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- **Strategic Reboot**: New 'Make Culture POP!' strategy drives growth through cultural relevance (K-pop, sports), creative innovation (Bitty Pop!), and D2C expansion (Pop! Yourself).
- **Financial Strength**: Q3 gross margin 40.2%, up 120bp YoY; adjusted EBITDA +23% to $24.4M.
- **Holiday Momentum**: KPop Demon Hunters and Pop! Yourself Europe launches poised for Q4 upside.
- **Risk Management**: Tariff-neutral pricing strategy maintained U.S. demand despite cautiousness.
- **Growth Catalysts**: Anime (30% sales, expanding globally), Bitty Pop! (Walmart's top toy), and AI-powered customization.

**【Management Opening Remarks】**
- CEO Josh Simon emphasized a new strategic focus: the 'Make Culture POP!' initiative, centered on culture, creativity, and commerce.
- Highlighted 1 billion units sold milestone and 27% growth in fan loyalty program membership.
- Announced multiyear renewals with major licensors (Disney, Warner Bros., Universal).

**【CEO Commentary】**
- **Culture**: Expanded into K-pop, sports, and music with partnerships like Netflix's *KPop Demon Hunters* (top presale item) and *The Late Show with Stephen Colbert*.
- **Creativity**: Launched Bitty Pop! (Walmart's 2025 top toy) and Mystery Minis blind boxes; introduced AI-powered Pop! Yourself builder.
- **Commerce**: Expanded D2C with Pop! Yourself kiosks in Europe and U.S.; vending machines planned for 2026.
- Anime segment grew to 30% of sales, with expansion opportunities in Asia and Latin America.

**【CFO Financial Commentary】**
- Q3 net sales: $250.9M (in line with expectations), gross margin 40.2% (vs. 39.7% last year).
- Adjusted EBITDA: $24.4M (vs. $19.8M last year), driven by $12.9M SG&A savings.
- Q4 outlook: Modest sales growth (Pop! Yourself Europe launch, KPop Demon Hunters), 40%+ gross margin.
- Balance sheet: $39.2M cash, $241M debt; refinancing process ongoing.

**【Q&A Highlights】**
- **Retail Trends**: U.S. cautious (tariff uncertainty), Europe strong (POS +10% YoY).
- **KPop Demon Hunters**: Leading holiday season presales, exclusive to Funko and Loungefly.
- **Pricing**: 2025 price increases fully offset tariffs; U.S. unit volumes held steady.
- **2026 Priorities**: Anime expansion, Bitty Pop! scale-up, Pop! Yourself kiosk rollout.


Funko, Inc. (FNKO) Q3 2025 Earnings Call Transcript

- **Revenue Decline**: Q2 net sales fell 22% to $193.5 million due to U.S. tariff disruptions, with 20% workforce reduction and production shifts to Vietnam.
- **Tariff Mitigation Success**: $40 million in incremental tariffs expected to be fully offset in 2025 via price increases and cost reductions, down from $45 million.
- **Back Half Recovery**: Second-half net sales expected to decline high single digits, with Q4 EBITDA margin improving to mid- to high single digits.
- **CEO Transition**: Search for permanent CEO underway, with potential announcement by end of quarter.
- **Liquidity Measures**: Filed ATM to raise $40 million and amended credit facilities to waive financial covenants, supporting refinancing efforts.

**【CEO Summary Section】**
- **Tariff Impact and Mitigation**: Q2 net sales declined 22% to $193.5 million due to U.S. tariff disruptions. The company implemented cost-cutting measures, including a 20% workforce reduction, shifted production from China to Vietnam, and raised prices to offset $40 million in incremental tariffs.
- **CEO Transition**: Interim CEO Mike Lunsford is leading the search for a permanent CEO, focusing on external candidates with a goal to name the successor by the end of the quarter.
- **Back Half Outlook**: Management expects second-half net sales to decline in the high single digits compared to 2024, with adjusted EBITDA margin improving to mid- to high single digits, driven by resumed shipments to direct import customers and price increases.

**【CFO Financial Commentary】**
- **Q2 Financials**: GAAP net loss was $26.7 million, with gross margin at 32.1% (down 990 basis points YoY). Adjusted EBITDA was negative $16.5 million, reflecting tariff-related costs and inventory reserves.
- **Liquidity and Debt**: Cash and equivalents were $49.2 million, with total debt at $256.6 million. The company filed an ATM to raise up to $40 million and amended credit facilities to waive financial covenants for Q2 and Q3.
- **Tariff Mitigation Progress**: The company expects to fully offset $40 million in incremental tariffs in 2025, down from an earlier estimate of $45 million, through price increases, production shifts, and cost reductions.

**【Q&A Highlights】**
- **Price Increases Impact**: CFO Yves Le Pendeven noted no meaningful decline in unit volumes post-July price increases, with e-commerce sales and POS data showing resilience.
- **Order Resumption**: Direct import customer orders paused in April-May resumed in June, with Q3 order visibility improving despite some rollover into early Q3.
- **Liquidity Strategy**: The company is pursuing debt refinancing and ATM equity offerings to bolster liquidity, with a focus on reducing reliance on revolving credit facilities.


Funko (FNKO)-7 Aug 25-2025 Q2 Earnings call transcript

- **International Growth Outpaces U.S.**: Europe POS +8% vs. 1% industry, new Southeast Asia store
- **Tariff Mitigation Success**: 90% China manufacturing shift to Vietnam/Cambodia by year-end
- **Cost Efficiency**: 20% workforce reduction, 100% freight locked in
- **Price Stability**: Maintained $14.99 Pops! despite tariffs, enhanced product quality
- **Financial Resilience**: $25.9M cash, $90.9M liquidity, on track to offset $45M tariffs
- **Key Risk**: Withdrew 2025 guidance due to tariff uncertainty, 'going concern' noted in filings

**【CEO Opening Remarks】**
- Q1 2025 net sales: $191 million (in line with guidance)
- Gross margin: 40.3% (above expectations)
- Adjusted EBITDA: -$5 million (better than forecast)
- Key international growth: 8% POS in Europe's G5 markets vs. 1% industry growth
- New global expansions: UAE, China, Philippines (first Southeast Asia store)
- U.S. challenges: Tariffs, selective consumer behavior impacting Q2
- Withdrew 2025 full-year outlook due to tariff uncertainty

**【Tariff Mitigation Strategy】**
1. **Supply Chain Diversification**
- Reduced China manufacturing for U.S. from 33% to ~5% by end-2025
- Accelerated Vietnam, Cambodia sourcing
2. **Cost Optimization**
- 20% global workforce reduction (majority implemented)
- 100% ocean freight rates locked in
- SKU rationalization to eliminate low-margin items
3. **Pricing Strategy**
- Maintained $14.99 Pops! price despite tariffs
- Invested in quality (sculpting, packaging) to enhance fan value

**【CFO Financial Highlights】**
- Q1 2025 Results:
  - Net sales: $190.7 million
  - Direct-to-consumer: 22% of sales
  - Gross profit: $76.9 million (40.3% margin)
  - Adjusted net loss: $17.8 million (-$0.33/share)
- Balance Sheet:
  - Cash: $25.9 million
  - Debt: $202.2 million
  - Inventory: $87.7 million (down 5% QoQ)
  - Liquidity: $90.9 million
- 2025 Outlook:
  - $45 million tariff impact to be offset via:
    - Sourcing diversification
    - Price increases
    - Cost reductions
  - U.S. direct imports resuming with retailers
  - International sales >33% of total

**【Q&A Key Takeaways】**
1. **Retailer Sentiment**
- U.S. POS improving: +low-single digits in last 4 weeks vs. -mid-single digits YTD
- Europe: +high-single digits vs. 1% industry growth
2. **Pricing Strategy**
- $14.99 Pops! price supported by retailers as competitive value
- Fan experience enhancements justify price point
3. **Cost Savings**
- 20% headcount reduction to deliver annualized savings
- Full impact visible in H2 2025
4. **Tariff Disclosure**
- 10-Q includes 'going concern' note
- In discussions with lenders for covenant relief
- Confident in resolving debt issues

Funko, Inc. (FNKO) Q1 2025 Earnings Call Transcript

- **Revenue Resilience**: Stabilized at $1 billion with 2024 gross profit and EBITDA up $100 million.
- **Q4 Strong Finish**: $294M sales (1% YoY), 42% gross margin, $26M EBITDA beat.
- **Growth Drivers**: Sports (185% Pop! Yourself growth), Bitty Pop! (83% YoY), and DTC (29% of sales).
- **Challenges**: 20% tariffs on Chinese imports, U.S. consumer softness, border disruptions.
- **2025 Outlook**: Modest sales growth, EBITDA slightly lower, with H2 acceleration.

**【CEO Summary Section】**
- **Revenue Stabilization**: Achieved $1 billion in net sales for 2024, with gross profit and adjusted EBITDA growing by over $100 million.
- **Q4 Performance**: Delivered $294 million in net sales (1% YoY growth), with direct-to-consumer (DTC) sales at 29% of total. Gross margin reached 42%, and adjusted EBITDA was $26 million, exceeding expectations.
- **Key Growth Areas**: Sports, Pop! Yourself (185% YoY growth), and Bitty Pop! (83% YoY growth). Expanded into sports memorabilia ($35 billion market) with NFL and NBA partnerships.
- **Strategic Initiatives**: Launch of Bitty City! at New York Toy Fair, DTC expansion, and fan loyalty program (280,000 members, 26% of US sales).
- **Leadership**: Added executives with expertise in sports, brand positioning, and sales operations.

**【CFO Financial Commentary】**
- **Q4 Financials**: Net sales $293.7 million (1% YoY), DTC up 20%. Gross margin 42.4% (480bps improvement). Adjusted net income $4.4 million, EBITDA $26.3 million.
- **Full Year 2024**: $1.05 billion net sales, EBITDA $94.7 million (vs. -$11.8 million in 2023).
- **2025 Outlook**: Modest sales growth ($1.05B-$1.102B) and EBITDA ($80M-$100M), with challenges from 20% tariffs on Chinese imports and U.S. consumer softness.
- **Mitigation Strategies**: Supply chain diversification, pricing adjustments, and DTC expansion.

**【Q&A Highlights】**
- **Europe Momentum**: POS up 17% YoY, driven by strong retail partnerships.
- **U.S. Challenges**: Mass retailers reduced orders, U.S. POS up 1% YoY, with cautious consumer spending.
- **Tariff Impact**: 20% tariffs on Chinese imports, affecting 1/3 of product costs. Border disruptions delaying Pop! Yourself shipments from Mexico.
- **Back-Half Growth**: Expect acceleration in H2 2025 with strategic initiatives like regional sports capsules and international DTC expansion.
- **Margin Profile**: Sports products similar to mainline margins, Pop! Yourself higher margin due to licensing fees on accessories.

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