We are recommending a prudent approach to Funko (NASDAQ: FNKO ) shares given the limited visibility in the interim, lack of strategy communication, and increased margin pressure dynamics. Although we believe Funko has done well in establishing a well-known brand, the persistentWe are two Andres & Angel, two professionals dedicated to U.S. investments and the two analysts behind this profile. We started this profile to uncover more remote investment ideas that are usually overlooked by traditional investors. ...

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Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud or unlawful business practices involving Funko, Inc. and its officers or directors [1] Group 1: Company Developments - Funko announced the departure of its CEO, Cynthia Williams, effective July 5, 2025, which led to a significant stock price drop of $0.51 per share, or 10.49%, closing at $4.35 per share on July 7, 2025 [3] Group 2: Legal Investigation - The investigation by Pomerantz LLP is focused on whether Funko and its executives have engaged in any fraudulent activities that could affect investors [1] - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4]

Core Insights - Funko has appointed Josh Simon as the new CEO, who has a strong background in entertainment and consumer products, previously working at Netflix, Disney, and Nike [1][5] - Simon's experience includes overseeing global merchandise and live experiences at Netflix, where he managed products for major titles and launched the company's first e-commerce platform [2][4] - Funko aims to leverage Simon's expertise to maximize growth opportunities and expand its business in the pop culture sector [5] Company Overview - Funko is a company focused on fandom and pop culture, with a diverse portfolio that includes brands like Funko, Loungefly, and Mondo, covering vinyl figures, collectibles, fashion accessories, and more [1] - The company is looking to build on its existing fan base and enhance its connection with lifestyle brands [5] Leadership Transition - Josh Simon succeeds interim CEO Mike Lunsford and will also join the board of Funko [4] - Funko's chairman, Charles Denson, expressed confidence in Simon's leadership abilities and his potential to drive the company's growth [5]

Core Insights - Funko has experienced a significant decline in its business, moving from a dominant position in collector culture to facing substantial challenges in its latest earnings report [1][2] - The company's second-quarter 2025 report revealed an adjusted net loss of $0.48 per share, which was worse than the expected loss of $0.44, and revenue fell to $193.5 million, a 21.9% year-over-year decline [2][3] - Gross margin decreased sharply from 42% to 32.1%, and adjusted EBITDA was negative at $16.5 million, indicating worsening profitability [2][3] Financial Performance - Core Collectibles sales dropped approximately 16%, Loungefly-branded products fell nearly 23%, and the "Other" category saw a staggering decline of almost 79% [3] - The overall decline in sales suggests issues beyond macroeconomic factors, pointing to brand fatigue and market oversaturation [3] Market Sentiment - The technical outlook for Funko's shares is negative, remaining below the 200-day moving average and in a persistent downtrend [4] - Analysts have not revised earnings upward in the last 90 days, with multiple downward revisions indicating a lack of confidence in the company's future performance [4] - Management's decision to withdraw full-year guidance reflects significant uncertainty, leading the market to view Funko as a stock to avoid [4] Industry Context - Funko operates within the Consumer Products – Discretionary industry, which ranks in the top 39% of the Zacks Industry Rank [5] - Other companies in the industry, such as Betterware de Mexico and Central Garden and Pet, are currently viewed more favorably within the Zacks Rank [5]

Financial Data and Key Metrics Changes - For Q2 2025, total net sales were $193.5 million, a 22% decline compared to the same quarter last year, primarily due to disruptions from U.S. tariff policies [8][9] - Gross profit was $62 million, resulting in a gross margin of 32.1%, down from 42% in Q2 of the previous year [9][10] - Adjusted net loss was $26.7 million or $0.48 per share, compared to adjusted net income of $5.6 million or $0.10 per diluted share in the prior year [10] - Negative adjusted EBITDA was $16.5 million, compared to adjusted EBITDA of $27.9 million in the same quarter last year [10][11] Business Line Data and Key Metrics Changes - Direct-to-consumer sales comprised 21% of gross sales, down from 23% in the same quarter last year [9] - The company experienced a significant decline in minimum guaranteed royalties due to sales disruptions and increased tariffs [10] Market Data and Key Metrics Changes - In the U.S. market, POS sales reported by larger wholesale customers were down just 5%, indicating resilience compared to the decline in year-over-year sell-in [13] - International business, representing over one-third of sales, saw 18% POS sales growth in the first half of the year and 28% growth in Q2 [13] Company Strategy and Development Direction - The company is focused on accelerating organic growth initiatives and exploring financial and strategic options, including a search for a new CEO [6][18] - A tariff mitigation plan has been implemented, including price increases in the U.S. market and shifting production out of China [14][15] - The company aims to fully offset the financial impact of incremental tariffs within the current year, with estimated costs reduced from $45 million to $40 million [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by U.S. trade policies but expressed confidence in a robust plan for improved financial performance in the second half of the year [7][12] - The company expects second half net sales to be down in the high single digits compared to 2024, with adjusted EBITDA margins projected in the mid to high single digits range [12][33] Other Important Information - The company executed an amendment to its credit facilities, providing waivers for financial covenants, which offers additional flexibility during this period [15] - The company is focused on refinancing its debt due in September 2026 and has engaged advisors for this process [16] Q&A Session Summary Question: Adjusted EBITDA and SG&A items - Management noted that almost five points of margin decline year-over-year was attributed to the tariffs announcement, impacting adjusted EBITDA [22][23] Question: Resumption of orders - Management confirmed that orders paused in Q2 have resumed, with good visibility on Q3 order patterns [25][26] Question: Customer reaction to price increases - Early customer reactions to price increases have shown no negative impact on unit volumes, with continued strong sell-through [30][31] Question: Guidance on adjusted EBITDA margins - Adjusted EBITDA margins of mid to high single digits are expected for the second half of the year, with improvement from Q3 to Q4 [33] Question: Cash flow and liquidity - Management acknowledged liquidity challenges but emphasized the flexibility provided by the recent credit agreement amendments and the ATM filing [35][36]

Financial Performance - Q2 2025毛利率为32.1%[7] - 渠道和产品销售组合变化对毛利率产生-0.6%的影响[7] - 产品利润率提高使毛利率增加3.5%[7] - 版权最低保证缺口导致毛利率下降-2.4%[7] - 关税导致毛利率下降-4.6%[7] - 库存准备金调整导致毛利率下降-5.8%[7] Sales & Top Properties - 前十大IP占比净销售额的33%[5] - 前十大IP占比未知[4] Global Expansion & Brand Engagement - Funko于2025年7月在东南亚开设了第一家授权商店，位于菲律宾[9] - Funko在2025年圣地亚哥动漫展（SDCC）上占据了最大的实体展位，通过四个沉浸式区域与各个年龄段和圈子的收藏家互动[13] - SDCC 2025上，每日都有售罄情况发生，表明产品受欢迎和品牌亲和力[13]

Filing Information This section provides details on the Form 10-Q filing, including registrant information, forward-looking statement disclaimers, and a high-level overview of key risk factors [Form 10-Q Details](index=1&type=section&id=Form%2010-Q%20Details) This section identifies the document as a Quarterly Report on Form 10-Q for Funko, Inc., covering the period ended June 30, 2025. It includes basic registrant information, securities registered, and filer status - The report is a Quarterly Report on Form 10-Q for Funko, Inc. for the period ended June 30, 2025[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Class A Common Stock, $0.0001 par value per share | FNKO | The Nasdaq Stock Market LLC | - Funko, Inc. is classified as an **Accelerated Filer**[5](index=5&type=chunk) [Special Note Regarding Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements regarding future operating results, financial position, economic impacts, business strategy, and other objectives. It emphasizes that these statements are based on current expectations and projections, subject to risks and uncertainties, and should not be relied upon as predictions of future events - The report contains forward-looking statements about future operating results, financial position, economic conditions, business strategy, and plans[9](index=9&type=chunk) - Forward-looking statements are subject to risks, uncertainties, and assumptions, including those detailed in Part II. Item 1A. 'Risk Factors', which may cause actual results to differ materially[9](index=9&type=chunk) - The company undertakes no obligation to update any forward-looking statements after the report date[10](index=10&type=chunk) [Summary of Risk Factors](index=4&type=section&id=Summary%20of%20Risk%20Factors) This section provides a high-level overview of the numerous risks and uncertainties that could materially and adversely affect Funko's business, financial condition, results of operations, or prospects. Key areas of risk include retail industry dynamics, international operations, indebtedness, going concern issues, strategic alternatives review, operational management, dependence on third-party content and intellectual property, business fluctuations, vendor reliance, legal proceedings, information technology, and organizational structure - The company faces risks related to global and regional economic downturns, changes in retail practices, and maintaining relationships with retail customers and distributors[13](index=13&type=chunk) - **Substantial doubt** exists about the company's ability to continue as a going concern due to financial covenant pressure from the current tariff retail environment and potentially insufficient working capital[13](index=13&type=chunk) - The company is reviewing strategic alternatives, with no assurance of successful identification or completion, or that any alternative will add stockholder value[13](index=13&type=chunk) Part I – FINANCIAL INFORMATION This part presents Funko's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures assessment [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Funko, Inc.'s unaudited condensed consolidated financial statements, including statements of operations, comprehensive (loss) income, balance sheets, cash flows, and stockholders' equity for the periods ended June 30, 2025 and 2024. It also includes detailed notes on organization, significant accounting policies, debt, tax receivable agreements, commitments, contingencies, segment information, income taxes, non-controlling interests, and earnings per share [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, Funko, Inc. reported significant net losses, a reversal from net income in the prior year's three-month period. Net sales decreased substantially, leading to operational losses and negative earnings per share Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $193,469 | $247,657 | $384,208 | $463,356 | | (Loss) income from operations | $(34,747) | $10,732 | $(57,945) | $(4,170) | | Net (loss) income attributable to Funko, Inc.| $(40,490) | $5,115 | $(68,078) | $(17,548) | | Basic (Loss) earnings per share | $(0.74) | $0.10 | $(1.26) | $(0.34) | | Diluted (Loss) earnings per share | $(0.74) | $0.10 | $(1.26) | $(0.34) | - Net sales decreased by **21.9%** for the three months and **17.1%** for the six months ended June 30, 2025, compared to the same periods in 2024[17](index=17&type=chunk) - The company shifted from an operating income of **$10.7 million** in Q2 2024 to an operating loss of **$34.7 million** in Q2 2025[17](index=17&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) The company reported a comprehensive loss for both the three and six months ended June 30, 2025, primarily driven by the net loss, despite a positive foreign currency translation gain Condensed Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(41,004) | $5,419 | $(69,063) | $(18,247) | | Foreign currency translation gain (loss) | $5,708 | $135 | $8,218 | $(506) | | Comprehensive (loss) income | $(35,296) | $5,554 | $(60,845) | $(18,753) | - Comprehensive loss attributable to Funko, Inc. was **$(34.9) million** for the three months ended June 30, 2025, compared to comprehensive income of **$5.2 million** in the prior year[19](index=19&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Funko's total assets slightly decreased from December 31, 2024, while total current liabilities significantly increased, primarily due to a substantial rise in the line of credit and current portion of long-term debt, leading to a decrease in total stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $694,909 | $707,254 | | Total current liabilities | $449,496 | $305,794 | | Line of credit | $145,000 | $60,000 | | Current portion of long-term debt | $108,849 | $22,512 | | Total stockholders' equity | $182,077 | $236,353 | - Cash and cash equivalents increased to **$49.2 million** as of June 30, 2025, from **$34.7 million** at December 31, 2024[21](index=21&type=chunk) - Inventories increased to **$101.3 million** as of June 30, 2025, from **$92.6 million** at December 31, 2024[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced a significant net cash outflow from operating activities, offset by substantial cash inflow from financing activities, primarily through increased borrowings on its line of credit Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(44,442) | $60,395 | | Net cash used in investing activities | $(15,241) | $(5,989) | | Net cash provided by (used in) financing activities | $73,663 | $(49,285) | | Net change in cash and cash equivalents | $14,496 | $5,098 | - Operating activities shifted from providing **$60.4 million** in cash in H1 2024 to using **$44.4 million** in H1 2025[23](index=23&type=chunk) - Financing activities provided **$73.7 million** in cash in H1 2025, a significant increase from using **$49.3 million**

Executive Summary [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Funko reported a challenging second quarter for 2025, with significant declines across key financial metrics, including net sales, gross profit, and a shift from net income to a substantial net loss, primarily attributed to a dynamic tariff environment Second Quarter Financial Results Summary (2025 vs 2024) | Metric | 2025 (Millions) | 2024 (Millions) | Dollar Change (Millions) | Percentage Change | | :----------------------- | :-------------- | :-------------- | :----------------------- | :---------------- | | Net sales | $193.5 | $247.7 | $(54.2) | (21.9)% | | Gross profit | $62.0 | $104.0 | $(42.0) | (40.4)% | | Gross margin | 32.1% | 42.0% | - | - | | SG&A expenses | $82.3 | $77.9 | $4.4 | 5.6% | | Net (loss) income | $(41.0) | $5.4 | $(46.4) | (859.3)% | | Net (loss) income per share | $(0.74) | $0.10 | $(0.84) | (840.0)% | | Adjusted net (loss) income* | $(26.7) | $5.6 | $(32.3) | (576.8)% | | Adjusted net (loss) income per share* | $(0.48) | $0.10 | $(0.58) | (580.0)% | | Adjusted EBITDA* | $(16.5) | $27.9 | $(44.4) | (159.1)% | [Management's Strategic Commentary](index=1&type=section&id=Management's%20Strategic%20Commentary) Interim CEO Mike Lunsford acknowledged the adverse impact of tariffs on Q2 performance and outlined strategic initiatives for the second half of 2025, focusing on cost reduction, product sourcing diversification, and price adjustments to stabilize the business and accelerate growth - Q2 2025 performance was impacted by a "dynamic and uncertain tariff environment"[4](index=4&type=chunk) - Expects headwinds to moderate and business to improve in H2 due to actions taken[4](index=4&type=chunk) - Strategic actions include cutting costs, diversifying product sourcing, and adjusting prices[4](index=4&type=chunk) - Team is focused on stabilizing the business, accelerating execution on growth initiatives, and unlocking Funko's long-term potential[4](index=4&type=chunk) Detailed Financial Results [Net Sales Analysis](index=1&type=section&id=Net%20Sales%20Analysis) Funko experienced a significant 21.9% year-over-year decline in total net sales for Q2 2025, driven by decreases across all brand categories and geographical segments, with the United States showing the steepest decline [Net Sales by Brand Category](index=1&type=section&id=Net%20Sales%20by%20Brand%20Category) Net Sales by Brand Category (Three Months Ended June 30) | Brand Category | 2025 (Thousands) | 2024 (Thousands) | Dollar Change (Thousands) | Percentage Change | | :--------------- | :--------------- | :--------------- | :------------------------ | :---------------- | | Core Collectible | $157,477 | $186,738 | $(29,261) | (15.7)% | | Loungefly | $31,847 | $41,483 | $(9,636) | (23.2)% | | Other | $4,145 | $19,436 | $(15,291) | (78.7)% | | **Total net sales** | **$193,469** | **$247,657** | **$(54,188)** | **(21.9)%** | [Net Sales by Geography](index=1&type=section&id=Net%20Sales%20by%20Geography) Net Sales by Geography (Three Months Ended June 30) | Geography | 2025 (Thousands) | 2024 (Thousands) | Dollar Change (Thousands) | Percentage Change | | :---------------- | :--------------- | :--------------- | :------------------------ | :---------------- | | United States | $117,874 | $163,021 | $(45,147) | (27.7)% | | Europe | $57,784 | $60,382 | $(2,598) | (4.3)% | | Other International | $17,811 | $24,254 | $(6,443) | (26.6)% | | **Total net sales** | **$193,469** | **$247,657** | **$(54,188)** | **(21.9)%** | [Profitability Metrics](index=1&type=section&id=Profitability%20Metrics) The company's profitability significantly deteriorated in Q2 2025, with gross profit declining by over 40% and gross margin contracting by nearly 10 percentage points, leading to a substantial net loss and negative adjusted EBITDA, contrasting sharply with the prior year's positive figures Key Profitability Metrics (Three Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | Change (YoY) (Thousands) | | :---------------------------------- | :--------------- | :--------------- | :----------------------- | | Gross profit | $62,040 | $104,048 | $(42,008) | | Gross margin | 32.1% | 42.0% | (9.9) pp | | SG&A expenses | $82,259 | $77,897 | $4,362 | | (Loss) income from operations | $(34,747) | $10,732 | $(45,479) | | Net (loss) income attributable to Funko, Inc. | $(40,490) | $5,115 | $(45,605) | | Basic (loss) earnings per share | $(0.74) | $0.10 | $(0.84) | | Adjusted net (loss) income | $(26,686) | $5,563 | $(32,249) | | Adjusted (loss) earnings per diluted share | $(0.48) | $0.10 | $(0.58) | | Adjusted EBITDA | $(16,531) | $27,917 | $(44,448) | [Balance Sheet Highlights](index=2&type=section&id=Balance%20Sheet%20Highlights) As of June 30, 2025, Funko's balance sheet showed an increase in cash and inventories compared to December 31, 2024, but also a significant rise in total debt, primarily driven by increased borrowings on its line of credit Balance Sheet Key Metrics (June 30, 2025 vs December 31, 2024) | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | | :-------------------------- | :------------------------ | :-------------------------- | :----------------- | | Cash and cash equivalents | $49,151 | $34,655 | $14,496 | | Inventories | $101,344 | $92,580 | $8,764 | | Total current assets | $287,773 | $287,059 | $714 | | Line of credit | $145,000 | $60,000 | $85,000 | | Current portion of long-term debt | $108,849 | $22,512 | $86,337 | | Total debt (including current portion) | $256,605 | $182,815 | $73,790 | | Total stockholders' equity | $182,077 | $236,353 | $(54,276) | [Cash Flow Activities](index=7&type=section&id=Cash%20Flow%20Activities) For the first six months of 2025, Funko reported negative net cash from operating activities, an increase in cash used in investing activities, but a substantial positive net cash flow from financing activities, primarily due to increased borrowings on its line of credit Net Cash Flow Activities (Six Months Ended June 30) | Activity | 2025 (Thousands) | 2024 (Thousands) | Change (Thousands) | | :-------------------------------------- | :--------------- | :--------------- | :----------------- | | Net cash (used in) provided by operating activities | $(44,442) | $60,395 | $(104,837) | | Net cash used in investing activities | $(15,241) | $(5,989) | $(9,252) | | Net cash provided by (used in) financing activities | $73,663 | $(49,285) | $122,948 | | Net change in cash and cash equivalents | $14,496 | $5,098 | $9,398 | | Cash and cash equivalents at end of period | $49,151 | $41,551 | $7,600 | Outlook and Guidance [Second Half 2025 Expectations](index=2&type=section&id=Second%20Half%202025%20Expectations) Funko anticipates an improvement in financial performance during the second half of 2025 compared to the first half, projecting high single-digit net sales decline year-over-year and mid-to-high single-digit adjusted EBITDA margin, with Q4 expected to outperform Q3 - Financial performance is expected to improve compared with the first half of 2025[9](index=9&type=chunk) - Net sales are projected to be down **high single-digits** compared with the second half of 2024[9](index=9&type=chunk) - Adjusted EBITDA margin is expected to be in the **mid- to high single-digits range**[9](index=9&type=chunk) - Q4 results are anticipated to ramp up over Q3[9](index=9&type=chunk) - The outlook includes the anticipated impact of recent tariff rates but does not account for any further tariff actions[7](index=7&type=chunk) Non-GAAP Financial Measures [Definition and Reconciliation](index=3&type=section&id=Definition%20and%20Reconciliation) Funko utilizes non-GAAP financial measures, such as adjusted net income/loss and adjusted EBITDA, to provide investors with supplementary information on operational performance and facilitate period-over-period comparisons, while acknowledging their limitations and potential non-comparability with other companies' metrics - Non-GAAP financial measures (adjusted net income/loss, adjusted EBITDA, adjusted EBITDA margin) are used internally for evaluating operating performance, planning, and assessing incentive compensation[10](index=10&type=chunk) - These measures enhance understanding of core business results and allow for comparison by removing the impact of items not directly resulting from core operations[10](index=10&type=chunk) - Non-GAAP measures have limitations as analytical tools and may not be comparable to similar measures disclosed by competitors[10](index=10&type=chunk) Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income (Three Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | | Net (loss) income attributable to Funko, Inc. | $(40,490) | $5,115 | | Reallocation of net (loss) income attributable to non-controlling interests | $(514) | $304 | | Equity-based compensation | $3,112 | $3,276 | | Acquisition costs and other expenses | — | $(1,605) | | Certain severance, relocation and related costs | — | $101 | | Foreign currency transaction loss (gain) | $1,463 | $(563) | | Income tax expense (benefit) | $9,743 | $(1,065) | | **Adjusted net (loss) income** | **$(26,686)** | **$5,563** | | Adjusted net (loss) income margin | (13.8)% | 2.2% | | Adjusted (loss) earnings per diluted share | $(0.48) | $0.10 | Reconciliation of Net (Loss) Income to Adjusted EBITDA (Three Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | | Net (loss) income | $(41,004) | $5,419 | | Interest expense, net | $4,522 | $5,081 | | Income tax expense | $848 | $789 | | Depreciation and amortization | $14,528 | $15,419 | | **EBITDA** | **$(21,106)** | **$26,708** | | Equity-based compensation | $3,112 | $3,276 | | Acquisition costs and other expenses | — | $(1,605) | | Certain severance, relocation and related costs | — | $101 | | Foreign currency transaction loss (gain) | $1,463 | $(563) | | **Adjusted EBITDA** | **$(16,531)** | **$27,917** | | Adjusted EBITDA margin | (8.5)% | 11.3% | Company Information [About Funko](index=3&type=section&id=About%20Funko) Funko is a leading global pop culture lifestyle brand, offering a diverse range of products including vinyl figures, fashion accessories, and high-end art under brands like Funko, Loungefly, and Mondo, catering to the growing 'Kidult economy' worldwide - Funko is a leading global pop culture lifestyle brand with a diverse collection of brands including Funko, Loungefly, and Mondo[12](index=12&type=chunk) - Products span vinyl figures (Pop!, Bitty Pop!, Pop! Yourself), micro-collectibles, fashion accessories, apparel, plush, action toys, high-end art, and music collectibles[12](index=12&type=chunk) - Products are at the forefront of the growing 'Kidult economy,' inspiring fans globally[12](index=12&type=chunk) - Founded in 1998 and headquartered in Washington state, with global offices, retail locations, operations, and licensed partnerships[12](index=12&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The press release includes forward-looking statements regarding future performance and strategy, which are subject to various known and unknown risks and uncertainties, encompassing the ability to execute business strategy, manage debt, maintain licenses, economic downturns, and impacts from tariffs and trade restrictions - The press release contains forward-looking statements regarding product offerings, strategic plans, anticipated financial results, and the impact of the macroeconomic environment, including tariffs[13](index=13&type=chunk) - These statements are based on management's current expectations but involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially[13](index=13&type=chunk) - Key risks include the ability to execute business strategy, manage inventories, risks related to indebtedness (including compliance with covenants and going concern), maintaining license agreements, impacts from economic downturns, changes in the retail industry, competition, fluctuations in gross margin, dependence on third-party content, intellectual property rights, attracting and retaining employees, third-party manufacturing, international operations (tariffs and trade restrictions), and litigation[13](index=13&type=chunk) Unaudited Condensed Consolidated Financial Statements [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, detailing the company's revenues, expenses, and resulting net loss Funko, Inc. Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net sales | $193,469 | $247,657 | $384,208 | $463,356 | | Cost of sales | $131,429 | $143,609 | $245,297 | $273,036 | | Selling, general, and administrative expenses | $82,259 | $77,897 | $167,066 | $163,492 | | Depreciation and amortization | $14,528 | $15,419 | $29,790 | $30,998 | | Total operating expenses | $228,216 | $236,925 | $442,153 | $467,526 | | (Loss) income from operations | $(34,747) | $10,732 | $(57,945) | $(4,170) | | Interest expense, net | $4,522 | $5,081 | $8,371 | $11,392 | | Other expense (income), net | $887 | $(557) | $1,055 | $996 | | (Loss) income before income taxes | $(40,156) | $6,208 | $(67,371) | $(16,558) | | Income tax expense | $848 | $789 | $1,692 | $1,689 | | Net (loss) income | $(41,004) | $5,419 | $(69,063) | $(18,247) | | Net (loss) income attributable to Funko, Inc. | $(40,490) | $5,115 | $(68,078) | $(17,548) | | Basic (loss) earnings per share | $(0.74) | $0.10 | $(1.26) | $(0.34) | | Diluted (loss) earnings per share | $(0.74) | $0.10 | $(1.26) | $(0.34) | [Balance Sheets](index=6&type=section&id=Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing the company's assets, liabilities, and stockholders' equity Funko, Inc. Condensed Consolidated Balance Sheets (Unaudited) | Asset/Liability/Equity | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :------------------------------------------ | :------------------------ | :-------------------------- | | **Assets:** | | | | Cash and cash equivalents | $49,151 | $34,655 | | Accounts receivable, net | $99,963 | $119,882 | | Inventories | $101,344 | $92,580 | | Total current assets | $287,773 | $287,059 | | Property and equipment, net | $72,658 | $78,357 | | Goodwill | $133,989 | $133,652 | | Total assets | $694,909 | $707,254 | | **Liabilities:** | | | | Line of credit | $145,000 | $60,000 | | Current portion of long-term debt | $108,849 | $22,512 | | Accounts payable | $66,514 | $63,130 | | Accrued royalties | $46,396 | $61,362 | | Total current liabilities | $449,496 | $305,794 | | Long-term debt | $2,756 | $100,303 | | Total liabilities and stockholders' equity | $694,909 | $707,254 | | **Stockholders' Equity:** | | | | Total stockholders' equity attributable to Funko, Inc. | $181,169 | $233,019 | | Total stockholders' equity | $182,077 | $236,353 | [Statements of Cash Flows](index=7&type=section&id=Statements%20of%20Cash%20Flows) This section details the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, categorizing cash movements into operating, investing, and financing activities Funko, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Net loss | $(69,063) | $(18,247) | | Net cash (used in) provided by operating activities | $(44,442) | $60,395 | | Net cash used in investing activities | $(15,241) | $(5,989) | | Net cash provided by (used in) financing activities | $73,663 | $(49,285) | | Effect of exchange rates on cash and cash equivalents | $516 | $(23) | | Net change in cash and cash equivalents | $14,496 | $5,098 | | Cash and cash equivalents at end of period | $49,151 | $41,551 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of non-GAAP financial measures, specifically Adjusted Net (Loss) Income and Adjusted EBITDA, to their most directly comparable U.S. GAAP financial measures for the three and six months ended June 30, 2025, and 2024 Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income (Six Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | | Net (loss) income attributable to Funko, Inc. | $(68,078) | $(17,548) | | Reallocation of net (loss) income attributable to non-controlling interests | $(985) | $(699) | | Equity-based compensation | $6,377 | $7,100 | | Acquisition costs and other expenses | — | $1,579 | | Certain severance, relocation and related costs | — | $1,967 | | Foreign currency transaction loss (gain) | $1,639 | $1,013 | | Income tax expense (benefit) | $16,531 | $2,914 | | **Adjusted net (loss) income** | **$(44,516)** | **$(3,674)** | | Adjusted net (loss) income margin | (11.6)% | (0.8)% | | Adjusted (loss) earnings per diluted share | $(0.81) | $(0.07) | Reconciliation of Net (Loss) Income to Adjusted EBITDA (Six Months Ended June 30) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | | Net (loss) income | $(69,063) | $(18,247) | | Interest expense, net | $8,371 | $11,392 | | Income tax expense | $1,692 | $1,689 | | Depreciation and amortization | $29,790 | $30,998 | | **EBITDA** | **$(29,210)** | **$25,832** | | Equity-based compensation | $6,377 | $7,100 | | Acquisition costs and other expenses | — | $1,579 | | Certain severance, relocation and related costs | — | $1,967 | | Foreign currency transaction loss (gain) | $1,639 | $1,013 | | **Adjusted EBITDA** | **$(21,194)** | **$37,491** | | Adjusted EBITDA margin | (5.5)% | 8.1% |