Hasbro, Inc. (HAS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong growth prospects, particularly in the Wizards segment and MAGIC, with robust revenue and operating margin projections. The Q&A session reveals positive sentiment towards partnerships and digital gaming, despite some concerns about margins. The strategic plan outlines optimistic guidance and partnerships, which are likely to boost stock prices. However, some margin pressures and cautious CP growth temper expectations, resulting in a positive but not overly strong outlook.
Key Financial Performance
Fourth Quarter Revenue $1.5 billion, up 31% year-over-year. Growth driven by both main segments.
Fourth Quarter Adjusted Operating Profit $315 million, up 180% year-over-year. Resulting in a 21.8% operating margin.
Fourth Quarter Adjusted Earnings Per Share (EPS) $1.51, reflecting accelerating momentum.
Full Year Revenue $4.7 billion, up 14% year-over-year. Driven by exceptional performance in Wizards and progress across the portfolio.
Full Year Adjusted Operating Profit $1.1 billion, up 36% year-over-year. Adjusted operating margin of 24.2%, up nearly 400 basis points due to favorable mix and cost productivity.
Full Year Adjusted Earnings Per Share (EPS) $5.54, reflecting strong financial performance.
Wizards of the Coast Fourth Quarter Revenue $630 million, up 86% year-over-year. Driven by MAGIC, which grew 141% due to strong holiday releases.
Wizards of the Coast Full Year Revenue $2.2 billion, up 45% year-over-year. MAGIC revenue grew nearly 60%, reinforcing its position as a strong gaming franchise.
Consumer Products Fourth Quarter Revenue $800 million, up 7% year-over-year. Strength in Hasbro Gaming and Marvel.
Consumer Products Full Year Revenue $2.4 billion, down 4% year-over-year. Demonstrated resilience despite absorbing $70 million in tariff impact.
Cost Transformation Savings $175 million in gross savings for 2025. Total savings of $800 million achieved to date, with a $1 billion target.
Operating Cash Flow $893 million for 2025, reflecting strong cash generation.
Debt Leverage Gross leverage target achieved at 2.3x, supported by increased earnings and reduced debt load.
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Operating Highlights
Wizards of the Coast: Achieved 86% sales growth in Q4, driven by Magic and Digital. Full-year sales grew nearly 60%, with record-breaking sets like Avatar: The Last Airbender and Final Fantasy.
New Video Games: Revealed gameplay trailers for EXODUS and WARLOCK, with over 100 million views. Both games are set to launch in 2027.
New Partnerships: Announced partnerships for Harry Potter, Voltron, and Street Fighter, with product launches starting in 2026.
Transformers: Celebrating the 40th anniversary of the 1986 animated film with a new product line.
Global Reach: Hasbro now reaches over 1 billion people annually, up from an initial estimate of 585 million.
Partnerships: Expanded partnerships with over 1,000 collaborators, including new deals with Warner Bros. Discovery and Amazon MGM Studios.
AI Integration: Deployed AI across financial planning, supply chain, and design, reducing prototype development time by 80% and freeing up 1 million hours of work.
Cost Savings: Achieved $175 million in gross savings in 2025, contributing to a total of $800 million since the transformation began.
Playing to Win Strategy: Focused on growth through play, partnerships, and digital capabilities, resulting in a 14% revenue increase and record profits in 2025.
Digital-First Approach: Advanced digital gaming and IP development, with over 60 active entertainment projects.
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Risk or Challenges
Tariff Costs: Tariff costs are expected to remain relatively flat year-over-year, with much of the incremental costs landing in the front half of the year. This could impact margins and profitability.
Higher Royalty Expenses: Wizards segment is expected to absorb higher royalty expenses, which could impact operating margins despite revenue growth.
Incremental Costs for Video Game Releases: Planned 2027 video game releases, EXODUS and WARLOCK, are expected to incur incremental costs, potentially affecting profitability in the Wizards segment.
Interest Expense: Interest expense is expected to be higher year-over-year, primarily related to planned refinancing activity, which could create a headwind to EPS.
Foreign Exchange Impacts: Lower non-operating income is expected due to translational foreign exchange impacts, which could negatively affect EPS.
Macro Volatility: The company acknowledges macroeconomic volatility, which could impact consumer behavior and overall financial performance.
Supply Chain Risks: While supply chain productivity has improved, there are ongoing risks related to manufacturing diversification efforts and tariff impacts.
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Guidance & Outlook
Revenue Growth: Hasbro expects consolidated revenue to grow between 3% and 5% year-over-year on a constant currency basis in 2026, with growth across all segments.
Operating Margins: Operating margins are projected to be between 24% and 25% for 2026, reflecting continued operating leverage and disciplined execution.
Adjusted EBITDA: Expected to be in the range of $1.4 billion to $1.45 billion for 2026.
Wizards Segment Growth: Wizards is expected to deliver mid-single-digit revenue growth in 2026, supported by a healthy release cadence and sustained engagement across the MAGIC ecosystem. Operating margins are expected to remain in the low 40% range.
Consumer Products Segment Growth: Revenue is expected to grow low single digits year-over-year in 2026, with operating profit margins in the 6% to 8% range. Growth will be supported by a strong entertainment slate from partners like the Walt Disney Company.
Entertainment Segment Growth: Revenue is expected to be slightly positive year-over-year in 2026, with operating margins of approximately 50%.
Cost Savings: Approximately $150 million of gross cost savings are expected in 2026 from initiatives across supply chain and operating expense transformation.
Capital Allocation: Hasbro plans to continue investing in high-return growth opportunities, paying down debt, maintaining a healthy balance sheet, and returning cash to shareholders through dividends and a new $1 billion share repurchase program.
Phasing of Revenue and Margins: Stronger revenue growth is expected in the first half of 2026 due to entertainment-related releases and MAGIC set releases, with margin expansion anticipated in the second half driven by favorable business mix and productivity improvements.
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Shareholder Return Plan
Dividend Payments: We returned $393 million to shareholders through dividends while continuing to reduce debt and invest behind growth.
Share Repurchase Program: The Board has authorized a new $1 billion share repurchase program, providing additional flexibility to return excess capital to shareholders over time.
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Key Q&A
Q:How do you lap the impressive growth in MAGIC as we look into fiscal '26?
A:Growth is driven by several vectors including distribution growth, player growth, and partnerships. Wizards Play Network (WPN) grew 20% last year and is expected to grow double digits this year. Non-WPN-based distribution growth exceeded WPN growth and will continue to do so. Player growth is robust, with organized play metrics showing hardcore player growth and casual fans sticking around. Partnerships with brands like Teenage Mutant Ninja Turtles, The Hobbit, Marvel Super Heroes, and Star Trek are expected to contribute to growth.
Q:What is driving the momentum in the expanded partnership slate and how does it impact medium-term top-line growth for CP?
A:Hasbro's superpower is inspiring a lifetime of play, engaging consumers from young ages to adulthood. Partners choose Hasbro for its ability to handle multigenerational brands. Partnerships are expected to lean into gamified product opportunities and entertainment-driven brands. CP is back to growth, with licenses helping to build scale and contributing to midterm growth in '27 and '28.
Q:Can you unpack the margin performance of Wizards and expectations for 2026?
A:Wizards segment margins are expected to remain in the high 30s to low 40s range. In 2025, margins were favorable due to mix, leverage, and cost productivity. For 2026, margins are expected to contract slightly due to increased royalty expenses and additional expenses related to the launch of two games in 2027.
Q:What are the assumptions behind CP guidance for low single-digit revenues and 6%-8% operating profit growth?
A:Retail inventory is expected to hold steady, with no significant positive or negative impact. Tailwinds include a stronger entertainment slate with four movie releases from Disney. CP growth is expected to be balanced throughout the year, with Q2 showing strong growth due to tariff-related comps from 2025.
Q:What is the proportion of MAGIC sales going to players versus collectors?
A:MAGIC is overwhelmingly player-based or player-collector-based, with 80%-90% of sales going to players or player collectors and a relatively small portion going to collectors only.
Q:Why was licensing revenue down in toys, and has the out-licensing program stalled?
A:Licensing revenue was down due to a tough comp from MY LITTLE PONY trading cards in China. However, other aspects of the business, such as out-licensed toys and location-based entertainment, are healthy and growing.
Q:What are Hasbro's views on AI's impact on the video game industry and how is Hasbro positioning itself?
A:AI is seen as a productivity tool in the short term, saving about 1 million people-hours. In the midterm, AI will transform concepting, idea generation, and asset creation. Long term, AI will open new categories of play and revenue opportunities. Hasbro is focusing on collector markets and adults initially, with plans to expand as technology matures.
Q:What are the expectations for Monopoly Go! in 2026?
A:Monopoly Go! is expected to remain stable, with a $12 million to $14 million monthly run rate. User acquisition expenses have decreased, and Scopely has been adept at value capture within the game.
Q:What are the overall revenue growth drivers and risks for 2026?
A:Growth drivers include supply chain improvements, a strong entertainment slate, and consumer strength. Risks include supply chain constraints, entertainment slate performance, and consumer spending behavior.
Q:What is the pipeline for digital gaming and its potential impact on Hasbro?
A:Hasbro has a strong digital licensing business and successful games like Monopoly Go!. Self-published games like EXODUS and WARLOCK are expected to perform well. Investments in new talent markets and partnerships are expected to improve profitability and game quality.
Q:What is Hasbro's outlook for the toy industry POS in 2026?
A:Hasbro focuses on gamified, entertainment-driven, multi-purchase, and multi-generational categories, which are expected to grow mid- to high-single digits. The traditional toy market is in structural decline due to fewer births and earlier substitution.
Q:What is the outlook for first-party products in 2026?
A:MAGIC, D&D, Peppa Pig, board games, and PLAY-DOH are expected to perform well. TRANSFORMERS may have a down year, but other first-party products show potential for growth.
Q:What are the key factors affecting operating margin outlook for 2026?
A:Positive factors include volume, mix, and pricing. Headwinds include increased royalties, tariff costs, and higher marketing and product development expenses.
Q:What caused CP margins to decline despite strong sales growth?
A:Tariff costs were the main factor, with $40 million in costs in 2025, 60%-65% of which hit in Q4. Increased royalty expenses also contributed to margin pressure.
Q:How was the sell-through or POS cadence throughout the quarter?
A:Toy POS was strong despite challenges like the removal of SNAP benefits. Hasbro gained share in key categories for 16-18 out of 20 weeks from September to December.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of AI on gameplay expectations and barriers to entry in the video game industry. Additionally, they did not provide detailed numerical breakdowns for certain revenue and margin projections, relying instead on general trends and qualitative descriptions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
DD
Disney
EXODUS
HBO
Hasbro Chief
MAGIC
Marvel Super
Monopoly
Pig
Play
Studios
Super Heroes
TRANSFORMERS
Vice President
Win
age
capability
class
creator
enterprise
experimentation
family fan
film
gameplay
kid family
lineup
magic play
mission
pillar
premier
reach partner
record
series
system
talent
team
title
trailer
value work
workflow
HAS Transcript
Hasbro, Inc. (HAS) Q4 2025 Earnings Call Transcript
Positive2-10
The earnings call summary indicates strong growth prospects, particularly in the Wizards segment and MAGIC, with robust revenue and operating margin projections. The Q&A session reveals positive sentiment towards partnerships and digital gaming, despite some concerns about margins. The strategic plan outlines optimistic guidance and partnerships, which are likely to boost stock prices. However, some margin pressures and cautious CP growth temper expectations, resulting in a positive but not overly strong outlook.
Hasbro, Inc. (HAS) Q3 2025 Earnings Call Transcript
Positive10-23
The earnings call revealed strong financial performance, particularly in the Wizards of the Coast segment, and an increase in shareholder returns. Despite some uncertainties in tariff impacts and cost management for upcoming projects like EXODUS, the overall guidance was optimistic with raised EBITDA and strong product momentum. The Q&A highlighted robust growth strategies and stable pricing, which are likely to positively influence the stock price in the short term.
Hasbro, Inc. (HAS) Q2 2025 Earnings Call Transcript
Positive7-23
The earnings call summary reveals strong financial performance, particularly in the Wizards segment with a 16% revenue growth and a 46.3% margin. The success of the Final Fantasy set, exceeding expectations, indicates strong demand and potential for sustained sales. Despite some concerns about tariffs and inventory levels, the company's strategic partnerships and product launches are promising. The Q&A section highlights positive analyst sentiment, especially regarding the MAGIC segment's growth. Overall, the financial performance and optimistic guidance suggest a positive stock price movement in the short term.
Hasbro, Inc. (NASDAQ:HAS) Q1 2025 Earnings Call Transcript
Positive4-25
Hasbro's earnings call indicates strong financial performance, with significant EPS and revenue growth driven by key products like Magic and MonopolyGo. The company has a solid cost savings plan and is diversifying its supply chain to mitigate tariff impacts. Despite some market unpredictability, management's optimistic outlook and strategic partnerships, like with Mattel, support a positive sentiment. The Q&A showed management's proactive approach to challenges, reinforcing confidence in their strategy. Overall, these factors suggest a positive stock price movement over the next two weeks.
HAS Slides
HAS Report
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