HASBRO, INC. (HAS)

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

(Dollar and share amounts in tables presented in millions, unless otherwise noted)

The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the Company's 2025 Form 10-K.

Overview

Hasbro, Inc. (“Hasbro”) is a leading game, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play. With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, toys, licensed consumer products, location-based entertainment, film, TV and more.

Through our franchise-first approach, we unlock value from both new and legacy IP, including Magic: The Gathering, Monopoly, Hasbro Games, Play-Doh, Transformers, Dungeons & Dragons, Nerf, and Peppa Pig, as well as premier partner brands. Powered by our portfolio of iconic brands and a diversified network of partners and subsidiary studios, we bring fans together wherever they are, from tabletop to screen.

For more than a decade, Hasbro has been consistently recognized for its corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, a 2025 JUST Capital Industry Leader, one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50, and a Brand that Matters by Fast Company.

Recent Developments

In fiscal year 2025, we launched our refreshed strategy "Playing to Win" to refocus the Company on inspiring a lifetime of play across more categories, more partners, and more ways to engage. Through play fueled brand engagement and partner scaled co-investment, we plan to expand our consumer reach as a games, IP, and toy company.

In the first half of 2026, we've made exciting new steps on executing the Playing to Win strategy, including:

•The release of Marvel Super Heroes, along with all past and future Marvel sets, within Magic: The Gathering Arena, allowing players to jump into the Marvel Universe through Hasbro's online adaption of the iconic Magic: The Gathering card game.

•The announcement of a multi-year licensing partnership starting in 2027 with Warner Bros. Discovery Global Consumer Products, making Hasbro the global primary toy licensee for the world of Harry Potter and the upcoming HBO Original Harry Potter series.

•The announcement of a licensing collaboration with Amazon MGM Studios to produce action figures, toys and roleplay for the studio’s upcoming live-action Voltron movie and with Legendary Entertainment tied to the live-action Street Fighter movie.

•The launch of Sixth Wall Studio, a new AI studio dedicated to bringing iconic characters into the AI era through new channels, such as behavioral licensing.

We believe these strategic moves position us to accelerate innovation and drive long-term growth in line with our Playing to Win strategy which emphasizes play-driven engagement and collaboration with partners.

Tariffs

Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results. The Company monitors the impact of tariffs to its business operations on an ongoing basis and may need to implement actions such as price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods. The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, actual or potential impairments, write-downs or unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results. During the first three and six months of 2026, the Company recognized approximately $9.4 million and $17.7 million of tariff costs within Cost of sales, respectively.

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On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") tariffs that we and other companies paid to the U.S. government since the enactment on April 2, 2025. In the third quarter of 2026, we made our first application to the U.S. Customs and Border Protection ("CBP") agency seeking a refund for a majority of the IEEPA tariffs we paid, and we plan to submit additional applications later this year when we are permitted. The ultimate timing and amounts received is uncertain and subject to processing by the CBP. These amounts could impact our results in 2026.

Unauthorized Network Access

In late March 2026, the Company identified unauthorized access to our network. Upon discovery, the Company promptly activated its security incident response protocols, implemented containment measures, including proactively taking certain systems offline, and launched an investigation with the assistance of third-party cybersecurity professionals. Simultaneously, the Company implemented its business continuity plans, including manual ordering and processing procedures at a reduced rate of operations in order to continue servicing its customers.

The impacts of these system disruptions included order processing, shipping, and invoicing delays, resulting in a negative impact on net sales and operating profit during the second quarter, particularly within the Consumer Products segment. As of June 28, 2026, the Company has since returned to pre-incident order processing, shipping, and invoicing practices.

The Company also incurred incremental expenses of approximately $10.8 million during the three and six months ended June 28, 2026 as a result of the unauthorized network access, including for third-party IT recovery and forensic experts, professional services and other costs incurred to investigate and remediate the attack. The Company expects to incur a less significant amount of additional costs related to the incident in future periods. The Company has not recognized any insurance proceeds during the three months ended June 28, 2026 related to the unauthorized network access. The timing of recognizing insurance recoveries, if any, may differ from the timing of recognizing the associated expenses.

Summary of Results

The Company's revenue increased from $980.8 million for the three months ended June 29, 2025 to $1,139.6 million for the three months ended June 28, 2026. The increase in revenue is driven primarily by growth in our Wizards of the Coast and Digital Gaming segment, specifically within tabletop gaming driven by Magic: The Gathering.

The Company's revenue increased from $1,867.9 million for the six months ended June 29, 2025 to $2,139.8 million for the six months ended June 28, 2026. The increase in revenue is driven primarily by growth in our Wizards of the Coast and Digital Gaming segment, specifically within tabletop gaming.

The Company recorded an operating profit of $252.5 million and $522.8 million for the three and six months ended June 28, 2026, respectively, as compared to an operating loss of $798.2 million and $627.5 million for the three and six months ended June 29, 2025, respectively. The change in operating profit was driven by the improved revenue growth discussed above, as well as a one-time $1,021.9 million non-cash goodwill impairment recorded in the Consumer Products segment in the second quarter of 2025. No such impairment occurred during the three and six months ended June 28, 2026.

See below for further discussion on the consolidated and segment results of operations for the three and six months ended June 28, 2026 and June 29, 2025.

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RESULTS OF OPERATIONS

The following table presents the consolidated results of operations for the three months ended June 28, 2026 and June 29, 2025:

Net revenues – Net revenues for the second quarter of 2026 increased 16.2% to $1,139.6 million from $980.8 million for the second quarter of 2025 primarily driven by growth of $141.4 million, or 27.1%, in the Wizards of the Coast and Digital Gaming segment and $20.6 million, or 4.7%, in the Consumer Products segment. This growth was partially offset by a $3.2 million, or 20%, decrease in the Entertainment segment. See the Segment Results discussion below for further details.

As part of our Playing to Win strategy, we have aligned our brand portfolios as follows:

•Grow Brands: Brands representing the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth.

•Optimize Brands: Brands representing opportunities to maintain or grow share while improving operating profit returns.

•Reinvent Brands: Brands representing opportunities to reinvent or restructure to drive innovation and improved operating profit returns.

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The following table presents net revenues by brand portfolio category:

(1) During the first quarter of 2026, the classification of brands within these categories was reviewed and certain brands were reclassified based on changes in growth, profitability or other characteristics. As such, the respective historical revenues associated within these brands has been reclassified into the brands' new brand category.

GROW BRANDS: Net revenues in the Grow Brands portfolio increased $164.3 million, or 22.2%, in the second quarter of 2026, compared to the second quarter of 2025. The net revenue

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OBJECTIVE

Our objective within the following discussion is to provide an analysis of the Company’s Financial Condition, Cash Flows and Results of Operations from management's perspective, which should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto, included in Part II, Item 8. Financial Statements, of this Annual Report on Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs. Refer to “Statement Regarding Forward-Looking Statements” and Part I, Item 1A. Risk Factors, of this Form 10-K for a discussion of other uncertainties, risks and assumptions associated with these statements.

The following includes a comparison of our consolidated results of operations for fiscal years 2025 and 2024. For a comparison of our consolidated results of operations for fiscal years 2024 and 2023, refer to Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed with the SEC on February 27, 2025. Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.

The fiscal years ended December 28, 2025 and December 29, 2024 were both fifty-two week periods.

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Table of Contents

EXECUTIVE SUMMARY

Hasbro Inc. ("Hasbro") is a leading games, intellectual property ("IP"), and toy company whose mission is to create joy and community through the magic of play. With over 100 years of expertise, we deliver play experiences to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.

We generate revenue and earn cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories. This includes: innovative toy and gaming brands and role-playing and fantasy card collecting games; the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro PULSE, our direct-to-consumer platform; the distribution, license and sale of digital games developed both internally and through licensing out our IP to third parties, such as Baldur's Gate 3, Monopoly Go! and Magic: The Gathering Arena and other digital games; and entertainment content. Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.

Recent Developments

Tariffs

Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results. The Company monitors the impacts of tariffs to its business operations on an ongoing basis and may need to implement actions such as price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods. The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, actual or potential impairments, write-downs or unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results.

As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, the Company assessed its goodwill for potential impairment, resulting in the recognition of a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.

The Company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025. While the final impacts of tariffs remain uncertain, the Company continues to execute decisively against the evolving tariff backdrop.

On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") Tariffs that we have been paying to the U.S. government since the enactment on April 2, 2025. This could impact our results in 2026 and we are currently evaluating the accounting impacts including our ability to apply for a refund on tariffs previously paid.

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Summary of Financial Performance

Results of Operations — Consolidated

The following table presents the consolidated results of operations for 2025 and 2024:

Net Revenues

Consolidated net revenues for the year ended December 28, 2025 increased 13.7% to $4,701.3 million from $4,135.5 million for the year ended December 29, 2024, primarily driven by growth of $675.6 million, or 44.7%, in the Wizards of the Coast and Digital Gaming segment. This growth was offset by a $106.3 million, or 4.2%, decrease in the Consumer Products segment, as well as a $3.5 million, or 4.4%, decrease in the Entertainment segment. Refer to the Segment Results discussion below for further details.

The following table presents net revenues expressed by brand portfolio category for 2025 and 2024:

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Grow Brands: Our Grow Brands represent the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth, such as MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, Marvel, including SPIDER-MAN and THE AVENGERS, and DUNGEONS & DRAGONS. The Grow Brands portfolio net revenues increased 24.4% in 2025 as compared to 2024. The net revenue increase primarily reflects higher net revenues from MAGIC: THE GATHERING, which had a record year, increasing $641.5 million from 2024 behind Universes Beyond sets such as Final Fantasy, Avatar: The Last Airbender, Marvel's Spider-Man, and Edges of Eternities. Growth in MAGIC: THE GATHERING was accompanied by an increase in MONOPOLY, both in the traditional games space, as well as from increased contributions from our digital licensing arrangement with Scopely, Inc. for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024. The net revenue increase was partially offset by revenue declines from PLAY-DOH and DUNGEONS & DRAGONS.

Optimize Brands: Optimize Brands represent opportunities to maintain or grow share while improving operating profit returns, including brands such as TRANSFORMERS, PEPPA PIG, and Lucasfilms' STAR WARS. The Optimize Brands portfolio net revenues decreased 4.6% in 2025 as compared to 2024. During 2025, Optimize Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS, impacted by a reduced slate of entertainment releases, along with declines from PEPPA PIG and BABY ALIVE. The net revenue decrease was partially offset by continued growth in TRANSFORMERS and DUEL MASTERS.

Reinvent Brands: Reinvent Brands represent opportunities to reinvent or restructure to drive innovation and improve operating profit returns and include those brands such as NERF, BEYBLADE, PJ MASKS, POWER RANGERS, and FURBY. The Reinvent Brands net revenues decreased 13.7% in 2025 as compared to 2024 primarily driven by lower net revenues from NERF, which were partially offset by revenue contributions from BEYBLADE. In addition, Reinvent Brands net revenues were also negatively impacted by the lapping of prior year's licensing revenues for MY LITTLE PONY trading cards, which directly resulted in a decrease of $40.5 million, or 47.0%, year-over-year.

OPERATING COSTS AND EXPENSES

Cost of Sales: Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence. Cost of sales increased 9.9% to $1,296.2 million, or 27.6% of net revenues, for 2025 compared to $1,179.5 million, or 28.5% of net revenues, for 2024. The Cost of sales increase in dollars was driven primarily by sales volumes and a $26.7 million benefit recorded during 2024 related to a historical over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements. Additionally, Cost of sales for 2025 includes $44.9 million of tariff costs. These factors were offset by supply chain productivity and cost savings initiatives.

Program Cost Amortization: Program cost amortization totaled $35.8 million, or 0.8% of net revenues in 2025, compared to $49.3 million, or 1.2% of net revenues in 2024. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method. Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed. The decrease in dollars and as a percent of net revenues during 2025 was driven by reduced content spend.

Royalties: Roya

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