Q4 2024 Earnings Summary
- Hasbro expects mid-single-digit revenue growth from 2025 through 2027, driven by the continued strength and momentum of MAGIC: THE GATHERING, a stronger entertainment slate supporting the toys and consumer products business, and the launch of the video game Exodus in 2026, which is anticipated to be a significant growth driver.
- The digital gaming segment is outperforming expectations, with MONOPOLY GO! generating approximately $10 million per month in revenue and Baldur's Gate 3 nearly doubling initial forecasts, highlighting the success of Hasbro's expansion into digital gaming and the potential for future growth in this high-margin segment.
- The company anticipates significant margin expansion, particularly from improvements in the profitability of the toys segment, driven by innovation, mix benefits, and substantial cost savings, aiming to achieve $1 billion in gross cost savings by 2027 with 50% flowing to the bottom line. This positions Hasbro for improved profitability and earnings growth.
- Expectations of declining revenue in Q1 2025, with projections of a mid- to high single-digit decrease, primarily due to the Easter timing shift and continued challenges in categories like NERF and STAR WARS.
- Anticipated margin compression in the Wizards segment, as monetization strategies increase profits but reduce margins, potentially impacting overall profitability.
- Exposure to tariffs on imports from China, which could increase costs and negatively impact margins, as the company relies significantly on Chinese manufacturing and is monitoring potential tariff impacts.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -14% (from $1,288.9M to $1,101.6M) | Revenue fell sharply driven largely by the dramatic ~90% drop in Entertainment revenue and declines in other segments, reflecting the impact of strategic divestitures and reduced digital and franchise performance relative to last year’s higher base. |
Consumer Products Revenue | ~–1% (from $753.9M to $746.3M) | Relatively flat performance indicates that despite broader industry trends, shifts in product mix and inventory management balanced out declines seen in other categories, maintaining a near-constant revenue level compared to the prior period. |
Wizards of the Coast and Digital Gaming | -6.7% (from $363.2M to $339M) | The segment experienced a decline due to lower digital licensing revenue and the absence of a major digital release, suggesting a lapping effect from last period’s strong performance. |
Franchise Brands | -7% (from $843.7M to $786.2M) | The decrease is attributable to weaker performance in key brands (e.g., NERF and Dungeons & Dragons) as demand slackened relative to a stronger prior period, which saw more robust activity. |
Partner Brands | +17.5% (from $154M to $181M) | A marked improvement driven by strong new product performances and improved licensing dynamics helped boost Partner Brands significantly over the previous year’s muted figures. |
Portfolio Brands | -11% (from $151.9M to $134.4M) | The decline reflects lower revenues from flagship products such as POWER RANGERS and GI JOE, continuing the trend of underperformance compared to the previous period. |
Entertainment Revenue | ~-90% (from $171.8M to $16.3M) | A steep drop largely resulted from the sale of the eOne Film and TV business, which removed a major revenue stream that had contributed significantly in the prior period. |
North America Revenue | +1.6% (from $414.4M to $421M) | A modest uptick driven by stable regional demand and slight operational improvements, despite industry headwinds that pushed revenues lower in other regions compared to the previous period. |
Europe Revenue | -9.6% (from $197.3M to $177.9M) | The decline is mainly due to weaker market conditions and reduced sales, echoing challenges faced in the prior period but now compounded by ongoing economic pressures. |
Asia Pacific Revenue | +44% (from $64.8M to $93.4M) | A robust increase reflects improved market penetration and an enhanced product mix in emerging markets, a notable reversal from prior underperformance. |
Latin America Revenue | -30% (from $77.4M to $54M) | The significant decline is attributed to regional economic headwinds and lower consumer demand, worsening from the relatively stable performance observed in some other regions during the previous period. |
Operating Income | Turned from a loss of -$1,198.6M to a profit of $59.8M | The turnaround was driven by cost reductions, improved operating efficiency, and the elimination of one-off losses (notably from the eOne sale), marking a stark improvement over last year’s massive loss. |
Net Income | Improved from a loss of -$1,061.1M to -$34.3M | Substantial recovery in net income stemmed from the operational turnaround, lower expenses, and strategic divestitures that removed large previous losses, resulting in a far narrower loss compared to the prior period. |
Basic EPS | Improved from -$7.64 to -$0.25 | The per-share recovery reflects the dramatic operational improvement and reduced extraordinary losses, leading to a much less negative EPS compared to Q4 2023. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Consumer Products Revenue | Q4 2024 | Expected to decline in Q4 2024, with a mid-single-digit decrease | no guidance | no current guidance |
Wizards of the Coast Revenue | Q4 2024 | Anticipated to decline by over 20% in Q4 2024 | no guidance | no current guidance |
Operating Profit Margin | Q4 2024 | Full-year operating profit margin expected to be close to 20%, but Q4 2024 is anticipated to be lower | no guidance | no current guidance |
Monopoly Go! Licensing Revenue | Q4 2024 | Expected to generate approximately $10 million in licensing revenue per month during Q4 2024 | no guidance | no current guidance |
Overall Market Expectations | Q4 2024 | The toy industry, excluding building blocks, is expected to decline by low single digits to low mid-single digits for the holiday season | no guidance | no current guidance |
Total Revenue | FY 2025 | no prior guidance | Expected to be up slightly year-over-year on a constant currency basis | no prior guidance |
Wizards Revenue | FY 2025 | no prior guidance | Forecasted to grow between 5% to 7% | no prior guidance |
Licensed Digital Games | FY 2025 | no prior guidance | Expected to be flat | no prior guidance |
Wizards Operating Margin | FY 2025 | no prior guidance | Expected to be between 39% and 40% | no prior guidance |
Consumer Products Revenue | FY 2025 | no prior guidance | Expected to be flat to down 4% | no prior guidance |
Consumer Products Operating Margin | FY 2025 | no prior guidance | Expected to be between 8% and 10% | no prior guidance |
Entertainment Revenue | FY 2025 | no prior guidance | Expected to be flat with an operating margin of approximately 50% | no prior guidance |
Total Hasbro Adjusted EBITDA | FY 2025 | no prior guidance | Forecasted to be $1.1 billion to $1.15 billion | no prior guidance |
Capital Expenditure | FY 2025 | no prior guidance | Expected to spend approximately $250 million in project capital, with half supporting internal video game development | no prior guidance |
Operating Cash Flow | FY 2025 | no prior guidance | Expected to be roughly flat and sufficient to fund existing capital allocation priorities | no prior guidance |
Tariffs | FY 2025 | no prior guidance | Guidance includes anticipated tariffs on imports from China and potential tariffs on Mexico and Canada | no prior guidance |
Manufacturing Footprint | FY 2025 | no prior guidance | Plan to reduce U.S. toy and game volume originating from China from 50% to under 40% over the next two years | no prior guidance |
Hasbro Operating Margin | FY 2025 | no prior guidance | Expected to expand on average by 50 to 100 basis points annually from 2025 through 2027 | no prior guidance |
Gross Leverage Target | FY 2025 | no prior guidance | Expected to reach a target of 2.5x or better by 2026 | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Consumer Products Revenue | Q4 2024 | Mid single-digit decline | 746.3MVs. 753.9MIn Q4 2023 (∼1% decline, better than mid-single-digit) | Beat |
Wizards of the Coast Revenue | Q4 2024 | Decline by over 20% | 339MVs. 363.2MIn Q4 2023 (∼7% decline, better than −20%+) | Beat |
Operating Profit Margin (Full Year) | FY 2024 | Close to 20% | ∼16.7% (Total Operating Income ∼690M ÷ Total Revenue ∼4,135.5M) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Digital Gaming | Consistently described as a key growth driver in Q1–Q3 with robust revenue from MONOPOLY GO! and Baldur's Gate 3, highlighting steady monthly licensing revenue, long-tail revenue models, and favorable digital growth (e.g., Q1: record downloads and revenue ; Q2: revenue exceeding minimum guarantees ; Q3: steady performance and strategic UA initiatives ). | Q4 emphasized strong digital gaming performance with MONOPOLY GO! generating $38 million in revenue, outstanding marketing impact (e.g., Will Ferrell campaign), and Baldur's Gate 3 nearly doubling forecasts. The digital segment was a major growth contributor with record margins (over 40%). | Consistent and positive – Digital gaming remains a core driver, with Q4 showing even stronger performance and effective marketing. |
MAGIC: THE GATHERING | Across Q1–Q3, MAGIC was repeatedly cited as a consistently strong IP driving growth through new set releases (e.g., Modern Horizons 3 in Q2 and innovative digital engagement in Q3) and robust fan engagement; earlier calls emphasized growth in both physical and digital platforms. | Q4 noted that MAGIC nearly matched its record 2023 performance despite fewer set releases while benefiting from increased active players, high-demand events, and upcoming collaborations (e.g., Final Fantasy, Spider-Man) that signal continued long-term growth. | Consistently strong with incremental improvements – Continued robust engagement and strategic collaborations signal future momentum. |
Consumer Products Turnaround | Q1 highlighted inventory cleanup, margin pressures (e.g., -9.2% in Q1), and efforts to rejuvenate key brands. Q2 and Q3 emphasized progress with improved pricing, cost savings, and moderated declines, despite persistent market softness. | Q4 reported a return to profitability with an operating margin of 6% and significant net cost savings of $227 million. Emphasis was placed on improved product mix (e.g., Beyblade, Furby, and My Little Pony) and a roadmap for further margin expansion into the low-teens in 2025. | Steady turnaround – Ongoing improvements in operational efficiency and cost savings are positively impacting margins. |
Core Toy Business | Q1 pointed to a 21% revenue decline driven by broader market softness (particularly in action figures and NERF), with inventory cleanup impacting closeout volume. Q2 and Q3 continued to cite challenges with reduced closeout sales and softness in certain categories. | Q4 further emphasized core challenges with key brands like NERF and Star Wars underperforming and intentional volume reductions (e.g., $100 million cut in closeouts) leading to lost market share, despite efforts to improve profitability. | Persistently negative – Core toy business continues to face volume and market share challenges despite cost‐focused strategies. |
Wizards of the Coast Performance | Q1 noted 7% revenue growth and margin improvements due to strong digital contributions, with Q2 highlighting impressive 20% growth and high operating margins (e.g., 54.7% in Wizards) and Q3 warning of Q4 margin drag from product timing. | Q4 reported record performance with continued revenue growth driven by flagship products such as MAGIC and MONOPOLY GO! Although margins remain high (operating margin >40%), there is caution about near-term pullbacks due to capitalization effects and adjusted royalty expenses. | Strong yet cautious – Consistent robust performance is tempered by near-term margin pressure risks. |
Overall Margin Dynamics | Q1 described margin gains from supply chain productivity and a favorable mix with digital and licensing contributions. Q2 showed significant margin expansion (e.g., Wizards margins up nearly 17 points) but noted future compression risks, while Q3 indicated potential Q4 pullback from lower-margin product mix and timing issues. | Q4 reported overall record margins driven by cost savings and improved product mix, yet highlighted compression risks from capitalizing new video game costs and tariff-related pressures. Despite these risks, margin expansion efforts continue to outpace compression concerns. | Mixed but positive – Overall expansion efforts have driven strong margins, although emerging compression risks are noted. |
Operational Improvements & Cost Savings | Q1 through Q3 consistently discussed operational excellence, design-to-value strategies, and substantial cost and supply chain productivity gains that contributed to margin improvements. Reports included progress toward net savings targets across segments (e.g., Q1 cost savings initiatives ; Q2 cost and supply chain improvements ; Q3 supply chain and OpEx savings ). | Q4 detailed significant milestones, with $227 million in net cost savings already achieved and a roadmap to reach $1 billion in savings by 2027. The focus remains on further supply chain optimizations, cost structure refinement, and operational discipline. | Accelerating improvement – Clear progress with increasingly ambitious savings targets and robust operational enhancements. |
Supply Chain Vulnerabilities & Geopolitical Risks | Q1 noted reliance on China (40% of volume) but with limited profit exposure, while Q2 and Q3 did not focus on geopolitical issues. | Q4 revisited the topic prominently by discussing China-related tariff exposure and implementing productivity measures to mitigate rising logistics and supply chain costs, with close monitoring of geopolitical risks and tariff impacts. | New emphasis in Q4 – Previously under-discussed, now a cautious focus as geopolitical risks and tariffs gain prominence. |
Exodus Video Game Launch | Not mentioned in Q1, Q2, or Q3 earnings calls. | Introduced in Q4 as a significant new growth driver with planned launch in 2026, expected to boost revenue and EBITDA though initial margin pressures from depreciation of capitalized development expenses are anticipated. | New topic – Represents a major strategic initiative with the potential for substantial future impact. |
Entertainment Slate & IP Licensing | Q1 showcased an asset-light entertainment model with multiple film and TV projects and strong licensing deals (e.g., Monopoly movie, D&D enhancements). Q2 and Q3 continued to highlight extensive collaborations (e.g., Transformers One, LEGO partnerships, Marvel collaborations) boosting licensing revenue and fan engagement. | Q4 emphasized an enhanced entertainment slate aimed for 2026–2027 with renewed focus on high-profile franchises and robust IP licensing strategies. The strategy includes leveraging successful licensing partnerships to drive high-margin revenue streams, with continued diversification across media platforms. | Evolving and sustained – Consistent emphasis on leveraging IP, with even richer entertainment initiatives emerging in Q4. |
Digital Transformation & International Expansion | Q1 mentioned digital successes (e.g., MONOPOLY GO! breakthrough), but little focus on international expansion. Q2 and Q3 increasingly stressed the pivot toward digital platforms and highlighted growing international partnerships (e.g., global collaborations with LEGO and international IP resurgences). | Q4 provided detailed strategic emphasis on digital transformation—highlighting digital gaming growth, preparation for self-published titles, and increased digital revenue contributions—as well as an aggressive international expansion strategy, particularly in emerging markets and location-based entertainment worldwide. | Consistent and deepening – Digital and international strategies have grown increasingly central to Hasbro's long-term plan. |
One-Time Adjustments & Cost Inflation Concerns | Q1 explicitly addressed one-time adjustments (e.g., a $20 million stock comp adjustment) and cautioned about cost inflation in labor, materials, and logistics, noting mitigating productivity gains. Q2 and Q3 did not emphasize these aspects as strongly. | Q4 revisited the topic by de-emphasizing one-time adjustments—now seen as nonrecurring—and reiterated that cost inflation (approx. 2–3%) is being effectively offset by supply chain productivity improvements and cost efficiencies. | Recurring with manageable risk – Initially flagged in Q1 and reemerging in Q4, with confidence in mitigation through efficiencies. |
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Mid-term Margin Guidance
Q: Is margin expansion target cumulative or annual?
A: The company expects cumulative margin expansion of 50 to 100 basis points per year, totaling 150 to 300 basis points over three years. The upcoming video game launches will impact margins due to capitalization and depreciation of development costs, but overall profit and cash flow will improve.
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MAGIC Releases
Q: How do upcoming MAGIC sets compare to Lord of the Rings?
A: The Final Fantasy set may become the best-selling MAGIC set in history. Preorders for gift bundles sold out in one hour, compared to a week for Lord of the Rings. The Spider-Man set is expected to perform well, attracting both existing players and new fans, though it will be smaller due to different product composition.
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Video Game Strategy
Q: What is the video game release cadence and development approach?
A: Starting from 2026, the company plans to release one to two video games per year. They will focus on joint ventures and partnerships, such as the co-publishing deal with Sabre Interactive. This model reduces risk and leverages top industry talent to expand their IP.
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EBITDA and EPS Expectations
Q: Is EBITDA expected to reach $1.3 billion next year?
A: EBITDA estimates are not far off at around $1.3 billion, with potential to be higher. Earnings per share for 2026 might be over $5, but factors like increasing tax rates and interest expenses could impact this.
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Tariff Impact
Q: How are tariffs affecting guidance?
A: The company has incorporated the February 1 administration's tariff announcements into guidance, focusing on China tariffs. They have minimal sourcing from Canada and Mexico, so the main concern is the China rate.
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Cost Savings and Margin Expansion
Q: What drives incremental cost savings toward the $1 billion goal?
A: Beyond supply chain efficiencies, savings will come from gross-to-net improvements, design-to-value initiatives, and managed expense reductions. These measures will contribute to margin expansion, especially in the Consumer Products segment.
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Digital Gaming Performance
Q: What is the run rate for MONOPOLY GO! and digital gaming strength?
A: MONOPOLY GO! is contributing about $10 million per month. Marketing efforts like the Will Ferrell campaign boosted performance. Baldur's Gate 3 also exceeded forecasts, doubling expectations due to strong community engagement.
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NERF Strategy and Brand Licensing
Q: How is NERF being repositioned, and thoughts on brand licensing?
A: NERF is categorized under "reinvent", focusing on its core of safe active play. The company is exploring beyond traditional darts and considering broader product innovations. While preferring to create brands in-house, they are open to licensing, which has shown success in expanding categories and increasing POS by 50% year-over-year.
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Consumer Products Outlook
Q: How did POS trend in Q4, and what's affecting Q1 outlook?
A: Q1 is impacted primarily by the Easter timing shift. The company expects typical industry patterns in January and February, with no significant deviations.
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Early 2025 Trading
Q: How is early 2025 performance, considering possible pull-forward?
A: The start of the year is decent and aligns with company expectations. There was no significant holiday pull-in affecting Q4, and Q1 is tracking to be down mid- to high single digits, as anticipated.