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.

• Net income was $5.4 million ($0.10 per diluted share), a significant turnaround from a net loss of $75.9 million in Q2 2023, aided by improved gross margins and lower operating expenses.

• Gross margin reached 42.0%, up from 29.2% last year, supported by inventory reserve relief and lower shipping costs.

• CEO Cynthia Williams outlined a fan-centric growth strategy focused on core fans, new audiences, expanded distribution, and improved fan experience.

• Inventory and debt levels were reduced sequentially and year-to-date.

Financial highlights

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

• Adjusted EBITDA was $27.9 million, well above guidance and reversing a negative $7.6 million in the prior year.

• Adjusted net income was $5.6 million ($0.10 per diluted share), above guidance.

• Cash and cash equivalents increased to $41.6 million at June 30, 2024.

• Total debt decreased to $210.9 million at June 30, 2024, down from $246.4 million sequentially.

Outlook and guidance

• Full-year 2024 guidance reiterated: net sales $1.047–$1.103 billion, adjusted EBITDA $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.

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

• Expect higher Q4 sales due to direct-to-consumer mix and giftable products, contingent on holiday demand.