HASBRO, INC.

Hasbro, Inc. is a leading game, intellectual property, and toy company whose mission is to create joy and community through the magic of play. The company operates in the highly competitive play industry, which includes toys, games, and digital gaming, and faces competition from toy and game companies, digital gaming companies, and digital gaming developers, as well as large retailers offering private-label products. The industry is characterized by low barriers to entry, rapidly changing consumer interests, and increasing competition from artificial intelligence-enabled product development. Hasbro competes based primarily on meeting consumer preferences and the quality and play value of its products and experiences, and to a lesser extent on product pricing.

The filing names several primary competitors, including large toy and game companies, digital gaming companies, and digital gaming developers, as well as large retailers who offer products under their own private labels. Hasbro's stated competitive advantages include a broad and deep brand portfolio rooted in play, one of the biggest and most diverse licensing businesses in the world, and a profitable games business anchored by MAGIC: THE GATHERING, DUNGEONS & DRAGONS, MONOPOLY, and Hasbro gaming classics. The company believes its diversified portfolio together with the strength of its extensive intellectual property portfolio provides a competitive advantage. In 2025, net revenues from the top five customers accounted for approximately 35% of consolidated global net revenues, with Amazon.com, Inc. and Wal-Mart, Inc. together representing 20% of consolidated global net revenues, each accounting for 11% and 9%, respectively.

Hasbro generates revenue through three lines of business: games, IP (licensing and entertainment), and toys. The games business is described as a high profit, high growth investment center, encompassing physical and digital games, trading cards, and role-playing games. The IP licensing and entertainment business is a capital-light, partner-scale opportunity that drives brands across consumer product categories, screens, and experiences. The toys business serves as the first handshake with consumers and is a cash-generative business in a stable category driven by brands, innovation, and licenses. The company also generates revenue through direct-to-consumer platforms including Hasbro PULSE, SECRET LAIR, D&D Beyond, and Magic: The Gathering Arena, and through out-licensing its intellectual property to third parties for digital games, consumer products, and location-based entertainment.

The Wizards of the Coast and Digital Gaming segment includes MAGIC: THE GATHERING, one of the original collectible card games, which had a record year in 2025 supported by the success of Universes Beyond sets such as Avatar: The Last Airbender and Final Fantasy, which was the highest selling set of all-time based on net revenues. This segment also includes DUNGEONS & DRAGONS, one of the world's most popular tabletop role-playing games, and digital gaming initiatives including internally developed titles like EXODUS and WARLOCK: DUNGEONS & DRAGONS, both expected to be released in 2027, as well as licensed digital games such as MONOPOLY GO! and Baldur's Gate 3. The Consumer Products segment includes toys and games based on owned and controlled brands such as MONOPOLY, HASBRO GAMES, PLAY-DOH, TRANSFORMERS, NERF, and PEPPA PIG, as well as partner brands including MARVEL, STAR WARS, and BEYBLADE. The Entertainment segment focuses on reinforcing storylines through television, film, and digital content, with principal brands including PEPPA PIG and MY LITTLE PONY.

The Entertainment segment generated net revenues that decreased 4.4% in 2025 compared to 2024. The Consumer Products segment net revenues decreased by $106.3 million, or 4.2%, in 2025. The Wizards of the Coast and Digital Gaming segment net revenues increased by $675.6 million, or 44.7%, in 2025. The Grow Brands portfolio, which includes MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, Marvel, and DUNGEONS & DRAGONS, saw net revenues increase 24.4% in 2025, driven by a $641.5 million increase in MAGIC: THE GATHERING and increased contributions from MONOPOLY GO! which contributed $168.0 million of revenue in 2025 compared to $112.2 million in 2024. The Optimize Brands portfolio net revenues decreased 4.6% in 2025, and the Reinvent Brands portfolio net revenues decreased 13.7% in 2025.

In 2025, Hasbro continued to execute on its Operational Excellence program, an ongoing enterprise-wide cost-savings initiative, delivering almost $800 million of gross cost savings through 2025 and on path to a previous $1.0 billion commitment. The company recognized a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment during the second quarter of 2025, driven by the estimated impact of tariffs and other macroeconomic headwinds. The company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025. In February 2026, the Board of Directors authorized the repurchase of up to $1.0 billion in Common Stock, replacing all prior authorizations. The company also executed a long-term sublease for 265,000 square feet of office space in Boston, Massachusetts to serve as the principal headquarters for its toy and game business and corporate function, with an expected move from Pawtucket during the fourth quarter of 2026.

Consolidated net revenues for fiscal 2025 increased 13.7% to $4,701.3 million from $4,135.5 million in fiscal 2024. Operating profit was $11.1 million, or 0.2% of net revenues, compared to $690.0 million, or 16.7% of net revenues, in the prior year, significantly impacted by the $1,021.9 million goodwill impairment charge. Net loss attributable to Hasbro, Inc. was $322.4 million, or $2.30 per diluted share, compared to net earnings of $385.6 million, or $2.75 per diluted share, in 2024. The effective tax rate was negatively impacted by the non-deductible goodwill impairment, with income tax expense of $216.2 million on a pre-tax loss of $102.0 million.

A key growth vector is the continued expansion of the digital gaming business, including the internal development of AAA and AA games such as EXODUS and WARLOCK: DUNGEONS & DRAGONS, both currently in development for PC, PlayStation 5, and Xbox and expected to be released in 2027. The company also highlighted a new slate of multi-year licensing partnerships announced in 2025 that expand Hasbro's presence on the casino floor, providing access to new entertainment experiences for adult fans and gamers. The digital licensing business, led by MONOPOLY GO! from partners at Scopely, Inc., remains a meaningful contributor to licensing revenues, contributing $168.0 million of revenue in 2025 compared to $112.2 million in 2024.

Another growth vector is the expansion of the licensing business, which the company describes as a capital-light, partner-scale opportunity. The company's Playing to Win strategy includes extending the reach of brands through out-licensing to third parties for consumer products, digital games, and entertainment. Recent examples include the return of MONOPOLY at McDonald's in a new digital-first format and a resurgence from MY LITTLE PONY through licensing across merchandising categories, music, and trading card products. Location-based entertainment is also a focus, with experiences such as TRANSFORMERS at multiple Universal Studios theme parks, seven Peppa Pig Theme Parks with Merlin Entertainment, and Hasbro City in Mexico, all operated by third parties making the capital investments.

The company is continuing to execute on its Operational Excellence program, which includes targeted cost-savings, supply chain transformation, and certain restructuring actions. Through 2025, the company has delivered almost $800 million of gross cost savings and is on path to its previous $1.0 billion commitment. The company is also focused on reducing complexity across the business, including significantly reducing SKU count, reducing owned inventory levels, and reducing the cost structure. The company noted that it is continuing to transform the business by upgrading systems and talent with an emphasis on rapid adoption of AI, modernizing product design and development processes, and process and systems modernization across IT, accounting, finance, and HR.

The company's supply chain strategy includes optimizing the manufacturing and logistics network, advancing integrated planning, and embedding design to value and design for manufacture principles. The company continues to pursue a resilient sourcing strategy by diversifying its manufacturing footprint, with the majority of products manufactured by third-party manufacturers located in China, Vietnam, India, Japan, Belgium, the United States, Mexico, and Indonesia. The company is also focused on supply chain excellence to continue improving predictability, costs, and services across the network. The company expects to move its primary headquarters for toys, board games, licensing, and entertainment operations from Pawtucket, Rhode Island to Boston, Massachusetts during the fourth quarter of 2026.

The company's capital allocation strategy includes the repurchase of common stock, with the Board of Directors authorizing the repurchase of up to $1.0 billion in Common Stock in February 2026, which replaces and supersedes all prior approved share repurchase authorizations and has no expiration date. The company's practice has been to pay dividends on a quarterly basis, though the declaration of dividends is subject to the discretion of the Board of Directors. There were no repurchases of the company's Common Stock during 2025. The company has approximately $3,281.9 million in total long-term indebtedness. The filing does not provide specific R&D spending levels or capital expenditure plans for the upcoming period.

A significant headwind flagged by management is the imposition or threat of tariffs, including reciprocal or retaliatory tariffs, particularly on products manufactured in China for import into the U.S. The company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025 and recorded a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment driven by the estimated impact of tariffs and other macroeconomic headwinds. The company noted that significant changes in trade policy announced by the U.S. government could adversely impact forward-looking financial results, and that the final impacts of tariffs remain uncertain.

Another constraint is the highly competitive nature of the play industry, with low barriers to entry and rapidly changing consumer interests. The company noted that the use of artificial intelligence is likely to result in increased competition in the markets in which it competes. The company also faces risks related to customer concentration, with Amazon.com, Inc. and Wal-Mart, Inc. together representing 20% of consolidated global net revenues in 2025. Additionally, the company's substantial business, sales, and manufacturing operations outside the U.S. subject it to risks associated with international operations, including currency fluctuations, political instability, and complications in complying with different laws in varying jurisdictions.

The most material risk to Hasbro is the impact of tariffs, which resulted in $44.9 million ¹ in tariff costs during 2025 and contributed to a $1,021.9 million ² non-cash goodwill impairment in the Consumer Products segment. The company faces significant customer concentration risk, with Amazon.com, Inc. and Wal-Mart, Inc. together representing 20% ³ of consolidated global net revenues in 2025, each accounting for 11% ⁴ and 9% ⁵, respectively. The company's substantial long-term indebtedness of approximately $3,281.9 million ⁶ could limit cash availability and require diversion of cash to debt service. The company's strategy depends heavily on the success of digital gaming, where costs are higher with no assurance of success, and the company faces the risk of significant write-offs if digital game development is discontinued or not commercially successful. Additionally, the company relies on third-party manufacturers, a substantial but decreasing number of which are in China, exposing it to geopolitical and supply chain disruptions.

Management's message in the filing conveys a tone of strong execution and momentum, highlighting that fiscal year 2025 was a year of strong results driven by continued execution on the Playing to Win strategy and cost-savings initiatives. The company finished 2025 with strong momentum, led by another record performance in the Wizards of the Coast and Digital Gaming segment, continued growth in licensing, and operating profit improvement across the Company. Management emphasized that MAGIC: THE GATHERING had a record year, supported by the success of Universes Beyond sets, and that digital licensing was once again led by Monopoly Go! The company also highlighted solid performance from BEYBLADE, TRANSFORMERS, and Hasbro Gaming in the Consumer Products segment, as well as strong success from partner licensed brands such as MARVEL. The strategic priorities emphasized for the period ahead include the five key building blocks of the Playing to Win strategy: Anytime is Playtime, Aging Up, Everyone Plays, Digital and Direct, and Partner Scale. Management also noted that through 2025, the company has delivered almost $800 million of gross cost savings and is well on its path to its previous $1.0 billion commitment.