Hasbro Raises 2026 Guidance After Q3 Revenue and Profit Growth

Hasbro (NASDAQ: HAS ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Hasbro Inc. reported a strong Q3 2026 with a 15% increase in revenue and a 52% improvement in adjusted operating profit, driven by growth in all segments, especially Wizards of the Coast. Magic: The Gathering's revenue exceeded $600 million for the first time, growing 34% year-over-year, with significant contributions from new releases like The Hobbit and Reality Fracture. The company raised its full-year guidance, expecting consolidated revenue growth of 7% to 9% and adjusted EBITDA between $1.575 billion and $1.625 billion.

Hasbro's licensing business is highlighted as a strategic focus, contributing $700 million in annual revenue and supported by IP like Peppa Pig and Transformers. Future outlook includes continued growth for Magic in 2027 with six major releases planned, and a focus on expanding digital games with upcoming launches like Exodus and Warlock. Consumer Products segment revenue grew 4% to $828 million, with strong performance from Marvel products, and the company expects further growth in this segment for the holiday season. The company is increasing its share repurchase target for the year to $400 million, demonstrating confidence in its financial position.

Management highlighted macroeconomic resilience, noting a strong consumer base and favorable category dynamics in trading cards. Full Transcript OPERATOR Good morning and welcome to the Hasbro third quarter 2026 earnings conference call. At this time all parties will be in listen-only mode. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad.

Today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Fred Whiteman, Vice President of Hasbro Investor Relations. Please go ahead.

Fred Whiteman (Vice President, Investor Relations) Thank you and good morning everyone. Joining me today are Chris Cocks, Hasbro's Chief Executive Officer, and Gina Goetter, Hasbro's Chief Financial Officer and Chief Operating Officer. We'll begin today's call with Chris and Gina providing commentary on the company's performance before taking your questions. Our earnings release and presentation slides for today's call are posted on our investor website.

The press release and presentation include information regarding non-GAAP adjustments and non-GAAP financial measures. Our call today will discuss certain adjusted measures which exclude these non-GAAP adjustments. A reconciliation of GAAP to non-GAAP measures is included in the press release and presentation. Please note that whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share.

Before we begin, I would like to remind you that during this call and the question and answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives and similar matters. There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. These factors include those set forth in our Annual Report on Form 10-K, our most recent 10-Q, in today's press release and in our other public disclosures.

We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Chris Cocks. Chris. Chris Cocks (Chief Executive Officer and Board Member) Thanks, Fred.

And good morning everyone. Hasbro delivered another strong quarter with record profitability. Revenue grew 15% and adjusted operating profit improved 52%, with growth across all three of our segments. Wizards of the Coast momentum continued, driven by the Magic flywheel, and our consumer products business posted another quarter of gains.

We're increasing our outlook for the year, which Gina will walk through in her remarks. Despite all of the macro noise in the quarter, we stayed true to our superpower, inspiring a lifetime of play. We do that by building deep, lasting fandom around great IP. Magic is the clearest proof point.

Magic revenue topped 600 million for the first time, growing 34% versus last year and beating the record we set last quarter. Strength was broad-based across tentpole releases, backlist and Secret Lair. The Hobbit, which launched in August, is the fourth best-selling set in Magic's history, and it did that with a leaner product lineup. Shipments of Reality Fracture, which debuted in early October, exceeded our expectations, and backlist and Secret Lair are on track for record years.

Looking at Q4, Star Trek, our final set of the year, arrives in November, and early signs are encouraging. It's drawing Star Trek fans who are new to Magic, which is the core thesis behind Universes Beyond. You can see that demand in engagement. Hobbit pre-release participation across our 13,000 Wizards Play Network partners was the highest we've seen for a Universes Beyond release, and MagicCon Atlanta is sold out with badge sales up nearly 30% versus last year.

The clearest proof is the player base. Take the first nine months of 2026 and compare it with all of 2024, our last year without a tentpole Universes Beyond release: Organized Play participants are up more than 40% with three months left in the year. Fans come in through IP they already love, and expanded distribution makes it easier to find us. They stay because deep gameplay married with best-in-class fan experiences distinguishes Magic from other trading card games.

In 2027, we expect Magic to grow on top of a record 2026. Each of our six tentpole releases next year has a full product suite. We're scaling production capacity to meet demand, and our fan base and retail distribution keep expanding. At New York Comic Con, we announced Marvel Darkhold Destiny.

Our prior Marvel sets brought existing storylines into Magic. This one tells an original Marvel story centered on a brand new character and a companion comic. All six sets next year are bangers and we look forward to telling you more about them in the coming months. Turning to Digital Games: at Gamescom, we kicked off hands-on previews for Exodus and confirmed an April 7, 2027 launch date.

We're excited to get Exodus in front of players with more demos and announcements in the coming months. Warlock, our D&D action-adventure game, follows in 2027 and was the number one most wish-listed new game from opening night. We'll share more on both titles before year end. Starting this quarter, we're providing additional information on our licensing business and it's a model we like.

It's asset-light, which lets us focus on what we do best while leaning into our partners' capital investments. Hasbro is a top five global licensor with more than 17 billion in annual retail sales and we plan to build on that position across five priorities. First, we're building an enterprise-wide franchise system that aligns story, product and retail around key moments. Peppa Pig's Baby EV initiative is the proof point.

Retail sales grew nearly 30% while we spent a third less on marketing. Second, we're scaling licensed consumer products anchored by Peppa Pig, Transformers and My Little Pony and extending into Magic and Dungeons & Dragons. Third, we're accelerating location-based entertainment where we're the number one licensor in the space. Fourth, we're diversifying digital licensing with a pipeline of mobile, PC and console titles.

Monopoly Go shows the asymmetric opportunity when you partner with industry leaders. Fifth, we're using entertainment and music to create fandom that pays off across the portfolio. What connects all five strategies is the same asset-light model, and these businesses generate nearly $700 million in annual revenue across consumer products, digital and entertainment. Turning to consumer products, revenue grew 4% to 828 million, in line with our expectations, and our toy and game business delivered its fourth consecutive quarter of growth.

Marvel product was the standout with revenues up more than 35%, supported by theatrical releases from our partners at Marvel Studios. We're pleased with the momentum across our entertainment-led brands. Transformers' 40th anniversary has been a great moment for fans as we brought the 1986 film back to theaters on Transformers Day, which coincided with strong retail events. In Marvel, Spider-Man remains strong following Brand New Day and Power Charge.

Spider-Man is featured in multiple holiday gift guides. Dr. Doom product is on shelf ahead of the Avengers Doomsday debut in December, with several items on retailers' top toy lists. We're entering the holidays with momentum, especially in our focus Gem Square categories—those parts of the toy industry that are gamified, entertainment-driven, multi-purchase and multi-generational.

The third quarter showed what happens when we stay true to our superpower of inspiring a lifetime of play. Magic is deepening its player base and setting records. Licensing extends our brands through great partners who bring their own capital, and our toy and game business has grown four quarters in a row. That is a balanced portfolio and it's the foundation for the outlook Gina will walk through.

Before I turn things over, I want to thank our teams and partners around the world for delivering another great quarter. Gina Goetter (Executive Vice President, Chief Financial Officer & Chief Operating Officer) Thanks, Chris, and good morning, everyone. Q3 was our strongest quarter of the year with revenue growth and margin expansion across all three segments. Revenue, profit, and cash flow each came in ahead of our expectations, and the quarter gives us the confidence to raise our outlook again.

Net revenue in the third quarter was $1.6 billion, up 15% year over year. Adjusted operating profit was $541 million, up 52%, with an adjusted operating margin of 33.9%, up 830 basis points on favorable business mix, cost productivity, and the benefit of tariff refunds, which I'll detail in a moment. Adjusted earnings per diluted share were $2.90, up 73%, reflecting operating leverage, higher interest income, and a lower effective tax rate. Through the first nine months, net revenue of $3.7 billion grew 15%, adjusted operating profit of $1.1 billion grew 35%, and adjusted operating margin expanded 440 basis points to 29.7%.

Total Hasbro adjusted EBITDA was $605 million in the quarter, up 46%, and $1.27 billion year to date, up 29%. Our cost transformation program remains on track, contributing $105 million to the first nine months against our full-year commitment of $150 million. Those savings are doing exactly what we designed them to do, absorbing higher royalties and input costs while funding the investment behind Magic and our 2027 digital game launches. Turning to the segments, Wizards delivered another exceptional quarter.

Segment revenue grew 31% to $747 million, with Magic growing 34% to $616 million behind the release of The Hobbit, Reality Fracture, and solid backlist performance. Third quarter results include approximately $40 million of Magic sales that we had expected in the fourth quarter, primarily related to Reality Fracture. Predicting the timing of a set is difficult when a release falls right at the start of the quarter, so this is business as usual. Operating profit grew 46% to $367 million with a 49.2% operating margin, up 520 basis points, as volume and mix more than offset higher royalty expense and the step-up in marketing behind our upcoming video game launches.

Digital and licensed gaming revenue was $134 million, up 3%, with MONOPOLY GO! continuing to perform in line with our expectations. The print operations decisions we discussed last quarter continue to pay off. Increasing initial print and distribution runs has given us the capacity to meet demand at launch, reduce costs, and plan our manufacturing network more efficiently.

Across premier sets, Universes Beyond Commander Decks, and Secret Lair, we are producing more product than at any point in the brand's history, and sell-through is confirming the demand is there to support it. Through nine months, Magic revenue of $1.6 billion is up 34%, and the ecosystem remains healthy. Across both new releases and backlist, Consumer Products delivered the margin inflection we have been working towards. Revenue grew 4% to $828 million, with growth across almost all of our markets.

Adjusted operating profit doubled to $178 million, inclusive of approximately $48 million of tariff refunds, with an adjusted operating margin of 21.5% compared to 11.2% last year. The underlying improvement is the durable part of the story, and it is broad-based. Supply chain productivity, lower distribution costs, disciplined operating expense, and favorable business mix were more than able to offset higher input costs. Through the third quarter, CP revenue of $1.7 billion has grown 3%, and adjusted operating margins of 7.7% have grown 410 basis points, including the one-time tariff refund recognized in Q3.

We also enter the holiday season in good shape. Operationally owned inventory ended the quarter at $359 million, down 10% versus last year, and both owned and retail inventory are clean and well positioned against the seasonal build and the upcoming entertainment slate. The broader operating environment remains dynamic, and our teams continue to manage it well. The oil-related input costs we flagged earlier in the year are now flowing through the P&L, and the mitigation playbook we built is helping to offset that pressure.

On tariffs, the refunds recognized this quarter relate to prior-year duties, and we have updated our guidance to incorporate the lower China tariff rate of 12.5%. With greater stability in the trade environment, we are taking a more measured and flexible approach to our sourcing footprint, balancing cost, speed, and resilience across our network, and we remain focused on exiting the year with a dependable supply base and clean inventory on both sides of the shelf. Entertainment segment revenue was $20 million, up 9%, and adjusted operating profit of $18 million contributed at a 91.1% margin, driven by favorable mix and deal timing.

Beginning this quarter, we are reporting licensing revenue as a separate line on the P&L. This disclosure puts together the licensing revenue for digital gaming, including MONOPOLY GO!, as well as our licensed consumer products business, at roughly 11% of year-to-date revenue. It is a meaningful and capital-light contributor that spans the entire portfolio, and we believe the added transparency provides better visibility into our primary revenue streams.

Total licensing revenue was $144 million in the quarter and $417 million year to date, which is down 4%, primarily due to $26 million of nonrecurring items across several licensing agreements in the prior year, as well as tough Caillou, My Little Pony, trading cards compares. From a balance sheet and cash flow perspective, through the first nine months we generated $907 million in operating cash flow, up 85% versus last year on earnings growth and improved working capital. We ended the quarter with $851 million of cash and $576 million of short-term investments, which are match-dated against our November 2026 maturity.

We contributed $226 million toward debt reduction and returned $445 million to shareholders through dividends and share repurchases. Turning to our full-year outlook, we are raising guidance for the year. We now expect consolidated revenue to grow 7% to 9% year over year on a constant-currency basis, and adjusted EBITDA to be in the range of $1.575 to $1.625 billion. At the segment level, Wizards is now expected to grow revenue between 16% to 18% with operating margins of approximately 44% to 45%.

From a phasing standpoint, the fourth quarter carries a step-up in royalties as well as approximately $15 million of marketing spend behind the video game launches. Also note that the approximately $40 million of Reality Fracture and backlist revenue pre-shifts recognized in the third quarter shifts out of our fourth quarter expectations. For Consumer Products, we continue to expect revenue to grow 1% to 3% for the year, with an increase in adjusted operating margin to 8% to 10%, including the benefit from the tariff refunds.

The fourth quarter margin will step down sequentially from Q3, as the tariff refund benefit was completely recognized in Q3 and Q4 carries a heavier promotional and shipping mix. Entertainment segment revenue is now expected to grow 3% to 5% with operating margins of approximately 65%. On capital allocation, our priorities are unchanged, but our capacity has grown. First, we continue to invest in the business behind our highest-return growth opportunities, led by Wizards, digital gaming, and licensing.

Second, we remain focused on paying down debt and maintaining a healthy balance sheet. Third, based on the continued strength of our cash flow, we are again increasing our share repurchase target for the year from $200 million to $400 million. We have repurchased $149 million through the first nine months and expect to be active through the balance of the year. And finally, we remain firmly committed to our dividend.

As part of today's release, the Board has authorized the fourth quarter dividends. A few words on how we're thinking about next year. While we're not giving 2027 guidance today, directionally the setup is a good one.