Q3 2024 Earnings Summary
- Monopoly Go! continues to generate steady revenue of approximately $10 million per month for Hasbro, with healthy user acquisition rates and strong engagement, signaling sustained success in digital gaming and IP licensing.
- MAGIC: THE GATHERING has outperformed expectations, posting growth driven by successful releases with both analog and digital formats showing strength, reinforcing confidence in the brand's long-term health and future growth prospects.
- Hasbro's strategic shift towards higher-margin products and partnerships, along with operational improvements, is enhancing profitability, evidenced by strong Consumer Products margins and expectations of continued improvement in sell-through due to better product positioning and retail alignment.
- Hasbro lowered its Consumer Products revenue guidance, citing approximately $100 million reduction due to lower closeout volumes, softness in entertainment-backed brands like Star Wars, and execution issues transitioning to a leaner inventory structure. This indicates potential revenue declines in Q4.
- Year-to-date point-of-sale (POS) for Hasbro is down high single digits, excluding divested brands, which is worse than the overall toy industry decline of low single digits, suggesting Hasbro is underperforming the market.
- Downloads of Monopoly Go! have continued to decline significantly, as highlighted by analysts, raising concerns about the sustainability of its revenue contributions, despite management's expectation of approximately $10 million in monthly royalty revenue.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -15% YoY | Primarily driven by the sale of the eOne Film & TV business reducing Entertainment segment revenues and lower Consumer Products sales due to fewer major brand releases, partially offset by growth in Wizards of the Coast and Digital Gaming. |
Consumer Products | -10% YoY | Decline caused by exited licenses, reduced closeout sales, and lower revenues from key properties (e.g., MARVEL, STAR WARS), with only partial offsets from cost-saving measures. |
Entertainment | -86% YoY | Substantial drop due to the divestiture of eOne’s Film & TV business and minimal new programming deliveries in the remaining entertainment operations. |
Partner Brands | -17% YoY | Lower sales of licensed products like MARVEL and STAR WARS, impacted by fewer new entertainment releases to drive demand. |
Portfolio Brands | -12% YoY | Weaker performance in BABY ALIVE and POWER RANGERS, partially offset by the refreshed FURBY line introduced in the prior year. |
Non-Hasbro Branded Film & TV | -100% YoY (down from $93.9M) | Result of completing the eOne Film & TV sale, removing non-Hasbro content from the portfolio. |
Operating Income (EBIT) | $301.9M (up from -$169.5M) | Improvement driven by the absence of prior-year impairment charges, stronger profitability in Wizards of the Coast and Digital Gaming, and cost savings from operational efficiencies. |
Net Income | $223.2M (up from -$171.5M) | No large non-cash impairments (unlike prior year) and enhanced margins from higher-margin segments (e.g., digital gaming), coupled with lower overall costs. |
Asia Pacific Consumer Products | +33% YoY | Improvement due to easing market conditions and stronger sales of core brands, whereas the prior year was constrained by inventory reductions and weaker demand. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Consumer Products Revenue | Q4 2024 | expected to grow year-over-year | mid single-digit decline | lowered |
Wizards of the Coast Revenue | Q4 2024 | no prior guidance | decline by over 20% | no prior guidance |
Operating Profit Margin | Q4 2024 | no prior guidance | lower than 20% | no prior guidance |
Monopoly GO! Licensing Revenue | Q4 2024 | no prior guidance | $10 million per month | no prior guidance |
Overall Market Expectations | Q4 2024 | no prior guidance | toy industry expected to decline by low single digits to low mid-single digits | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Consumer Products Revenue YoY Decline | Q3 2024 | Expected to decline in the low single digits | Declined from 956.9MIn Q3 2023 to 860.1MIn Q3 2024, which is about a 10% decrease YoY (a high single-digit to low double-digit decline) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Magic: The Gathering | Highlighted as a key growth driver in Q2, Q1, and Q4 2023, with strong set performance (Modern Horizons 3), high operating margins, and future collaborations (Final Fantasy, Marvel). | Continued strong growth driven by key releases (e.g., Gloomborouh), digital expansion via Arena, and upcoming Marvel collaboration. Q4 2024 revenue will be down vs. a big 2023 holiday set. | Consistent strength in brand with digital and collaboration-driven expansion. 2025 outlook remains bullish. |
MONOPOLY GO! | Previously emphasized as a significant contributor (exceeding minimum guarantees), with occasional mention of monthly decay rates but long-term sustainability. | Generates about $10 million/month in licensing revenue, expected to stay steady and possibly be flat to up in 2025. Marketing spends remain high but align with plans. | Steady performance with loyalty programs and robust UA. Continues to be a material revenue driver. |
Baldur’s Gate 3 | Previously noted for strong releases (e.g., ~$30 million in Q2 2024) and recognized as a top-rated game with long-term impact on Hasbro’s digital strategy. | Outperformed at $35 million in revenue, expected to have a long-tail of profitability over multiple years (though not annually repeatable). | Continues robust digital contribution. Anticipated to remain a steady earner beyond initial launch. |
Star Wars | Not consistently flagged for weak demand before; limited direct mentions in prior calls. | Weaker demand contributed 30%-40% of revenue decline in the Consumer Products segment, action figures underperformed. | Sentiment turned negative in Q3 2024. Softer performance vs. earlier periods. |
Consumer Products Volume | Q2 and Q1 2024 also revealed volume declines but noted reliance on Q4 for partial rebound. | Discounted toy volume down ~70% YTD in Q3. Q4 remains critical for overall volume, with “good” toy volume expected to be flat to slightly up. | Ongoing pressure on discounted volume, but optimism for Q4 to offset earlier declines. |
Shift Toward Digital & Licensing | Previously described as “skating to where the puck is going,” with digital gaming growth (Magic Arena, MONOPOLY GO!, Baldur’s Gate 3) driving margins. | Emphasized pivot to higher-margin digital gaming and IP as a core strategy, contributing to three consecutive quarters of operating margin expansion. | Consistent strategic priority, reinforcing digital as the future of play with strong margins. |
Brand Pruning & Net Brand Creation | Q4 2023 signaled the brand pruning process as largely complete, shifting to net brand creation. | No explicit update on brand pruning or net brand creation in Q3 2024. | No current mention, indicating brand pruning may be finished; focus presumably on franchise-first brands. |
Supply Chain & Cost Initiatives | Q2 2024 and earlier calls highlighted major wins in supply chain, mitigating cost inflation and improving margin. | ~60% of cost savings from supply chain productivity this year; “design to value” improvements to begin impacting P&L in 2025. | Continues to offset inflation, supporting margin gains. Likely to remain a focus. |
Dividend Safety & Deleveraging | In prior calls, management reaffirmed the dividend as a capital allocation priority alongside deleveraging. | No mention in Q3 2024. | No new commentary; appears stable, with no changes signaled in Q3. |
Beyblade | In Q2 2024, described as best-performing Beyblade release ever in some markets, fueling expectations for top status in 2024. | Beyblade X gaining momentum, supported by a new anime series and targeted advertising. Seen as a potentially strong holiday performer. | Positive momentum continues; brand remains a key growth focus in toys. |
Point-of-Sale Trends | Q2 references Transformers’ POS swings; earlier calls noted uncertainty despite some positive Easter lifts in Q1. | Year-to-date POS down high single digits, expecting incremental improvement in Q4. Overall toy industry down 2%-5% YTD. | Still cautious, aligning with industry down mid-single digits and focusing on Q4 rebound. |
Dungeons & Dragons | Q2 2024: 18 million users, new 3D sandbox game teased. Earlier calls cited brand expansions (Baldur’s Gate 3, licensing deals). | New Player’s Handbook is the fastest-selling product in D&D history; D&D Beyond now 19 million users, ~60% of D&D revenue is direct-to-consumer. | Continues expansion with strong digital engagement and new game offerings. Potential long-term driver. |
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Monopoly Go! Revenue Outlook
Q: Is the $10M/month royalty revenue from Monopoly Go! sustainable?
A: Management expects $10 million per month in royalty revenue from Monopoly Go! to remain steady for many months to come. They see healthy user acquisition rates, strong engagement, and successful initiatives like Tycoon Club, which could even increase revenue. They anticipate Monopoly Go! in 2025 to be flat to up versus 2024. -
Wizards of the Coast Revenue Decline
Q: Why is Wizards' Q4 revenue and margin expected to decline?
A: The decline is due to MAGIC set timing, specifically not having a comparable Lord of the Rings holiday set in Q4 this year. This absence impacts both revenue and margins due to volume deleverage. Additionally, the timing of January sets affects when revenue is recognized. -
Consumer Products Guidance Reduction
Q: What caused the reduction in Consumer Products guidance?
A: The guidance reduction of about $100 million is due to lower closeout volumes (about half), underperformance in entertainment-backed brands like Star Wars (30–40%), and challenges from leaner inventory structures. Despite this, POS expectations haven't materially changed. -
Impact of Exited Brands
Q: How did exited brands impact results, and what's expected ahead?
A: Exited brands negatively impacted revenue by about $25 million in both Q3 and expected similarly in Q4. Next year, they expect to earn healthier royalties from these outsourced brands, surpassing previous operating margins. -
MAGIC Revenue Outlook
Q: Will MAGIC revenue decline this year despite recent outperformance?
A: Yes, MAGIC is expected to decline due to the lack of a holiday set comparable to last year's Lord of the Rings release. While MAGIC outperformed in the first three quarters, set timing affects the full-year outlook. -
Baldur's Gate 3 Performance
Q: How will Baldur's Gate 3 continue to contribute financially?
A: Baldur's Gate 3 exceeded expectations, contributing about $35 million this year. While not expected to remain at this level, management anticipates continued revenue for several years due to strong partnership with Larian and ongoing community engagement. -
POS Trends and Holiday Outlook
Q: What's the POS trend and holiday expectation?
A: Year-to-date POS is down high single digits excluding divested brands. The toy industry, excluding building blocks, is down 2% to 5%, and this trend is expected to continue through the holiday season. -
Cost Savings Opportunities
Q: What are the remaining cost savings opportunities?
A: Next year's cost savings will be balanced between supply chain (about 50%) and managed expenses. Initiatives include design-to-value savings and refining supplier and logistics networks. -
Holiday Season Expectations
Q: How is retailer sentiment ahead of the holidays?
A: Retailer sentiment remains supportive and unchanged. Management is excited about brands like Play-Doh, Beyblade X, Transformers, Marvel, and their board game portfolio for the fourth quarter. -
Future of MAGIC and Marvel Collaboration
Q: What's the outlook for the upcoming MAGIC Marvel releases?
A: Upcoming Marvel Secret Lair drops are expected to generate low to mid-single-digit millions per release. A major Spider-Man set is planned for the second half of next year, with more collaborations over the next 4–5 years. Management sees a bright future for MAGIC, contributing to top-line growth in 2025. -
Relationship with Scopely
Q: How is Hasbro's relationship with Scopely evolving?
A: Hasbro values Scopely as a strong partner in mobile gaming. They collaborate on games like Yahtzee, Scrabble, and Monopoly Go!, and are open to future projects leveraging Hasbro's IP. Scopely's innovations, such as Tycoon Club and in-game events, enhance player engagement and can increase Hasbro's royalty revenue.