Hasbro (HAS) Q4 2025 earnings review
Wizards Casts a Massive Spell; Toys Return to Growth
Hasbro delivered a blockbuster Q4, crushing expectations with 31% YoY revenue growth. The engine was Wizards of the Coast, which exploded 86% higher driven by a record quarter for MAGIC: THE GATHERING. Crucially, the Consumer Products (Toys) segment broke its losing streak, growing 7% YoY with adjusted operating margins expanding to 6.7%. Management signaled confidence by authorizing a new $1B buyback and guiding for continued growth in 2026.
🐂 Bull Case
Wizards of the Coast revenue nearly doubled in Q4 (+86%), with Tabletop Gaming up 139%. The segment generated $1.0B in operating profit for the full year, boasting a 46% margin. The 'Universes Beyond' strategy (collaborations) is proving to be a massive commercial success.
After quarters of decline, Consumer Products (Toys) grew 7% in Q4, driven by core brands like TRANSFORMERS and PEPPA PIG. Inventory is clean (down significantly YoY in units), setting the stage for cleaner execution in 2026.
🐻 Bear Case
The disparity in quality is stark: Wizards generated $283.5M in operating profit in Q4, while Consumer Products generated only $53.6M despite having higher revenue ($800M vs $630M). The company is effectively a gaming company subsidizing a toy manufacturer.
While not quantified in the Q4 release, the company logged a $1B goodwill impairment in Q2 largely due to tariff implementation impacts on the Consumer Products business. Future trade policy shifts remain a material overhang for the low-margin toy segment.
⚖️ Verdict: 🟢🟢
Strong Buy. This was a statement quarter. The 'Playing to Win' strategy is working: digital and gaming are printing money, and the legacy toy business has stabilized. With a new $1B buyback and healthy 2026 guidance, momentum is clearly accelerating.
Key Themes
MAGIC: THE GATHERING Explosion
Accelerating. MAGIC revenue in the Tabletop category surged 139% YoY in Q4 ($494.7M vs $207.0M). This was driven by the 'Universes Beyond' sets (specifically Marvel's Spider-Man mentioned in Q3 call context and Avatar in Q4 release). FY25 MAGIC revenue rose 59%, confirming the brand has successfully expanded beyond its core niche.
Consumer Products Returns to Growth
Reversing. After a year of declines (-4% in Q1, -16% in Q2, -7% in Q3), the Consumer Products segment grew 7% in Q4. Growth was seen in North America (+12%) and Europe (+15%), offsetting continued weakness in Asia Pacific (-24%). Operating margin in the segment expanded to 6.7% (adjusted) from essentially break-even/loss levels in prior periods.
Digital Licensing Payoff
Stable. 'Monopoly Go!' continues to be a high-margin contributor, generating $168 million in revenue for the full year 2025. This high-margin revenue stream is critical for the Adjusted EBITDA expansion, which hit $1.36 billion for the year (beating guidance).
Entertainment Segment Fade
Decelerating. Entertainment revenue fell 5% in Q4 and 4% for the full year. While now a much smaller, asset-light part of the business post-eOne sale, it remains a drag on top-line growth. Adjusted operating margin compressed to 4.5% in Q4 from abnormally high levels earlier in the year.
Tariff-Driven Goodwill Impairment
The full-year results include a massive $1.02 billion non-cash goodwill impairment recorded in Q2, triggered specifically by the implementation of tariffs. This signals management's long-term view that trade barriers have permanently impaired the profit potential of the Consumer Products segment compared to historical norms.
Other KPIs
Accelerating. Margin expanded significantly from 10.2% in the prior year period (24Q4). This was driven by the favorable mix shift toward the ultra-high margin Wizards segment (45% margin) and away from low-margin entertainment.
Stable/Improving. Cash flow increased from $847M in the prior year despite the net loss (which was driven by non-cash impairment). This capital generation supported $225M in debt reduction and $393M in dividends.
Accelerating. This single segment generated 90% of the company's total adjusted operating profit ($315M) for the quarter. The reliance on Wizards execution has never been higher.
Guidance
Decelerating vs Q4's +31% surge, but represents a stable continuation of the turnaround narrative compared to FY25's +14%. implies the Q4 surge was partly timing/release driven, but the core business has firmly pivoted to growth.
Accelerating. Implies growth of 3-7% vs FY25's $1.36 billion. This suggests margin expansion is expected to continue or stabilize at high levels.
Stable. The midpoint (24.5%) is roughly in line with the FY25 result of 24.2%. This suggests the mix shift benefit (more Wizards, less low-margin Toys) has largely played out, and further gains will come from operational efficiency.
Key Questions
Sustainability of Wizards Growth
Q4 saw an explosive 86% growth in Wizards. How much of this was one-time 'Universes Beyond' releases (Spider-Man/Avatar) vs. sustainable organic growth, and do you face a 'compa cliff' in Q4 2026?
Consumer Products Margins
While CP revenue grew, adjusted margins (6.7%) lag far behind the corporate average. With tariff headwinds persisting, what is the realistic ceiling for Toy margins in FY26?
Capital Allocation Pace
You announced a new $1B share repurchase program. Given the debt reduction progress ($225M in 2025), should investors expect an accelerated pace of buybacks in H1 2026?