Funko(FNKO) - 2025 Q2 - Quarterly Report

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 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] 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] Special Note Regarding Forward-Looking Statements 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] - 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] - The company undertakes no obligation to update any forward-looking statements after the report date[10] Summary of Risk Factors 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] - 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] - The company is reviewing strategic alternatives, with no assurance of successful identification or completion, or that any alternative will add stockholder value[13] 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 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 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] - 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] Condensed Consolidated Statements of Comprehensive (Loss) Income 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] Condensed Consolidated Balance Sheets 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] - Inventories increased to $101.3 million as of June 30, 2025, from $92.6 million at December 31, 2024[21] Condensed Consolidated Statements of Cash Flows 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] - Financing activities provided $73.7 million in cash in H1 2025, a significant increase from using $49.3 million