D&D 5E (2014) D&D Cited in Hasbro Quarterly Report as Revenue Increase for Hasbro

[Mirtek]

We just have to wait and see whether they update their investor fact sheet. So far they didn't deem D&D worthy enough to spend a few pixels to include it there

 

[Kramodlog]

I understand you may not be familiar with quarterly reporting for public companies.

Oh the irony! Here is someone who knows about it and says something similar to me. I hope you learn something here. Enjoy, champ.

I'm a manager of financial reporting and I write these things (10-Q's) for a living.

What Hasbro has to is explain the revenue variance between current period (Q3 and Sept 2014 YTD) versus prior year (Q3 and Sept 2013 YTD). Depending upon their auditors (I'm guessing Big 4 due to the size of the company), they're going to have to get pretty granular (probably to the nearest million, if not hundred thousand).

It doesn't surprise me that they listed D&D, because this part of the 10-Q tends to be an exercise to come up with enough variances amongst all their product lines to account for the difference.

As this is comparing results to prior year, my guess is that D&D had a difference that was material enough for the auditors, but that can be easily explained due to the fact that there was probably very little revenue being generated in Q3 2013 as opposed to Q3 2014, when they launched 5e and could recognize all the revenue for items shipped (not necessarily sold by retailers) in the quarter.

Note that they don't disclose how much of the 86 million increase in revenue is broken down by product line so it's impossible to tell how much revenue D&D generated for Hasbro... only that the change from period to period was materially significant.

Did the launch go well? Well enough to be mentioned, but we're unable to ascertain how well due to the lack of disclosure.

 

[Mistwell]

Oh the irony! Here is someone who knows about it and says something similar to me. I hope you learn something here. Enjoy, champ.

Only he's not saying what you said. He repeats what I said - it has to be material to Hasbro's revenue. Your example of going from $1000 to $10,000 is not material, which is exactly what I said. He and I are saying the same thing - we don't know the number, we just know it was materially significant. He also concludes it did well - well enough to be mentioned s materially significant to Hasbro's revenues. Virtually identical to what I said and almost the opposite of what you said.

Are you still pretending we don't know that the launch went well?

 

[mflayermonk]

You might have better luck digging around European filings for those numbers.

 

[Jester David]

It doesn't mean much.

Net revenue is revenue after expenses. It's the profit. D&D makes a good example to trot out since its net revenues for the first 9 months of 2014 will be higher than in 2013. Because product was actually released, opposed to the first 9 months of 2013 when they released two things: "eff" and "all". Staffing expenses would likely have wiped out much of the profit earned during that time.
So the net revenue looks significantly higher in comparison, not being a negative number. Which makes it useful for that kind of explanatory statement justifying finances.

Even during the transition between 2e and 3e and 3e to 4e there was still product. A dead year is unusual. So this kind of comparison would never have occurred before for D&D, when you'd be able to compare no sales (aside from PDFs) with sales of highly anticipated core books. The percentage of increase will look great on the sheets, and casual investors won't know enough of the game to notice the reasons. It just makes Hasbro look good, because they increased sales by X amount.

We don't know if net revenue is up from 2008 or 2000, when other editions launched.
We don't know if sales are consistently good of if it was a short spike.
We don't know if sales will continue to be good or drop off.
We don't know if sales will satisfy Hasbro and the higher ups at WotC.

 

[Jester David]

Are you still pretending we don't know that the launch went well?

We don't know for sure.

We do know that the brands that are making more money than last year are doing better than the brands that are making less money than last year.
We do know that D&D is making more money than last year.
We do know that the money D&D made in Q3 is making its revenue for the entire 9-month period look good.

Anything else is speculation.

 

[Uchawi]

Speak for yourself; I'm waiting with bated breath for Four Degrees of Connection starrting Will Smith.

Or Six Degrees of Connection starring Kevin Bacon.

 

[Hussar]

We don't know for sure.

We do know that the brands that are making more money than last year are doing better than the brands that are making less money than last year.
We do know that D&D is making more money than last year.
We do know that the money D&D made in Q3 is making its revenue for the entire 9-month period look good.

Anything else is speculation.

You're missing what's being said. It's not that D&D made more money (it did, but, that's not what's being said). It's that Hasbro's profits are up and Hasbro names D&D as one of the reasons for that. In the past fifteen years, while Hasbro has certainly had growth years in profit, not once did it mention that any if it's profit growth was due to D&D, regardless of how much dollar profit or growth D&D has had.

IOW, not only did D&D's profits go up (which isn't really all that hard considering they hadn't sold a book in two years), it went up enough overall to show up on Hasbro's profit sheet. That's pretty darn successful.

 

[Jester David]

You're missing what's being said. It's not that D&D made more money (it did, but, that's not what's being said). It's that Hasbro's profits are up and Hasbro names D&D as one of the reasons for that. In the past fifteen years, while Hasbro has certainly had growth years in profit, not once did it mention that any if it's profit growth was due to D&D, regardless of how much dollar profit or growth D&D has had.

IOW, not only did D&D's profits go up (which isn't really all that hard considering they hadn't sold a book in two years), it went up enough overall to show up on Hasbro's profit sheet. That's pretty darn successful.

That's still speculative. This quoted fragment of the report is *only* comparing higher versus lower net revenues for Hasbro owned game lines. We simply do NOT know why any individual brand was singled out for mention.

It could be the total money that brand is making, yes. But it could be any brand that made a certain percentage more/less money than a standard deviation (brand X is making +/- 10% than the previous year). Or there could be brands that pass a certain minimum threshold (brand X is making +/- >$100,0000 more than the previous year). We also don't know how far back changes in revenue are considered.

It's a single data point, and we don't know why D&D was chosen.
Yes, it could be because 5e made a crapload of money. Or it could just as easily be because its net revenues were a significant percentage higher than the same period last year.

However..
Upon re-reading, I misread the report.
Editing for emphasis: "In the quarter, higher net revenues from SOME products were only partially offset by lower net revenues from other games brands. In the first nine months of 2014, higher net revenues from SOME products were more than offset by lower net revenues from other games brands."
The phrase "more than offset by is troubling. I first read it as "more than offset", as in the profit increase of MONOPOLY, MAGIC: THE GATHERING, SIMON, DUNGEONS AND DRAGONS, ELEFUN & FRIENDS and OPERATION made up for the slower increase (or even decrease) of BOP IT!, DUEL MASTERS, JENGA and TWISTER. But it doesn't say that. It says "more than offset by". In that the higher revenues for the first group of games were not enough to make up for the lower revenues of the underperforming lines.

So in the Quarter D&D 5e was released, the extra money allowed the brands to offset reduced revenues for underperforming lines. But the total money/percentage made was not enough to make a meaningful difference in the finances of more than one quarter.
Now, if nothing else was released over that same period, we could claim that D&D alone boosted the quarter. However, MtG released it's 2015 Core set and the Khans of Tarkir expansion set in Q3 as well. So it could be D&D did okay but MtG did gangbusters and boosted the quarter. Or both.

What we do know, is that D&D did not rate a mention in the Q3 quarterly report while Magic did:
http://icv2.com/articles/comics/view/29983/magic-up-double-digits-q3
http://seekingalpha.com/article/257...-2014-results-earnings-call-transcript?page=1
That would be where Hasbro would have named D&D was one of the reasons its games department's profits were up. But they didn't.