This conference call was held by Hasbro to discuss the performance of the company in the second quarter of 2025. During the meeting, company executives including the CEO and CFO/COO provided a detailed review of the company's financial performance and information on non-GAAP adjustments and non-GAAP financial metrics. Additionally, the meeting highlighted various factors that may affect actual results and reminded participants to be mindful of the risks associated with forward-looking statements.

In the second quarter of 2025, Hasbro outperformed expectations, particularly in the Wizards of the Coast business, licensing, and digital business. Magic: The Gathering showed significant growth, with both new and old product lines setting sales records. The company also increased its investment in the digital gaming field, including the upcoming flagship game and collaborations with industry veterans. Despite facing challenges such as tariffs and other macroeconomic environment challenges, Hasbro is expected to achieve sales recovery in the second half of the year by adjusting cost structures and optimizing supply chains, especially in the North American market. Additionally, with a diversified product line and strategic market investments, the company remains optimistic about future growth.

Hasbro had a strong performance in the second quarter, exceeding expectations with increases in revenue, profit, and profit margin, despite facing challenges in the external environment. Its Magic business showed strong results, especially with Magic The Gathering achieving its highest sales in history, leading to a 16% increase in revenue. Although there was a slight decrease in revenue in the consumer products division, disciplined cost control and promotional spending helped achieve a near break-even profit. The company raised its full-year performance expectations, expecting total revenue to achieve mid-single-digit growth and adjusted operating profit margin to reach 22% to 23%. Additionally, the company plans to maintain financial flexibility and shareholder returns through cost savings, debt reduction, and investments in core growth engines.

In recent discussions, it was mentioned that the release of the Final Fantasy game card set has become the largest in history, with demand far exceeding expectations. The company achieved a revenue of 200 million dollars in just one day, surpassing the 200 million dollars reached in six months by the previous "Lord of the Rings" series. Despite increasing production four times, market demand remains strong, and the product is expected to have a long sales tail. In addition, the company is confident in the future growth of the Magic series and other related product lines, planning to meet market demand by introducing more popular IP and optimizing product lines. It is expected that market performance will remain strong in 2026 and beyond.

During the discussion, the company reiterated its midterm goal, which is to achieve an annual average operating profit margin growth of 500 to 1000 basis points over the next 27 years. Despite the performance exceeding expectations in the current year, the company stated that it will not immediately adjust its midterm goal, mentioning the possibility of performance fluctuations in the coming years. Additionally, it was mentioned in the discussion that the performance of the Monopoly Go game has significantly accelerated, contributing $44 million in revenue in a single quarter, setting a new record. This was attributed to the excellent collaboration with Star Wars and lower-than-expected user acquisition costs, resulting in game revenue exceeding previous estimates. The company expects monthly revenue for the second half of the year for this game to be between $12 million and $14 million.

In this discussion, the company raised its full-year guidance due to better-than-expected performance in the first quarter, despite facing uncertainties such as the upcoming holiday season and tariff impacts. Management stated that although the first quarter showed strong results, considering the tariff impacts in the second half of the year and the early stages of the sales cycle, the current guidance is appropriate. In addition, the discussion also involved the company's growth strategy for its gaming business, particularly "Magic: The Gathering," and the role of third-party intellectual property in business growth, highlighting success achieved through strategies for expanding both new and existing players and providing a positive outlook for long-term growth.

The discussion focused on the company's performance in the recent quarter, particularly from the perspective of a "wizard." The performance was excellent, but the magnitude of improvement compared to market expectations appeared to be more moderate. The conversation mentioned the impact of tariffs, uncertainty in the Wizards business, and the performance of the CP (possibly referring to consumer products) business. The company noted that while the gaming and collectibles market performed well, the cautious retail environment and inventory management attitude affected performance expectations. Additionally, strict inventory monitoring by retailers and delayed holiday product procurement also influenced performance predictions, with some popular items expected to experience stockouts during the holiday season.

During the discussion, it was mentioned that Magic: The Gathering has achieved significant sales growth in the Japanese market through collaborations with IPs such as Final Fantasy, being seen as the second best-selling product after Modern Horizons 2. This success has prompted the company to further expand into the Japanese market and seek more potential IP collaborations, especially in Japan, as it leads the global TCG market in innovation and diversity. Additionally, through collaborations with IPs like Spider-Man and Avatar, Magic: The Gathering is attempting to attract a younger and more diverse player base while also working to increase the proportion of female players. Finally, the discussion also touched on consumer responses and industry trends in the US market for Magic: The Gathering.

The performance of the toy industry in the second quarter was discussed, especially the growth in sales of trading cards and building sets, while other categories showed flat or slight decline. Collaboration with the entertainment industry such as "Transformers" and Marvel toy series was mentioned as having strong sales. At the same time, innovative products such as Beyblade and the Plato Barbie collaboration with Mattel also had a positive impact. The impact of tariffs on toy prices was discussed, noting that price increases may be a slow and ongoing process, and how retailers and manufacturers are working to protect key price points to maintain consumer purchasing power.

In the second half of 2023, the company adjusted its product portfolio based on mathematical and logical analysis, deciding not to introduce products that cannot withstand significant price increases into the US market in order to avoid imposing excessive burden on consumers. At the same time, the company is watching to see if large retailers are demanding suppliers to take on more inventory risk, for example, by having suppliers bear the risk of unsold inventory through a marketplace model, but as of now, the company has not encountered this situation.

The conversation discussed the significant increase in the base of magic players, especially through organized gaming events which attracted a 40% annual growth rate, as well as attracting a large number of new players through specific events like Final Fantasy. At the same time, the discussion also involved the performance outlook of the consumer product line, including retailers' cautious attitude towards holiday orders and inventory strategies, as well as the reasons for adjusting the full-year performance guidance.

During the discussion, the company's senior management indicated that there are currently no plans to adjust the operating profit margin of the digital and coastal business segments by more than 40% in the short term. They also mentioned that starting in 2026, profits may be affected by depreciation due to the Exodus project. In addition, a rationalization strategy for SKUs (stock-keeping units) was discussed, including reducing complexity and streamlining product lines, particularly targeting the adjustment of SKUs in the US market to address tariff impacts and inventory management. The company is optimistic about the growth of the future CP (Consumer Products) department, expecting significant market portfolio growth next year through a strong entertainment product line including Spider-Man, Star Wars, and the Avengers. Furthermore, the positive market feedback on early innovative products such as Barbie and Peppa Pig was also mentioned.

The company discussed the growth of new players in the Magic card game in the current quarter, pointing out that the number of new players has increased compared to previous years. They also mentioned several important factors in inventory management, including tariff costs, foreign exchange rate impact, and adjustments to retailers' Direct Import (DI) strategies. The company stated that despite facing these challenges, their expectations and management of inventory are still under control.