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HASBRO, INC. (HAS)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 delivered a clear beat: revenue $887.1M (+17% YoY) and adjusted EPS $1.04, both above Wall Street consensus; reported EPS was $0.70, reflecting non-GAAP items . Consensus EPS was $0.67* and revenue $770.6M*; actuals were well above these levels. Values retrieved from S&P Global.
- Mix shift to high-margin Wizards and Digital Gaming drove adjusted operating margin to 25.1% (+550 bps YoY) and adjusted operating profit to $222M (+50% YoY) .
- Guidance: consolidated FY 2025 outlook unchanged, but Wizards full-year raised to mid-to-high teens revenue growth with low-40s operating margin; gross cost savings target accelerated to $175–$225M for 2025 .
- Strategic catalysts: extension of multi-year Disney Consumer Products agreement for Marvel and Star Wars (strengthening toys, games, and MAGIC Universes Beyond tie-ins), plus strong pipeline for MAGIC (Final Fantasy, Spider-Man) and digital (Monopoly GO!) .
What Went Well and What Went Wrong
What Went Well
- Wizards of the Coast and Digital Gaming revenue +46% driven by MAGIC: THE GATHERING (+45%) and digital/licensed gaming; segment operating margin expanded to 49.8% (+11 pts) .
- Management raised Wizards full-year guide (mid-to-high teens revenue growth; low-40s margin) on broad-based demand, with Final Fantasy “best-selling set of all time on day 1” and Spider-Man/Avatar sets building excitement .
- Strategic partnerships strengthened: multi-year extension with Disney for Marvel and Star Wars, supporting toys and games across preschool, Play-Doh, action and role play categories .
- CEO: “Our collaboration with one of the world’s most valuable brand portfolios has never been stronger.”
What Went Wrong
- Consumer Products revenue -4% (ahead of plan) with operating margin at -11.0%; adjusted operating margin -7.8% as higher royalties and advertising offset lower OpEx .
- Entertainment revenue -5% YoY on deal timing; GAAP operating loss of $11.2M (vs. $5.8M profit in Q1’24), adjusted operating profit roughly flat ($17.4M vs. $18.2M) .
- Operating cash flow decreased to $138.1M from $177.8M last year due to working capital (AR timing) .
- Tariffs present 2025 headwinds: modeled gross impact $100–$300M (net $60–$180M after mitigations); uncertainty around reciprocal tariffs across global hubs and retailer order patterns (DI vs. DOM) .
Financial Results
Consolidated Results vs Prior Year and Prior Quarter
Versus Wall Street Consensus (S&P Global)
Segment Breakdown (Q1 2025 vs Q1 2024)
KPIs and Additional Details (Q1 2025)
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- Strategy and mix: “Play focused, partner scaled, and performing. Revenue rose 17% led by a surging MAGIC business and continued strength in licensing.”
- Wizards outlook: “Final Fantasy will be the best-selling set of all time on day 1… store count up 20%… Universes Beyond increased the active installed base.”
- Tariff posture: “Our guidance is based off of 145% [China] and 10% reciprocal everywhere else… We believe there should be free and fair trade for toys.”
- Pricing strategy: “We are going to have to raise prices inside of [the] 145% tariff regime… try to do it as selectively as possible and minimize the burden.”
- Cost transformation: “Now targeting $175–$225 million in gross savings this year… accelerating elements of our cost savings program.”
Q&A Highlights
- Tariffs impact and modeling: Management outlined $100–$300M gross headwind with $60–$180M net after mitigation; assumptions include 145% China/10% ROW, with retailer order timing shifts from DI to DOM .
- Wizards guidance mechanics: Strong Q1, healthy MAGIC set cadence; Q2 down YoY on lapping licensing settlement and mix, but margins remain healthy despite rising royalties .
- Retailer conversations: Fluid inventory management; no significant cancellations at “big 3”; white-space shelf opportunities emerging .
- Supply chain timing: Diversification largely a 2026 event; category-dependent feasibility (electronics/high-deco/foam stickier in China) .
- Monopoly GO!: Momentum sustained with major partner events (Star Wars); Hasbro maintains ~$10M/month licensing revenue outlook .
Estimates Context
- Q1 2025 delivered a significant beat versus Wall Street: EPS $1.04 vs $0.67*; revenue $887.1M vs $770.6M*. Values retrieved from S&P Global.
- Implications: Consensus likely to move higher for Wizards margins and revenues given raised segment outlook; Consumer Products estimates may widen given tariff scenario ranges communicated by management .
Key Takeaways for Investors
- The quarter’s beat was driven by Wizards and Digital Gaming mix, with adjusted margin expanding to 25.1%; this mix strength provides a buffer against tariff-related uncertainty .
- Raised Wizards FY guide and Disney extension are tangible catalysts; near-term set launches (Final Fantasy, Spider-Man) support continued momentum .
- Consumer Products remains the swing factor; monitor Q2 DI→DOM shifts and pricing actions at protected price points ($9.99/$19.99) .
- Tariff path is the key macro variable—management modeled worst case and accelerated cost offsets; watch for policy clarity and retailer behavior into holiday resets .
- Cash generation softer YoY on working capital timing; balance sheet strengthening continues (debt reduction, leverage target 2.5x by 2026) .
- Dividend maintained at $0.70 and payable June 4; shareholder returns remain a priority alongside debt paydown .
- Trading lens: Strong beat and raised Wizards guide are positive; any tariff relief or evidence of CP resilience could be an upside catalyst. Conversely, sustained tariff pressure or retailer order delays would be near-term headwinds .