A：Hasbro delivered another strong quarter, capping off a remarkable first half of 2026. Despite headwinds from oil and trade policy, the business grew profits for the first half with an increase, and Wizards continued to grow strongly. The toy business also posted another quarter of growth with several products showing solid year-over-year performance.

A：Magic: The Gathering has had a significant performance, with a strong start to the year, day one and month one revenue records for the Marvel superheroes set, and it became the fastest set to reach $300 million in revenue. The revenue growth is attributed to broad-based distribution, real player growth, and the ongoing pull of new fans through existing IP. Since 2009, the tabletop and digital Magic businesses have compounded revenue at over 17% a year.

A：Magic: The Gathering is not just a local game store-based niche business; it is a mega franchise comparable to major entertainment brands like Pokemon, EA Sports, World of Warcraft, and Minecraft. What sets it apart is its longevity, having compounded for more than 35 years and its depth and complexity which players find attractive. The franchise is also spread across millions of players, treated as a lifelong pursuit rather than a trend.

A：Hasbro has recently launched Blooms, a new product for adults, which sold out at major retailers within 24 hours. The company has also announced a multi-year licensing agreement with Nintendo to develop products inspired by the Legend of Zelda franchise. Additionally, Tony’s launched the first Hasbro games for Tony Box 2 with strong pre-orders, Monopoly Big Board Bucks became a top new premium slot title, and the licensing team is extending the brand's reach through partnerships and into new categories. Hasbro is focusing its digital investment on trading card games and role-playing games with the potential to become significant digital franchises, such as focusing on brands like Ballers Gate 3 which is one of the most awarded role-playing games of the last decade.

A：Hasbro's digital strategy contributed to its financial performance in the second quarter by focusing on a set of platforms and genres to create community hubs and major franchise moments for its brands. This strategy helped in reducing lower conviction projects from the portfolio, decreasing the annual spend base, and leveraging high-ownership titles that are number one in digital licensing to drive revenue and upside for the brands.

A：The cyber incident impacted Hasbro's financial results by causing a net revenue loss of $20 million, which was less than forecasted. The revenue impact was also limited to the assumption of $60 million. Adjusted operating loss was $7.5 million, primarily due to higher input costs, royalties, and timing within operating expenses.

A：Hasbro's supply chain and manufacturing capabilities are scaling through deliberate decisions to increase initial print and distribution runs for Magic releases, which have improved operational efficiency and positioned the company to better meet demand. The success in scaling supply chain and manufacturing capabilities is evident from the largest Magic Premier release in the brand's history and the largest Day one release with Marvel superheroes executed in the second quarter.

A：Hasbro has increased its guidance for the year, anticipating consolidated revenue to grow 5 to 7% year over year on a constant currency basis. The company expects an adjusted operating margin of 25% to 26% and adjusted EBITDA in the range of $1.45 to $1.5 billion. For the year, Wizards is expected to grow revenue in the low double-digit range with operating margins in the low 40% range, and the entertainment segment is expected to have slightly positive year-over-year revenue with operating margins of approximately 50%. Looking forward into 2027, Lizard's operating margins are expected to remain in the high 30 to low 40% range, inclusive of the video game releases and amortization expense.

A：The expected decline in total digital spend is by at least 25% in 2028.

A：Wizards is the biggest driver of growth.

A：There are new initiatives and partnerships planned for Magic, including a strong lineup of first-party sets announced at a convention in Amsterdam, and strategic partnerships with adjacent universes beyond IP.

A：The revenue growth forecast for the back half of the year is for magic to grow by low single digits, which includes a mid single digits growth in Q3 and a down low single digits in Q4.

A：The Q4 revenue growth forecast is down low single digits, which is unchanged from the previous forecast and is influenced by a large Q4 in 2025 and the timing of the Q1 set launch in 2027.

A：The timing difference between Q1 set launches is such that in 2027, the Q1 set will launch in early February compared to 2025 where it launched in mid-January. This difference impacts Q4 results by shifting $40 million from Q4 into Q1, which can sway how Q4 finishes.

A：The strategy for managing supply and demand for Magic cards is to go in with larger initial print runs to supply the first distribution push and then lean into back orders and reorders. This strategy aims to avoid chasing demand and ensure that there is confidence in the ability to work with print partners to increase fundamental capacity within their facilities.

A：The company has decided not to adjust the impairment charge out of results, viewing it as a one-time, transitory cost. The charge is part of the focus on the profitability of digital games and is included in the P&L and EBITDA. Future results will continue to reflect this impairment charge as part of the investment that is now being unwound.

A：Marvel Super Heroes is off to a strong start and the company is very pleased with its performance. The company's approach to the supply chain and sales strategy involves bigger allocations for initial sales, which has benefited Marvel. The strategy also includes strong reorders and brisk sell-through rates, ensuring reasonable inventory levels and consistent reorders from channel partners.

A：The potential impact of the upcoming video game launch is a topic of speculation since the number of units it may sell is uncertain. The company believes in the fundamental value of the business across digital and tabletop segments and maintains its guidance of high 30s to low 40s for the segment's adjusted EBITDA margin. The expected outcomes may vary, but the company has considered the overall portfolio strength and balance in its financial projections.

A：The expected adjusted EBITDA margin range for next year is influenced by a number of factors including the development costs for the games, which are within the previously discussed range of $100 million to $250 million. The assumption on how the amortization expense will work is also a factor, with two-thirds of it expected to flush through within the first game launch. Additional marketing expenses, including incremental marketing for both video games and Magic, also contribute to the margin range.

A：The company feels good about its guidance for the back half of the year, as the retail side of the business creates a question mark due to its dependence on the holiday season and consumer macros. However, the business is less reliant on holiday sales due to a shift in strategy.

A：For the current year, they have announced three first-party sets and expect a similar number of sets with a slight increase in first-party content. For the next year, they will formally announce six sets, with three universes beyond and three first-party IP. The number of sets is expected to remain roughly the same year over year, with an increase in the percentage of first-party content.

A：Marvel has performed well across every channel and has particularly excelled with new players and in less traditional channels. It has done especially well in mass channels like Disney theme parks and game stores without organized play, such as Gamestop.

A：The $56 million impairment charge is related to game releases in 2028 and beyond and doesn't change the economics for 2027. It is mentioned that 2026 will be the peak year for spend on digital, and then it will start to decrease.

A：The potential upside for the back half of the year could come from continued strong performance in Magic, D&D (which is performing particularly well with its Beyond products), and thechoice business with their new releases related to the Gem Square theme. They also have a strong lineup of films from Disney contributing positively, especially 'Toy Story' with 'Potato Head' and 'Star Wars', with 'Hobbit' and 'Marvel' (specifically 'Spider-Man' and 'Avengers') expected to perform well in the holiday period.

A：When forecasting future sales, one should account for the different composition of each Magic set in terms of SKUs, card density, and complexity. Not every set will have the same sales potential, and factors like readiness, anniversaries, and keeping themes fresh play a role in the variability of quarterly sales.

A：The distribution of Magic continues to primarily flow through hobby channels at about 70%, with mass channels accounting for about 20% and international channels about 10%. All three segments are experiencing growth.

A：The transcript does not provide a direct answer to whether retailers are placing larger orders for fall sets or becoming less cautious. However, the positive comp sales in the April quarter at all toy retailers, including Walmart, Five Below, and Gamestop, suggest that retailers may be reacting positively to the market and ordering more in anticipation of better sales.

A：The current state of the toy retail environment is returning to historical patterns, which is a contrast to the atypical Q2 of the previous year that was affected by the tariff environment. Retailers are confident in their shelf due to the strong momentum in the category, leading to orders that are building as expected or historically seen.

A：Retailers traditionally being conservative, the improved ability to provide them with real-time product has changed the dynamics. Retailers are leaning in and are eager for more product, signaling a shift in inventory management and a demand for new offerings.

A：Retailers are particularly eager to stock products that are gamified, entertainment-driven, multipurpose, generational, and related to pop culture phenomena such as superheroes and Star Wars. This is reflected in the great response to products like Magic, Blooms, and related licensed items.

A：The company anticipates continuing to release one to two significant games per year but with changes in the types of games, levels of spending, and methods of market approach. They plan to include a mix of big games and more service-oriented games, as well as potentially more smaller content pieces within games. The company is also looking to partner with co-publishers to lower risks and is evolving studio infrastructure to be more cost-effective while maintaining high talent density.

A：The new Magic: The Gathering sets include sequels and original settings. Kamigawa is a sequel to a previous set and is anticipated to perform well, while the following two sets will present more original universes. Upcoming universes beyond these will feature more fantasy themes and will not include settings like New York City, based on fan feedback.