Deborah M. Thomas
Executive Vice President and Chief Financial Officer at Hasbro
Good morning, everyone. On behalf of Hasbro employees globally, I would like to thank Rich for stepping up at this time for us, our Board, our shareholders, and our Company. The past couple of weeks have been difficult for all of us at Hasbro. Brian is missed but the impact he made is unmistakable. We heard from so many of you remarking on Brian's leadership and your positive personal interactions with him. Thank you for sharing these memories with us. Brian empowered me and the executive team to run Hasbro and together we are and will continue doing that. Brian was proud of our third quarter results. They showcase the strength of Hasbro's unique business model, with growth in Entertainment and at Wizards in both tabletop and digital gaming. Our results also show the strength of our global teams as they expertly manage through supply chain disruptions and position us for growth in the fourth quarter and for the year. Brian believed, as we do, in investing to grow, to unlock Hasbro's full potential and create value for our shareholders. Our priorities remain the same, and we are executing against those priorities.
The quarter highlighted our focus on de-levering our balance sheet, as we repaid an additional $400 million of debt, bringing our year-to-date total to $972.5 million of long-term debt retired. We also paid the dividend, which has been maintained following the eOne acquisition and throughout the pandemic. At quarter end, cash on hand was $1.2 billion and we continue to make significant progress toward our goal of returning to our target of 2 times to 2.5 times debt-to-EBITDA and maintaining our investment-grade rating.
For the quarter, revenue grew 11% versus last year, and 6% versus pro forma 2019. MAGIC: THE GATHERING, MY LITTLE PONY, PEPPA PIG and PJ MASKS were among our largest revenue gaining properties globally in the quarter, further supported by significant entertainment deliveries. These include My Little Pony: A New Generation for Netflix, Yellowjackets for Showtime; Fear the Walking Dead for international markets; Come From Away and Finch for Apple TV, as well as The Rookie for ABC.
Entertainment segment revenues grew 76%, with gains in scripted and unscripted television, live action and animated film, and animated content. This performance has us well on the way to reach 2019 levels of Entertainment revenue for the full-year, excluding the Music business over the second half of the year. The segment delivered adjusted operating profit of $42.1 million, or 12.9% operating profit margin, up from an adjusted loss of $3.6 million last year.
We're developing over 200 projects across film and TV, including content for over 30 Hasbro brands for the coming years. Year-to-date through September, we've invested approximately $526 million in content development and continue to anticipate a full-year spend range of $675 million to $750 million.
For the fourth quarter, we have significant deliveries planned, including Graymail, a new scripted program for Netflix; additional episodes of The Rookie and Yellowjackets; and the films Clifford the Big Red Dog and Mrs. Harris Goes to Paris.
Wizards of the Coast and Digital Gaming segment revenues increased 32%. Wizards had a great third quarter and we expect the business to deliver its goal of doubling from its 2018 revenue by the end of 2021, two years ahead of plan. MAGIC: THE GATHERING and DUNGEONS & DRAGONS led this growth both in the quarter and over the past few years, with gains in both tabletop and digital gaming revenues. It was the second largest quarter in Wizards' history, behind only Q2 of this year. Among the MAGIC releases in the quarter, our third quarter premier set, Adventures in the Forgotten Realms, launched July 23 and became our first co-branded premiere set. Fans of both MAGIC and DUNGEONS & DRAGONS embraced the product, and it's on track to be our best-selling summer release of all-time. Importantly, our digital investments are driving revenue growth. Magic: The Gathering Arena mobile continues to grow. It's a meaningful source of new players, and our releases were bolstered by their engagement in the game. Our licensed digital gaming business also delivered strong growth in the quarter. Operating profit in the segment increased on the higher revenues. Investments in future game development and support of new game launches, as well as increased digital gaming depreciation, reduced operating profit margin from last year.
Consumer Products revenue declined 3%. There is strong demand for our brands but we were unable to fulfill approximately $100 million of product we had orders for during the quarter. Including these missed shipments, revenue would have increased 5%. In September, we shipped the most volume ever domestically in a single month, and through today, we have shipped the majority of what we didn't deliver in the third quarter. This achievement is remarkable given it was accomplished in the middle of a global pandemic with unprecedented supply chain challenges across the globe.
As we shared last quarter, we took steps early to mitigate risk, including activating alternate ports in China and the US, expanding our shipping capacity, working closely with customers to provide support where we can and prioritize supply based on inventory and customer needs, and in certain instances using airfreight to ensure delivery. The team has done an amazing job and continues to work nonstop. Global point of sale declined mid-single digits. As we improve our in-stock levels, and see the effects of a significant increase in advertising spend and out of aisle execution, we expect significant improvement.
Within Consumer Products, Hasbro Gaming revenues grew in the quarter, led by demand across our gaming portfolio, and Emerging Brands revenue was up, fueled by our toy and game launches of PEPPA PIG and PJ MASKS. In our Franchise Brands, Rich already spoke to the success of MY LITTLE PONY and how this positions us well in the relaunch of the brand. TRANSFORMERS revenue increased in the quarter. The final chapter of the War for Cybertron Trilogy launched July 29 on Netflix driving continued demand in our Generations Fan product. We also celebrated a new milestone for the TRANSFORMERS Franchise, when Universal Studios Beijing opened Transformers: Metrobase, the first-ever TRANSFORMERS-themed land. In partnership with Paramount, production on Transformers: Rise of the Beasts continues for theatrical release next summer.
Partner Brands revenue declined, but Hasbro products for the Marvel portfolio grew, including Marvel Legends and the new preschool product line launch supporting Spidey and His Amazing Friends. We also introduced new products to support Marvel Studios' Disney+ series and the theatrical release of Marvel Studios' Shang-Chi and the Legend of the Ten Rings. Ghostbusters revenue increased with the primary launch of the toy line in August for the feature film Ghostbusters: Afterlife from Sony Pictures, coming to theatres November 19.
Operating profit for the Consumer Products segment decreased $15.8 million, reflecting the lower revenue and incremental expense for freight and related costs. Price increases to mitigate the higher expenses in shipping and input costs went into effect in most markets in August and will be fully implemented for the fourth quarter.
Looking at our overall Hasbro P&L, gross margin, including cost of sales and program amortization, declined 130 basis points. This reflected essentially flat cost of sales dollars. Given favorable mix and growth in Entertainment, cost of sales declined 340 basis points as a percent of revenue. The robust Entertainment revenue growth drove an associated increase in program amortization of 470 basis points.
Product development increased $17 million, led by incremental investments in future tabletop and digital games at Wizards and our ongoing commitment to innovation across the business.
Advertising expense increased $26 million, including promotional activity in support of the My Little Pony movie and advertising behind new Wizards' game launches. We have aggressive advertising plans for this holiday season, shifting more dollars this year into the fourth quarter, to drive point of sale. We will, however, closely match this expense with inventory availability.
Adjusted SD&A increased $35 million and continues to reflect higher expenses as the business returns to pre-COVID levels. This includes higher freight costs, incremental marketing and sales expense, increased depreciation associated with capitalized digital games, and increased compensation. Despite these higher expenses, SD&A remained flat as a percentage of revenue.
The adjusted underlying tax rate for the quarter was 23.4% compared to 19.9% a year ago. The rate is mainly driven by a change in the mix of income. We continue to expect the full-year underlying rate to remain at approximately 21%.
Our balance sheet is strong. In addition to our cash position and lower debt, DSOs were 68 days, a reduction of five days compared to Q3 2020, reflecting both higher revenue and good collections, despite shipping a large volume of product late in the quarter.
Inventory increased slightly year-over-year but declined absent FX. At quarter end, we had less in finished goods on hand than typical, and significantly more in-transit inventory. In general, total transit times have nearly doubled across all lanes and, on certain lanes, transit times are as much as 50 days longer compared to pre-pandemic levels.
Our strong third quarter and year-to-date performance has us on track to meet our guidance for double-digit revenue growth, which we now are expecting in the range of 13% to 16% for the full-year and maintaining an adjusted operating margin of approximately 15%. We have orders to support the high-end of the revenue growth range, but there are supply chain factors out of our control which could impact our ability to fully achieve the upside.
I am incredibly proud of how the organization has come together this year. Despite many obstacles, our results showcase the strength of our business, our strategy, and our team.
Our leadership team is now happy to take your questions.
