Hasbro raises outlook as Wizards unit drives 16% revenue growth

Hasbro reported second-quarter net revenue of $1.14 billion, a 16% increase from a year earlier, as growth in Wizards of the Coast and Digital Gaming outpaced its other divisions. The company raised its full-year revenue growth guidance to 5% to 7% on a constant-currency basis and increased its adjusted EBITDA outlook to $1.45 billion to $1.5 billion, according to its earnings release.

The quarter underscored the role of adult collectors, hobby gamers and long-running franchise fans in Hasbro’s strategy. Wizards of the Coast and Digital Gaming revenue rose 27% to $664 million, while operating profit in the segment increased 12% to $270 million, producing an adjusted operating margin of 40.7%, the company said.

Magic: The Gathering was the main driver. Hasbro said revenue from the trading-card franchise rose 32% in the quarter. Chief executive Chris Cocks told analysts on the company’s earnings call that Magic’s appeal rests on long-term play and collecting, with repeat engagement supporting both a secondary market and a fan base measured in the tens of millions.

Trading-card games can generate recurring revenue because new sets refresh the pool of playable and collectible cards. Hasbro said the Marvel Super Heroes set became the fastest Magic release to reach $300 million, with records for first-day and first-month sales. The company said Magic distribution rose by double digits across hobby stores, mass retail and international markets. Hobby stores account for about 70% of Magic sales, while mass retail represents about 20% and international markets about 10%.

Digital spending shifts toward core franchises

Hasbro is also narrowing its digital slate. The company said it is taking $56 million in charges tied to games that no longer meet its investment criteria. Its continuing platforms include Magic: The Gathering Arena, Baldur’s Gate 3, Dungeons and Dragons Beyond, and two titles planned for 2027: Exodus, a science-fiction role-playing game, and Warlock, a Dungeons & Dragons expansion.

The company said it is moving more development work to lower-cost regions, with Montreal becoming its main hub. Hasbro expects total digital spending to decline by at least 25% annually by 2028.

Some savings are being directed to CharacterOS, which Hasbro describes as a behavioral licensing platform for digital avatars and interactive uses of its characters. The company said 12 characters are already available in licensing pilots covering digital avatars, customer support tools and location-based entertainment.

Adult consumers broaden the product mix

Hasbro refers internally to its adult-oriented franchise strategy as GEM Squared, meaning gamified, entertainment-driven, multi-purchase and multi-generational, according to Cocks. He told analysts that retailers are seeking more products in those categories, including goods aimed at so-called kidult consumers.

The approach extends beyond tabletop and digital games. Cocks said Blooms by Play-Doh, a line aimed at adult crafters, sold out at major retailers within 24 hours of launch. Hasbro also has a multi-year licensing agreement with Nintendo for Legend of Zelda products, with the first items expected in 2027.

Margins, cyberattack costs and capital returns

Adjusted operating profit for the quarter rose 14% to $282 million, and adjusted operating margin was 24.8%, Hasbro said. Adjusted diluted earnings per share fell 2% to $1.28, which the company attributed to the digital write-down.

For the first half, net revenue rose 15% to $2.1 billion, adjusted operating profit increased 21% to $569 million and adjusted operating margin expanded by 150 basis points. Hasbro said its cost transformation program delivered $70 million in first-half savings toward a full-year target of $150 million, helping offset higher input costs, royalties and digital investment.

Consumer products revenue rose 5% to $463 million, although the segment recorded an operating loss of $7.5 million. Entertainment revenue fell 20% to $12.8 million, while the segment’s adjusted operating margin rose more than 400 basis points to 67.2%, helped by mix in Family Brands and film and television, the company said.

Hasbro said a March cyberattack reduced revenue by about $25 million, less than its earlier estimate of $40 million to $60 million, and that operations were restored ahead of schedule. The company also raised its full-year share repurchase target to at least $200 million from $100 million previously.

This story draws on original reporting from PYMNTS.