Funko (FNKO) Q3 2025 earnings summary

Executive summary

• Net sales for Q3 2025 were $250.9 million, down 14.3% year-over-year, with net income of $0.9 million, a 79.4% decrease from Q3 2024; the Bitty Pop! line was a key sales driver.

• The Make Culture Pop strategy, new licensing deals, and product innovations, including rapid launches like KPop Demon Hunters, drove brand engagement.

• Sales declines were broad-based across all channels and geographies, driven by tariff disruptions and macroeconomic uncertainty.

• Management has identified substantial doubt about the company's ability to continue as a going concern due to forecasted covenant non-compliance and liquidity challenges.

• New retail initiatives, such as Pop Yourself kiosks and a dedicated space at Inter Miami CF's stadium, expanded brand presence.

Financial highlights

• Q3 2025 net sales: $250.9M (-14.3% YoY); gross margin: 40.2% (down from 40.9% YoY); gross profit: $100.8M.

• Adjusted EBITDA for Q3 2025: $24.4M (9.7% margin), above expectations but down from $31.0M YoY.

• SG&A expenses were $79.8 million, including a $1.0 million non-recurring charge, reflecting cost reductions.

• Cash and cash equivalents stood at $39.2 million, net inventory at $99.8 million, and total debt at $241 million as of September 30.

• U.S. net sales declined 20.1% year-over-year; Europe was nearly flat, and other international sales fell 10.8%.

Outlook and guidance

• Q4 2025 net sales are expected to increase modestly from Q3, driven by Pop Yourself's European launch and K-pop Demon Hunters sales.

• Gross margin is projected at approximately 40%, with adjusted EBITDA margin in the mid to high single digits.

• Management expects continued pressure from tariffs, macroeconomic uncertainty, and a challenging retail environment to impact sales, margins, and liquidity.

• The company is pursuing cost reductions, working capital management, and exploring strategic alternatives, including a potential sale.

• Additional financing or refinancing of credit facilities will be necessary in the near term.