Funko (FNKO) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales reached $190.7 million, down 11.6% year-over-year, aligning with guidance but reflecting lower sales to specialty and mass market retailers.

• Gross margin improved to 40.3% from 40.0% year-over-year, slightly above expectations due to product mix.

• Adjusted EBITDA was -$4.7 million, a decline from $9.6 million in Q1 2024, and adjusted net loss was $17.8 million ($0.33/share), both better than anticipated.

• Net loss widened to $28.1 million ($0.52/share), up 18.6% year-over-year, as sales declines outpaced cost reductions.

• International markets, especially Europe, showed strong growth and comprised 36% of total net sales, while U.S. sales declined 16.7% year-over-year.

Financial highlights

• Net sales: $190.7M (Q1 2025) vs. $215.7M (Q1 2024), down 11.6%.

• Gross profit was $76.9 million, with SG&A expenses at $84.8 million, below guidance.

• Cash and cash equivalents stood at $25.9 million as of March 31, 2025, down from $34.7 million at year-end.

• Total debt increased to $202.2 million from $182.8 million sequentially.

• Net inventory decreased to $87.7 million from $92.6 million in Q4.

Outlook and guidance

• 2025 full-year outlook withdrawn due to intensified and volatile tariffs, especially on China imports, and macroeconomic uncertainties.

• Management expects to breach Maximum Net Leverage and Minimum Fixed Charge Coverage Ratio covenants in Q2 2025, raising substantial doubt about going concern status.

• Q2 expected to be negatively impacted by tariffs and sales disruption from paused U.S.-bound China orders.

• Second half of 2025 expected to improve as tariff offsets and supply chain diversification take effect.

• Actions include cost controls, shifting manufacturing, growing international markets, and seeking covenant relief or refinancing.