Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Funko Inc (FNKO, Financial) delivered net sales of $191 million, in line with guidance.
- Gross margin was 40%, and adjusted EBITDA came in at a negative $5 million, both ahead of expectations.
- International performance continues to be a strength, with Funko gaining market share and outpacing the broader toy market in Europe.
- Funko is expanding its global footprint with new licensed and partner stores in the United Arab Emirates, China, and the Philippines.
- The direct-to-consumer business remains a critical pillar, with the fan rewards loyalty program continuing to grow and drive profitability.
Negative Points
- Funko Inc (FNKO) is withdrawing its 2025 outlook due to complexities and uncertainties related to global tariffs.
- The company faced intensified pressure in the US from tariffs and more selective consumer behavior.
- Shipping delays on products crossing the Mexico border hampered sales of Pop Yourself in Q1.
- Total debt increased by $19.4 million from the end of the previous quarter, reaching approximately $202.2 million.
- Funko implemented a 20% reduction in its global workforce as part of cost discipline measures.
Q & A Highlights
Q: Can you offer any extra color on the mitigation efforts Funko is taking in response to the current tariff situation, particularly regarding price adjustments and retailer sentiment?
A: Cynthia Williams, CEO: The pricing decisions were made back in January, allowing us to discuss them with retail partners since the New York Toy Fair. Retailers view our products as a fantastic value in pop culture collectibles, priced below competitors. The tariffs led to deeper partnerships with retailers, and we decided to hold the line on pricing at $14.99, the same as our exclusives, while investing in quality improvements.
Q: Can you discuss the POS trends you're seeing so far in the quarter and what you're looking for over the next few months?
A: Eve Le Pendervan, CFO: In the US, POS has been down mid-single digits year-to-date but improved to low single-digit growth in the past four weeks. In Europe, which is over a third of our business, we continue to see high single-digit year-over-year comps, gaining momentum.
Q: Were the price increases planned for the year, or were they in response to the original 20% tariffs?
A: Cynthia Williams, CEO: The price increases were planned for the year and not in response to the tariffs. We had already communicated these changes to our retail partners.
Q: Did margins come in above expectations, and what were the drivers?
A: Eve Le Pendervan, CFO: Yes, gross margin came in slightly above the high end of our guidance range. There wasn't much tariff impact in Q1. Improvements were seen across product margins, inventory reserves, and discounts, with no major driver to call out.
Q: Regarding the 20% headcount reduction, how should we think about its impact moving forward?
A: Cynthia Williams, CEO: The reduction was challenging but necessary. Most of it has already occurred, with some attrition and planned hires not being backfilled. The cost savings will be reflected throughout the remainder of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
