Hasbro(US:HAS)2025-07-23 13:32Financial Data and Key Metrics Changes - Net revenue for Q2 2025 was $981 million, essentially flat year over year, driven by the strength of the Magic segment [18] - Adjusted operating profit was $247 million with an adjusted operating margin of 25.2%, up 20 basis points from the previous year [18] - Adjusted earnings per diluted share rose to $1.30, a 7% increase year over year [19] Business Line Data and Key Metrics Changes - Wizards of the Coast and digital gaming segment revenue grew 16% to $522 million, led by The Gathering, which delivered 23% growth [19] - Consumer products revenue declined 16% to $442 million, primarily due to retailer order timing and market softness in select geographies [20] - Entertainment segment revenue was $16 million, in line with expectations, contributing $10 million in adjusted operating profit [21] Market Data and Key Metrics Changes - The organized play segment saw a nearly 40% year-over-year increase in unique players during the first half of 2025 [11] - EMEA and APAC regions are performing well, with expectations for growth in both regions by year-end [14] - The U.S. toy and game volume is currently 50% sourced from China, with plans to reduce this to less than 40% by 2027 [26] Company Strategy and Development Direction - The company is focused on its "Playing to Win" strategic plan, emphasizing premium, high-margin segments like Wizards, licensing, and digital [7] - A new exclusive publishing agreement for a Dungeons and Dragons game reflects the company's commitment to investing in top-tier talent and expanding digital engagement [13] - The company is diversifying its supply chain and implementing targeted pricing actions to mitigate tariff impacts [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in 2025, supported by record operating margins and strong performance in the Magic segment [17] - The current tariff situation is better than previously anticipated, with an estimated impact of $60 million on the 2025 P&L [24] - The company raised its full-year guidance for revenue, margin, and adjusted EBITDA, reflecting strong performance and improved visibility [27] Other Important Information - A non-cash goodwill impairment charge of $1 billion was recorded in the consumer products segment due to tariff impacts [25] - The company is on track to achieve $175 million to $225 million in gross cost savings for the year [28] - The capital allocation priorities include investing in high-return growth drivers, debt reduction, and returning cash to shareholders via dividends [29] Q&A Session Summary Question: Can you elaborate on the demand for Final Fantasy and how it compared to expectations? - Management noted that Final Fantasy exceeded expectations, achieving $200 million in revenue within one day, significantly outpacing previous releases [35][36] Question: How do you view the midterm outlook and potential for operating margin expansion? - Management reaffirmed the midterm outlook, indicating that while this year is over-delivering, they still see a path to their growth profile despite potential headwinds [50][53] Question: What are the expectations for Monopoly Go and its recent performance? - Management highlighted that user metrics for Monopoly Go continue to exceed benchmarks, with revenue contributions likely to be higher than previously estimated [56][58] Question: How is the company addressing the impact of tariffs on pricing and inventory? - Management indicated that while tariffs have not yet significantly impacted consumer takeaway, they expect gradual price increases and are managing inventory levels cautiously [106][110] Question: What is the company's strategy for expanding the Magic player demographic? - Management emphasized the importance of new IPs and collaborations to attract younger players and increase female representation in the player base [99][100]