FNKO — Funko, Inc.

FNKO Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Sales: $273 million for Q4, up 9% year-over-year, exceeding guidance.
• Gross Margin: 41%, slightly above expectations, marking the seventh out of the last eight quarters above 40%.
• SG&A Expenses: $91 million, down 12% from Q4 2024.
• Adjusted EBITDA: $23 million, at the high end of expectations.

2. Strategic Updates and Business Highlights:

• Product Launches: Successful introduction of KPop Demon Hunters collectibles and Bitty Pop! in Walmart.
• Cultural Engagement: Strong presence at Toy Fairs and Comic Cons, with initiatives like Pop! Yourself launched in Europe.
• New Partnerships: Collaboration with Topps and Fanatics for MLB collectibles; expansion into sports and entertainment IPs.
• International Growth: Appointed Andy Oddie as Chief International Officer to drive growth in Asia and Latin America, capitalizing on cultural trends from these regions.
• Content Creation: Development of original content with Rideback, focusing on storytelling and leveraging AI for efficiency.

3. Forward Guidance and Outlook:

• 2026 Net Sales Guidance: Expected to be flat to up 3% compared to 2025, with core product lines projected to grow.
• Adjusted EBITDA Forecast: Between $70 million and $80 million, driven by improved profitability and cost management.
• Gross Margin Expectation: 41% to 43% for 2026, aided by renewed licensing agreements and tariff mitigation strategies.

4. Bad News, Challenges, or Points of Concern:

• Declining Segment: Loungefly expected to see a decline in sales due to SKU cuts, impacting overall growth.
• Tariff Impact: Total tariffs and duties in 2025 were approximately $40 million, with potential pressures continuing into 2026.
• Market Risks: Uncertainties regarding oil prices and shipping costs could affect margins.

5. Notable Q&A Insights:

• Sales Trends: Consistent growth expected throughout 2026, not reliant on a strong second half.
• Content Creation Investment: Long-term growth driver, but significant capital investment is not anticipated; partnerships with major studios will be key.
• Debt Management: No additional borrowing expected in 2026; the company plans to manage operations with existing cash flows and continue debt paydowns.
• Licensing Agreements: Renewed licenses with major studios for the 2026 film slate, positioning Funko well for upcoming releases.
• Global Opportunities: Interest in expanding into sports collectibles, with inquiries about specific teams like the Springboks Rugby team highlighting the potential for international market growth.

Overall, Funko demonstrated a strong finish to 2025 with positive sales momentum and strategic initiatives aimed at expanding market presence and profitability, despite facing challenges in certain product lines and external market pressures.