Demand for Barbie dolls and toys based on "Jurassic World" and "Toy Story" led Mattel to a narrower-than-expected-loss during the first quarter.
Shares of the toymaker skyrocketed as much as 14 percent after the closing bell Thursday.
The results, which come just days after rival Hasbro reported a surprise profit, may indicate that the U.S. toy industry is finally able to put the bankruptcy and closure of Toys R Us behind it.
Sales of Barbie jumped 7 percent in the quarter, the sixth consecutive quarter of growth for the doll brand. This is a good sign for Mattel, especially as it plans the theatrical release of a live-action Barbie movie starring Oscar-nominated actress Margot Robbie.
The brand has also become more inclusive, adding new skin tones and professions to its line-up of dolls.
But that doesn't mean Mattel is out of the woods just yet.
The toy manufacturer has had trouble reviving sales despite overhauling the company's management team, suspending its dividend and developing plans to cut $650 million in costs.
American Girl and Fisher-Price, once massively successful brands, remain weak points for the company. Sales of American Girl products fell 32 percent and sales of toys from Fisher-Price and Thomas & Friends fell 8 percent.
Overall sales of toys in the infant, toddler and preschool segments slipped 15 percent, the company reported.
"While we are in a multi-year turnaround, we remain on-track to achieve our goals to restore profitability and regain top line growth in the short-to-mid-term and capture the full value from our IP in the mid-to-long term," Ynon Kreiz, chairman and CEO of Mattel, said in a statement Thursday.
Mattel's net loss narrowed to $183.7 million, or 53 cents per share, from $311.3 million, or 90 cents per share, a year earlier, when the company dealt with the sudden sales drop from the loss of Toys R Us.
The company's net sales fell 2.7 percent to $689.2 million in the first quarter ended March 31, but topped the $645 million analysts had expected, according to Refinitiv.
A voluntary recall of the Rock n' Play Sleeper earlier this month had an estimated $27 million impact on earnings. The baby product had reportedly been tied to more than 30 infant deaths.
Disclosure: NBCUniversal, the parent company of CNBC, distributes films from the "Jurassic World" franchise.