Adult Hasbro fans see ‘magical’ 16% sales spike

“Magic fans have been playing and collecting for years because mastery never ends,” CEO Chris Cox Ali said The company’s second quarter earnings call Tuesday (July 21). “This retention is what fuels a strong secondary market and passionate community of tens of millions of fans who treat the game as a lifelong pursuit rather than a passing trend.”

This fan base is now reshaping Hasbro’s digital strategy. The company is divesting $56 million in games that no longer meet its investment limits and doubling down on the platforms its most loyal fans already use. The platforms that remain in the lineup — Magic: The Gathering Arena, Baldur’s Gate 3, Dungeons and Dragons Beyond, and two new games scheduled for release in 2027 (Exodus, a sci-fi role-playing game and Warlock, an expansion for Dungeons & Dragons) — are designed for the fans who are driving Hasbro’s revenue growth today.

On the cost side, Hasbro is also shifting more development work to lower-cost areas, with Montreal emerging as a major hub, and total digital spending is expected to decline at least 25% annually by 2028. Some of those savings are being used for financing. CharacterOSHasbro’s behavioral licensing platform, which turns Hasbro characters into digital avatars and interactive experiences that fans can license directly.

Big fans lead every category

Internally, Hasbro calls this strategy GEM Squared: game-based, multi-buy, multi-generational entertainment. In plain terms, this means creating products designed for adults who grew up with the brand and never left it.

This client appears in every category. Magic: The Gathering grew revenues by 32% in the second quarter, and the Marvel Super Heroes collection became the fastest release in game history to reach $300 million, setting records for first-day and first-month sales. Distribution has grown by double digits across hobby stores, mass retail and international markets, with hobby stores now accounting for approximately 70% of Magic’s sales, mass retail about 20% and international markets the remaining 10%.

The adult-focused push extends beyond games. Blooms by Play-Doh, a new line aimed at adult crafters, sold out at major retailers within 24 hours of its launch, Cox said. A multi-year licensing agreement with Nintendo to develop Legend of Zelda products will begin taking effect in 2027.

“Retailers are tempted and eager to have more products in those GEM Squared categories,” Cox said. “Toys, entertainment-based, multi-purchase, multi-generational. It’s basically stuff for kids.”

What else stood out?

• The March cyberattack cost Hasbro less than the company feared. Lost revenue was approximately $25 million, well below previous projections of $40 million to $60 million, and operations were fully restored ahead of schedule.
• Twelve Hasbro characters are already available for pilot licensing through CharacterOS, which includes digital avatars, customer support tools, and location-based entertainment.
• On a broader cost front, Hasbro’s cost transformation program contributed $70 million in the first half versus a full year commitment of $150 million, which helped offset higher input costs, royalties and digital investment.
• The Entertainment segment reported an adjusted operating margin of 67.2%, up more than 400 basis points, on a favorable mix within family brands and movies and TV, despite a 20% revenue decline versus a tough comparison to the prior year.

Second quarter results and full-year forecasts

Hasbro I mentioned Second quarter net revenue was $1.14 billion, up 16% year over year. Adjusted operating profit was $282 million, an increase of 14%, with an adjusted operating margin of 24.8%. Adjusted earnings per diluted share were $1.28, down 2% due to the digital write-down.

During the first half, net revenue of $2.1 billion increased 15%, adjusted operating profit of $569 million increased 21%, and adjusted operating margin expanded 150 basis points.

Wizards segment revenue grew 27% to $664 million, with operating profit increasing 12% to $270 million and an adjusted operating margin of 40.7%. Consumer products revenue grew 5% to $463 million, although the segment posted an operating loss of $7.5 million. Entertainment revenue was $12.8 million, down 20%.

For the full year, Hasbro raised its consolidated guidance for revenue growth to a range of 5% to 7% on a constant currency basis and raised its adjusted operating margin forecast to 25% above 26%, with adjusted EBITDA now expected to be between $1.45 billion and $1.5 billion. Consumer products revenue is expected to grow in the low single digits. The company also increased its stock buyback target to at least $200 million for this year, from $100 million previously.