Funko, Inc. Q1 FY2025 earnings call

• Context: Came into 2025 with a strategy to set a stronger foundation, diversify into sports, gaming, music, and improve retail opportunities. - International performance: Funko is gaining share internationally, outpacing the broader toy market; expanded global footprint with stores in UAE, China, and Philippines. - Tariff mitigation: Paused most U.S. bound orders from China, accelerated sourcing diversification to Vietnam, Cambodia, etc., implemented cost discipline measures including workforce reduction, renegotiated freight rates, and rationalized SKUs. - Sports and gaming: Launched Pop! Yourself at NBA All-Star Weekend, expanded into team stores, and announced WNBA Pop! figures. - Direct-to-consumer: Fan Rewards loyalty program growing, Pop! Yourself and customer data platform driving profitability and advocacy.

For the first quarter, total net sales were $190.7 million, within guidance. Direct-to-consumer sales comprised 22% of gross sales. Gross profit was $76.9 million, equal to a gross margin of 40.3%. Adjusted net loss was $17.8 million or $0.33 per share, and negative adjusted EBITDA was $4.7 million, both better than expected. Net inventory was $87.7 million, down from $92.6 million at the end of Q4.

• Withdrew 2025 full year outlook due to tariff policy changes and macroeconomic uncertainty. - Second quarter expected to be negatively impacted by tariffs. - Expect second half of 2025 to improve with full offset of incremental tariff impact via sourcing diversification, price increases, and continued international momentum.

• Macro environment uncertainties impacting business. - Tariff impacts on cost of goods sold and sales disruption. - Supply chain disruptions and consumer behavior changes affecting sales.

Q: Can you offer extra color on mitigation efforts, retailer sentiment, and purchase patterns post-Easter?

A: Pricing was decided in January, retail partners aligned to price point since early January, received support for holding line, deepened partnerships. POS trends in U.S. saw improvement in past four weeks.

Q: Clarity on pricing, margins, and headcount reduction?

A: Pricing decided in January, margins came in above expectations with slight improvements in product margins, inventory reserves, etc. Headcount reduction of 20% mostly implemented, with cost savings showing in Q2 and remaining throughout the year.