive number of exclusive products we bring to a broad array of retailers globally. We have also had a heavy focus over the past few years to secure additional space at retail. Beyond traditional in-aisle planograms, you could find us with out-of-aisle placement, stand-alone displays, pallet programs, end caps and at the check lane. This additional real estate at various retailers globally opens new consistent selling opportunities, both in season and year-round as our price value and strong consumer propositions drive solid results for the customers by extension of our licensors. We know that the question of capital allocation is on many investors' minds, and it's on ours, too. We do not have any new news on that front to announce today. I do feel we are getting closer to the point that we can be more specific about our plans in this area. As a company, we are in a much, much stronger place than we were during the turmoil of 2018 and 2019. We are still mindful, however, that our success is not a reason to squander all that hard work. We are soliciting a wide range of opinions and taking a very thoughtful look at all of our options and possibilities for the years ahead and, by extension, what our capital goals and needs should be. I will now pass it over to John for some of their comments, after which I will come back to discuss Q4 and a bit more.

Thank you, Stephen, and hello, everyone. It's always a bit more pleasant to talk about the business after Q3, another $300-plus million sales quarter behind us, slightly more than last year, a super outcome. Stephen talked a lot about sales, but I'll layer in one more observation. Earlier this year, we added to our earnings presentation deck, an attempt to more clearly break out the core evergreen business that we view as foundational to the company. This analysis looks to isolate the more volatile content-driven figures and doll product lines. We understand that for those who don't live in our aisles at retail every day, the dynamics of the 30-plus businesses in our portfolio are nearly impossible to visualize and keep track of. As we've also pointed out, there are limits to what we can share for both confidentiality and competitive reasons. But in any case, I wanted to highlight that among the positive attributes of our Q3 results, our content business lifting nicely year-over-year, given the strength of that portion of the portfolio as we enter the back half of the year. But more importantly, the core evergreen businesses collectively have put up solid numbers this year, inclusive of Q3, that is not to suggest we intend to fall into the trap of scrutinizing quarterly box scores when we are managing to a full year result. This view of our business is more of an analysis of the outcome of our collective efforts more than an organizational design or a specific destination we're trying to navigate towards. But overall, we continue to feel it's helpful, so we hope externally you find it at least somewhat insightful. Moving on down the P&L, gross margins held up well in the quarter. Cost of product was a bit higher than the prior year as we've been seeing and anticipating. Similarly, royalty expenses have been a little bit lower in aggregate to help compensate. We're very happy with the 33-plus percent gross margin in any quarter, but in particular, during our largest quarter. Gross profit dollar growth of 2% in the quarter, $1.8 million in total is modest, but much better than the unfavorable $14 million gross profit swing we saw in the first half of the year. We continue to feel that we are running a business that should deliver a minimum of 30% gross margins on a full-year basis. That projection assumes that not everything executes perfectly, but a number of things that don't work as planned remain a somewhat tolerable quantity and don't miss the intended mark too dramatically. Selling expenses in the quarter were $7.6 million, down from $10.7 million in the prior year. There are at least a couple of different things happening in this area. We're lapping some expensive quarters in the selling, warehousing and outbound freight areas last year, which in total generated about $1.5 million in one-time favorability this quarter. We also have a bit of a timing save as we have been pushing more of our planned media spend into Q4 than what we have done historically. I would say year-to-date, that's about $2 million that will find its way into Q4 compared to last year. So a lot of moving pieces here. But as we get closer to the end of the year, the cumulative variance starts to smooth out a bit. Our G&A spending similarly was decent in the quarter at $33.1 million, down 2% from $33.8 million and meaningfully improved from the 16% increase we posted in the first half of the year. We are starting to lap some staffing-related cost increases that took place in 2023. We also continue to work down some short-term spending, which I've talked about before, related to Sarbanes-Oxley, cybersecurity and other process-related deferred maintenance type areas we've been catching up on. It's also worth noting that the teams have taken to heart the message that we were very clear about at the start of the year regarding revenue comparison being tough this year. So we needed some new thinking and ideas about where we could reallocate spending to more beneficial areas. As a result, we saw some benefits here and there starting to dribble through in the quarter. This is a persistent bailing water exercise as broadly our fixed costs tend to creep up consistently such that without scale leverage, it is very challenging to maintain or expand margins. In reviewing the year-over-year detail, it's worth noting that the creditworthiness of some retailers remains a concern for us. I would estimate that we're up to about 1% of the year-over-year sales decline attributable to a deteriorating credit situation in some of our customers. This reflects a combination of customers who have filed for bankruptcy as well as those we consider very high risk. We are frequently in discussions internally for both our toy city and costume businesses around this issue. Our crystal ball isn't perfect. We have one noteworthy account in North America who remains significantly past due but has yet to file. But overall, we think we've done a good job to date turning off shipping at the right time. We do suspect there is more bad news to come on this front in the world of retail, unfortunately. On a lighter note, let's talk about interest expense. As Stephen pointed out, as we move through our seasonal curve, we have paid down our short-term borrowings as of quarter close, and we remain undrawn as of today. Our year-to-date interest expense is $938,000, a reduction of $4.8 million versus the first nine months of 2023. For fans of EPS, that's over $0.40 per share in annual pickup with one quarter left to go. And for fans of cash, it's clearly a meaningful year-over-year pickup in pre-tax net income even if it doesn't appear in our adjusted EBITDA metric. Adjusted EPS for the quarter was $4.79 and $4.50 for the first nine months. Those numbers are up from $4.75 and down from $5.66, respectively, from 2023. Our trailing 12-month adjusted EBITDA is $58.5 million, reflecting an 8.5% EBITDA margin. And now back to Stephen for some additional remarks.

Thank you, John. We talked a lot last quarter about many of our new product initiatives for this fall, but I wanted to highlight a few more areas as we look to finish up the year. A little over 2 years ago, we highlighted an internal analysis where we assessed the role of low and open price point retails to our overall business. We recently revisited that analysis, and we're happy to see consistent results. It continues to be the case that over half of our total company Toy and Consumer Product sales volume is driven by retail price levels of $30 or less. When you raise that threshold to $50, you're getting close to 90% of our sales volume. We remain committed to running a business that is built around the idea of accessible price points and by extension addressing the widest possible consumer market, both in the US and internationally. This philosophy, by extension, helps to minimize our risk inventory in any one of our product lines as well as reduce the amount of cash we are tying up in working capital. And although price points do not directly relate to size, you could also consider the supply chain efficiencies associated with smaller cube products, whether you're considering ocean freight, warehousing or a new appropriate direct-to-consumer shipping and walk in our showroom, you will see that commitment to opening price points across nearly every single one of our businesses. And I should also highlight, it's always a key criterion that we contemplate entering new categories of businesses either organically or via acquisition. With all that said, however, we do selectively and thoughtfully bring to the trade higher price rate propositions from time to time. We understand the excitement and energy around gift-giving delivering the big bucks, and we don't want to stay shut out of that portion of the market. Our Disney Princess Style Collection and fresh prep gourmet kitchen is a great item as a consistent presence in our license we introduced last year. Our Black and Decker tabletop workbench is a great evergreen item available at most major accounts. Our climbing jungle gym comes in Fisher-Price, Paw Patrol, and Mini Mouse versions. It encourages children to engage in physical activity, enhancing their motor skills and overall health. The safe and easy assembly, play structure allows children ages 2 to 6 to express activity and their creativity and imagination, complete with an attachable slide, squeaking stairs, a task panel, this durable climbing gym is one of the most popular sought-after preschool toys this holiday season. This fall, everyone is really excited about our latest offering in this price range. Building on the tremendous success of our Target shopping cart and target cash register late last quarter, Target introduced the new toy check lane. This toy delivers on all the pretend shopping needs. It comes with a Target pretend shopping bag, various Target essentials, groceries, and pretend money. It features a hand-crank conveyor belt, beeping scanner, a credit card swipe machine, and a working cash register with microphone, cash drawer, and working buttons. The team really did a fabulous job with this item, and it looks amazing and plays well. I personally enjoyed showing nearly everyone who has come to our offices over the past several months what a great example it is of our bringing something new and fresh to retail, but also being very fast to market given how quickly we went from concept to customer approval to shipping. Another area we didn't cover on our last earnings call with some of our key focus items this fall from Nintendo. The recently launched Super Mario Course Complete Playset is a must-have for any Super Mario fan. You can experience the fun of conquering a course just like the iconic video games, helping Mario climb the famous stairs using the spinning lever. The set comes with a 2.5-inch Mario figure, Interactive stairs, flagpole, castle, and a base platform offering multiple ways to play and display. We are also highlighting one of the most sought-after and best-selling toys, the Mario Kart Mini Anti-Gravity RC Racer. Mario can race in standard mode or switch to anti-gravity mode for drifts and thrilling tricks. The enhanced performance of this RC allows you to pop wheelies and perform 360-degree spins with an impressive range of up to 100 feet. Simply put, it's a great toy. And from another iconic Nintendo IP, we're offering from the world of Legend of Zelda, the link with power shield and sword action figure inspired by The Legend of Zelda: Breath of the Wild. Also, in our last call, we avoided discussing Sonic 3 due to embargo issues. But since then, the product has begun to hit the shelf and has generated some great reactions. The 5-inch figures are the core segment within the line with a nice range of characters and styles. Our key driver is our ultimate talking Sonic, the 12-inch scale movie-style figure has 15 points of articulation and features over 30 iconic humorous phrases and sounds from the movies. These items are available across all major accounts leading up to the film's release this December. I also wanted to point out we have an exciting new line of toys supporting the holiday launch of Moana 2. Our product line celebrates the new music, new caricatures, and the new outfits consumers will experience when they see Moana 2 in theaters this holiday season. Moana sings one of her iconic songs and the new JAKKS large doll, to complement the story, JAKKS is also launching a large doll of Moana's new little sister, Simea. Simea will capture your heart in the story and at retail. Lastly, but not least, as a reminder, the extensive line of products based on The Simpsons are continuing to be delivered to retail, and we have seen extremely strong sell-through performance to date. As mentioned earlier, our November and December calendars are filled with great placement at retail for a broad portfolio of businesses. I strongly encourage you to get out to the retail this holiday season and look for JAKKS products, and I hope you will agree that our retail execution could stand with the very best in the industry across a wide range of IP. As always, thank you for your support and interest, and happy Halloween.

Thank you. At this time, we will start a Q&A session. Our first question today is from Eric Beder from Small Cap Consumer Research. Your line is open.

Good afternoon.

Hey, Eric.

Congratulations.

Thank you. Good afternoon.

I want to talk a little bit about the outdoor segment and the opportunities there. I mean, obviously, you have the Authentic Brands products beginning to flow out. I know it's only the skateboards right now. But how positive and confident are you when you look at that potential to have that drive really kind of the outdoor business and kind of offset some of the seasonality you have?

Thank you, Eric. First off, we just recently launched the Element portion of our initiative with Authentic Brands Group, and we launched it with a retailer called Cataby to get initial reads. The sell-throughs that we launched have been nothing but tremendous. It's been in the numbers that were there in 2022, and they are now regrouping and looking at 2025 much more aggressively. So, the initial start and initial launch have been very successful. That being said, we have planned for this spring to launch a breadth of product from the Element skateboard line with our new Roxy Floaties that will be done at exclusivity at one of our major retailers, and our new distribution platform with all the new seasonal products will just be launching during the first quarter. That being said, our current existing business, which is our seasonal ball pits, tents, outdoor play products, and outdoor furniture has had a difficult comparison over the last few years due to the container issues with bulk products that were so expensive during the COVID period. But now we're seeing better comparisons we saw it in this third quarter, and we will look to have growth for that segmentation in 2025. So it's really diverse. It's diverse with the Authentic Brands Group from Quiksilver, Roxy, Element, and Juicy Couture amongst some of the names. And then with a lot of our friendly competitors that we do licenses with, from Mattel to Hasbro Spin Master, PAW Patrol, Fisher-Price, and Transformer. So, it's really a diverse product line and much stronger than it's been over the last three years going forward.

I understand it's early to discuss the Cars movies, but I'd like to ask about some upcoming projects for 2025, like Dog Man, which is set to be released at the start of the year. Typically, I believe most holiday movies perform better in the first half of the year. Given that, how do you view these additional releases and their potential impact?

Last night, I spoke with A.J. and this morning, I had a call with our group to discuss potential opportunities related to Dog Man, which has sold over 60 million books since 2016. This will be its first movie, and as of last night, their trailer has received 17.2 million views compared to Sonic 3's 16.5 million. This is a strong indicator considering Sonic's established success, and we feel cautiously optimistic about it. We won’t be stocking heavy inventory due to uncertainty, but retail interest is extremely strong. The potential size of this opportunity remains to be seen, but the statistics and reception so far have been positive. Moana 2 is launching in November this year. Typically, with movies like Moana, Frozen, or Encanto, the initial release is strong, but the real momentum often builds the following year through streaming. We're excited about Moana 2 and looking forward to Sonic 3, which releases late December on the 20th. If it performs well, we anticipate positive momentum going into 2025. Additionally, we are preparing for several new movies, including Minecraft, Snow White, How to Train Your Dragon, Demon Slayer, PAW Patrol, Lilo & Stitch, as well as Harry Potter and Pokémon, for which we just acquired rights in EMEA. There is a wealth of intellectual property available that will support our IP-driven lines. I want to emphasize that our evergreen business sectors are performing well, and we are enthusiastic about our overall strength. Continued growth in portfolio management and the addition of strong intellectual properties bode well for the company. As I've mentioned over the past two quarters, being debt-free enables us to free up capital for new initiatives, licenses, and to enhance our international structure.

Okay. And for one quick other quick one, you've talked about this Target private label product I've seen it. It looks great. Obviously, there are other retailers that have checkout counters and other pieces, is that something you can leverage into other potential accounts as a part of the private label? Thank you.

So, Target initiative has been terrific. The relationship that we have with Target is phenomenal. The success of the cash register, our new check lane item, the cart is doing very well. We will build that portfolio with Target. At the same time, there are other opportunities, especially international, that we are launching various initiatives in the private label program. We will announce during the first half of 2025, a lot of new initiatives in that private label initiative program with other major retailers.

Okay. Great. Congratulations, good luck in the holiday season.

Thanks, Eric.

Thank you. Our next question comes from Tom Forte with The Maxim Group. Your line is open.

Great. Thanks. First off, Stephen, and John, congrats on the quarter. I have one question and one follow-up. So Stephen, when you consider the value of intellectual property that you license or are considering licensing, what are your current thoughts on the state of the box office? And is it less important for IP to be associated with or supported by hit films?

Great question. So IP theatrical as well as just IP that's non-theatrical is important. I'll give you examples of that. So we have a complete line of Princess product, a very successful line called Princess Style Collection, which we do with the Walt Disney Company that doesn't align itself with any theatrical company in movies in Princess and it does extremely well. Our current Frozen line that we've extended into style collection as well, doesn't necessarily need the theatrical IP behind it. They kind of do well without it, and sometimes theatrical initiatives are built up and then slightly go away in time. The basic portfolio we have from the previous, call it, the organic princesses that everyone knows of, the Rapunzel, The Snow White and so on to the Frozen and then you get the Moanas that added to our portfolio, those always enhance and bring in new consumers versus what was the past. If you think about it, Frozen 1 was in 2013 November, we're now 11 years into it, and it's still extremely strong with the new IP coming until 2027, I think, is when the Walt Disney Company mentioned they're doing it. Right now, our business in the Walt Disney platform is doing extremely well without having heavy IP behind it. But then again, you get the Moana 2 that brings a lot of excitement to the retail trade and based on what we've seen, based on what retailers are seeing globally is extremely exciting, and we're happy, and we've had years before when Moana 1 came out. So we kind of have an understanding. But as the portfolio managed mix is what we do. It's some of its general IP elements itself Roxy, Quiksilver are not theatrical IP, but they are well-branded IP that's known worldwide. You've got to take a portfolio of platform management in the various categories which we're in. At the same time, we're looking at diverse distribution platforms, not just going necessarily in the normal, call it, toy trade. From the DICK'S Sporting Goods, Academy sporting goods, the value chains, there are so many new avenues that we're achieving distribution. So it's not necessarily just the new IP, it's distribution, new IP, and building off the basic IP that we have.

Great. Thank you for that. Very helpful. All right. So second, can you give your current thoughts on competition and your ability to secure additional shelf space with their new product initiatives such as The Simpsons line?

So it's very interesting. The toy world is changing. We've seen several different companies have issues over the years, some of which have turned into bankruptcies and so on. For us, we're looking at garnering more and more shelf space. So when a company has an issue and they can't ship, there's usually a white space and a retailer knows that one thing JAKKS Pacific is known for is quick to market reaction, and we can help the retailer when someone's not able to perform or where a property is not performing. That’s something that is very beneficial to us. The competition, it's there, but we just focus on what we do best, which is focusing on making sure retailers make great margin and the consumer gets a great product at a great price. By doing that, we are garnering more and more shelf space. Then again, when there's not the shelf space available, we have extremely strong placement with exclusive products globally with retailers that allows the retailer to promote the products, which then carries further products in our categories. In addition to that, we do a complete line of out-of-aisle placement that allows you to not only have the in-line initiatives that you see at retail, but to be out of aisle to garnish more retail footprint and allow the consumer to see products more just in the toy aisle. So for instance, the checkout stands at Walmart, we do a terrific job with our Mario, Sonic, and our Princess at the checkout stand, so we just look at every avenue and every way of distribution and normally, it's slightly different than our competitors just because of our nimbleness as a company.

Great. Thank you.

Thank you.

Thank you. And our next question comes from Eric Wold with B. Riley Securities. Your line is open.

Thanks. Thanks guys for taking my questions. Glad to join my first call. A quick follow-up on your prior comments, turn around in the new IP, the new products coming out. I know it's difficult to discuss specific licenses or IP. But as you move into stronger film slate starting with this quarter and then presumably even more so next year and kind of the content-led piece becomes a bigger driver than it has been over the past 12-ish months. You've seen from retailers in terms of their desire to allocate shelf space and kind of their ordering patterns around content led, how confident are they in kind of taking inventory upfront versus something you may have to chase if that demand exceeds their expectations?

Let me provide you with an example starting with Dog Man, which is set for release in January. Retailers, many of whom have children well acquainted with these books, have sold over 60 million units. However, it remains relatively unknown since there hasn't been a substantial product in the market yet. Both we and the retailers are cautious in our approach, but we have a plan to launch products quickly based on sell-through rates to maintain necessary shelf space. Currently, retailers are opting for products that they find reliable due to the economy and upcoming elections. They aim to offer consistent products that minimize risk, as introducing unknown intellectual property can consume shelf space, hurt profitability, and disengage customers. We maintain strong relationships with retailers globally and collaborate closely with our IP partners to manage this process effectively. We will not overcommit inventory on uncertain products since that would be a gamble for us. If a potential success, initially planned as a moderate product, turns out to be a big hit, we can quickly scale up. This involves ongoing communication with our retailers. At this moment, most of our sales teams are engaged with our major retail partners to finalize plans for the remainder of the holiday season. We are already preparing for the first and second halves of 2025 because we are confident in our product lineup. We anticipate a significant year ahead for us as we feel positive about our portfolio of brands and categories, leading to overall comfort with our offerings.

Perfect. And then a follow-up question, John. You obviously talked about the Q3 margin and kind of the puts and takes versus last year for the quarter. As you move into the holiday season, what should we think about in terms of puts and takes for gross margin this year versus what you experienced last year?

I believe that trying to compare the quarter year-over-year is somewhat imprecise. Q4 tends to be one of our smaller quarters, so it doesn't take much to alter the percentage. However, I want to reiterate that we are still optimistic about achieving at least a 30% growth for the full year, as we have stated for some time. I know there were some doubts earlier this year regarding our Q1 results, but we are still on track for that outcome, I hope.

Thanks, John. Appreciate it.

I am showing no more questions at this time. So I would now like to turn it back to Steve Berman for closing remarks.

Ladies and gentlemen, thank you very much for the time on the call. I wish everybody a happy Halloween and look forward to speaking to you on our next call. Thank you very much.

This does conclude the program. You may now disconnect.