Funko(US:FNKO)2025-03-07 02:44Financial 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]