Q3 2026 Hasbro Inc Earnings Call

October 20, 2026

Operator: Good morning, and welcome to the Hasbro Q3 2026 earnings conference call. At this time, all parties will be in listen-only mode. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad. Today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Fred Wightman, Vice President of Hasbro Investor Relations. Please go ahead.

Speaker #1: Good morning, and welcome to the HASBRO third quarter 2026 earnings conference call. This time all parties will be in listen-only mode. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad.

Speaker #1: Today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Fred Wightman, Vice President at Hasbro Investor Relations.

Speaker #1: Please go ahead.

Fred Wightman: Thank you, and good morning, everyone. Joining me today are Chris Cocks, Hasbro's Chief Executive Officer, and Gina Goetter, Hasbro's Chief Financial Officer and Chief Operating Officer. We'll begin today's call with Chris and Gina providing commentary on the company's performance before taking your questions. Our earnings release and presentation slides for today's call are posted on our investor website. The press release and presentation include information regarding non-GAAP adjustments and non-GAAP financial measures. Our call today will discuss certain adjusted measures which exclude these non-GAAP adjustments. A reconciliation of GAAP to non-GAAP measures is included in the press release and presentation. Please note that whenever we discuss earnings per share or EPS, we are referring to earnings per diluted share.

Speaker #2: Thank you, and good morning, everyone. Joining me today are Christian Cocks, Hasbro's Chief Executive Officer, and Gina Goetter, Hasbro's Chief Financial Officer and Chief Operating Officer.

Speaker #2: We'll begin today's call with Chris and Gina providing commentary on the company's performance before taking your questions. Our earnings release and presentation slides for today's call are posted on our investor website.

Speaker #2: The press release and presentation include information regarding non-GAAP adjustments and non-GAAP financial measures. Our call today will discuss certain adjusted measures, which exclude these non-GAAP adjustments.

Speaker #2: A reconciliation of GAAP to non-GAAP measures is included in the press release and presentation. Please note that whenever we discuss earnings per share, or EPS, we are referring to earnings per diluted share.

Fred Wightman: Before we begin, I would like to remind you that during this call and the question and answer session that follows, members of Hasbro management may make forward-looking statements concerning management's expectations, goals, objectives, and similar matters. There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements. These factors include those set forth in our annual report on Form 10-K, our most recent 10-Q, in today's press release, and in our other public disclosures. We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Chris Cocks. Chris?

Speaker #2: Before we begin, I would like to remind you that during this call and the question-and-answer session that follows, members of HASBRO management may make forward-looking statements concerning management's expectations, goals, objectives, and similar matters.

Speaker #2: There are many factors that could cause actual results or events to differ materially from the anticipated results or other expectations expressed in these forward-looking statements.

Speaker #2: These factors include those set forth in our annual report on Form 10-K, our most recent 10-Q, in today's press release, and in our other public disclosures.

Speaker #2: We undertake no obligation to update any forward-looking statements made today to reflect events or circumstances occurring after the date of this call. I would now like to introduce Chris Cocks.

Speaker #2: Chris?

Chris Cocks: Thanks, Fred, and good morning, everyone. Hasbro delivered another strong quarter with record profitability. Revenue grew 15% and adjusted operating profit improved 52%, with growth across all three of our segments. Wizards of the Coast momentum continued, driven by the Magic flywheel, and our Consumer Products business posted another quarter of gains. We're increasing our outlook for the year, which Gina will walk through in her remarks. Despite all of the macro noise in the quarter, we stayed true to our superpower, inspiring a lifetime of play. We do that by building deep, lasting fandom around great IP. Magic is the clearest proof point. Magic revenue topped $600 million for the first time, growing 34% versus last year and beating the record we set last quarter. Strength was broad-based across tentpole releases, backlist, and Secret Lair.

Chris Cocks: Thanks, Fred, and good morning, everyone. Hasbro delivered another strong with record profitability. Revenue grew 15% and adjusted operating profit improved 52%, with growth across all three of our segments. Wizards of the Coast momentum continued, driven by the Magic flywheel, and our Consumer Products business posted another quarter of gains. We're increasing our outlook for the year, which Gina will walk through in her remarks. Despite all of the macro noise in the quarter, we stayed true to our superpower, inspiring a lifetime of play. We do that by building deep, lasting fandom around great IP. Magic is the clearest proof point. Magic revenue topped $600 million for the first time, growing 34% versus last year and beating the record we set last quarter. Strength was broad-based across tentpole releases, backlist, and Secret Lair.

Speaker #3: Thanks, Fred, and good morning, everyone. HASBRO delivered another strong quarter with record profitability. Revenue grew 15%, and adjusted operating profit improved 52%, with growth across all three of our segments.

Speaker #3: Wizards of the Coast momentum continued, driven by the Magic flywheel, and our Consumer Products business posted another quarter of gains. We're increasing our outlook for the year, which Gina will walk through in her remarks.

Speaker #3: Despite all of the macro noise in the quarter, we stayed true to our superpower, inspiring a lifetime of play. We do that by building deep, lasting fandom around great IP, magic is the clearest proof point.

Speaker #3: Magic revenue topped $600 million for the first time, growing 34% versus last year and beating the record we set last quarter. Strength was broad-based across tentpole releases, backlist, and Secret Lair.

Chris Cocks: The Hobbit, which launched in August, is the fourth best-selling set in Magic's history, and it did that with a leaner product lineup. Shipments of Reality Fracture, which debuted in early October, exceeded our expectations, and backlist and Secret Lair are on track for record years. Looking at Q4, Star Trek, our final set of the year, arrives in November, and early signs are encouraging. It's drawing Star Trek fans who are new to Magic, which is the core thesis behind Universes Beyond. You can see that demand in engagement. Hobbit pre-release participation across our 13,000 Wizards Play Network partners was the highest we've seen for a Universes Beyond release, and MagicCon Atlanta is sold out, with badge sales up nearly 30% versus last year. The clearest proof is the player base.

Speaker #3: The Hobbit, which launched in August, is the fourth best-selling set in magic's history, and it did that with a leaner product lineup. Shipments of reality fracture, which debuted in early October, exceeded our expectations.

Speaker #3: And Backlist and Secret Lair are on track for record years. Looking to Q4, Star Trek—our final set of the year—arrives in November, and early signs are encouraging.

Speaker #3: It's drawing Star Trek fans who are new to Magic, which is the core thesis behind Universes Beyond. You can see that demand and engagement.

Speaker #3: Hobbit pre-release participation across our 13,000 Wizards Play Network partners was the highest we've seen for a Universes Beyond release. And MagicCon Atlanta is sold out, with badge sales up nearly 30% versus last year.

Speaker #3: The clearest proof is the player base. Take the first nine months of 2026, and compare it with all of 2024—our last year without a 10-poll Universes Beyond release.

Chris Cocks: Take the first 9 months of 2026 and compare it with all of 2024, our last year without a tentpole Universes Beyond release. Organized play participants are up more than 40%, with 3 months left in the year. Fans come in through IP they already love, and expanded distribution makes it easier to find us. They stay because deep gameplay, married with best-in-class fan experiences, distinguishes Magic from other trading card games. In 2027, we expect Magic to grow on top of a record 2026. Each of our 6 tentpole releases next year has a full product suite. We're scaling production capacity to meet demand, and our fan base and retail distribution keep expanding. At New York Comic-Con, we announced Marvel: Darkhold Destiny. Our prior Marvel sets brought existing storylines into Magic. This one tells an original Marvel story centered on a brand-new character and a companion comic.

Speaker #3: Organized Play participants are up more than 40%, with three months left in the year. Fans come in through IP, they already love, and expanded distribution makes it easier to find us.

Speaker #3: They stay because deep gameplay, married with best-in-class fan experiences, distinguishes Magic from other trading card games. In 2027, we expect Magic to grow on top of a record 2026.

Speaker #3: Each of our six 10-poll releases next year has a full product suite. We're scaling production capacity to meet demand, and our fan base and retail distribution keep expanding.

Speaker #3: At New York Comic-Con, we announced Marvel: Darkhold Destiny. Our prior Marvel sets brought existing storylines into Magic; this one tells an original Marvel story, centered on a brand-new character and a companion comic.

Chris Cocks: All 6 sets next year are bangers, and we look forward to telling you more about them in the coming months. Turning to digital games, at Gamescom, we kicked off hands-on previews for Exodus and confirmed an 7 April 2027 launch date. We're excited to get Exodus in front of players, with more demos and announcements in the coming months. Warlock, our D&D action-adventure game, follows in 2027 and was the number 1 most wishlisted new game from opening night. We'll share more on both titles before year-end. Starting this quarter, we're providing additional information on our licensing business, and it's a model we like. It's asset light, which lets us focus on what we do best while leaning into our partners' capital investments.

Speaker #3: All six sets next year are bangers. And we look forward to telling you more about them in the coming months. Turning to digital games, at GamesCon, we kicked off hands-on previews for Exodus and confirmed an April 7, 2027 launch date.

Speaker #3: We're excited to get Exodus in front of players, with more demos and announcements in the coming months. Warlock, our D&D action-adventure game, follows in 2027 and was the number one most wishlisted new game from opening night.

Speaker #3: We'll share more on both titles before year-end. Starting this quarter, we're providing additional information on our licensing business. And it's a model we like.

Speaker #3: It's asset-light, which lets us focus on what we do best while leaning into our partners' capital investments. Hasbro is a top-five global licensor with more than $17 billion in annual retail sales.

Chris Cocks: Hasbro is a top 5 global licensor, with more than $17 billion in annual retail sales, and we plan to build on that position across 5 priorities. First, we're building an enterprise-wide franchise system that aligns story, product, and retail around key moments. Peppa Pig's Baby Evie initiative is a proof point. Retail sales grew nearly 30%, while we spent a third less on marketing. Second, we're scaling licensed Consumer Products anchored by Peppa Pig, Transformers, and My Little Pony, and extending into Magic and Dungeons & Dragons. Third, we're accelerating location-based entertainment, where we're the number 1 licensor in the space. Fourth, we're diversifying digital licensing with a pipeline of mobile, PC, and console titles. Monopoly GO! shows the asymmetric opportunity when you partner with industry leaders. Fifth, we're using entertainment and music to create fandom that pays off across the portfolio.

Speaker #3: And we plan to build on that position across five priorities. First, we're building an enterprise-wide franchise system that aligns story, product, and retail around key moments.

Speaker #3: Peppa Pig’s Baby Eevee initiative is the proof point. Retail sales grew nearly 30%, while we spent a third less on marketing. Second, we’re scaling licensed and favorite products, anchored by Peppa Pig, Transformers, and My Little Pony, and extending into Magic and Dungeons & Dragons.

Speaker #3: Third, we're accelerating location-based entertainment, where we're the number one licenser in the space. Fourth, we're diversifying digital licensing with a pipeline of mobile, PC, and console titles.

Speaker #3: Monopoly Go shows the asymmetric opportunity when you partner with industry leaders. Fifth, we're using entertainment and music to create fandom that pays off across the portfolio.

Chris Cocks: What connects all five strategies is the same asset-light model. These businesses generate nearly $700 million in annual revenue across Consumer Products, digital, and entertainment. Turning to Consumer Products, revenue grew 4% to $828 million, in line with our expectations. Our toy and game business delivered its fourth consecutive quarter of growth. Marvel product was the standout, with revenues up more than 35%, supported by theatrical releases from our partners at Marvel Studios. We are pleased with the momentum across our entertainment-led brands. Transformers' 40th anniversary has been a great moment for fans, as we brought the 1986 film back to theaters on Transformers Day, which coincided with strong retail events. In Marvel, Spider-Man remains strong following Brand New Day, and Power Charge Spider-Man is featured in multiple holiday gift guides.

Speaker #3: What connects all five strategies is the same asset-light model, and these businesses generate nearly $700 million in annual revenue across consumer products, digital, and entertainment.

Speaker #3: Turning to Consumer Products, revenue grew 4% to $828 million, in line with our expectations, and our Toy and Game business delivered its fourth consecutive quarter of growth.

Speaker #3: Marvel product was the standout, with revenues up more than 35%, supported by theatrical releases from our partners at Marvel Studios. We're pleased with the momentum across our entertainment-led brands.

Speaker #3: Transformers' 40th anniversary has been a great moment for fans, as we brought the 1986 film back to theaters on Transformers Day, which coincided with strong retail events.

Speaker #3: In Marvel, Spider-Man remains strong, following brand-new day, and Power Charge Spider-Man is featured in multiple holiday gift guides. Dr. Doom product is on shelf ahead of the Avengers: Doomsday debut in December, with several items on retailers' top toy list.

Chris Cocks: Doctor Doom product is on shelf ahead of the Avengers: Doomsday debut in December, with several items on retailers' top toy lists. We are entering the holidays with momentum, especially in our focused GEM Squared categories, those parts of the toy industry that are gamified, entertainment driven, multi-purchase, and multi-generational. The Q3 showed what happens when we stay true to our superpower of inspiring a lifetime of play. Magic is deepening its player base and setting records. Licensing extends our brands through great partners who bring their own capital. Our toy and game business has grown four quarters in a row. That is a balanced portfolio, and it is the foundation for the outlook Gina will walk through. Before I turn things over, I want to thank our teams and partners around the world for delivering another great quarter. Gina?

Speaker #3: We're entering the holidays with momentum, especially in our focus—Gem Square categories. Those parts of the toy industry that are gamified, entertainment-driven, multi-purchase, and multi-generational.

Speaker #3: The third quarter showed what happens when we stay true to our superpower of inspiring a lifetime of play. Magic is deepening its player base and setting records.

Speaker #3: Licensing extends our brands through great partners who bring their own capital. And our toy and game business has grown four quarters in a row.

Speaker #3: That is a balanced portfolio, and it's the foundation for the outlook Gina will walk through. Before I turn things over, I want to thank our teams and partners around the world for delivering another great quarter.

Speaker #3: Gina?

Gina Goetter: Thanks, Chris, and good morning, everyone. Q3 was our strongest quarter of the year, with revenue growth and margin expansion across all three segments. Revenue, profit, and cash flow each came in ahead of our expectations, and the quarter gives us the confidence to raise our outlook again. Net revenue in the Q3 was $1.6 billion, up 15% year-over-year. Adjusted operating profit was $541 million, +52%, with an adjusted operating margin of 33.9%, up 830 basis points on favorable business mix, cost productivity, and the benefit of tariff refunds, which I will detail in a moment. Adjusted earnings per diluted share were $2.90, up 73%, reflecting operating leverage, higher interest income, and a lower effective tax rate. Through the first nine months, net revenue of $3.7 billion grew 15%, adjusted operating profit of $1.1 billion grew 35%, and adjusted operating margin expanded 440 basis points to 29.7%.

Speaker #2: Thanks, Chris, and good morning, everyone. Q3 was our strongest quarter of the year, with revenue growth and margin expansion across all three segments. Revenue, profit, and cash flow each came in ahead of our expectations, and the quarter gives us the confidence to raise our outlook again.

Speaker #2: Net revenue in the third quarter was $1.6 billion, up 15% year over year. Adjusted operating profit was $541 million, up 52%, with an adjusted operating margin of 33.9%, up 830 basis points, on favorable business mix.

Speaker #2: Cost productivity and the benefit of tariff refunds, which I'll detail in a moment. Adjusted earnings per diluted share were $2.90, up 73%, reflecting operating leverage, higher interest income, and a lower effective tax rate.

Speaker #2: To the first nine months, net revenue of $3.7 billion grew 15%. Adjusted operating profit of $1.1 billion grew 35%. And adjusted operating margin expanded 440 basis points to 29.7%.

Gina Goetter: Total Hasbro adjusted EBITDA was $605 million in the quarter, up 46%, and $1.27 billion year to date, up 29%. Our cost transformation program remains on track, contributing $105 million through the first nine months against our full-year commitment of $150 million. Those savings are doing exactly what we designed them to do, absorbing higher royalties and input costs while funding the investment behind Magic and our 2027 digital game launches. Turning to the segments, Wizards delivered another exceptional quarter. Segment revenue grew 31% to $747 million, with Magic growing 34% to $616 million behind the release of The Hobbit, Reality Fracture, and solid backlist performance. Q3 results include approximately $40 million of Magic sales that we had expected in the Q4, primarily related to Reality Fracture.

Speaker #2: Total HASBRO adjusted EBITDA was $605 million. In the quarter, up 46%, and $1.27 billion year to date, up 29%. Our cost transformation program remains on track, contributing $105 million to the first nine months, against our full-year commitment of $150 million.

Speaker #2: Those savings are doing exactly what we designed them to do: absorbing higher royalties and input costs, while funding the investment behind magic and our 2027 digital game launches.

Speaker #2: Turning to the segments, Wizards delivered another exceptional quarter. Segment revenue grew 31% to $747 million, with Magic growing 34% to $616 million, behind the release of The Hobbit, Reality Fracture, and solid backlog performance.

Speaker #2: Third quarter results include approximately $40 million of magic sales that we had expected in the fourth quarter, primarily related to Reality Fracture, predicting the timing of a set is difficult when a release falls right at the start of the quarter, so this is business as usual.

Gina Goetter: Predicting the timing of a set is difficult when a release falls right at the start of the quarter, so this is business as usual. Operating profit grew 46% to $367 million, with a 49.2% operating margin, up 520 basis points as volume and mix more than offset higher royalty expense and the step-up in marketing behind our upcoming video game launches. Digital and licensed gaming revenue was $134 million, up 3%, with Monopoly GO! continuing to perform in line with our expectations. The print operations decisions we discussed last quarter continue to pay off. Increasing initial print and distribution runs has given us the capacity to meet demand at launch, reduce costs, and plan our manufacturing network more efficiently.

Speaker #2: Operating profit grew 46% to $367 million, with a 49.2% operating margin, up 520 basis points, as volume and mix more than offset higher royalty expense and the step-up in marketing behind our upcoming video game launches.

Speaker #2: Digital and licensed gaming revenue was $134 million, up 3%, with Monopoly Go continuing to perform in line with our expectations. The print operations decisions we discussed last quarter continue to pay off: increasing initial print and distribution runs has given us the capacity to meet demand at launch, reduce costs, and plan our manufacturing network more efficiently.

Gina Goetter: Across Premier Sets, Universes Beyond, Commander Decks, and Secret Lair, we are producing more product than at any point in the brand's history, and sell-through is confirming the demand is there to support it. Through nine months, Magic revenue of $1.6 billion is up 34%, and the ecosystem remains healthy across both new releases and backlist. Consumer Products delivered the margin inflection we have been working towards. Revenue grew 4% to $828 million with growth across almost all of our markets. Adjusted operating profit doubled to $178 million, inclusive of approximately $48 million of tariff refunds, with an adjusted operating margin of 21.5% compared to 11.2% last year. The underlying improvement is the durable part of the story, and it is broad-based. Supply chain productivity, lower distribution costs, disciplined operating expense, and favorable business mix was more than able to offset higher input costs.

Speaker #2: Across premier sets, universes beyond, commander decks, and secret lair, we are producing more products than at any point in the brand's history, and sell-through is confirming the demand is there to support it.

Speaker #2: Through nine months, Magic revenue of $1.6 billion is up 34%, and the ecosystem remains healthy across both new releases and backlist. Consumer Products delivered the margin inflection we have been working towards.

Speaker #2: Revenue grew 4% to $828 million, with growth across almost all of our markets. Adjusted operating profit doubled to $178 million, inclusive of approximately $48 million of tariff refunds, with an adjusted operating margin of 21.5%, compared to 11.2% last year.

Speaker #2: The underlying improvement is the durable part of the story, and it is broad-based. Supply chain productivity, lower distribution costs, disciplined operating expense, and favorable business mix were more than able to offset higher input costs.

Gina Goetter: Through the third quarter, CP revenue of $1.7 billion has grown 3%, and adjusted operating margins of 7.7% have grown 410 basis points, including the one-time tariff refund recognized in Q3. We also enter the holiday season in good shape operationally. Owned inventory ended the quarter at $359 million, down 10% versus last year, and both owned and retail inventory are clean and well-positioned against the seasonal build and the upcoming entertainment slate. The broader operating environment remains dynamic, and our teams continue to manage it well. The oil-related input costs we flagged earlier in the year are now flowing through the P&L, and the mitigation playbook we built is helping to offset that pressure. On tariffs, the refunds recognized this quarter relate to prior year duties, and we have updated our guidance to incorporate the lower China tariff rate of 12.5%.

Speaker #2: Through the third quarter, CP revenue of $1.7 billion has grown 3%, and adjusted operating margins of 7.7% have increased 410 basis points, including the one-time tariff refund recognized in Q3.

Speaker #2: We also enter the holiday season in good shape, operationally. Owned inventory ended the quarter at $359 million, down 10% versus last year. Both owned and retail inventory are clean and well-positioned against the seasonal build and the upcoming entertainment slate.

Speaker #2: The broader operating environment remains dynamic, and our teams continue to manage it well. The oil-related input costs we flagged earlier in the year are now flowing through the P&L, and the mitigation playbook we built is helping to offset that pressure.

Speaker #2: On tariffs, the refunds recognized this quarter relate to prior-year duties, and we have updated our guidance to incorporate the lower China tariff rate of 12.5%, with greater stability in the trade environment.

Gina Goetter: With greater stability in the trade environment, we are taking a more measured and flexible approach to our sourcing footprint, balancing cost, speed, and resilience across our network. We remain focused on exiting the year with a dependable supply base and clean inventory on both sides of the shelf. Entertainment segment revenue was $20 million, up 9%, and adjusted operating profit of $18 million contributed at a 91.1% margin, driven by favorable mix and deal timing. Beginning this quarter, we are reporting licensing revenue as a separate line on the P&L. This disclosure puts together the licensing revenue for digital gaming, including Monopoly GO!, as well as our licensed Consumer Products business. At roughly 11% of year-to-date revenue, it is a meaningful and capital-light contributor that spans the entire portfolio, and we believe the added transparency provides better visibility into our primary revenue streams.

Speaker #2: We are taking a more measured and flexible approach to our sourcing footprint, balancing cost, speed, and resilience across our network. And we remain focused on exiting the year with a dependable supply base and clean inventory on both sides of the shelf.

Speaker #2: Entertainment segment revenue was $20 million, up 9%, with adjusted operating profit of $18 million, contributed at a 91.1% margin, driven by favorable mix and deal timing.

Speaker #2: Beginning this quarter, we are reporting licensing revenue as a separate line on the P&L. This disclosure combines licensing revenue for digital gaming, including Monopoly GO!, as well as our licensed consumer products business.

Speaker #2: At roughly 11% of year-to-date revenue, it is a meaningful and capital-like contributor that spans the entire portfolio, and we believe the added transparency provides better visibility into our primary revenue streams.

Gina Goetter: Total licensing revenue was $144 million in the quarter and $417 million year to date, which is down 4%, primarily due to $26 million of non-recurring items across several licensing agreements in the prior year as well as Kayou My Little Pony trading card compares. From a balance sheet and cash flow perspective, through the first 9 months, we generated $907 million in operating cash flow, up 85% versus last year on earnings growth and improved working capital. We ended the quarter with $851 million of cash and $576 million of short-term investments, which are match dated against our November 2026 maturity. We contribute $226 million towards debt reduction and returned $445 million to shareholders through dividends and share repurchases. Turning to our full-year outlook, we are raising guidance for the year.

Speaker #2: Total licensing revenue was $144 million in the quarter, and $417 million year to date, which is down 4%, primarily due to $26 million of non-recurring items across several licensing agreements in the prior year, as well as tough Caillou, My Little Pony, and trading cards comparisons.

Speaker #2: From a balance sheet and cash flow perspective, through the first nine months, we generated $907 million in operating cash flow, up 85% versus last year on earnings growth and improved working capital.

Speaker #2: We ended the quarter with $851 million of cash and $576 million of short-term investments, which are matched, dated against our November 2026 maturity. We contributed $226 million towards debt reduction and returned $445 million to shareholders through dividends and share repurchases.

Speaker #2: Turning to our full-year outlook, we are raising guidance for the year. We now expect consolidated revenue to grow 7% to 9% year over year on a constant currency basis, and adjusted EBITDA to be in the range of $1.575 to $1.625 billion.

Gina Goetter: We now expect consolidated revenue to grow 7% to 9% year over year on a constant currency basis and adjusted EBITDA to be in the range of $1.575 billion to $1.625 billion. At the segment level, Wizards is now expected to grow revenue between 16% to 18% with operating margins of approximately 44% to 45%. From a phasing standpoint, the Q4 carries a step-up in royalties as well as approximately $15 million of marketing spend behind the video game launches. Also note that the approximately $40 million of Reality Fracture and backlist revenue pre-shifts recognized in the Q3 shift out of our Q4 expectations. For Consumer Products, we continue to expect revenue to grow 1% to 3% for the year with an increase in adjusted operating margin to 8% to 10%, including the benefit from the tariff refunds.

Speaker #2: At the segment level, Wizards is now expected to grow revenue between 16% to 18%, with operating margins of approximately 44% to 45%. From a phasing standpoint, the fourth quarter carries a step-up in royalties, as well as approximately $15 million of marketing spend behind the video game launches.

Speaker #2: Also note that the approximately $40 million of Reality Fracture and backlist revenue pre-ships recognized in the third quarter shift out of our fourth-quarter expectations.

Speaker #2: For Consumer Products, we continue to expect revenue to grow 1% to 3% for the year, with an increase in adjusted operating margin to 8% to 10%, including the benefit from the tariff refunds.

Speaker #2: The fourth-quarter margin will step down sequentially from Q3, as the tariff refund benefit was completely recognized in Q3, and Q4 carries a heavier promotional and shipping mix.

Gina Goetter: The Q4 margin will step down sequentially from Q3 as the tariff refund benefit was completely recognized in Q3 and Q4 carries a heavier promotional and shipping mix. Entertainment segment revenue is now expected to grow 3% to 5% with operating margins of approximately 65%. On capital allocation, our priorities are unchanged, but our capacity has grown. First, we continue to invest in the business behind our highest return growth opportunities led by Wizards, digital gaming, and licensing. Second, we remain focused on paying down debt and maintaining a healthy balance sheet. Third, based on the continued strength of our cash flow, we are again increasing our share repurchase target for the year from $200 million to $400 million. We have repurchased $149 million through the first 9 months and expect to be active through the balance of the year. Finally, we remain firmly committed to our dividend.

Speaker #2: Entertainment segment revenue is now expected to grow 3% to 5%, with operating margins of approximately 65%. On capital allocation, our priorities are unchanged, but our capacity has grown.

Speaker #2: First, we continue to invest in the business behind our highest return growth opportunities, led by Wizards, digital gaming, and licensing. Second, we remain focused on paying down debt and maintaining a healthy balance sheet.

Speaker #2: Third, based on the continued strength of our cash flow, we are again increasing our share repurchase target for the year, from $200 million to $400 million.

Speaker #2: We have repurchased $149 million through the first nine months, and expect to be active through the balance of the year. And finally, we remain firmly committed to our dividend.

Gina Goetter: As part of today's release, the board has authorized the Q4 dividends. A few words on how we're thinking about next year. While we're not giving 2027 guidance today, directionally, the setup is a good one. Wizards enters the year with a deeper release pipeline and a supply chain that can support it, and we expect over time this segment to continue operating at a healthy margin profile in the high 30s and low 40% range. With two video games scheduled for next year, Exodus and Warlock, we expect the non-cash amortization to result in 2027 margins in the high 30s range. As a reminder, amortization will show up as a depreciation charge within our cost of goods, and it will not be added back to adjusted EBITDA.

Speaker #2: As part of today's release, the Board has authorized the fourth-quarter dividends. A few words on how we're thinking about next year: while we're not giving 2027 guidance today, directionally, the setup is a good one.

Speaker #2: Wizards enters the year with a deeper release pipeline and a supply chain that can support it, and we expect over time the segment to continue operating at a healthy margin profile in the high 30s and low 40% range.

Speaker #2: With two video games scheduled for next year, Exodus and Warlock, we expect the non-cash amortization to result in 2027 margins in the high 30s range.

Speaker #2: As a reminder, amortization will appear as a depreciation charge within our cost of goods, and it will not be added back to adjusted EBITDA.

Gina Goetter: It will be broken out separately on our cash flow statement, making it easy to identify and added back in operating cash flow. In Consumer Products, the productivity and mix work we completed this year carries forward, and we expect to build off a structurally cleaner cost base. As previously noted, 2026 is the peak investment year for digital gaming, which means the spending curve begins to work in our favor from here. As we wrap up, Q3 was a quarter of execution. Wizards is scaling profitably and doing it at a size that was not possible two years ago. Consumer Products has delivered four quarters of revenue growth and has turned the corner on margin, with the underlying improvement holding up even before the tariff recovery. Our cost discipline is funding the investments that will drive 2027 and beyond.

Speaker #2: It will be broken out separately on our cash flow statement, making it easy to identify, and added back in operating cash flow. In Consumer Products, the productivity and mix work we completed this year carries forward, and we expect to build off a structurally cleaner cost base.

Speaker #2: And as previously noted, 2026 is the peak investment year for digital gaming, which means the spending curve begins to work in our favor from here.

Speaker #2: As we wrap up, Q3 was a quarter of execution, Wizards a scaling profitably, and doing it at a size that was not possible two years ago, consumer products has delivered four quarters of revenue growth and has turned the corner on margin, with the underlying improvement holding up even before the tariff recovery.

Speaker #2: And our cost discipline is funding the investments that will drive 2027 and beyond. We are raising our outlook with confidence, and we remain focused on closing the year from a position of strength.

Gina Goetter: We are raising our outlook with confidence, and we remain focused on closing the year from a position of strength. With that, I will turn it back to the operator for questions.

Speaker #2: And with that, I'll turn it back to the operator for questions.

Operator: Thank you. We will now be conducting a question and answer session. We ask you, please limit yourself to one question, one follow-up to allow as many as possible to participate. To ask your question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for our first question. Thank you. The first question today comes from the line of Stephen Laszczyk with Goldman Sachs. Please proceed with your questions.

Speaker #1: Thank you. We'll now be conducting a question-and-answer session. If we ask you, please limit yourself to one question and one follow-up to allow as many as possible to participate.

Speaker #1: To ask your question today, please press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

Speaker #1: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: One moment, please, for our first question. Thank you. And the first question today comes from the line of Stephen Lysic with Goldman Sachs. Please proceed with your questions.

Stephen Laszczyk: Hey, guys. Thanks for taking the questions. Maybe first for Chris, Magic continues to see really nice momentum. I would just be curious if you could maybe speak to some of the drivers or strengths that you saw, particularly in Q3, what might have outperformed versus your expectations across some of those sets. Then importantly, as you look ahead, it sounds like you are excited for each of the sets to come next year. I was curious if you could speak a little bit more about what you hope each of those new sets will contribute towards growing the franchise over the longer term, or perhaps maybe more generally, what gives you confidence that Magic can continue to grow off this higher base from here?

Speaker #3: Hey guys, thanks for taking the questions. Maybe first for Chris—Magic continues to see really nice momentum. I would just be curious if you could maybe speak to some of the drivers of strength that you saw, particularly in the third quarter.

Speaker #3: What might have outperformed versus your expectations across some of those sets? And then, importantly, as you look ahead, it sounds like you're excited for each of the sets to come.

Speaker #3: Next year, I was curious if you could speak a little bit more about what you hope each of those new sets will contribute toward growing the franchise over the longer term, or perhaps more generally, what gives you confidence that Magic can continue to grow off this higher base from here.

Chris Cocks: Sure thing. Good morning, Steven. Thanks for the question. Well, I would say what outperformed in Q3 for Magic, everything. Reality Fracture is one of the best-performing Premier Sets we have ever done. The Hobbit, despite being a much smaller product release in terms of the total number of SKUs, performed like a Premier Set release with a lot more Commander Decks and supplementary SKUs associated with it. Backlist continues to impress with its total number of sales. I think it is a combination of three or four things. First and foremost, it is new player growth and player engagement. The Hobbit pre-release was one of the biggest we have ever had. Our total number of players who are engaged in in-store play, which is probably our best proxy for actual engagement, is at records. Players are happy with the sets, giving us great feedback, repurchasing and investing behind them.

Speaker #4: Sure thing. Good morning, Stephen. Thanks for the question. Well, I would say, what outperformed in Q3 for Magic? Everything. Reality Fracture is one of the best-performing premier sets we've ever done.

Speaker #4: The Hobbit, despite being a much smaller product release in terms of the total number of SKUs, performed like a premier set release with a lot more Commander decks, and supplementary SKUs associated with it.

Speaker #4: And backlist continues to impress with its total number of sales. And I think it's a combination of three or four things. First and foremost, its new player growth and player engagement.

Speaker #4: The Hobbit pre-release was one of the biggest we've ever had. Our total number of players who are engaged in in-store play—which is probably our best kind of proxy for actual engagement—is at record levels.

Speaker #4: Players are happy with the sets, giving us great feedback, repurchasing and investing behind them. Our distribution is up. Our distribution is up. Over 40% in mass, over 30% in our WPN.

Chris Cocks: Our distribution is up. Our distribution is up over 40% in mass, over 30% in our WPN. It is broad-based. It is both North America as well as Europe and Southeast Asia. In general, I think we are seeing some great category tailwinds as well. Magic is performing well, but the overall category is seeing a boom, and that is just consistent with our overall thesis on what categories are going to perform, which we call GEM Squared, which is those categories that are gamified, entertainment-driven, multi-purchase, and multigenerational. I think trading cards over the last year have emerged as the number one category in toys and games. I think they are actually bigger than building blocks now, and we see that as a generational structural shift and not just as a one-time thing.

Speaker #4: It's broad-based. It's both North America as well as Europe, and Southeast Asia. And just in general, I think we're seeing some great, kind of category tailwinds as well.

Speaker #4: Magic's performing well, but the overall category is seeing a boom. And that's just consistent with our overall thesis that on what categories are going to perform, which we call GEM squared, which is those categories that are gamified, entertainment-driven, multipurchase, and multi-generational.

Speaker #4: And I think trading cards, over the last year, have emerged as the number one category in toys and games. I think they're actually bigger than building blocks now.

Speaker #4: And we see that as a generational structural shift and not just as kind of like a one-time thing.

Gina Goetter: Can I add one fun fact?

Speaker #2: Can I add one fun fact?

Chris Cocks: Sure.

Speaker #4: Sure.

Gina Goetter: I thought you would say this fun fact, but Chris mentioned backlist. Through these first few weeks here in Q4, our backlist contribution in 2026 year-to-date through these first couple of weeks of Q4 has already surpassed what we saw in 2025. To the point of all of the engines are continuing to hum. We have got momentum across our frontlist. We have got momentum across the backlist, and that is going to continue as we move into next year.

Speaker #2: I thought you'd say this fun fact, but Chris mentioned backlist. Through these first few weeks here in fourth quarter, our backlist contribution in 2026 year-to-date through these first couple of weeks of fourth quarter has already surpassed what we saw in 2025.

Speaker #2: So, to the point of all of the engines continuing to hum, we've got momentum across our front list; we've got momentum across the backlist.

Speaker #2: And that's going to continue as we move into next year.

Chris Cocks: I suppose I will make it real on one practical item. "The Hobbit," much smaller release in terms of SKUs versus The Lord of the Rings. The Hobbit is going to do about and maybe even more lifetime than The Lord of the Rings will do, despite it being a smaller release. It has certainly done that to date. We would typically expect something like The Hobbit to do 50% to 100%, 50% less than what a comparable, more full-featured release to do. That is a factor of player growth, player growth and the ability to be able to access product. We see that moving forward. I think a second part of your question was what gives us confidence in 2027 and beyond, it is all those factors. Q4, Magic will likely be down.

Speaker #4: And I suppose I'll make it real on one practical item. So, The Hobbit—much smaller release in terms of SKUs versus Lord of the Rings—the Hobbit's going to do about, and maybe even more, lifetime than Lord of the Rings will do.

Speaker #4: Despite it being a smaller release, it's certainly done that to date. We would typically expect something like the Hobbit to do 50 to 100 percent, 50 percent less than what a comparable, more full-featured release to do.

Speaker #4: And that's a factor of player growth. Player growth and the ability to be able to access product. And so we see that moving forward.

Speaker #4: I think a second part of your question was what gives us confidence in 2027 and beyond. It's all those factors. So, fourth quarter, Magic will likely be down, but a big part of that is we had some sales that happened earlier this quarter—or, sorry, that happened this quarter that should have happened early next quarter—because our supply chain was able to deliver a bit earlier, and the channel wanted it.

Chris Cocks: A big part of that is we had some sales that happened earlier this quarter, or sorry, that happened this quarter that should have happened early next quarter because our supply chain was able to deliver a bit earlier and the channel wanted it. We have some product in next quarter that we shifted into Q1. Minus those shifts, Magic would have had another growth quarter in the high single digits, low double digits, for Q4. Now it will probably be down, call it low single digits, mid-single digits. Barring that, it would have been up around 8% to 10%. Instead, you are going to see a big growth like you had of 30% plus in Q3.

Speaker #4: And we have some product in the next quarter that we shifted into Q1. So, minus those shifts, Magic would have had another growth quarter in the high single digits, low double digits.

Speaker #4: For Q4, now it'll probably be down. Call it low single digits, mid single digits. But barring that, it would have been up around 8 to 10 percent.

Speaker #4: And so instead, you're going to see a big growth like you had of 30% plus in Q3. You'll have a modest kind of decline in Q4, and then you're going to see another big spike in Q1.

Chris Cocks: You will have a modest decline in Q4, and then you are going to see another big spike in Q1. We expect the momentum to carry forward into 2027 with continued growth on the back of all those factors.

Speaker #4: And we expect the momentum to carry forward into 2027 with continued growth on the back of all those factors.

Stephen Laszczyk: That is great color. Very helpful. I can leave it there and pass it on.

Speaker #1: That's great color. Very helpful.

Speaker #3: I can leave it there and pass it on.

Operator: Our next question is in the line of James Hardiman with Citi. Please proceed with your question.

Speaker #1: Our next question is from James Harderman with Citi. Please proceed with your question.

James Hardiman: Hey, good morning. Thanks for taking my call. Chris, you just gave us a lot to chew on there in that last little follow-up. I just want to make sure I understand where we were and where we are. I believe your initial and previous expectation was that Wizards would be down in Q4. You are still saying it is going to be down in Q4, but had you not moved the timing both from Q4 into Q3 and from Q4 into Q1 of next year, we would now be talking about Wizards going from being down to being up high singles, low doubles. Just want to make sure I have all those moving pieces right, because certainly one of the big questions we are getting is a Q4 that was worse than where the Street was thinking about it.

Speaker #5: Hey, good morning. Thanks for taking my call. So, Chris, you just gave us a lot to chew on there in that last little follow-up.

Speaker #5: I just want to make sure—I just want to make sure I understand sort of where we were and where we are. I believe your initial and previous expectation was that Wizards would be down in the fourth quarter.

Speaker #5: You're still saying it's going to be down in the fourth quarter. But had you not moved the timing both from 4Q into 3Q and from 4Q into 1Q of next year, we would now be talking about Wizards going from being down to being up, high singles, low doubles.

Speaker #5: Just want to make sure I have all those moving pieces right, because certainly one of the big questions we're getting is a fourth quarter that was worse than sort of where the Street was thinking about it.

James Hardiman: Just need to double-check that.

Speaker #5: Just need to double-check that.

Chris Cocks: Yeah, you totally captured it, James, and good morning. I think the bottom line on Wizards is we manage the game for the fans and not for quarterly results. That should be an expectation moving forward. We are going to pace the sets based on the logical pacing, especially as we do more IP collaborations, and we are working with outside companies to make sure that we make the biggest moments possible. I think the honest answer also is we are chasing demand. We are going to be opportunistic about when we supply. Our supply chain team is doing a great job. They are helping chase one of the hottest categories in toys and games. Those two factors, occasionally we are going to have a quarter that is down modestly, but I think you can count on the fact that that is not a demand signal.

Speaker #4: Yeah, you totally captured it, James. And good morning. I think the bottom line on Wizards is we managed the game for the fans and not for quarterly results.

Speaker #4: That should be an expectation moving forward. We're going to pace the sets based on the logical pacing. Especially as we do more kind of IP collaborations, and we're working with outside companies to make sure that we make the biggest moments possible.

Speaker #4: And I think the honest answer is we're chasing demand. We're going to be opportunistic about when we supply. Our supply chain team is doing a great job.

Speaker #4: They're helping chase one of the hottest categories in toys and games. And due to those two factors, occasionally we're going to have a quarter that's down modestly.

Speaker #4: But I think you can count on the fact that that's not a demand signal, that's just a timing of when we ship and a timing of when we have product available.

Chris Cocks: That is just a timing of when we ship and a timing of when we have product available, and a factor of when we chose to make a product available based off of the best possible time for our channel partners and for our fans.

Speaker #4: And that's a factor when we choose to make a product available, based on the best possible time for our channel partners and for our fans.

Gina Goetter: The add I would have kind of quantitatively, when we were sitting in July doing earnings and looking at our Wizards H2, we had thought that it would be up collectively, call it low single digits. Now we are going to exit the year with a H2 that is call it high single digits, low double-digit rate. So the overall improvement or kind of momentum of Wizards is continuing. To Chris' point, there are things that can shift meaningful revenue as we are seeing. 1 week can make a difference, a meaningful difference in the quarter. I think you have got that compounding factor of just when we are launching our first set in 2027, and now Reality Fracture of how much was shipped that first week that just take Q4 down, but the overall H2 is well ahead of our expectations.

Speaker #2: Yeah, the add I'd have kind of quantitatively, when we were sitting in July doing earnings and looking at our Wizards' back half, we had thought that it would be up collectively, call it low single digits.

Speaker #2: Now we're going to exit the year with a back half that is, call it high single digits, low double-digit rates. So the overall improvement or kind of momentum of Wizards is continuing.

Speaker #2: To Chris's point, there are things that can shift meaningful revenue as we're seeing one week can make a difference, a meaningful difference in the quarter.

Speaker #2: And I think you've got that compounding factor of just when we're launching our first set in '27, and now the reality fracture of how much was shipped that first week.

Speaker #2: That just takes Q4 down, but the overall back half is well ahead of our expectations.

James Hardiman: Got it. That makes a ton of sense. I just think everybody is, I think, rightfully just trying

Speaker #5: Got it. That makes a ton of sense. I just think everybody is—I think, rightfully—just trying to understand what's signal and what's noise here, for sure.

Gina Goetter: Yeah

James Hardiman: to understand what is signal and what is noise here, for sure.

Gina Goetter: Yeah. We were staring at the same math ourselves as we were prepping, and we knew that was going to be one of the top questions.

Speaker #2: Yeah, yeah. We were staring at the same math ourselves as we were prepping, and we knew that was going to be one of the top questions.

Chris Cocks: Did we answer both your questions?

Speaker #4: So, did we answer both your questions?

James Hardiman: Yeah. I actually did have a second question on sort of margins, but it is the same,

Speaker #5: No, I actually did have a second question on sort of margins. But it's the same sort of general topic of sort of signal versus noise.

James Hardiman: sort of general topic of sort of signal versus noise. Margins for Wizards just continue to blow away, I think, even our most optimistic expectations. We are pushing nearly 50% year to date. Obviously, you have talked about that being in the high 30s next year. I guess what I am trying to figure out is how to think about sort of core Wizards margins. Obviously, there are some, I do not want to call them one-timers, because maybe that is the new normal. Is there any reason to think that relative to the really strong performance here year to date, that core Wizards margins would actually compress in 2027, or is it just some of the things that you have laid out, obviously video games and some of the other, if you want to call them idiosyncratic factors?

Speaker #5: Margins for Wizards just continue to blow away, I think, even our most optimistic expectations. We're pushing nearly 50 percent year-to-date. e. Obviously, you've talked about that being in the high 30s next year.

Speaker #5: I guess what I'm trying to figure out is how to think about sort of core Wizard margins. Obviously, there are some I don't want to call them one-timers because maybe that's the new normal.

Speaker #5: But is there any reason to think that, relative to the really strong performance here year-to-date, core Wizards margins would actually compress in 2027?

Speaker #5: Or is it just some of the things that you've laid out? Obviously, video games and some of the other, if you want to call them, idiosyncratic factors.

James Hardiman: Maybe help us think through core versus other items in the context of 2027 and beyond. Thanks.

Speaker #5: Maybe help us think through sort of core versus other items in the context of 2027 and beyond. Thanks.

Gina Goetter: Sure. Good question. This year, the volume growth that we are seeing on the business kicks off a favorable tailwind on leverage, so that you see that showing up in our 2026 margins. As we look forward to 2027, as we have talked about, we expect the Wizards business to grow. We expect that to be, call it mid to high single digits in that range. But we are not going to plan for that business to grow at the double-digit rate that we are guiding to now. So there is a little bit more leverage that kicks off in 2026 that we will see some leverage next year, just not as great. But to your point, the single biggest thing that will weigh on our margins next year that will keep it in the high 30s is that amortization expense that will flow through for both games.

Speaker #2: Sure. Sure. Good question. I mean, obviously, this year, the volume growth that we're seeing on the business kicks off a favorable tailwind on leverage.

Speaker #2: So that you see that showing up in our '26 margins. And as we look forward to '27, as we've talked about, we expect the Wizards business to grow, we expect that to be, call it, mid to high single digits in that range.

Speaker #2: But we're not going to plan for that business to grow at the double-digit rate that we're guiding to now. So there's a little bit more leverage that kicks off in '26 that we will see some leverage next year, just not as great.

Speaker #2: But to your point, the single biggest thing that will weigh on our margins next year, that will keep it in the high 30s, is that amortization expense.

Speaker #2: That will flow through for both games. And remember, as we've talked about Exodus, now we have the launch date of Exodus being April 7th.

Gina Goetter: Remember, as we have talked about Exodus, now we have the launch date of Exodus being 7 April. The first 3 months, we will see the majority of that amortization flow through. So it will be a Q2 event where we will see most of that, or I would say 65% of that cost come through. 85% of the depreciation hits within the first 12 months. So we will then pick up some two of Exodus as we go through the balance of the year, and then we have Warlock that is coming kind of in the back half. So that is probably the single biggest atypical thing in 2027 that will weigh on margins. Everything else, it puts and takes. Royalty expense might be a little bit heavier just given our UB set releases, but that is within the realm of reason. We will have puts and takes within operating expenses.

Speaker #2: The first three months, we'll see the majority of that amortization flow through. So it will be a Q2 event where we'll see most of that or I would say 65 percent of that cost come through.

Speaker #2: 85 percent of the depreciation hits within the first 12 months. So we'll then pick up some two of Exodus as we go through the balance of the year, and then we've got Warlock that's coming kind of in the back half.

Speaker #2: So that's probably the single biggest atypical thing in '27 that will weigh on margins. Everything else, it's puts and takes. We're going to have some royalty expense that might be a little bit heavier, just given our UB set releases, but that's within the realm of reason.

Gina Goetter: Everything else, it puts and takes. Royalty expense might be a little bit heavier just given our UB set releases, but that is within the realm of reason. We will have puts and takes within operating expenses.

Speaker #2: We'll have puts and takes within operating expenses. We'll continue to expect cost productivity to offset inflation. It's really the amortization expense.

Gina Goetter: We will continue to expect cost productivity to offset inflation. It is really the amortization expense.

James Hardiman: Perfect. Thanks, Gina. Thanks, Chris.

Speaker #5: Perfect. Thanks, Gina. Thanks, Chris.

Gina Goetter: Thank you.

Speaker #2: Thank you.

Operator: Our next questions are from the line of Xian Siew with BNP Paribas. Please proceed with your question.

Speaker #1: All right. Next questions are from the line of Zion Hugh with BNP Paribas. Please just use your questions.

Xian Siew: Hi, guys. Thanks for the question. You talked about player growth and how that's kind of driving Magic: The Gathering demand, but can you also maybe talk a little bit about repeat players and what you're seeing in terms of players once they come into the ecosystem, be it maybe it's via UB or something else, and then kind of staying and maybe spending more? Curious on that.

Speaker #6: Hi guys. Thanks for the question. You talked about player growth and how that's kind of driving Magic: The Gathering demand. But can you also maybe talk a little bit about repeat players and what you're seeing in terms of players once they come into the ecosystem via maybe UB or something else and then kind of staying and maybe spending more?

Speaker #6: Curious on that.

Chris Cocks: Yeah, for sure. I think the best proxy for that is backlist sales. As Gina mentioned, we already have sold more backlist this year than we did all of last year. That continues to grow at a rate as impressive as our frontlist is growing. Backlist is actually growing faster.

Speaker #4: Yeah. Yeah, for sure. I think the best proxy for that is backlist sales. And as Gina mentioned, we already have sold more backlist this year than we did all of last year.

Speaker #4: That continues to grow. At a rate as impressive as our front list is growing, backlist is actually growing faster. And I think that's a factor of we're bringing new players in, especially on things like universes beyond.

Chris Cocks: I think that is a factor of we are bringing new players in, especially on things like Universes Beyond. So Marvel fans, Avatar fans, Turtles fans, soon Star Trek fans, and they decide that they really like this game. Then they go and buy more sets, not just the Star Trek set. They go and buy Reality Fracture. They will go buy Noctis, which is our first Premier Set next year. They become Magic fans, and they stick around like a Magic fan and behave like a Magic fan, which is usually a 5 to 7-year period of time where they play the game actively. Occasionally, they will put the game down for maybe a year or two because they have a life stage, but then they come back. So, Magic is a really special game. It is one that we do not measure retention in days and months.

Speaker #4: So Marvel fans, Avatar fans, Turtle fans, and soon Star Trek fans—they decide that they really like this game. Then they go and buy more sets.

Speaker #4: And not just the Star Trek set. They go and buy Reality Fracture. They'll go buy Noctis, which is our first set, our first premiere set next year.

Speaker #4: And they become Magic fans, and they stick around like a Magic fan and behave like a Magic fan, which is usually a five-to-seven-year period of time where they play the game actively. Occasionally, they'll put the game down for maybe a year or two because they have a life stage.

Speaker #4: But then they come back. So Magic's a really special game. It's one where we don't measure retention in days and months; we really measure it in years.

Chris Cocks: We really measure it in years and generations. The new fans that we are attracting are just as engaged and just as valuable as the more traditional fans that we have had over our 35-year history.

Speaker #4: And generations. And the new fans that we're attracting are just as engaged and just as valuable. As the more traditional fans that we've had over our 35-year history.

Gina Goetter: Maybe one other fun fact. When you look at our-

Speaker #2: And maybe one other fun fact when you look at our when you look at our backlist sales, sorry, for this last quarter, to Chris's point of that people coming in playing the game and sticking, our largest sets that sold for backlist in terms of distribution were Foundation, Final Fantasy, and believe it or not, Lord of the Rings.

Chris Cocks: Sorry, go ahead.

Gina Goetter: When you look at our backlist sales, sorry, for this last quarter, to Chris' point of the people coming in, playing the game, and sticking, our largest sets that sold for backlist in terms of distribution were Foundations, Final Fantasy, and believe it or not, Lord of the Rings. Lord of the Rings, for those newer to the story, that was our very first Universes Beyond set that we did. Was it 2023? 2023.

Speaker #2: And that was our Lord of the Rings for those newer to the story. That was our very first universes beyond set that we did.

Speaker #2: Was that '23? '23.

Chris Cocks: Yeah. Sorry, you had a question too.

Speaker #4: Yeah. Sorry. I had a question too.

Gina Goetter: You had two questions.

Speaker #2: You had two questions. We're excited about backlist.

Xian Siew: Yeah.

Xian Siew: We are excited about backlist.

Speaker #4: And then no, no, it makes sense. And then maybe on '27, I think I heard you say Wizards maybe can grow in the mid to high single-digit range.

Xian Siew: No, it makes sense. Then maybe on 2027, I think I heard you say Wizards maybe can grow in the mid to high single-digit range. I guess that is including some of the maybe incremental video games. But maybe zooming in a little bit on Magic, you also mentioned the full product suite for all of the tentpole sets, scaling supply. You have grown distribution. So I do not know, it sounds like you have fuller sets, more supply, higher distribution, higher player count. It sounds like it is still setting up quite strong for 2027. But any kind of further thoughts on Magic. Gina's comment on mid to high single digits was Magic, not Wizards. So. Okay, we expect Magic to continue to grow at pace. Okay. Understood. Thank you.

Speaker #4: I guess that's including some of the maybe incremental video games. But maybe zooming in a little bit on Magic, you also mentioned kind of the full product suite for all the tentpole sets.

Speaker #4: Scaling supply. You have growing distribution. So I don't know. It sounds like you have fuller sets, more supply. Higher distribution, higher player count. It sounds like it's still setting up quite strong for '27 in any kind of further thoughts on that.

Chris Cocks: Gina's comment on mid to high single digits was Magic, not Wizards. So. Okay, we expect Magic to continue to grow at pace.

Speaker #3: Gina's comment on mid- to high-single digits was about Magic, not Wizards.

Speaker #4: So we expect Magic to continue to grow at pace. Okay. Understood. Thank you.

Xian Siew: Okay. Understood. Thank you.

Operator: The next question is from the line of Arpine Kocharyan with UBS. Please proceed with your question.

Speaker #1: The next questions are from the line of Arpine Kocharian with UBS. Please just use your questions.

Arpine Kocharyan: Hi. Good morning. Thank you. Thanks, Chris, for that clarification. That was going to be my follow-up question to you because as we think about Exodus, that should absolutely add to the top line.

Arpine Kocharian: Hi. Good morning. Thank you. Thanks, Chris, for that clarification. That was going to be my follow-up question to you because as we think about Exodus, that should absolutely add to the top line.

Speaker #7: Hi. Good morning. Thank you. And thanks, Chris, for that clarification. That was going to be my follow-up question to you, because as we think about Exodus, that should absolutely add to the top line.

Arpine Kocharyan: But the question really is related to Magic: The Gathering distribution. That went up further this quarter. Could you maybe talk a little bit about what's driving that, and should we expect to see further expansion in Wizards Play Network sequentially as we get into Q4 and into 2027? Then I have a quick follow-up.

Arpine Kocharian: But the question really is related to Magic: The Gathering distribution. That went up further this quarter. Could you maybe talk a little bit about what's driving that, and should we expect to see further expansion in Wizards Play Network sequentially as we get into Q4 and into 2027? Then I have a quick follow-up.

Speaker #7: The question really is related to Magic: The Gathering distribution. That went up further this quarter. Could you maybe talk a little bit about what's driving that?

Speaker #7: And should we expect to see further expansion in Wizards play networks sequentially as we get into Q4 and into 2027? Then I have a quick follow-up.

Chris Cocks: Sure. I think you should expect, as long as the hobby's growing, and there's vitality in the player base, I think you should expect new store growth to follow new player growth. Through Q3 of 2026, we've seen about a 38% in growth rate in the number of WPN stores. We have over 13,000 now. On mass, we've seen about a 28% growth rate on the number of stores. Magic's available now in close to 40,000 doors. That's just a testament of more people are buying Magic and more people are buying in the category, and more retailers want to be part of that story. Whether it's a GameStop or a Walmart or a Carrefour or a Smith's or a Mox Boarding House style, we see a lot of upside there.

Speaker #4: Sure. I think you should expect as long as the hobby is growing, and there's vitality in the player base, I think you should expect new player new store growth to follow new player growth.

Speaker #4: Through the third quarter of 2026, we've seen about a 38 percent growth rate in the number of WPN stores. We have over 13,000 now.

Speaker #4: On mass, we've seen about a 28 percent growth rate on the number of stores. Magic's available now in close to 40,000 doors. And that's just a testament of more people are buying Magic and more people are buying in the category.

Speaker #4: And more retailers want to be part of that story. Whether it's a GameStop or a Walmart or a Carrefour or a Smith's or a Knox Boarding House style, we see a lot of upside there.

Chris Cocks: And there's many more hobby shops and game cafes and board game cafes than 13,000 around the world. Those are just the ones that qualify into the Wizards Play Network today, and many, many more of them ask us to become part of that because they see the benefits of being part of our engagement loop and part of our reward cycle.

Speaker #4: And there's many more hobby shops and game cafes and board game cafes than 13,000 around the world. Those are just the ones that qualify into the Wizards play network today.

Speaker #4: And many, many more of them ask us to become part of that because they see the benefits of being part of our engagement loop and part of our reward cycle.

Arpine Kocharyan: Thank you. That's very helpful. Just to switch to Consumer Products, just because we're in the back half of the year and holiday season is ahead of us, you've talked about Consumer Products up low single digits for Q4. Is that still the case, how you're thinking about Q4? Just for housekeeping, on mass purposes, what's your as-reported implied revenue guide? Is it around percentage and a half better than constant FX of 7% to 9%? Am I calculating that correctly?

Arpine Kocharian: Thank you. That's very helpful. Just to switch to Consumer Products, just because we're in the back half of the year and holiday season is ahead of us, you've talked about Consumer Products up low single digits for Q4. Is that still the case, how you're thinking about Q4? Just for housekeeping, on mass purposes, what's your as-reported implied revenue guide? Is it around percentage and a half better than constant FX of 7% to 9%? Am I calculating that correctly?

Speaker #2: Thank you. That's very helpful.

Speaker #7: And just to switch to consumer products, just because we're in the back off of the year and holiday, excuse me, ahead of us, you have talked about consumer products up low single digits for Q4.

Speaker #7: Is that still the case? How are you thinking about Q4? And just for housekeeping, on mass purposes, what's your as reported implied revenue guide?

Speaker #7: Is it around percentage and a half better than constant FX of 7 to 9 percent? Am I calculating that correctly?

Gina Goetter: Yeah. You are calculating that correctly. On the, overall, as we look at Consumer Products, again, looking at the H2 of the year, we expect the H2 to be up low single digits. I believe that means our Q4 will be flattish, maybe slightly positive. Another similar story, like Wizards, where we had a pretty big comp last year because of all of the goofiness on tariffs and the shelf set timing changing, replan orders were stronger in Q4 last year. So overall, our H2 is really strong as the retailers have moved to more normal shelf set timing and shipping patterns. But there is a little bit of comp noise in our Q4 for CP as well.

Speaker #2: Yeah. Yeah. You're calculating that correctly. On the overall, as we look at consumer products, again, looking at the back half of the year, we expect the back half to be up low single digits.

Speaker #2: I believe that means our Q4, it will be flattish, maybe slightly positive. Another similar story, like Wizards, where we had a pretty big comp last year, because of all of the goofiness on tariffs and the shelf set timing changing, re-plan orders were stronger in fourth quarter last year.

Speaker #2: So overall, our back half is really strong as the retailers have moved to kind of more normal shelf set timing and shipping patterns. But there is a little bit of comp noise in our Q4 for CP as well.

Arpine Kocharyan: Okay. Thank you.

Arpine Kocharian: Okay. Thank you.

Speaker #7: Okay. Thank you.

Operator: Thank you. The next question is from the line of Eric Handler with Roth Capital. Please proceed with your questions.

Speaker #1: Thank you. The next questions in the line of Eric Handler with North Capital. Please receive your questions.

Eric Handler: Good morning. Thanks for the question.

Speaker #6: Good morning. Thanks for the questions. First, what if you could just be willing to dissect a little bit the Magic revenue? What percentage of the revenue is frontline versus backlist versus secret layer?

Gina Goetter: Good morning.

Eric Handler: First, I wonder if you could just be willing to dissect a little bit the Magic revenue, like what percentage of the revenue is frontlist versus backlist versus Secret Lair, and how has that changed, let's say, going back two years to three years?

Speaker #6: And how is that changed? Let's say going back two years, two, three years.

Gina Goetter: Yeah. Morning, Eric. Thank you for the question. We typically don't provide those levels of splits. Suffice it to say, just given how our frontlist is stacked, the majority of our revenue comes from the frontlist. The growth rates, as Chris was saying, the growth rate on backlist has been pretty strong, our growth rate on Secret Lair, but the majority of the revenue is going to come from that frontlist.

Speaker #2: Yeah, morning, Eric. Thank you for the question. We typically don't provide those levels of splits. It's sufficient to say, just given how our front list is stacked, the majority of our revenue comes from the front list.

Speaker #2: The growth rates as Chris was saying, the growth rate on backlist has been pretty strong. Our growth rate on secret layer, but the majority of the revenue is going to come from that front list.

Eric Handler: Okay. That's helpful. Then, there has been a lot of macro concerns about will the consumer potentially roll over a bit, just given inflationary concerns and consumer sentiment. It doesn't seem like there's really any concerns with Magic. When you look at your Consumer Products business, how are you thinking about that with your Q4 product line?

Speaker #6: Okay, that's helpful. And then there has been a lot of macro concerns about whether the consumer might potentially roll over a bit, just given inflationary concerns and consumer sentiment.

Speaker #6: It doesn't seem like there's really any concerns with Magic. When you look at your consumer products business, how are you thinking about that with your four Q product line?

Gina Goetter: Yeah, we are continuing to see a pretty resilient consumer, especially given how we have shifted our portfolio and our portfolio mix to those GEM Squared categories. We are definitely seeing momentum there. There is nothing that we see going into the holidays that has us concerned about the consumer.

Speaker #2: Yeah. We're continuing to see a pretty resilient consumer. And especially given how we've shifted our portfolio and our portfolio mix to those gems squared categories, we're definitely seeing momentum there.

Speaker #2: So there's nothing that we see going into the holidays that has us concerned about the consumer.

Eric Handler: Great. Thank you.

Speaker #6: Great. Thank you.

Operator: Our next questions are from the line of Anthony Bonadio with Wells Fargo. Please proceed with your questions.

Speaker #1: Our next questions are from the line of Anthony Bonadio with Wells Fargo. Please receive your questions.

Anthony Bonadio: Yeah. Hey, guys. Thanks for taking our questions. I wanted to ask about 2027 sets and specifically Marvel: Darkhold Destiny. I know you guys talked about the alignment of Marvel sets and your fan base. This one seems like it might be a little more synergistic. I guess just thoughts on that, expectations there, and then more broadly, just how you are thinking about the quality of the 2027 sets you have announced so far versus what you put out this year.

Speaker #4: Yeah. Hey, guys, thanks for taking our questions. I wanted to ask about 27 sets, and specifically Marvel Darkhold. I know you guys sort of talked about the alignment of Marvel sets and your fan base.

Speaker #4: This one seems like it might be a little more synergistic. I guess just thoughts on that expectations there. And then maybe more broadly, just how you're thinking about the quality of the 27 sets you've announced so far versus what you put out this year.

Chris Cocks: Well, I think a couple things. Darkhold Destiny should be pretty cool. It is an original storyline. There will be an original character. I think it really represents how we want to work with partners. We want to represent their IP authentically, and ideally, we would like to make them really a part of Magic, and I think this is a great example of it. I think fans will be excited by it. There has been some jokes a little bit in the fan community about how New York was one of our most frequent settings for Magic sets over the last year or two. I think this kind of brings Magic into superheroes and Marvel-style action and characters and storytelling, which should be fun. I think an important thing that you and all of the analysts should also be thinking about is the composition of the sets.

Speaker #3: Well, I think a couple of things. Darkhold Destiny should be pretty cool. It's an original storyline. There'll be an original character. I think it really represents how we want to work with partners.

Speaker #3: We want to represent their IP authentically. And ideally, we'd like to make them really a part of Magic. And I think this is a great example of it.

Speaker #3: I think fans will be excited by it. It will there's been some jokes a little bit in the fan community about how New York was one of our most frequent settings for Magic sets over the last year or two.

Speaker #3: And I think this kind of brings Magic into superheroes and Marvel style action and characters and storytelling which should be fun. I think an important thing that you and all of the analysts should also be thinking about is the composition of the sets.

Chris Cocks: This year and for the last couple years, we have had sets that have had Commander Decks in them, some sets that have not had Commander Decks in them, some sets that have had a full suite of collectible products, some sets that have had a more limited suite of collectible products. Next year, each of our six major sets will be full sets. They will have all the Commander Decks and all the collectible products associated with them. Then, as I mentioned, we see upwards of a 50% or even greater difference in sales per set when you have that full product suite. That is something I think you need to factor in as well. We have not shared all the details about all the sets next year. There are a couple secret ones in the back half of the year that we think our fans will be pretty excited by.

Speaker #3: So this year and for the last couple of years, we've had sets that have had Commander Dex in them, some sets that haven't had Commander Dex in them, some sets that have had a full suite of collectible products, some sets that have had a more limited suite of collectible products.

Speaker #3: Next year, each of our six major sets, we'll be full sets. They'll have all the Commander Dex and all the collectible products associated with them.

Speaker #3: And as I mentioned, we see upwards of a 50% or even greater difference in sales per set when you have that full product suite.

Speaker #3: And so that's something I think you need to factor in as well. We haven't shared all the details about all the sets next year.

Chris Cocks: There are a couple secret ones in the back half of the year that we think our fans will be pretty excited by.

Speaker #3: There's a couple secret ones in the back half of the year. That we think our fans will be pretty excited by. I think needless to say, we feel like all of them are going to be super high quality really great IP and we've had great partnerships with each.

Chris Cocks: I think needless to say, we feel like all of them are going to be super high quality, really great IP, and we have had great partnerships with each.

Anthony Bonadio: Super helpful. Thanks. Then maybe just one quick on Exodus, just any changes to how you are thinking about the range of outcomes there. Now that we have got the 7 April date, just key data points to watch from here as we get closer to that release.

Speaker #1: Super helpful. Thanks. And then maybe just one quick one on Exodus — just any changes to how you're thinking about the range of outcomes there? And now that we've got the April 7th date, just key data points to watch from here as we get closer to that release.

Chris Cocks: Well, I think the biggest thing that we're looking for is kind of wishlist and preorder activity. On wishlist, so far so good. It's approaching 1 million wishlists, which based on what we're benchmarking from other releases over the last couple years, that's benchmarking pretty favorably. We're going to have a big December. Actually, we're going to have a big couple months about new news associated with the game. But in particular, we're going to have some major news on the game in December, and we'll be watching those metrics very carefully as we head into the end of the year and shape our thinking about what we expect it to do commercially when it launches in April.

Speaker #3: Well, I think the biggest thing that we're looking for is kind of wish list and pre-order activity. And on wish lists, so far so good.

Speaker #3: It's approaching a million wish lists, which, based on what we're benchmarking from other releases over the last couple of years, is benchmarking pretty favorably.

Speaker #3: We're going to have a big December. Actually, we're going to have a big couple of months about new news associated with the game. But in particular, we're going to have some major news on the game in December.

Speaker #3: And we'll be watching those metrics very, very carefully as we kind of head into the end of the year. And shape our thinking about what we expect it to do commercially when it launches in April.

Anthony Bonadio: Thanks, guys.

Speaker #1: Thanks, guys. Thank you. The next questions from the line of Garrick Johnson with Seaport Research. Please receive your questions.

Operator: Thank you. The next question is from the line of Gerrick Johnson with Seaport Research. Please proceed with your questions.

Gerrick Johnson: Great, thank you. Good morning. First question, can you just go over the retail sales, the POS in the quarter for both Magic and Consumer Products?

Speaker #6: Great, thank you. Good morning. First question: Can you just go over the retail sales, the POS in the quarter, for both Magic and consumer products?

Gina Goetter: POS overall for us in the quarter was, call it up low single digits overall. I think that includes when I am saying that is just toy and game. The trading cards would have been up high single digits, low double digits numbers. There is a little bit of a timing lag of when we are doing this call and when we will see final September results. Those come in actually today. So maybe when we talk later on today, Gerrick, we will have some more additional information. But overall, categories were performing. I think most notably, we should look at how our GEM Squared categories are performing year to date. And those are up almost 14%. So again, when you think about our strategy and how we are shifting our portfolio mix to have those categories growing at a low double-digit pace, that is a good thing for us.

Speaker #2: No. Overall, for us in the quarter was call it up low single digits. Overall. I think that includes when I'm saying that that's just toying game.

Speaker #2: Yeah, yeah. And the trading cards would have been kind of up high single digits, low double-digit numbers. Yeah, there's a little bit of a timing lag between when we're doing this call and when we'll see final September results.

Speaker #2: Those come in actually today. So maybe when we talk later on today, Garrick, we'll have some more additional information. But overall, categories were performing.

Speaker #2: I think most notably, we should look at how our gems squared categories are performing year to date. And those are up almost 14%. So again, when you think about our strategy and how we're shifting our portfolio mix to have those categories growing at a kind of low double digit pace, that's a good thing for us.

Gerrick Johnson: Okay, great. And one follow-up, can you just discuss the distribution of Magic? Understanding you use distributors for your hobby shops, and then I guess you go direct to mass. Can you just discuss how you do distribute between the two channels, and what maybe the margin differential might be? But also the lag between when you recognize revenue and when perhaps a hobby shop realizes retail sale.

Speaker #6: Okay, great. And one follow-up: Can you just discuss the distribution of Magic? I understand you use distributors for your hobby shops, and then I guess you go direct to mass.

Speaker #6: Can you just discuss how you distribute between the two channels and what the margin differential might be? Also, could you address the lag between when you recognize revenue and when, perhaps, a hobby shop realizes a retail sale?

Chris Cocks: Hey, Eric. We use distribution quite extensively for both channels. We do direct for some. But I would say the vast majority of what we do is through distribution, and the margins are pretty comparable between distribution and direct for us. We have got a lot of good partnerships. Usually in a given territory, like in the US, I think we have somewhere in the neighborhood of 6 to 8 major distributors. In Europe, I think we have a bit less, but it is still 3 or 4. We want to make sure a hobby shop has a choice and can get fulfilled real time. Usually, our typical hobby shop gets fulfilled in an order in 24 to 48 hours from when they ship it. And usually, our distributors will take product anywhere from, on the low side, 2 weeks, on the high side, 6 weeks before a major release.

Speaker #3: Hey, Garrick. We use distribution quite extensively for both channels. We do direct for some, but I would say the vast, vast, vast majority of what we do is through distribution.

Speaker #3: And the margins are pretty comparable between distribution and direct for us. We've got a lot of good partnerships. Usually, in a given territory, like in the US, I think we have somewhere in the neighborhood of six to eight major distributors.

Speaker #3: In Europe, I think we have a bit less, but it's still like three or four. We want to make sure a hobby shop has a choice and can get fulfilled in real time.

Speaker #3: Usually, our typical hobby shop gets fulfilled in an order in 24 to 48 hours from when they ship it. And usually, our distributors will take product anywhere from, on the low side, two weeks, on the high side, six weeks before a major release.

Chris Cocks: Really, that just has to do with the composition of when the product is ready, when we can ship it out, and how complex the release looks like.

Speaker #3: And really, that just has to do with the composition of when the product's ready, when we can ship it out. And how complex the release looks like.

Chris Cocks: Really, that just has to do with the composition of when the product is ready, when we can ship it out, and how complex the release looks like.

Gerrick Johnson: Okay, great. Thank you for the detail.

Speaker #6: Okay. Great. Thank you for the detail.

Operator: Thank you. Our next question is from the line of Andrew Didora with Bank of America. Please proceed with your questions.

Speaker #1: Thank you. Our next question is from the line of Andrew DeDor with Bank of America. Please receive your questions.

Andrew Didora: Hey, good morning, everyone. Thanks for taking the questions. Chris, Magic gets a lot of the air time, and rightfully so, but just wanted to turn to the Consumer Products piece for a second. How do you think about the medium-term growth prospects within that division? Is this a segment that can sort of eke out low single digit top line with some modest margin improvement, or do you think about that segment differently?

Speaker #5: Hey, good morning, everyone. Thanks for taking the questions. I guess, Chris, Magic gets a lot of the airtime, and rightfully so, but I just wanted to turn to the consumer products piece for a second.

Speaker #5: I guess, how do you think about the medium-term growth prospects within that division? Is this a segment that can sort of eke out low single digit top line with some modest margin improvement?

Speaker #5: Or do you think about that segment differently?

Chris Cocks: I think our Consumer Products division inside of the midterm can do better than low single digits. If you look at just the new licenses that we have for 2027 alone, we will start shipping Harry Potter at the very tail end of this year. I think the series debuts in the Christmas timeframe. Then we will follow that up with a full line in Q1 and Q2. We will have The Legend of Zelda, which is a brand-new license for us. We will have three quarters of KPop Demon Hunters that effectively have had no comp. Then you are going to have another stacked movie lineup next year. You are going to have a new Spider-Man movie. You are going to have another Avengers film, Star Wars 50th anniversary, The Legend of Zelda movie, the new Harry Potter series, which I was lucky enough to do a tour of the set. It was magical.

Speaker #3: I think our consumer products division inside of the midterm can do better than low single digits. If you look at just like the new licenses that we have for 2027 alone, we'll start shipping Harry Potter at the very tail end of this year.

Speaker #3: I think the series debuts in the Christmas time frame. Then we'll follow that up with a full line in Q1 and Q2. We'll have The Legend of Zelda, which is a brand-new license for us.

Speaker #3: We'll have three quarters of K-pop Demon Hunters that effectively have had no comp. And then you're going to have another stacked movie lineup next year.

Speaker #3: You're going to have a new Spider-Man movie. You're going to have another Avengers film. Star Wars 50 is the anniversary. The Legend of Zelda movie, the new Harry Potter series, which I was lucky enough to do a tour of the set.

Chris Cocks: You are going to have another Avengers film, Star Wars 50th anniversary, The Legend of Zelda movie, the new Harry Potter series, which I was lucky enough to do a tour of the set. It was magical.

Speaker #3: And it was magical. Like no pun intended. I think all of those combined really sets up for a healthy 2027. And frankly, it's pretty favorable for 2028.

Chris Cocks: No pun intended. I think all of those combined really sets up for a healthy 2027, and frankly, is pretty favorable for 2028. From a margin perspective, as we drive incremental upside in terms of the top line, you just get some favorable leverage from that. I think our Consumer Products team has done a good job with managing their costs and getting that to something that we think is a lot more competitive. So I feel like we can get Consumer Products margins. My goal is to get it into the double digits and make it be really resilient in that midterm timeframe, which is consistent with the guidance that we have given you guys.

Speaker #3: And then, from a margin perspective, as we drive incremental upside in terms of the top line, you just get some favorable leverage from that.

Speaker #3: And then I think our CP team has done a good job with managing their costs and getting that to something that we think is a lot more competitive.

Speaker #3: So I feel like we can get CP margins my goal is to get it into the double digits and make it be really resilient in that midterm time frame, which is consistent with the guidance that we've given you guys.

Andrew Didora: That is great color. Thank you. Just a quick follow-up. I know, Gina, you spoke in your prepared remarks about your spend curve being to work in your favor. I think the CapEx guide this year is $225 million. You have done about $200 million or so the last several years. Just how should we think about CapEx over the next 18, 24 months? The savings that you have there, should we think about that going towards shareholders' returns? Thank you.

Speaker #5: That's great color. Thank you. Just a quick follow-up. And Gina, you spoke in your prepared remarks about your spend curve being to work in your favor I think the CapEx guide this year was 225 million.

Speaker #5: You've done about 200 million or so the last several years. Just how should we think about CapEx over the next 18, 24 months? And is the savings that you have there, should we think about that going towards shareholder returns?

Speaker #5: Thank you.

Gina Goetter: Got it. The commentary specifically was on our digital CapEx coming down, and I believe we said last quarter, by 2028, those development costs will be down 20% to 25%. To your point, since we have been capitalizing that will come directly out of that $225 million pool of dollars that we were using. In short, yes, as that cash flow frees up, it gives us flexibility to either reinvest back into the business to fund more towards share repurchases or to continue to buy back debt.

Speaker #2: Got it. Yeah. The commentary specifically was on our digital CapEx coming down. And I believe we said last quarter, by 2028, those development costs will be down 20% to 25%.

Speaker #2: To your point, since we've been capitalizing that, that will come directly out of that 225 million dollar pool of dollars that we were using.

Speaker #2: And in short, yes, as that cash flow frees up, it gives us flexibility to either reinvest back into the business, to fund more towards share repurchases, or to continue to buy back debt.

Andrew Didora: Great. Thank you.

Speaker #5: Great. Thank you.

Operator: Thank you. At this time, this will conclude our question and answer session, and will also conclude today's conference. We thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.

Speaker #1: Thank you. At this time, we will conclude our question and answer session, and we'll also conclude today's conference. We thank you for your participation.