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 Data and Key Metrics Changes - Total net sales for Q1 2025 were $190.7 million, in line with guidance [21] - Gross profit was $76.9 million, resulting in a gross margin of 40.3% [22] - Adjusted net loss was $17.8 million, or $0.33 per share, which was better than expected [22] - Negative adjusted EBITDA was $4.7 million, also better than expected [22] - Cash and cash equivalents stood at $25.9 million, with total debt at approximately $202.2 million, an increase of $19.4 million from the previous quarter [23] Business Line Data and Key Metrics Changes - Direct to consumer sales accounted for 22% of gross sales, comparable to the previous year [21] - Shipping delays affected sales of the Pop Yourself line in Q1 [22] Market Data and Key Metrics Changes - In the U.S. market, year-to-date point of sale (POS) was down mid-single digits, but improved to low single digits in the past four weeks [37] - In Europe, POS showed high single-digit year-over-year growth, significantly outpacing the overall toy industry [39] Company Strategy and Development Direction - The company aims to diversify into sports, gaming, and music to attract new fans [5] - Funko is focusing on improving retail opportunities and experiential engagements to delight collectors [5] - The company is withdrawing its 2025 outlook due to uncertainties related to global tariffs and macroeconomic conditions [9][24] - A cross-functional tariff task force has been established to mitigate tariff impacts and optimize operations [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the accelerated pace of change in the macro environment and its impact on business decisions [6] - The company is confident in its strategy and is taking disciplined actions to strengthen its foundation [8] - Management expects to fully offset the impact of incremental tariffs within the year through various initiatives [25] Other Important Information - The company is expanding its global footprint with new licensed stores in the UAE, China, and the Philippines [8] - Funko is committed to maintaining pricing to protect the fan experience despite rising costs [13] Q&A Session Summary Question: Can you offer extra color on mitigation efforts regarding price adjustments and retailer sentiment? - Management indicated that pricing decisions were made in January, and retail partners have been supportive of maintaining price points despite tariffs [32] Question: Can you discuss POS trends and expectations for the upcoming months? - Management noted that POS in the U.S. has shown improvement recently, while Europe continues to see strong growth [38] Question: Were the pricing changes planned prior to the tariffs? - Management confirmed that the pricing changes were planned before the tariffs were announced [43] Question: What drove the better-than-expected margins? - Management attributed the improved margins to slight improvements across product margins and inventory reserves, with no major drivers impacting Q1 [46] Question: How will the headcount reduction impact future quarters? - Management explained that the headcount reduction will provide cost savings throughout the year, with most reductions already implemented [48]

Financial Data and Key Metrics Changes - For Q1 2025, total net sales were $190.7 million, in line with guidance, with a gross margin of 40.3% and adjusted EBITDA at a negative $4.7 million, both better than expected [7][22][20] - Adjusted net loss was $17.8 million or $0.33 per share, which was also better than expectations [22] - Cash and cash equivalents stood at $25.9 million, total debt increased to approximately $202.2 million, and total company liquidity decreased to $90.9 million [23][24] Business Line Data and Key Metrics Changes - Direct to consumer sales accounted for 22% of gross sales, comparable to the previous year [21] - Shipping delays affected sales of the Pop Yourself line in Q1, indicating operational challenges [22] Market Data and Key Metrics Changes - In the U.S. market, year-to-date point of sale (POS) was down mid-single digits, but recent trends showed low single-digit growth in the past four weeks [35][37] - In Europe, POS grew by 8%, significantly outpacing the overall toy market growth of 1% [8][38] Company Strategy and Development Direction - The company aims to diversify into sports, gaming, and music while enhancing retail opportunities and experiential engagements [6] - A focus on tariff mitigation strategies has been implemented, including sourcing diversification and cost discipline measures [10][11] - The company is committed to maintaining pricing to ensure accessibility for fans, despite rising costs [13][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged intensified pressures from tariffs and selective consumer behavior, leading to the withdrawal of the 2025 outlook [9][24] - The company remains confident in its ability to offset incremental tariff costs through strategic actions [25][26] - Management emphasized the importance of partnerships and community engagement in navigating the current macro environment [28] Other Important Information - The company has reduced its global workforce by over 20% as part of cost-saving measures [12][46] - A cross-functional tariff task force has been established to address the impact of tariffs on operations [10] Q&A Session Summary Question: Can you offer extra color on mitigation efforts regarding price adjustments and retailer sentiment? - Management indicated that pricing decisions were made in January, and discussions with retail partners have been positive, supporting the decision to maintain price points [32][33] Question: Can you discuss POS trends and expectations for the upcoming months? - Management noted that while the U.S. market faced challenges, recent trends showed improvement, and Europe continued to perform well with high single-digit POS growth [35][38] Question: Clarification on pricing plans and margin drivers? - Management confirmed that planned price adjustments were not in direct response to tariffs and that gross margins exceeded expectations due to slight improvements across various metrics [42][44] Question: Regarding the headcount reduction, how should it be viewed moving forward? - Management explained that the majority of the headcount reduction has already occurred, with ongoing benefits expected throughout the year [46][48]

Financial Data and Key Metrics Changes - Total net sales for Q4 2024 were $293.7 million, up 1% year-over-year and at the top end of guidance [30] - Gross profit reached $124.4 million with a gross margin of 42.4%, an improvement from 37.6% in Q4 2023 [31] - Adjusted net income was $4.4 million, or $0.08 per diluted share, significantly up from $0.1 million in Q4 2023 [33] - For the full year, net sales were $1.05 billion compared to $1.1 billion in 2023, while adjusted EBITDA improved to $94.7 million from negative $11.8 million in 2023 [34] Business Line Data and Key Metrics Changes - Direct-to-consumer sales increased by 20% year-over-year, comprising 29% of gross sales compared to 25% in Q4 2023 [30] - Core collectibles business grew over 10% in Q4, with sales outside the US increasing by 23% [9] - The Biddy Pop line saw an impressive 83% year-over-year growth in Q4 [21] Market Data and Key Metrics Changes - Sales in Europe were up more than 20%, driven by strong seasonal performance at key retail partners [30] - POS in the fourth quarter was up 4% year-over-year globally, with 1% growth in the US and 17% growth in Europe [72] Company Strategy and Development Direction - The company is focusing on expanding its sports product line, which currently represents only 4% of total revenue, with significant growth potential identified in the $35 billion sports memorabilia market [12][64] - Plans to enhance direct-to-consumer sales and expand the Pop Yourself product line into new international territories are underway [39] - The company aims to improve brand value by avoiding sales into discount channels, thereby enhancing the shopping experience for fans [40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged softening consumer behavior in the US market and the impact of tariffs and inflation on operations [28] - Despite challenges, management remains optimistic about future growth, particularly in the second half of 2025 as strategic initiatives take effect [28][40] - The company is actively working on mitigating the impact of tariffs through various strategies, including renegotiating factory costs and adjusting pricing [38] Other Important Information - The company has strengthened its leadership team with key additions to enhance brand positioning and sales operations [25][27] - The fan loyalty program, Fan Rewards, added 120,000 new members in 2024, indicating strong customer engagement [24] Q&A Session Summary Question: Can you elaborate on the assumptions behind your guidance for the year? - Management highlighted green shoots in the business, particularly in direct-to-consumer and sports segments, while acknowledging headwinds from tariffs and consumer sentiment [46][47] Question: What is the potential size of the sports strategy over the next few years? - Management sees significant growth potential in the sports category, which is currently a small part of revenue, and plans to expand activations and regional capsules [59][64] Question: How is the POS performing in the US and Europe? - Management reported a 1% growth in US POS and a 17% growth in Europe, indicating stronger performance in the latter region [72] Question: Why is there a larger decline in sales expected in the first quarter? - Management attributed the decline to lower foot traffic in major retailers and cautious consumer spending, particularly in the direct-to-consumer channel [78][79] Question: Are there any mitigating actions being taken regarding tariffs? - Management confirmed that pricing adjustments and cost-sharing discussions with vendors are part of their strategy to offset tariff impacts [87]