Funko (FNKO) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales increased 3.2% year-over-year to $247.7 million, marking the first profitable quarter since Q3 2022, driven by direct-to-consumer and international growth despite macroeconomic pressures.

• Gross margin improved to 42.0% from 29.2% last year, aided by inventory reserve relief and lower shipping costs.

• Net income was $5.4 million ($0.10 per diluted share), a turnaround from a $75.9 million loss in Q2 2023, with adjusted EBITDA at $27.9 million.

• Leadership transition completed with Cynthia Williams as CEO and Yves Le Pendeven as CFO.

• Focus remains on inventory management, cost controls, and strategic investments in direct-to-consumer channels.

Financial highlights

• Q2 2024 net sales: $247.7 million (+3.2% year-over-year); gross profit: $104 million; gross margin: 42.0%.

• Adjusted net income: $5.6 million ($0.10 per diluted share); adjusted EBITDA: $27.9 million; SG&A: $77.9 million.

• Cash and equivalents at quarter-end: $41.6 million; total debt reduced to $223.9 million.

• Liquidity increased to $101.6 million from $69.1 million last quarter and $36.8 million a year ago.

• Net inventory: $109 million, down from $112.3 million at March 31, 2024.

Outlook and guidance

• Full-year 2024 guidance: net sales of $1.047–$1.103 billion; adjusted EBITDA of $65–$85 million.

• Q3 2024 guidance: net sales $282–$297 million, gross margin 38–39%, SG&A $90–$95 million, adjusted EBITDA $21–$25 million.

• Q4 expected to be stronger than Q3 due to higher direct-to-consumer mix and giftable products.

• Management remains focused on inventory management, cost controls, and direct-to-consumer growth.