Funko (FNKO) Q1 Loss Narrower Than Expected, Sales Dip Y/Y

Core Insights - Funko, Inc. reported first-quarter 2024 results with net sales declining year over year and missing the Zacks Consensus Estimate, while the bottom line showed improvement compared to both the consensus estimate and the previous year [1][2] Financial Performance - The company reported net sales of $215.7 million, a decrease of 14.4% from $251.9 million in the prior-year quarter, and missed the Zacks Consensus Estimate of $218 million, attributed to Hollywood strikes affecting new entertainment content [3] - An adjusted loss of 17 cents per share was narrower than the Zacks Consensus Estimate of a loss of 29 cents and improved from an adjusted loss of 49 cents in the year-ago quarter [2][3] - Adjusted gross margin expanded by 840 basis points year over year to 40%, driven by lower freight costs, higher direct-to-consumer sales, and improved inventory management [2][3] Expense Management - SG&A expenses decreased by 14.5% to $85.6 million from $100.1 million in the prior-year quarter, which included one-time charges [4] - Adjusted EBITDA totaled $9.6 million, a significant improvement from an adjusted EBITDA loss of $14 million reported a year ago [4] Segment Performance - Core Collectible sales declined by 14.6% year over year to $157.1 million, while Loungefly net sales fell by 20.6% to $40.7 million [5] - Geographically, net sales in the U.S., Europe, and Other International decreased by 17.4%, 7.2%, and 6.9% year over year, totaling $146.4 million, $54.2 million, and $15.1 million, respectively [5] Financial Position - The company ended the quarter with cash and cash equivalents of $26.1 million, long-term debt of $117.2 million, and total stockholders' equity of $217.6 million [7] Outlook - For Q2 2024, management expects net sales between $225 million and $240 million, with gross margin anticipated in the range of 38-40% and SG&A expenses between $80 million and $85 million [8] - Adjusted EBITDA is forecasted to be between $9 million and $15 million, with an expected adjusted net loss per share between 8 cents and 15 cents [8] - For the full year, Funko forecasts net sales between $1.047 billion and $1.103 billion, with adjusted EBITDA expected in the range of $65 million to $85 million [9]