Hasbro, Inc. Q3 FY2025 earnings call

• Hasbro delivered another strong quarter in Q3, extending growth trajectory with net revenue and operating profit showing robust year-over-year gains, driven by key brands like MAGIC, Marvel, MONOPOLY, etc. • Wizards led performance with 42% revenue growth, operating profit rising 39% to $252 million with an exceptional 44% operating margin. • Consumer Products navigated challenges but expects a solid bounce back in Q4 driven by innovation, entertainment tie-ins, and strategic partnerships. • Digital Gaming outperformed with Monopoly Go! and SORRY! WORLD topping mobile player charts, and upcoming announcements for EXODUS at the game awards. • Cost transformation efforts delivered approximately $150 million in realized gross savings through first 9 months, on track to achieve full year target. • Exciting collaboration tied to Netflix hit film KPop Demon Hunters, with product expected in 2026 and preorders live for MONOPOLY deal card game inspired by the film.

Wizards once again led the performance in the quarter. Revenue grew 42% to $572 million with broad-based gains across both tabletop and digital. MAGIC revenue increased 55% to $459 million, driven by engagement with our Universes Beyond sets, core IP Edge of Eternities, and momentum across Secret Lair and backlist products. Consumer Products navigated a complex quarter, with revenue of $797 million down 7% versus last year, though growth in Europe offset softer performance in North America. The Entertainment segment delivered revenue of $19 million, up 8% and an adjusted operating margin of 61%. Year-to-date, total Hasbro revenue is up 7% and adjusted operating profit has increased 14%.

• Raise full year revenue growth to high single digits and adjusted operating profit growth exceeding 20%. • Wizards expected full year revenue growth between 36% to 38% with an operating margin of approximately 44%. • Consumer Products expected revenue decline 5% to 8% year-over-year with margins between 4% to 6%. • Aim to achieve 2.5x leverage target at the end of this year, with Board declaring a quarterly dividend of $0.70 per share. • Expect momentum to continue into Q4 for Wizards with upcoming releases like Avatar: The Last Airbender and Final Fantasy holiday set, and Consumer Products to bounce back driven by innovation and entertainment tie-ins.

• Tariff impact on Consumer Products, with proactive supply chain diversification initiatives in place but potential ongoing headwinds. • Risks of actual results differing materially from forward-looking statements due to various factors set forth in public disclosures. • Supply chain risks, including potential delays or issues related to manufacturing and sourcing.

Q: Megan Clapp with Morgan Stanley on 4Q outlook and segment profitability A: Chris Cocks starts by noting for CP expected modest revenue growth with toy and games having more robust growth, offsetting licensing comp headwinds, and Wizards expected to have a heck of a quarter. Gina Goetter adds Wizards raise is due to revenue momentum with set releases and CP has relatively flat outlook but POS momentum accelerating Q: Arpine Kocharyan with UBS on MAGIC growth lap and royalty expense A: Chris Cocks talks about next year having about equivalent of 7 sets vs this year's 6.5 sets, backlist business 70% ahead of last year, and Universes Beyond continuing to work. Gina Goetter explains royalty expense back weighted due to universes beyond set releases, with roughly $50M - $60M in back half of year Q: Stephen Laszczyk with Goldman Sachs on EXODUS cost impact A: Gina Goetter explains capitalized software on balance sheet includes development costs for EXODUS and other games, with 65% of development cost hitting in launch quarter and 85% in first year, and it will impact gross margins but not add back to EBITDA Q: Christopher Horvers with JPMorgan Chase on tariff headwinds A: Gina Goetter says Q3 tariff pressure was ~$20M, Q4 has more, but fully running tariff playbook to mitigate impact, with actual tariff cost bigger next year but net impact managed through levers Q: James Hardiman with Citi on KPop and Wizards margins A: Chris Cocks talks about excitement for KPop collaboration with Netflix, working on various products, and Gina Goetter mentions Wizards segment expected to be in high 30s to low 40s margin long term Q: Alexander Perry with Bank of America on MAGIC mass channel growth A: Chris Cocks discusses hobby store growth and mass channel expansion through Universes Beyond, with incremental placements and new doors opened in underserved markets Q: Kylie Cohu with Jefferies on promotional cadence and Entertainment segment A: Chris Cocks says been choiceful with pricing benefiting from retailer responses, and Gina Goetter says Entertainment segment expected to be roughly same revenue base with 50%-60% margin, lumpy due to deal timings Q: Jaime Katz with Morningstar Research on product development and D&D A: Gina Goetter says step-up in product development spend largely from Wizards and Digital, and Chris Cocks talks about D&D having several games in development across portfolio, including digital games