Super Hero Squad Rumorbuster

Tuesday, August 5, 2008

Marvel Financials for Q2

Since a fair number of people are posting about Marvel's earnings we figured what the hay, we'll post a link to them. We might do a more comprehensive break down of the release later, but for now, interesting tidbits include:

- "Licensing Segment net sales increased to $94.9 million in Q2 2008 from $65.6 million in Q2 2007. The increase was driven primarily by the recognition of revenue previously deferred due to earliest-in-store restrictions related to the Iron Man and The Incredible Hulk feature films."

Marvel's Licensing Segment is where they have chosen to record income from the Hasbro deal, and while this is a recent decision, the numbers from previous quarters have been altered to reflect this change in treatment (it's like having a fruit company where you report the money you have tied up in apples and oranges on different lines. If next year you combine apples and oranges in one line, it produces anomalies, like your apple and orange assets sinking to 0, while "fruit" assets skyrocket. You can better represent this to shareholders by explaining in notes that last year's "fruit" was so much, and that it's really a combination of the two previous years categories apples and oranges).

That allows us to see, in part, the increase in overall licensed product sales from 2008 (Iron Man, Hulk) and 2007 (Spider-Man, Fantastic Four), but it's not conclusive.

Another interesting bit?

- "Revenue from Marvel’s film production segment commenced in the second quarter with the release of Iron Man and The Incredible Hulk. We’re very pleased with the success of these films which have generated $817 million in global box office receipts -- $571 million from Iron Man and $246 million from The Incredible Hulk -- with Iron Man still to open in Japan"

Now, of that, they only acknowledge 29 million give or take on the balance sheet, but that's because their distributors have different revenue recognition (aka, money counting) timelines, so that 29 or so million is just foreign pre-sales. That also means that Q3's figures will likely have revenues from those films and we'll finally be able to see how much of that $817 million (and counting) makes it back to Marvel.

The other interesting thing to note is that World War Hulk was wrong, and Iron Man can beat the Hulk. It would be interesting to know how much of that disparity in box office receipts has to do with (1) the previous Hulk movie and resultant bad press, (2) the tremendous critical acclaim Iron Man received (93% at Rotten Tomatoes, 92% for the top critics) compared to Hulk (68% at Rotten Tomatoes, 58% for the top critics), and (3) the word-of-mouth/viral campaign surrounding Iron Man and the Nick Fury connection. But we'll likely never get that type of information. Oh well.

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