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Shares in Hasbro (NASDAQ: HAS) soared up to 10% on Tuesday after reporting that its second quarter 2019 beat estimates. The game and toy maker may have stumbled last year, but it is on a roll in 2019. The latest revenue report shows that it is continuing that trend.
Hasbro’s net revenue rose 9% year over year to $984.5 million. That handily beat the analysts’ consensus estimates of a 6% increase.
Revenues were driven by the strong performance of franchise brands such as Magic: The Gathering, Monopoly, Play-Doh, and Transformers toys, which collectively increased 14% year over year. Meanwhile, emerging brands that include Power Rangers, Furreal Friends, and Playskool rose an incredible 28%. The company’s profits were further boosted by partner brand Disney, which saw huge demand for toys related to the movie Avengers: Endgame.
Hasbro’s operating income soared 47% year over year to $128.3 million. The company’s management have enacted strong cost cutting measures, which were originally planning save between $30 million and $40 million by 2021, but it looks like the plan is performing much better than expected. It expects to pull in $50 million in expense reductions in 2019 alone.
Magic: The Gathering Arena casts a spell
But perhaps one of Hasbro’s strongest moves was its emphasis on digital gaming and esports through the game Magic: The Gathering Arena (MTGA). The free-to-play PC game – based on the popular physical collectible fantasy card game – launched earlier this year after months of beta testing and became a huge hit with players.
Digital gaming, led by Magic: The Gathering Arena, became the biggest driver for Hasbro’s 28% year-over-year growth in its entertainment, licensing, and digital segment.
During the earnings call, Hasbro CEO Brian Goldner said that over 400 million MTGA games were played this quarter, with the overall total surpassing 1.1 billion games played since the beta launched last September.
The company will continue to invest heavily in online gaming. User engagement for MTGA remains high, with players logging about eight hours per week. It is currently one of the top-10 esports brands on the Amazon-owned video game livestreaming platform Twitch. On top of that, each player is spending an average of $75 annually to purchase in-game currency called gems, making it a potentially huge area of revenue growth for the company.
Hasbro has also sponsored a number of high-profile MTGA esports tournaments, where players have a chance to earn six-figure prizes.
