UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________to _____________ Commission file number: 001-38274 FUNKO, INC. (Exact name of registrant as specified in its charter) Delaware 35-2593276 (State or other ju ...

Funko Reports First Quarter 2024 Financial Results; Reiterates Full-Year Outlook for 2024 --Q1 Net Sales Within Guidance Range, Gross Margin and Adjusted EBITDA Above Expectations; New CEO Appointed-- EVERETT, Wash. May 9, 2024 -- Funko, Inc. (Nasdaq: FNKO), a leading pop culture lifestyle brand, today reported its consolidated financial results for the first quarter ended March 31, 2024. First Quarter Financial Results Summary: 2024 vs 2023 "For the 2024 first quarter, we reported solid overall financial r ...

Funko-A (FNKO) is expected to deliver a year-over-year increase in earnings on lower revenues when it reports results for the quarter ended March 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on May 9, 2024, might help the stock move higher if these key numbers are better than expectation ...

Editor's note: Seeking Alpha is proud to welcome Alejandro Sanchez-Ortiz Ampuero as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access. Click here to find out more » kipgodi Thesis Funko (NASDAQ:FNKO) is a company with a very recognizable brand that sets them apart from their competitors. The pop culture is continuously expanding, allowing the company to la ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Financial Data and Key Metrics - Q4 2023 net sales were $291.2 million, with wholesale channel sales of $216.7 million and direct-to-consumer (D2C) sales of $74.5 million [12] - Gross profit was $109.4 million, with a gross margin of 37.6%, up from 33.2% in Q3 2023 [27] - Adjusted EBITDA for Q4 was $23.5 million, at the upper end of the guidance range [29] - Inventory at year-end was $119 million, down more than 50% from $246 million at the end of 2022 [7] - Cash and cash equivalents stood at $36.5 million, after paying down $26.2 million of debt in Q4 [37] Business Line Performance - D2C sales in Q4 represented 26% of net sales, up from 17% in Q4 2022, with a nearly 30% YoY increase [6][27] - Pop! Yourself and limited edition products were key contributors to D2C growth, with Pop! Yourself driving significant sales through both online and in-store channels [20][59] - The company launched Bitty Pop! and Pop! Yourself in 2023, both of which were well-received and contributed to business growth [20] Market Performance - Inventory levels in the channel for larger retail partners were 32% lower at the end of 2023 compared to 2022, reflecting healthier levels relative to POS sales [7] - POS sales were down high-single-digit percentages YoY, but this was offset by a mix shift towards the D2C channel [80][81] Strategy and Industry Competition - The company completed a transformation plan in 2023, which included eliminating unprofitable product lines, reducing workforce, and aggressively lowering inventory levels [5][22] - The focus for 2024 is on long-term profitable growth, with an emphasis on expanding the D2C business, increasing sales of Pop! Yourself, and limited edition products [8][23] - The company plans to achieve positive comps later in 2024, despite expecting lower Q1 net sales compared to Q1 2023 [30][31] Management Commentary on Operating Environment and Future Outlook - Management expects 2024 full-year adjusted EBITDA to be considerably higher than 2023, driven by growth in higher-margin product lines and the D2C business [23][39] - The company anticipates improved financial results in the second half of 2024 due to seasonality, easing Hollywood strikes, and reduced shipping disruptions [108] - Shipping costs remain uncertain due to hostilities in the Red Sea, which could impact transit times and revenue recognition [32][89] Other Important Information - Steve Nave, CFO and COO, will resign effective March 15, 2024, with Yves LePendeven taking over as acting CFO [10][35] - The company expects to announce a permanent CEO in Q2 2024 [11] - SG&A expenses in the second half of 2023 declined to 32% of net sales from 38% in the first half, driven by cost reductions [36] Q&A Session Summary Question: How is the company managing the transition after Steve Nave's departure? - Mike Lunsford has been actively running the company since July 2023, and Yves LePendeven is well-qualified to take over the CFO role [75][76] - The company does not anticipate any operational disruptions, as the leadership team is strong and aligned [76] Question: What are the drivers of D2C growth in 2024? - D2C growth is expected to continue, driven by Pop! Yourself, limited edition drops, and expansion into new territories [74][101] - The company plans to focus on higher-margin products and direct connections with fans [95] Question: How is the Red Sea situation impacting the business? - The Red Sea disruptions primarily affect shipments from Asia to Europe, leading to longer transit times and higher costs [89][97] - While the impact is more pronounced in Q1, the company does not expect it to disrupt full-year sales projections [97] Question: What are the expectations for EBITDA margin improvement? - EBITDA margin improvement is expected through a mix shift towards D2C and higher-margin products, as well as annualizing cost reductions from 2023 [83][85] - SG&A expenses will increase due to higher marketing spend for D2C growth, but overall margins are expected to improve [85] Question: When will the new CEO be announced? - The company expects to announce the new CEO in Q2 2024, with hopes of introducing them on the next earnings call [78]

Funko-A (FNKO) came out with quarterly earnings of $0.01 per share, in line with the Zacks Consensus Estimate. This compares to loss of $0.35 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this company would post a loss of $0.08 per share when it actually produced earnings of $0.03, delivering a surprise of 137.50%.Over the last four quarters, the company has surpassed consensus EPS estimates two times.Funko-A, which belongs to the Zacks Consumer ...

Executive Summary [Fourth Quarter 2023 Financial Highlights](index=1&type=section&id=Fourth-Quarter%20Financial%20Results%20Summary%3A%202023%20vs%202022) In Q4 2023, Funko's net sales decreased by **12.6%** year-over-year to **$291.2 million**. Despite the sales decline, gross margin saw a significant improvement to **37.6%** from **28.3%**. The company narrowed its net loss to **$10.8 million** from **$42.2 million** in the prior-year period and achieved a positive Adjusted EBITDA of **$23.5 million**, a strong recovery from a negative **$6.3 million** in Q4 2022 Q4 2023 vs Q4 2022 Financial Results (in millions) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $291.2 | $333.0 | -12.6% | | Gross Profit | $109.4 | $94.3 | +16.0% | | Gross Margin | 37.6% | 28.3% | +9.3pp | | Net Loss | ($10.8) | ($42.2) | Improved | | Adjusted Net Income (Loss) | $0.5 | ($17.9) | Improved | | Adjusted EBITDA | $23.5 | ($6.3) | Improved | [Full Year 2023 Financial Highlights](index=1&type=section&id=Full-Year%20Financial%20Results%20Summary%3A%202023%20vs%202022) For the full year 2023, net sales declined to **$1.1 billion** from **$1.3 billion** in 2022. The company reported a significant net loss of **$154.1 million**, a sharp increase from the **$8.0 million** loss in the previous year. Adjusted EBITDA fell substantially to **$27.2 million** from **$97.4 million** in 2022, reflecting operational challenges and restructuring costs throughout the year Full Year 2023 vs Full Year 2022 Financial Results (in billions/millions) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.1 | $1.3 | -15.1% | | Gross Profit | $333.0 | $434.0 | -23.3% | | Gross Margin | 30.4% | 32.8% | -2.4pp | | Net Loss | ($154.1) | ($8.0) | Worsened | | Adjusted Net Loss | ($45.4) | $29.6 (Income) | Worsened | | Adjusted EBITDA | $27.2 | $97.4 | -72.1% | [Management Commentary](index=1&type=section&id=Management%20Commentary) The Interim CEO stated that the company successfully completed a comprehensive plan in 2023 to reduce costs, improve operational efficiency, and focus on core products, addressing inventory issues and workforce size. Q4 results were at the upper end of guidance, driven by strong Direct-to-Consumer (DTC) growth. Despite facing headwinds in 2024 from a softer content schedule and shipping uncertainties, management expects significant bottom-line improvement, supported by further DTC expansion - Successfully completed a comprehensive plan in 2023 to reduce costs, improve operational efficiencies, and focus on core products, addressing inventory issues and workforce size[4](index=4&type=chunk) - Q4 2023 net sales and adjusted EBITDA were at the upper end of guidance, fueled by a nearly **30%** increase in the direct-to-consumer (DTC) business, which comprised **26%** of total revenue[6](index=6&type=chunk) - The company anticipates **significant bottom-line improvement in 2024** despite headwinds from Hollywood strikes and Red Sea shipping issues, focusing on DTC expansion and limited-edition products[8](index=8&type=chunk) [Leadership Update](index=2&type=section&id=Leadership%20Update) The company announced the resignation of Steve Nave, Chief Financial Officer (CFO) and Chief Operating Officer, effective March 15, 2024. Deputy CFO Yves LePendeven will assume the role of Acting CFO - **Steve Nave**, Funko's **CFO and COO**, is resigning effective **March 15, 2024**[9](index=9&type=chunk) - **Yves LePendeven**, the company's **Deputy CFO**, will serve as **Acting CFO** upon Mr. Nave's departure[9](index=9&type=chunk) Detailed Financial Performance [Fourth Quarter 2023 Net Sales Analysis](index=2&type=section&id=Fourth%20Quarter%202023%20Net%20Sales%20by%20Category%20and%20Geography) In Q4 2023, total net sales fell **12.6%** YoY. By product category, Core Collectibles and Loungefly branded products saw declines of **12.6%** and **25.1%** respectively, while the 'Other' category grew by **44.0%**. Geographically, a strong **26.3%** sales growth in Europe was offset by an **18.0%** decline in the United States and a **48.5%** drop in Other International markets Q4 Net Sales by Product Brand (in thousands) | Brand Category | Q4 2023 | Q4 2022 | % Change | | :--- | :--- | :--- | :--- | | Core Collectibles | $212,776 | $243,340 | -12.6% | | Loungefly Branded Products | $54,908 | $73,346 | -25.1% | | Other | $23,552 | $16,354 | +44.0% | | **Total Net Sales** | **$291,236** | **$333,040** | **-12.6%** | Q4 Net Sales by Geography (in thousands) | Geography | Q4 2023 | Q4 2022 | % Change | | :--- | :--- | :--- | :--- | | United States | $197,368 | $240,647 | -18.0% | | Europe | $78,138 | $61,869 | +26.3% | | Other International | $15,730 | $30,524 | -48.5% | | **Total Net Sales** | **$291,236** | **$333,040** | **-12.6%** | [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) As of December 31, 2023, Funko significantly improved its balance sheet health by more than halving its inventory to **$119.5 million** from **$246.4 million** at the end of 2022. Cash and cash equivalents nearly doubled to **$36.5 million**, while total debt saw a moderate increase to **$273.6 million** Balance Sheet Highlights (Year-End, in millions) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $36.5 | $19.2 | | Inventories | $119.5 | $246.4 | | Total debt | $273.6 | $245.8 | - Inventory levels were substantially lowered to **$119 million** at year-end 2023, down from **$246 million** at the end of 2022 and **$162 million** at the end of Q3 2023[7](index=7&type=chunk) 2024 Outlook and Guidance [Full Year 2024 Outlook](index=3&type=section&id=2024%20Full%20Year%20Outlook) For the full year 2024, Funko anticipates net sales to be in the range of **$1.047 billion to $1.103 billion**. The company projects a significant recovery in profitability, with Adjusted EBITDA expected to be between **$65 million and $85 million** Full Year 2024 Guidance (in billions/millions) | Metric | Outlook | | :--- | :--- | | Net Sales | $1.047 to $1.103 | | Adjusted EBITDA | $65 to $85 | [First Quarter 2024 Guidance](index=3&type=section&id=2024%20First%20Quarter%20Guidance) For the first quarter of 2024, the company guides for net sales between **$214 million and $227 million**. It expects an adjusted net loss per share in the range of **$0.32 to $0.24** and Adjusted EBITDA between **$0 million and $5 million** Q1 2024 Guidance (in millions, except per share) | Metric | Outlook | | :--- | :--- | | Net Sales | $214 to $227 | | Gross Margin % | ~37% | | SG&A Expense | $87 to $88 | | Adjusted Net Loss | ($17) to ($13) | | Adjusted Net Loss per Share | ($0.32) to ($0.24) | | Adjusted EBITDA | $0 to $5 | Financial Statements [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the full year 2023, Funko reported net sales of **$1.1 billion** and a net loss attributable to the company of **$154.1 million**, or (**$3.19**) per share. This compares to net sales of **$1.3 billion** and a net loss of **$8.0 million**, or (**$0.18**) per share, in 2022. The increased loss was driven by lower sales, non-recurring charges, and higher interest expense Annual Income Statement Highlights (in thousands) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net sales | $1,096,086 | $1,322,706 | | (Loss) income from operations | ($103,827) | ($11,920) | | Net (loss) attributable to Funko, Inc. | ($154,079) | ($8,035) | | Diluted (Loss) per share | ($3.19) | ($0.18) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet at year-end 2023 showed total assets of **$804.6 million**, down from **$1.09 billion** in 2022, largely due to a significant reduction in inventory from **$246.4 million** to **$119.5 million**. Total liabilities stood at **$566.6 million**, while total stockholders' equity decreased to **$238.0 million** from **$389.7 million** Year-End Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $36,453 | $19,200 | | Inventory, net | $119,458 | $246,429 | | Total assets | $804,645 | $1,091,145 | | Total current liabilities | $358,832 | $361,397 | | Total stockholders' equity | $238,040 | $389,689 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In 2023, Funko generated **$30.9 million** in cash from operating activities, a significant improvement from the **$40.1 million** used in 2022, primarily driven by a **$122.5 million** positive change from inventory reduction. Cash used in investing was **$39.8 million**, and cash provided by financing was **$25.6 million**. The company ended the year with a cash balance of **$36.5 million** Annual Cash Flow Summary (in thousands) | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $30,935 | ($40,134) | | Net cash used in investing activities | ($39,796) | ($78,065) | | Net cash provided by financing activities | $25,596 | $54,639 | | Net change in cash and cash equivalents | $17,253 | ($64,357) | | Cash and cash equivalents at end of period | $36,453 | $19,200 | Non-GAAP Reconciliations [Reconciliation to Adjusted Net Income (Loss)](index=9&type=section&id=Reconciliation%20of%20Net%20%28loss%29%20income%20to%20Adjusted%20net%20income%20%28loss%29) For the full year 2023, Funko's GAAP net loss of **$154.1 million** was adjusted to a non-GAAP adjusted net loss of **$45.4 million**. Significant adjustments included a **$100.2 million** gain from a tax receivable agreement liability adjustment, a **$30.3 million** inventory write-down, and a **$147.6 million** income tax expense adjustment which includes a large valuation allowance on deferred tax assets FY 2023 Reconciliation to Adjusted Net Loss (in thousands) | Description | Amount | | :--- | :--- | | Net loss attributable to Funko, Inc. (GAAP) | ($154,079) | | Tax receivable agreement liability adjustment | ($100,223) | | Inventory write-down | $30,338 | | One-time disposal costs (inventory) | $8,687 | | Acquisition costs and other expenses | $14,241 | | Severance, relocation and related costs | $6,486 | | Income tax expense adjustment | $147,630 | | **Adjusted net loss (Non-GAAP)** | **($45,397)** | [Reconciliation to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20Net%20%28loss%29%20income%20to%20Adjusted%20EBITDA) The company's full-year 2023 Adjusted EBITDA was **$27.2 million**, a sharp decline from **$97.4 million** in 2022. The calculation starts with a GAAP net loss of **$164.4 million** and adds back interest, taxes, D&A, and other non-recurring or non-cash items. Key add-backs for 2023 included D&A (**$59.8 million**), inventory write-downs and disposal costs (totaling **$39.0 million**), and equity-based compensation (**$10.5 million**), while a large gain on the tax receivable agreement liability (**$100.2 million**) was subtracted FY 2023 Reconciliation to Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | Net loss (GAAP) | ($164,438) | | Interest expense, net | $27,970 | | Income tax expense | $132,497 | | Depreciation and amortization | $59,763 | | **EBITDA** | **$55,792** | | Adjustments (net) | ($28,589) | | **Adjusted EBITDA (Non-GAAP)** | **$27,203** | - Major adjustments to derive Adjusted EBITDA included adding back **inventory write-downs ($30.3 million)** and **one-time disposal costs ($8.7 million)**, and subtracting a **gain on the tax receivable agreement liability adjustment ($100.2 million)**[27](index=27&type=chunk)[28](index=28&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________________________ FORM 10-K ___________________________________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the ...

(Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________to _____________ Commission file number: 001-38274 FUNKO, INC. Delaware 35-2593276 (State or othe ...