การประชุมแถลงผลประกอบการไตรมาส 3 ปี 2026 ของฮาสโบร (HAS): การเติบโตของ Magic ผลักดันการปรับเพิ่มแนวโน้มผลประกอบการ

ประเด็นสำคัญ

• รายได้สุทธิประจำไตรมาส 3/2026 ของฮาสโบร (Hasbro) เพิ่มขึ้น 15% เมื่อเทียบรายปี แตะที่ 1.6 พันล้านดอลลาร์ ขณะที่กำไรจากการดำเนินงานปรับปรุงแล้วเพิ่มขึ้น 52% แตะที่ 541 ล้านดอลลาร์ และกำไรต่อหุ้น (EPS) ปรับปรุงแล้วเติบโต 73% แตะที่ 2.90 ดอลลาร์
• รายได้จากธุรกิจ Wizards of the Coast เพิ่มขึ้น 31% แตะที่ 747 ล้านดอลลาร์ โดยรายได้จาก Magic: The Gathering ทำสถิติสูงสุดใหม่ที่ 616 ล้านดอลลาร์ เพิ่มขึ้น 34% ซึ่งได้รับแรงหนุนจากชุด The Hobbit, Reality Fracture และยอดขายสินค้าในแคตตาล็อกเดิม (backlist)
• รายได้จากกลุ่มสินค้าอุปโภคบริโภค (Consumer Products) เติบโต 4% แตะที่ 828 ล้านดอลลาร์ ซึ่งเป็นการเติบโตติดต่อกันเป็นไตรมาสที่ 4 สำหรับธุรกิจของเล่นและเกม ขณะที่กำไรจากการดำเนินงานปรับปรุงแล้วเพิ่มขึ้นเท่าตัวแตะที่ 178 ล้านดอลลาร์ ซึ่งรวมถึงเงินคืนภาษีศุลกากรประมาณ 48 ล้านดอลลาร์
• กระแสเงินสดจากการดำเนินงานในช่วง 9 เดือนแรกแตะที่ 907 ล้านดอลลาร์ เพิ่มขึ้น 85% โดยฮาสโบรได้ปรับเพิ่มเป้าหมายการซื้อหุ้นคืนประจำปี 2026 จาก 200 ล้านดอลลาร์ เป็น 400 ล้านดอลลาร์
• ฝ่ายบริหารได้ปรับเพิ่มประมาณการผลประกอบการเต็มปี โดยคาดว่ารายได้ในรูปเงินสกุลคงที่จะเติบโต 7%–9% และ EBITDA ปรับปรุงแล้วจะอยู่ที่ 1.575 พันล้าน–1.625 พันล้านดอลลาร์
• ฝ่ายบริหารคาดว่า Magic จะเติบโตขึ้นอีกในปี 2027 โดยได้รับการสนับสนุนจากการเปิดตัวชุดหลัก 6 ชุดที่มีกลุ่มผลิตภัณฑ์ครบถ้วน การกระจายสินค้าที่กว้างขึ้น และการเติบโตอย่างต่อเนื่องของผู้เล่น

ข้อมูลทางการเงินที่สำคัญ

สำหรับช่วง 9 เดือนแรกของปี 2026 ฮาสโบรสร้างรายได้ 3.7 พันล้านดอลลาร์ เพิ่มขึ้น 15% และมีกำไรจากการดำเนินงานปรับปรุงแล้ว 1.1 พันล้านดอลลาร์ เพิ่มขึ้น 35% โดยอัตรากำไรจากการดำเนินงานปรับปรุงแล้วขยายตัว 440 basis points แตะที่ 29.7%

ผลการดำเนินงานทางธุรกิจและด้านการปฏิบัติการ

Wizards of the Coast และ Magic

รายได้ของ Magic เพิ่มขึ้น 34% แตะที่ 616 ล้านดอลลาร์ในไตรมาส 3 และแตะที่ 1.6 พันล้านดอลลาร์สำหรับช่วง 9 เดือนแรก ซึ่งเพิ่มขึ้น 34% เช่นกัน ฝ่ายบริหารระบุว่า Reality Fracture เป็นหนึ่งในชุดหลัก (premier sets) ที่ทำผลงานได้แข็งแกร่งที่สุดในประวัติศาสตร์ของแบรนด์ ขณะที่ The Hobbit กลายเป็นชุดที่ขายดีที่สุดเป็นอันดับ 4 ของ Magic แม้ว่าจะมีไลน์สินค้าที่กระชับกว่าก็ตาม

รายได้ของ Magic ประมาณ 40 ล้านดอลลาร์ที่คาดไว้ในไตรมาส 4 ถูกรับรู้ในไตรมาส 3 โดยมีสาเหตุหลักมาจากการจัดส่ง Reality Fracture เกิดขึ้นเร็วกว่าที่วางแผนไว้ ฝ่ายบริหารเน้นย้ำว่าการขยับของกรอบเวลานี้สะท้อนถึงความพร้อมของสินค้าและความต้องการในช่องทางจำหน่าย มากกว่าการชะลอตัวของอุปสงค์พื้นฐาน

การเข้าร่วมการแข่งขันอย่างเป็นทางการ (organized play) ของ Magic ในช่วง 9 เดือนแรกของปี 2026 สูงกว่าระดับตลอดปี 2024 มากกว่า 40% เครือข่าย Wizards Play Network ขยายตัวเกิน 13,000 ร้านค้า เพิ่มขึ้นประมาณ 38% ขณะที่ Magic มีวางจำหน่ายในร้านค้าปลีกขนาดใหญ่ (mass-market) เกือบ 40,000 แห่ง ซึ่งคิดเป็นการเติบโตของจำนวนร้านค้าประมาณ 28%

อุปสงค์สำหรับสินค้าในแคตตาล็อกเดิมยังคงแข็งแกร่ง ฝ่ายบริหารระบุว่ายอดขายสินค้าแคตตาล็อกเดิมในปี 2026 ในช่วงสัปดาห์แรก ๆ ของไตรมาส 4 ได้แซงหน้ายอดขายรวมของปี 2025 เรียบร้อยแล้ว รายได้จากเกมดิจิทัลและเกมที่ได้รับลิขสิทธิ์เพิ่มขึ้น 3% แตะที่ 134 ล้านดอลลาร์ โดย MONOPOLY GO! ทำผลงานได้ตามความคาดหมายของบริษัท

กลุ่มสินค้าอุปโภคบริโภค

รายได้จากกลุ่มสินค้าอุปโภคบริโภคเพิ่มขึ้น 4% แตะที่ 828 ล้านดอลลาร์ รายได้จาก Marvel เติบโตมากกว่า 35% โดยได้รับแรงหนุนจากการเปิดตัวภาพยนตร์จาก Marvel Studios นอกจากนี้ ฝ่ายบริหารยังชี้ให้เห็นถึงแรงส่งในแบรนด์ Transformers และสินค้าเทศกาลที่เชื่อมโยงกับ Spider-Man และ Dr. Doom

อัตรากำไรจากการดำเนินงานปรับปรุงแล้วเพิ่มขึ้นเป็น 21.5% จาก 11.2% นอกเหนือจากเงินคืนภาษีศุลกากรที่เป็นรายการเกิดขึ้นครั้งเดียวแล้ว ฝ่ายบริหารระบุว่าการปรับปรุงพื้นฐานมาจากผลิตภาพของห่วงโซ่อุปทาน ค่าใช้จ่ายในการจัดจำหน่ายที่ลดลง ค่าใช้จ่ายในการดำเนินงานที่มีระเบียบวินัย และสัดส่วนธุรกิจที่เอื้ออำนวย

สินค้าคงเหลือที่เป็นของบริษัท ณ สิ้นไตรมาสอยู่ที่ 359 ล้านดอลลาร์ ลดลง 10% เมื่อเทียบรายปี ฝ่ายบริหารระบุว่าสินค้าคงเหลือของบริษัทและในช่องทางค้าปลีกอยู่ในระดับที่สะอาดและได้รับการจัดวางอย่างเหมาะสมสำหรับช่วงเทศกาล holiday

ธุรกิจลิขสิทธิ์และเกมดิจิทัล

ฮาสโบรเริ่มรายงานรายได้จากธุรกิจลิขสิทธิ์แยกต่างหาก รายได้จากธุรกิจลิขสิทธิ์อยู่ที่ 144 ล้านดอลลาร์ในไตรมาส 3 และอยู่ที่ 417 ล้านดอลลาร์นับตั้งแต่ต้นปีจนถึงปัจจุบัน ซึ่งคิดเป็นประมาณ 11% ของรายได้ YTD ยอดรวม YTD ลดลง 4% โดยมีสาเหตุหลักมาจากรายการลิขสิทธิ์ที่ไม่เกิดขึ้นประจำจากปีก่อนจำนวน 26 ล้านดอลลาร์ และการเปรียบเทียบที่ทำได้ยากกับสถิติที่สูงของการ์ดสะสม Kayou MY LITTLE PONY

Exodus มีกำหนดเปิดตัวในวันที่ 7 เมษายน 2027 ตามด้วย Warlock ในช่วงปลายปี 2027 ฝ่ายบริหารระบุว่า Exodus มีจำนวนผู้เพิ่มลงในรายการสินค้าที่อยากได้ (wish-list) ใกล้แตะ 1 ล้านรายแล้ว และระบุว่ากิจกรรม wish-list และการสั่งซื้อล่วงหน้าเป็นตัวชี้วัดสำคัญก่อนการเปิดตัว

แนวโน้มและประมาณการจากฝ่ายบริหาร

ฮาสโบรปรับเพิ่มแนวโน้มผลประกอบการเต็มปี 2026:

• การเติบโตของรายได้รวมอยู่ที่ 7%–9% ในรูปเงินสกุลคงที่ โดยฝ่ายบริหารระบุว่าการเติบโตตามรายงานจะสูงกว่าประมาณ 1 จุดเปอร์เซ็นต์
• EBITDA ปรับปรุงแล้วอยู่ที่ 1.575 พันล้าน–1.625 พันล้านดอลลาร์
• การเติบโตของรายได้จาก Wizards อยู่ที่ 16%–18% โดยมีอัตรากำไรจากการดำเนินงานประมาณ 44%–45%
• การเติบโตของรายได้จากกลุ่มสินค้าอุปโภคบริโภคอยู่ที่ 1%–3% โดยมีอัตรากำไรจากการดำเนินงานปรับปรุงแล้วอยู่ที่ 8%–10% ซึ่งรวมเงินคืนภาษีศุลกากรแล้ว
• การเติบโตของรายได้จากกลุ่มความบันเทิงอยู่ที่ 3%–5% โดยมีอัตรากำไรจากการดำเนินงานประมาณ 65%

ฝ่ายบริหารคาดว่าผลประกอบการไตรมาส 4 ของ Wizards จะมีค่ารอยัลตีที่สูงขึ้น และมีค่าใช้จ่ายทางการตลาดประมาณ 15 ล้านดอลลาร์สำหรับวิดีโอเกมที่กำลังจะเปิดตัว รายได้ของ Magic อาจลดลงในระดับเลขตัวเดียวต่ำถึงปานกลางในไตรมาส 4 เนื่องจากการเลื่อนรับรู้รายได้บางส่วนไปยังไตรมาส 3 และการขยับสินค้าบางส่วนไปยังไตรมาส 1/2027 หากไม่รวมผลกระทบด้านกรอบเวลาเหล่านี้ ฝ่ายบริหารประเมินว่า Magic จะเติบโตประมาณ 8%–10% ในไตรมาส 4

ฮาสโบรไม่ได้ออกประมาณการที่เป็นทางการสำหรับปี 2027 ในเชิงทิศทาง ฝ่ายบริหารคาดว่ารายได้ของ Magic จะเติบโตในอัตราเลขตัวเดียวระดับปานกลางถึงสูง ส่วนอัตรากำไรปี 2027 ของ Wizards คาดว่าจะอยู่ในช่วง 30% ปลาย ๆ โดยมีสาเหตุหลักมาจากค่าตัดจำหน่ายที่ไม่ใช่เงินสดที่เกี่ยวข้องกับ Exodus และ Warlock

ความเสี่ยงและประเด็นที่ต้องติดตาม

• รายได้รายไตรมาสของ Magic อาจเปลี่ยนแปลงอย่างมีนัยสำคัญขึ้นอยู่กับวันเปิดตัว ความพร้อมในการผลิต และกำหนดเวลาการจัดส่งของผู้จัดจำหน่าย
• อัตรากำไรของกลุ่มสินค้าอุปโภคบริโภคในไตรมาส 4 จะลดลงเมื่อเทียบกับไตรมาสก่อนหน้า เนื่องจากเงินคืนภาษีศุลกากรถูกรับรู้ไปทั้งหมดในไตรมาส 3 ขณะที่ไตรมาสที่สี่มีสัดส่วนของกิจกรรมส่งเสริมการขายและการขนส่งที่สูงกว่า
• ต้นทุนวัตถุดิบที่เกี่ยวข้องกับน้ำมันกำลังส่งผลกระทบผ่านงบกำไรขาดทุน แม้ว่าฝ่ายบริหารจะระบุว่ามาตรการเพิ่มผลิตภาพกำลังช่วยชดเชยแรงกดดันดังกล่าว
• อัตรากำไรปี 2027 ของ Wizards จะเผชิญกับการตัดจำหน่ายจากการเปิดตัวเกมดิจิทัล 2 เกม ฝ่ายบริหารคาดว่า 65% ของต้นทุนที่เกี่ยวข้องกับ Exodus จะถูกรับรู้ภายใน 3 เดือนแรก และ 85% ของค่าเสื่อมราคาภายใน 12 เดือนแรก
• ค่าใช้จ่ายรอยัลตีอาจเพิ่มขึ้นเนื่องจาก Magic ขยายกำหนดการเปิดตัวในซีรีส์ Universes Beyond

ประเด็นสำคัญจากการตอบคำถามนักวิเคราะห์

ฝ่ายบริหารระบุว่าการเติบโตของ Magic ขับเคลื่อนโดยผู้เล่นใหม่ การมีส่วนร่วมที่แข็งแกร่งขึ้น การกระจายสินค้าที่กว้างขึ้น และอุปสงค์ในหมวดสินค้า ผู้เล่นที่เข้ามาผ่านความร่วมมือใน Universes Beyond ยังซื้อสินค้าชุดอื่น ๆ ด้วย ซึ่งช่วยสนับสนุนให้ยอดขายสินค้าในแคตตาล็อกเดิมเติบโตเร็วขึ้น

ชุดหลักทั้ง 6 ชุดของ Magic ในปี 2027 วางแผนให้เป็นการเปิดตัวแบบเต็มรูปแบบพร้อม Commander Decks และผลิตภัณฑ์สำหรับสะสม ฝ่ายบริหารกล่าวว่ากลุ่มผลิตภัณฑ์แบบเต็มรูปแบบสามารถสร้างยอดขายได้สูงกว่าการเปิดตัวที่จำกัดอย่างน้อย 50% แม้ว่าจะไม่ได้ให้ประมาณการในระดับรายชุดไว้ก็ตาม

ในส่วนของกลุ่มสินค้าอุปโภคบริโภค ฝ่ายบริหารกล่าวว่ากลุ่มธุรกิจนี้สามารถเติบโตได้เร็วกว่าระดับเลขตัวเดียวต่ำในระยะปานกลาง โดยไลน์สินค้าปี 2027 รวมถึง Harry Potter, The Legend of Zelda, K-Pop Demon Hunters และสินค้าที่เชื่อมโยงกับความบันเทิงจาก Marvel และ Star Wars เป้าหมายระยะปานกลางของฝ่ายบริหารคือการดันอัตรากำไรของกลุ่มสินค้าอุปโภคบริโภคให้อยู่ในระดับเลขสองหลัก

โครงการปรับโครงสร้างต้นทุนของฮาสโบรสร้างผลประหยัดได้ 105 ล้านดอลลาร์ในช่วง 9 เดือนแรก จากเป้าหมายเต็มปีที่ 150 ล้านดอลลาร์ ฝ่ายบริหารระบุว่าค่าใช้จ่ายในการพัฒนาดิจิทัลที่ลดลงเมื่อเวลาผ่านไปอาจเพิ่มความยืดหยุ่นในการนำเงินไปลงทุนต่อ การลดหนี้ หรือการซื้อหุ้นคืน

บันทึกการประชุมแถลงผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Good morning, and welcome to the Hasbro Third Quarter 2026 Earnings Conference Call.

[Operator Instructions]

Today's conference is being recorded. If for any objections, you may disconnect at this time. At this time, I'd like to turn the call over to Fred Wightman, Vice President, Hasbro Investor Relations. Please go ahead.

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Frederick 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.

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?

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 3 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. 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 arrived in November and early signs are encouraging. It's drawing Star Trek fans who were new to Magic, which is the core thesis behind Universes Beyond. You can see that demand and engagement. Hobbit prerelease 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 bad sales up nearly 30% versus last year.

The clearest proof is the player base. 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 game play, married with best-in-class span 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 with 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. 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 Games Con, we kicked off hands-on previews for Exodus and confirmed in April 7, 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 #1 most wishlist 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. 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 EV initiative is a proof point. Retail sales grew nearly 30%, while we spent 1/3 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 #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. What connects to all 5 strategies is the same asset-light model, and 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, and 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're 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 Spiderman 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 lists. We're entering the holidays with momentum, especially in our focused GEM Squared categories. Those parts have been toy industry that are gamified, entertainment-driven, multi-purchase and multigenerational.

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. Licensing extends our brands through great partners who bring their own capital, and our toy and game business has grown 4 quarters in a row. 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. 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 3 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 third quarter was $1.6 billion, up 15% year-over-year. Adjusted operating profit was $541 million, plus 52%, with an adjusted operating margin of 33.9%, up 830 basis points unfavorable business mix, 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. Through the first 9 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%. 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 9 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. 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 the 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 continued 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. 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. Through 9 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. 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 onetime tariff refund recognized in Q3. We also entered 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 related 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, 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. 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. 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 nonrecurring items across several licensing agreements in the prior year, as well as tough Kayou MY LITTLE PONY trading cards 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. 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 fourth quarter 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 third quarter, shifts out of our fourth quarter 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.

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. Entertainment segment revenue is now expected to grow 3% to 5% and 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 is 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.

And finally, we remain firmly committed to our dividend. 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. 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 2 video games scheduled for next year, Exodus and Warlock, we expect the noncash 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. 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. 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. As we wrap up, Q3 was a quarter of execution. Wizards is scaling profitably and doing it at a size that was not possible 2 years ago. Consumer Products has delivered 4 quarters of revenue growth and has turned the corner on margin with the underlying improvement holding up even before the tariff recovery. 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. And with that, I'll turn it back to the operator for questions.

Operator

[Operator Instructions]

And the first question today comes from the line of Stephen Laszczyk with Goldman Sachs.

Stephen Laszczyk

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. 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 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?

Chris Cocks

Sure 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. 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. and back list continues to impress with its total number of sales. And I think it's a combination of 3 or 4 things.

First and foremost, it's new player growth and player engagement. The Hobbit prerelease was one of the biggest we've ever had our total number of players who are engaged -store play, which is probably our best kind of proxy for actual engagement is at record 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. 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.

Magic is 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 multi-purchase and multigenerational. And I think trading cards over the last year have emerged as the #1 category in toys and games, I think they're actually bigger than building blocks now. and we see that as a generational structural shift and not just as kind of like a onetime thing.

Gina Goetter

Can I add more fun fact? 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 fourth quarter has already surpassed what we saw in 2025. So to the point of like all of the engines are continuing to hum. We've got momentum across our front lines. We've got momentum across the backlist. And that's going to continue as we move into next year.

Chris Cocks

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, it's going to do about and maybe even more lifetime than Lord of the Rings will do, 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%, 50% less than what a comparable more full-featured relief to do. 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.

I think the second part of your question was what gives us 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. And we have some product in 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 for Q4. Now it will probably be down, call it, low single digits, mid-single digits. But barring that, it would have been up around 8% to 10%. And so instead, you're going to see a big growth like you had a 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 and we expect the momentum to carry forward in 2027 with continued growth on the back of all those factors.

Stephen Laszczyk

That's great color. Very helpful. I can leave it there and pass it on.

Operator

Our next question is from the line of James Hardiman with Citi.

James Hardiman

So Chris, you just gave us a lot to chew on there in that last little follow-up. 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. 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. Just want to make sure I have all those moving pieces, right, because certainly, one of the big questions we're getting a fourth quarter that was worse than sort of where the Street was thinking about it, just need to make double-check that.

Chris Cocks

Yes, you totally captured it, James, I think the bottom line on Wizards is we manage the game for the fans and not for quarterly results. Like 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. And I think the honest answer also is we're chasing demand.

Like we're going to be opportunistic about when we supply. Our supply chain team is doing a great job. They're helping like chase one of the hottest categories in toys and games. And those 2 factors, occasionally, we're going to have a quarter that's down modestly. But I think you can count on the fact that, that's not a demand signal. That's just the timing of when we ship and the 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.

Gina Goetter

Yes, the add I'd have kind of quantitatively, when we were sitting in July doing earnings and looking at our Wizards back half, we have thought that it would be up collectively, call it, low single digits. 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. To Chris' point, like there are things that can shift meaningful revenue as we're seeing, like 1 week can make a difference, a meaningful difference in the quarter.

And I think you've got that compounding factor of just when we're launching our first set in and now reality fracture of how much was shipped that first week that just take 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 to understand what's signal and what's noise here for sure.

Gina Goetter

Yes. We were staring at the same math ourselves as we were prepping and we knew that was going to be the top -- one of the top questions.

Chris Cocks

So did we answer both your questions?

James Hardiman

So actually I did have a second question on sort of margins, but it's the same 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 were pushing nearly 50% year-to-date. Obviously, you've talked about that being in the high 30s next year.

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 onetimers because maybe that's the new normal. But 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've laid out, obviously, video games and some of the other, if you want to call them, idiosyncratic factors. Maybe help us think through sort of core versus other items in the context of 2027 and beyond.

Gina Goetter

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, 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. 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 we'll 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.

And remember, as we've talked about Exodus, now we have the launch date of Exodus being April 7. And the first 3 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% of that cost come through 85% of the depreciation hits within the first 12 months. So we'll then pick up some to Exodus as we go through the balance of the year and then we get -- we've got Warlock that's coming kind of in the back half. So that's probably the single biggest atypical thing in '27 that will weigh on margins. Everything else, it puts and takes. We're going to royalty expense might be a little bit heavier just given our UB set releases, but that's within the realm of reason. 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.

Operator

Our next questions are from the line of Xian Siew with BNP Paribas.

Xian Siew Hew Sam

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 via UB or something else and then kind of staying and maybe spending more. Curious on that.

Chris Cocks

Yes, for sure. I think the best proxy for that is backlit sales. And 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 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 some Marvel fans, Avatar fans, turtle fans, Star Trek fans, and they decide that they really like this game and then they go and buy more sets and not just the Star Trek that they go and buy a reality fracture.

They'll go by Noctis, which is our first set -- our first premier set next year and 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. And occasionally, they'll put the game down for maybe a year or 2 because they have a life stage, but then they come back. So Magic is a really special game. It's one that we don't measure retention in days and months. We really measure it in the years 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 a 35-year history.

Gina Goetter

And maybe one other point of fact -- when you look at our backlist sales -- sorry, for this last quarter, to Chris' point of like the people coming in, playing the game and sticking our largest sets that sold for backlist in terms of distribution with foundation, Final Fantasy and believe it or not, Lord of the Rings. 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. Is that '23? 23.

Chris Cocks

Yes. Sorry, you had question 2?

Gina Goetter

You had 2 questions. Yes, we're excited about that

Xian Siew Hew Sam

No, 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. 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 of the tentpole sets, scaling supply, you've grown distribution. So I don't know, it sounds like you've -- fuller set more supply, higher distribution, higher player count. It sounds like it's still setting up quite strong for '27. And any kind of further thoughts on that?

Chris Cocks

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

Operator

The next question is from the line of Arpine Kocharyan with UBS.

Arpine Kocharyan

And thanks, Chris, for that clarification. That was going to be my follow-up question to you because as we think about Exodus absolutely add to the top line. 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? And then I have a quick follow-up.

Chris Cocks

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. In through third quarter of 2026, we've seen about a 38% 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, like Magic is available now in close to 40,000 doors. And that's just a testament of more people were 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 care for or a Smith, or a MAX boarding house style, we see a lot of upside there.

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.

Arpine Kocharyan

That's very helpful. And just to switch to Consumer Products, just because we're in the back half of the year and holiday 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? And just for housekeeping and math purposes, what's your as reported implied revenue guide, is it around 1 percentage better than constant FX of 7% to 9%? Am I calculating that correctly?

Gina Goetter

Yes. Yes, you're calculating that correctly. On -- 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. 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 shelf set timing changing, replan orders were stronger in fourth quarter last year.

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.

Operator

The next question is from the line of Eric Handler with ROTH Capital.

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 frontline versus backlist versus secret lair? And how has that changed, like, let's say, going back 2 years -- 2, 3 years?

Gina Goetter

Good morning, Eric. Yes, we -- thank you for the question. We typically don't provide those levels of splits. It's suffice it to say, just given kind of how our frontlist is stacked. The majority of our revenue comes from the front list. The growth rates, as Chris was saying, like 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 front list.

Eric Handler

Okay. That's helpful. And then there has been a lot of concern, 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 4Q product line?

Gina Goetter

Yes. We're continuing to see a pretty resilient consumer especially given how we've shifted our portfolio and our portfolio mix to those Gem-squared categories, we're definitely seeing momentum there. So there's nothing that we see going into the holidays that has us concerned about the consumer.

Operator

Our next question is from the line of Anthony Bonadio with Wells Fargo.

Anthony Bonadio

I wanted to ask about 27 sets and specifically Marvel Darko. I know you guys sort of 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 maybe more broadly, just how you're thinking about the quality the 27 sets you've announced so far versus what you put out this year?

Chris Cocks

Well, I think a couple of things. [ Darko ] 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. 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. I think fans will be excited by it. It will -- like 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. 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 you and all of the analysts should also be thinking about is the composition of the sets. So this year and for the last couple of years, we've had sets that have had Commander Decks in them, some sets that haven't had Commander Decks and 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 6 major sets will be full sets. They'll have all the Commander Decks and all the collectible products associated with them. And 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. 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. 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.

Anthony Bonadio

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

Chris Cocks

Well, I think the biggest thing that we're looking for is kind of wish list and preorder activity. And on which list so far, so good, it's approaching 1 million wish lists, which based on what we're benchmarking from releases over the last couple of years, that's benchmarking pretty favorably. 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, 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.

Operator

The next question is from the line of Gerrick Johnson with Seaport Research.

Gerrick Johnson

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'm saying that, that's just in toy and game, yes. yes. And the trading cards would have been kind of up high single digits, low double digits numbers. Yes. there's a little bit of a timing lag of when we're doing this call and we'll see final September results come in actually today. So maybe when we talk later on today, Gerrick, we'll have some more additional information.

But overall, categories we're 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'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 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 2 channels and what maybe the margin differential might be. But also, the lag between when you recognize revenue and when perhaps the hobby shop realizes retail sale?

Chris Cocks

Gerrick, we use distribution quite extensively for both channels. We do do direct for some. But I would say the vast mass vast majority of what we do is through distribution. 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 U.S., 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's still like 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 products anywhere from -- on the low side, 2 weeks, on the high side, 6 weeks before a major release. And 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.

Operator

Our next question is from the line of Andrew Didora with Bank of America.

Andrew Didora

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. 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? 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 like the new licenses that we have for 2027 alone, we'll start shipping Harry Potter at the very tail end of this year. 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. We'll have 3 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.

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 the movie, the new Harry Potter series, which I got -- I was lucky enough to do a tour of the set as 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. 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. 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.

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's great color. Just a quick follow-up. I know you spoke in your prepared remarks about your spending curve being torque in your favor. I think the CapEx guide this year was $225 million. 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?

Gina Goetter

Got it. Yes, 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've been capitalizing that, that will come directly out of that $225 million of dollars that we were using. 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.

Operator

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.