Funko(US:FNKO)2025-05-08 21:32Financial 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]