Core Insights - Funko reported Q3 CY2025 revenue of $250.9 million, falling short of analyst expectations of $262 million, representing a 14.3% year-on-year decline [5] - The company achieved a non-GAAP profit of $0.06 per share, significantly exceeding analysts' consensus estimates of -$0.09 [5] Revenue Performance - Revenue of $250.9 million was a 14.3% decline year-on-year and a 4.2% miss against expectations [5] - Adjusted EBITDA was $24.43 million, beating estimates of $15 million, with a margin of 9.7% [5] Management Strategy - Management emphasized cost control and product strategy as key drivers for adjusted profitability, despite revenue shortfalls [3] - The CEO highlighted SKU rationalizations, reduced clearance sales, and price increases as effective measures to offset tariff pressures [3][4] Licensing and Partnerships - Funko secured multiyear licensing agreements with major studios like Warner Bros, NBC Universal, and Disney, enhancing its portfolio of over 900 active licenses [6] - These partnerships are viewed as critical for maintaining access to popular franchises and supporting future product launches [6] International Growth - Management noted strong double-digit growth in Europe, contrasting with a more subdued U.S. market [6] - Recent production shifts from China to Vietnam are expected to improve supply chain flexibility, despite minor delays [6] Product Innovation - New product formats, such as Bitty Pop! mini vinyl figures, have gained traction, with early success noted in Walmart's holiday campaign [6][7] - The company plans to leverage its speed-to-market advantage to capitalize on emerging pop culture trends [7] Direct-to-Consumer Strategy - Funko is enhancing its e-commerce experience and rolling out customization kiosks, including AI-powered builders and vending machine pilots [7] - These initiatives are seen as differentiators in a competitive collectibles market [7]

Company Overview - Funko's net sales in 2023 reached $1.1 billion[7] - In 2023, the United States accounted for 69% of Funko's sales, while international sales contributed 31%[7] - Core Collectibles represented 73% of 2023 sales, Loungefly accounted for 20%, and other brands made up the remaining 7%[8] - Wholesale channels accounted for 79% of 2023 sales, while direct-to-consumer (DTC) channels contributed 21%[9] Strategic Initiatives - The company aims to reduce SKU counts by approximately 30% to focus on core product lines[42, 48] - Funko implemented more than $150 million of annualized cost savings in 2023 compared to peak Q4 2022 levels[45] - Workforce reductions of approximately 25% were implemented from year-end 2022 levels[45] Financial Performance & Targets - In 2017, the Adjusted EBITDA margin was 17.4%, while in 2023, it was 7.0%[38] - The company expects equity-based compensation of approximately $15 million, depreciation and amortization of approximately $64 million, and interest expense of approximately $18 million for the full year 2024[69]