Hasbro, Inc. (HAS) 2024 Q2 Earnings Call Summary
July 25, 2024 
Hasbro, Inc. (HAS)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Strong Quarter Performance: Hasbro reported a good quarter with strength in gaming and digital licensing, increased operating margin, and healthy inventory.
- Growth in MAGIC: THE GATHERING: The release of Modern Horizons 3 became the fastest selling set in MAGIC's history.
- Digital Licensing Success: Monopoly Go! continued its momentum, grossing over $3 billion in revenue and driving significant upside to revenue and operating profit.
- Consumer Products Licensing Growth: Growth was helped by new partnerships, notably with Kayo collectible trading cards for My Little Pony.
- Guidance Raised for Full Year: Based on the performance in the first half of the year, Hasbro is raising its full-year guidance.
Pessimistic Highlights
- Consumer Products Decline: Q2 saw a 20% decline in consumer products, driven by lower closeout volume, reduced entertainment slate, and exited brands.
- Entertainment Segment Decline: The Entertainment segment declined 90% due to the sale of the eOne film and TV business.
- Challenges in Toy Turnaround: Hasbro is still in the midst of a turnaround effort in toys, facing volume losses in recent quarters.
Company Outlook
- Wizards Revenue Outlook: Total Wizards revenue expected to be down 1% to 3%, with digital licensing expected to be down in Q3 and flat in Q4.
- Consumer Products Revenue Outlook: Anticipated to be down 7% to 11%, with a low single-digit decline in Q3 before flipping to growth in Q4.
- Adjusted EBITDA Guidance Increased: Now expected in the range of $975 million to $1.025 billion, up from the prior guidance.
Q & A Highlights
Q: Can you talk about internal development of video games and capital commitment for that business? (Eric Handler, ROTH Capital)
A: About half of Hasbro's $250 million annual capital is going into digital games, aiming to ship 1 to 2 new games per year starting as early as late 2025 or early 2026. (Chris Cocks)
Q: Could you clarify the guidance raise and the contribution of Monopoly Go! and MAGIC? (Megan Alexander, Morgan Stanley)
A: The guidance raise is primarily due to Monopoly Go!'s performance, with $105 million expected in revenue for the full year. MAGIC's Modern Horizons 3 outperformed Lord of the Rings within the quarter. (Gina Goetter)
Q: Has anything changed in your outlook for MAGIC: THE GATHERING's underlying business for the back half of the year? (Arpine Kocharyan, UBS)
A: No significant changes. MAGIC is performing better than expected, with Modern Horizons 3 expected to have a long tail of sales. (Chris Cocks)
Q: Can you discuss the major margin headwinds for the Wizards business in the second half? (Drew Crum, Stifel)
A: The biggest driver is the lapping of Baldur's Gate, with digital licensing expected to be down in Q3 and flat in Q4. (Gina Goetter)
Q: What signs of green shoots are most encouraging in consumer products? (Alex Perry, Bank of America)
A: Beyblade is performing well in early markets, and Transformers One is expected to drive Q3 and Q4 growth. Retail inventory levels are healthy. (Chris Cocks)