Funko Q2 Earnings Call Highlights
Key Points
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- Funko’s second-quarter sales rose 7% year over year, with particularly strong growth in Europe and core collectibles, while Loungefly declined modestly but showed improvement. First-half sales increased 6%.
- Profitability improved significantly: adjusted EBITDA reached $40.9 million versus a $16.5 million loss a year earlier, helped by a tariff-related benefit. Funko raised its full-year adjusted EBITDA outlook to $100 million–$110 million while maintaining its flat-to-3% sales-growth forecast.
- Funko is expanding its faster product-development strategy through an HP additive-manufacturing partnership, new Pop! Mystery formats and additional retail placements, while remaining cautious about tariffs, freight costs and holiday demand.
Funko (NASDAQ:FNKO) reported higher second-quarter sales, improved profitability and a raised adjusted EBITDA outlook as the collectible-products company said its “Make Culture POP!” strategy is gaining traction across regions, product categories and fan communities.
Speaking during a presentation tied to San Diego Comic-Con, Chief Financial Officer Yves LePendeven said second-quarter sales increased 7% year over year, following growth in the first quarter. First-half sales rose 6%.
Growth was broad-based rather than concentrated in one product, region or intellectual property, LePendeven said. U.S. sales increased 3%, while European sales rose 19%. Core collectibles sales grew 9%. Loungefly sales declined 2%, but LePendeven said the result represented an improving trend from the first quarter and reflected better SKU productivity.
Margins and EBITDA Improve
Funko reported a gross margin of 56.6% in the second quarter, compared with 32.1% a year earlier. However, LePendeven said the reported figure included a $25 million credit related to expected tariff refunds and the release of accrued tariffs.
Excluding the tariff-related credit, gross margin was 44.4%, which LePendeven described as a record high for the company and above its prior guidance range of 42% to 44%.
- SG expenses improved by more than 400 basis points as a percentage of sales from the prior year.
- Adjusted EBITDA was $40.9 million, compared with negative adjusted EBITDA of $16.5 million a year earlier.
- Excluding the tariff-related benefit, adjusted EBITDA was $15 million, above the company’s guidance range.
During the quarter, Funko also sold its IEEPA tariff claims with a face value of $22 million for $19 million in proceeds. The company used the funds to reduce debt by $15 million, LePendeven said.
Funko reiterated its full-year net sales outlook of flat to up 3% and raised its adjusted EBITDA guidance to between $100 million and $110 million. LePendeven said the increased EBITDA outlook reflects the $25 million tariff credit recognized in the second quarter and $5 million of improved profitability.
Strategy Centers on Faster Demand Response
Chief Executive Officer Josh Simon said Funko’s strategy is focused on identifying cultural and entertainment demand earlier, converting those signals into products and distributing them through wholesale and direct-to-consumer channels.
“The magic for us is that we’ve really sort of honed that engine of sensing demand, turning it into products, and getting into our fans’ hands in a really repeatable way,” Simon said.
Simon said the company has established teams and processes to secure licenses, design products, manufacture them and move them through retail channels more quickly when unexpected entertainment properties gain popularity. He said the strategy is designed to help Funko respond to demand across movies, television, sports, anime and video games.
The company also announced a formal partnership with HP focused on additive manufacturing under Funko’s Hyper Strike strategy. Simon said the partnership could enable Funko to develop products in weeks rather than the months or years associated with traditional manufacturing processes.
Funko’s first product under the partnership was a WWE and Garbage Pail Kids mashup sold at Fanatics Fest, Simon said. The product sold out at the event. He also cited quick preorders tied to Heated Rivalry, Off Campus and Obsession, as well as a championship five-pack launched after the Knicks won the NBA championship.
New Formats and Experiences
At Comic-Con, Funko launched Pop! Mystery, a blind-box collection format that includes common figures, rare versions and a global one-of-one chase item. Chief Product Officer Husnal Shah said the initial Flora collection expands an original Funko plant-themed Pop! line into the mystery format.
Funko said it is also launching Pop! Mystery collections based on One Piece and Warner Bros. horror properties. Simon said the format could become a platform that extends across entertainment franchises, sports and Funko-owned intellectual property, though he said it is too early to estimate its revenue contribution.
Simon said Funko is seeing continued incremental shelf placement for Bitty Pop!, another extension of its core Pop! brand. The company is also developing roughly half a dozen additional formats that it expects to begin introducing in early 2027 and beyond.
Funko highlighted its Pop! Yourself customization offering, including a Comic-Con-exclusive Spider-Man: Brand New Day experience. Simon said the company plans to test more location-specific versions of Pop! Yourself with retail partners later in the year. He added that Funko expects to announce additional stores where the experience will be available.
Retail Demand, Content Slate and Leadership Addition
LePendeven said the company has visibility of roughly three to four months on orders from wholesale customers and is seeing a return to more normalized seasonal ordering patterns compared with last year. Global wholesale point-of-sale sales increased 6% year over year in the second quarter, while year-to-date POS sales rose 9%, according to Simon.
In the U.S., year-to-date POS sales were up in the mid-single digits, while European POS sales rose slightly more than 20%, Simon said. He added that Funko has secured additional retail displays in about 350 stores across retailers including Smyths, HMV, Gift Universe and independent stores. The company also cited increased Bitty Pop! displays at Smyths and Spider-Man-related placements at Walmart.
Simon said Funko’s top 10 franchises and programs represented about 32% of second-quarter sales, underscoring the breadth of its portfolio. He cited demand for The Mandalorian Grogu, Toy Story 5, Spider-Man, One Piece, Pokémon and sports products, while expressing enthusiasm for Avengers: Doomsday.
The company also named Kristen Hamilton as its new chief commercial officer. Hamilton, who starts Aug. 24, most recently served as senior vice president and head of global e-commerce and direct-to-consumer at Crunchyroll. Simon said she previously spent about 15 years at Hasbro in leadership roles spanning e-commerce, consumer product strategy, transformation, brand management and marketing.
For the second half, Simon said Funko expects core collectibles to continue growing, while Loungefly becomes healthier through improved productivity. He said the company remains cautious about the broader consumer environment and cited tariffs, freight costs, raw-material costs and holiday sell-through as factors that could affect results.
About Funko (NASDAQ:FNKO)
Funko, Inc is a pop culture consumer products company best known for its stylized vinyl figures, apparel, accessories and other licensed collectible goods. The company's signature product line, Funko Pop!, features bobblehead-style figurines that showcase characters from a wide array of entertainment franchises, including film, television, gaming, sports and music. In addition to vinyl figurines, Funko's portfolio encompasses plush toys, action figures, stationery, home goods and novelty items, all leveraging licensing agreements with major global brands.
Founded in 1998 by Mike Becker in Washington state, Funko initially focused on creating nostalgic bobbleheads before expanding its product offerings under current leadership.
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