Funko, Inc. Q1 FY2026 earnings call

• Q1 saw execution of the 'make culture pop' strategy with involvement in K - pop Demon Hunters, Stranger Things final season, One Piece, Star Wars, and Michael Jackson moments. - Creatively, Bitty Pop and Demon Slayer's ink paint deco were examples of new products. - Commercially, had pop yourself experiences at WrestleMania and Inter - Miami Stadium, and LoungeFly launched Swarovski collection, new fig girl, and bag charms. - New management: new head of marketing and brand, Andy Adi as chief international officer touring Latin America and Asia. - Focus on expanding into older Disney films and lounge fly related to Disney classics.

Q1 sales were up 5%. The core collectibles business was up 17%. Gross margin was the highest ever at 44%, driving an adjusted EBITDA of $11 million. For LoungeFly, fees were cut by 50% so sales will be down this year, but they're doubling down on wearable storytelling, expanding styles beyond the iconic mini backpack, doubling down on accessories like bag charms and pins (double digit growth), and expanding reach with a new diffusion line for Gen Z.

• Q2 guidance: sales up low single digits to mid single digits, adjusted EBITDA between $5 - $10 million. - Full year guidance: sales flat to up 3%, adjusted EBITDA between $70 - $80 million. - Favorable current tariff rates, but watching oil prices; reaffirmed full year guidance.

• Uncertainty on timing of obtaining tariff refunds. - Watching oil prices, not yet negatively impacting but too soon to say.

Q: POS globally was up 6% in Q1, wholesale channel up 12%, by territory US up 6% and Europe up 28%?

A: Yes, very healthy trend.

Q: What level of upside could we see from potential refunds and tariffs?

A: Paid approx $20 million in IEPA tariffs, taking steps to obtain refund, uncertain on timing, exploring monetization options.

Q: Talk about gross margin drivers for Q1 and Q2?

A: Reduction in discounting and promotional activity, renewed licensing agreements, channel and sales mix; guidance 42 - 44% for rest of year.

Q: Future Funkos excited about?

A: Pop Mystery lineup, new categories in book talk and romanticy.

Q: Expanding into older Disney films?

A: Constantly thinking of ways to bring Disney characters to life, core to portfolio.

Q: Retail footprint expansions?

A: Working on revitalizing space with FAO Schwartz in NY, testing pop yourself kiosk experience with partners later this year.