Funko, Inc. Q4 FY2025 earnings call

• Participating in culture moments: Being at toy fairs, New York Comic Con, having strong presence in sports, entertainment areas like Zootopia 2, Wicked, and expanding into book talk, anime, video games. - Operational highlights: Launched Pop Yourself in Europe, Biddy Pop rolled out in Walmart, new program Hyperstrike, appointed Andy Adi as chief international officer focused on Asia and Latin America growth.

For the fourth quarter, net sales were $273 million. Gross margin was at 41%. SG&A expenses were $91 million, down 12% from Q4 of last year. Adjusted EBITDA was $23 million, at the high end of expectations.

• 2026 net sales expected to be flat to up 3% year over year. - Adjusted EBITDA guided between $70 million and $80 million. - 2026 gross margin expected 41 to 43 percent, driven by renewal of key licensing agreements with lower minimum guaranteed royalties. - Tariff assumptions remain around 15% for remainder of year, exploring refunds. - Substantial improvement in adjusted EBITDA driven by tariff mitigation strategies, renewal of licensing contracts, and growth initiatives like Biddy Pop and Pop Yourself.

• Tariff rates could change, currently assuming around 15% but unsure. - Potential impact of oil prices on shipping costs.

Q: Please describe the shape of the flat to plus 3% guidance past Q1. Should it be pretty consistent throughout the year? And what gets you to the top versus low end of that guide?

A: It should be pretty consistent throughout the year. Q2 to comp up a bit over last year, steady growth in Q3 and Q4.

Q: To what extent does Funko view original content creation as a growth driver? How much does the company plan to invest in original content? And how does AI play into this strategy?

A: Viewed as long-term growth driver. Takes time to develop content. AI seen as tool for efficiency. Rely on licensor partners for content development.

Q: Does Funko need to use any of its extended credit agreement in 2026 or will the company continue to pay down debt like they did in Q4?

A: No, don't expect additional borrowing, managing on operating cash flows, plan to make incremental debt paydowns.

Q: Can you break out the POS trends and inventory restocking domestically versus Europe? And if you saw any noticeable trends, positive or negative as the quarter progressed? What about so far during Q1?

A: Continued double digit growth in POS sales in Europe. In U.S., improving trend into Q1. Retailer inventory in healthy place.

Q: Within the 2026 guidance, what would you highlight as the key initiatives to both drive top-line results and margin versus 2025?

A: Key initiatives include strong entertainment slate, Biddy Pop, international growth, new products, World Cup lineup, pop mystery products. Margin driven by price adjustments, renewal of licensing contracts, monitoring tariff and oil price impacts.

Q: Can you quantify the tariff impact you experienced in 2025 and what incremental pressure you expect in the first half of 2026?

A: In 2025, total tariffs and duties close to $40 million, half related to IEPA tariffs. Unsure about incremental pressure in first half of 2026.

Q: To what extent has Funko signed new or expanded IP partnerships ahead of the relatively strong film slate in 2026?

A: Renewed licenses with major studios. Focus on net new white space areas like creators, appointed Reid Dutcher as board member.

Q: The whole of South Africa would love it if you would make Funko Pops of the Springbok rugby team.

A: Will look into it.