Funko, Inc.(FNKO)Q2 2026 法說會逐字稿

Hi, everyone. I am here with Josh and Yves, and we are here at San Diego Comic-Con — the perfect place to have this discussion about Funko and its business because so much of Funko is here and has been here for the past 20 years.

Yeah. I often think there would not be the Funko that exists today without Comic-Con. It is a massive highlight of the year for us. We are excited you were able to join us and excited to take a little bit of a walk around in a bit here.

I have been to your booth several times, several years. Now it makes sense to come together like this. Before we get to the nitty-gritty, that is something I want to talk about because you have been here for 20 years. The booth has grown. The product has grown. The fandom has grown. Just what is that general feeling? Does this feel like a celebration when you come to San Diego every year?

It does. You'll see the folks who work in our booth are largely fans from all over the world. They take time off work and out of their lives to come in, hang out here, and help interact. It is also a great way for this community of fans from all across the country and the world to come in, celebrate Funko, experience the brand, and buy some incredibly coveted limited-edition products. It is flattering, humbling, and wild to see the lines at our booth for people who are here to get the exclusive products you can only get here at Comic-Con.

Absolutely. It is obviously great to see this fandom that happens here. I have seen those exclusives get off those shelves. So I know some business happens here as well. Let's get into that. How has this quarter been for Funko?

Numbers have been great, and it is really a reflection of our 'make culture pop' strategy gaining traction. We are pleased to report sales were up 7% in the quarter, building on the growth from Q1. For the first half of the year, we were up 6%. The good news is it was not just one product or region or IP; it was really broad-based. In the U.S., we were up 3%. In Europe, we were up 19%. From a product perspective, our core collectibles were up 9%. Although Loungefly was down 2%, it was an improving trend from what we saw in Q1, and we are really pleased with better SKU productivity.

Very nice. I am going to say that increase in the U.S. about 0.045 — that might just be me. Just so you know. But that is great to hear. Josh, what are some highlights of this quarter with Funko?

Yves mentioned the momentum we are seeing, and I think a big part of that is the 'make culture pop' strategy moving from strategy to execution. It is really about culture sensing and creating demand across the entertainment and pop culture landscape; creativity giving it form in products; and commerce putting it in fans' hands all over the world. On the culture side, it is about how we get faster at sensing what is happening and turning that into products. On creativity, we will take a walk around in a little bit and you will get to see our brand-new Pop! Mystery platform. That is about taking what people love about Pop and turning it into a broader experience and a new product format. I am excited to show you how that is about to materialize. It is great to see the 'make culture pop' strategy coming together and really moving from idea to execution in the quarter.

It is interesting because some franchises you are ready and prepared for, like Avengers: Doomsday, for example. Then you have ones you have to predict the popularity of, and then you get an explosion out of nowhere, like last year's interest in K-Pop Demon Hunters. How do you balance predicting versus following up?

Because we cannot predict everything, what we have to do is build a repeatable offense. That means having upstream teams ready to make licensing deals quickly, the internal capacity to design products and manufacture them fast, and retail relationships — whether wholesale partners or our own D2C channel — to get products to consumers quickly. The magic for us is that we have honed that engine: sensing demand, turning it into products, and getting them into fans' hands in a repeatable way. We are starting to see that happen more and more.

You only have to do that with movies, television, sports, anime.

Exactly. And video games and culture in general.

And maybe the raccoon that is taking the world by storm right now.

Well, should we go take a look at the booth? I am very excited to show what we have here on the show for you.

Let's go check it out. Alright. Let's check out what is over here.

So this is Husnal, our Chief Product Officer.

Hi, Husnal. Nice to meet you. Pleasure.

Alright.

So, obviously, there are some great products here. There is a special one here — the Pop! Mystery. Can you tell us about that?

Yes. At San Diego Comic-Con we are launching our Pop! Mystery line. This is the Flora pack right here. Flora is a plant line that we started as a standard product, and now we have made it into a mystery collection. It is absolutely fabulous. You can get one of six possible commons in a pack. Each wave has six commons with a chase as well as a global one-of-one chase, which differentiates us from the market and is extremely exciting.

Did you say one-of-one?

Yes, one of one of these out there. Imagine if you are a fan with the one.

Oh my gosh. That is amazing.

You have to see which one is inside, right?

Open it.

Okay.

What if this is the worldwide chase? Alright. Let's open this one.

You got it. Let's see.

Oh, it is pretty. I like that. Oh, is that Tula? The Tula is so cute. Not the one-of-one, but it is one of the ones I like. Look.

I think it is great, and we are obviously revealing this here at Comic-Con. This is original IP that we have created, and we are also launching with some of the biggest IP in the world, including with One Piece and with Warner Bros. on the models line.

Speaking of Warner Bros., One Piece and Flora have a little activation going over here, right?

Yes, and we are giving away pieces in that activation, so you might want to go check it out.

I think I do want to check it out. Let's go do it. Let's see what this is here. Oh, got a knock. Knock. Flora, Flora. Oh. Hey!

Hi, Andre. This is Nick.

How are you doing? Nice to meet you. Can I come in? Oh my gosh. Wow. This is beautiful.

Welcome to the Pop! Flora greenhouse.

Tell me about what it is like to create experiences for people at San Diego Comic-Con when it comes to Funko. Obviously, getting the pops, but you are giving a more immersive experience to them, right?

100%. This is such a special opportunity to be at San Diego Comic-Con. We really consider this our World Cup, our Super Bowl all in one. It provides us an amazing opportunity to be on the ground with our fans as part of the launch of Pop! Mystery. We created these mystery game rooms — this is the Pop! Flora Greenhouse — and we wanted to bring our own IP and our fandom to life. This is not just a banner ad or a shelf display. This is a greenhouse you can stand in and experience yourself.

I like that because it brings more into the fandom when you can offer an experience along with the product. Now let's see some more stuff here.

Thank you for stopping by. This is really cool. We also have a One Piece area and a Warner Bros. area and K-Pop Demon Hunters.

Thanks again, Nick. That was really cool.

Alright.

Let's take a look around this way.

You know, obviously we sell a lot of exclusive products that you can only get here, which draws massive lines and is super humbling. What you experienced in the mystery room is our first step into doing something more experiential. One of the most compelling experiences we have become known for both online and soon rolling out into wholesale partners is the Pop! Yourself experience. You can do that at the Hollywood store and a couple of stores we will announce soon. You can do it at the Miami stadium with the football club there. Here at Comic-Con we are celebrating the upcoming launch of Spider-Man: Brand New Day with a Pop! Yourself experience as well.

You tell me I can Pop! Myself a Spider-Man right now?

You sure can — a limited edition you can only get here. It is a version of our kiosk experience where you can pick your body type, skin tone, hair, clothes, and some specific Spider-Man outfits you can only get here at Comic-Con.

Alright. Want to give it a try?

I have to Pop! Myself here.

Let me start building. You said this is an exclusive Spider-Man: Brand New Day Pop!, right?

Exclusive only here at Comic-Con.

Alright. Let me pick my body type, skin tone, lashes, hair, some glasses — this looks like me. Very nice.

Lots of different hairstyles and exclusive accessories.

We got a VIP badge — perfect for Spider-Man going to Comic-Con. You can hold the mask in his hand. I see a little Hulk Bitty Pop in there. Is that also exclusive here?

It comes with a Bitty Pop! Hulk.

Oh, that is awesome. Alright. Package that Pop! Top. Look at that — me in the Spider-Man outfit with web shooting, mask, and the exclusive Hulk Bitty Pop! That is a cool experience to come here if you are excited for Spider-Man: Brand New Day and Pop! Yourself.

We will start to roll out geo-specific experiences and test them later this year with retail partners. You can imagine something like this popping up in other parts of the world to create unique, location-specific experiences.

That is great. I was thinking you could do this at Funko stores, and now you are saying there might be other stores and places around the world to do this too. Alright. Stay tuned for that. Let's go check out the next part of the booth.

Let's go by the Mondo booth. Mondo is our premium collector toy line. These guys are amazing artists. I have some Mondo figures in my home right now. We are going to cut through the crowd here.

Hey! How's it going, man? Good to see you.

I am a huge Ninja Turtles fan, so I am very excited about what is going on here.

This is the TMNT Mondoverse, where our partnership with Paramount has given us permission and access to create our own 'what if' scenario sequel story to the nineties film. We are bringing in all the characters and whimsy and wildness of the comics, video games, and cartoons into this real-world, gritty, man-in-a-suit vibe that the movies have. Paramount has given us the blessing to reimagine character history. For example, we are introducing new versions of the Punk Frogs as kid brothers that Mikey finds in the sewers. That is the kind of story expansion we are able to do with our Mondoverse.

I was curious because you have Funko and Mondo under the same roof, but you are doing different types of products. Have you seen a transition from Funko to Mondo in terms of more detailed figures? Does Funko support you with access and licensing?

What we get from Funko is support, credibility, and doors being opened for us to get licenses, access, and relationships that we otherwise might not be able to get. It is an amazing pairing that creates another collectible through line. You might collect Funko Pops for years and also want a realistic 1:6 scale — you can stay in-house at Funko through Mondo for a diverse collection. We are so proud of it and cannot wait to show more.

This is awesome — so much nostalgia here: Real Ghostbusters, Match the Universe, Street Sharks.

One more stop on this tour. We have seen the booths and fans enjoying the experiences. This feels like a good way to end in San Diego. We are in the big Pop! Mystery box, and the mystery is probably where we'll end up after this box closes. For now, should we go and take some investment questions? I think we should. Thank you so much, everyone.

One minute, we were dodging crowds at Comic-Con, and next we are here in the Funko office. Somehow, Josh, you made it all the way to London.

I am across the pond spending time with our EMEA team and partners. It is a late night, but I am excited to be reunited with you here live.

The magic mystery box can do multiple locations with multiple drop-offs. Now that we shared all the fun stuff at Comic-Con, Yves, can you tell us a little more about the financials?

Sure. As I mentioned earlier, sales were up 7% in Q2 and 6% for the first half. We reported a gross margin of 6.6% compared to 32.1% last year. To be clear, our Q2 gross margin benefited from the recognition of a $25 million credit related to expected tariff refunds and the release of accrued tariffs. For comparison to our guidance range of 42% to 44%, our gross margin normalized for that $25 million credit was 44.4%, which was still a record high for Funko. SG&A expenses improved as a percentage of sales by over 400 basis points compared to last year. Adjusted EBITDA was $40.9 million compared to negative adjusted EBITDA of $16.5 million last year. Excluding the tariff-related benefit, we delivered adjusted EBITDA of $15 million — well above our guidance range. In the quarter, we executed a sale of our IEEPA tariff claims: a total of $22 million in claims for proceeds of $19 million, and we used that to pay down debt by a total of $15 million, making more progress on deleveraging our balance sheet.

Sounds like great results. And what about the outlook?

For the outlook, we are reiterating our net sales guidance of flat to up 3%, and we are raising our adjusted EBITDA guidance to $100 million to $110 million. That raise is driven by the $25 million tariff credit from Q2 as well as $5 million from improved profitability.

That is great. Thank you, Yves. Josh, what can investors expect in the second half of the year from Funko?

The results Yves discussed highlight the model we are building: sensing demand earlier, creating repeatable ways to turn demand into products, and scaling them through the right retail channels globally. In the second half, our consolidated sales will reflect a more normalized year-over-year shipment comparison. We will continue to be prudent given the broader consumer environment. Regarding Loungefly and SKU reductions, we have made meaningful progress but would not declare the work finished. The encouraging signal in Q2 was that sales were down 2% with approximately 50% fewer SKUs, showing increased productivity. For the remainder of the year, we expect core collectibles to continue growing. Overall, the core is growing, Loungefly is becoming healthier, and our underlying earnings power is improving. Q2 is an early proof point that the 'make culture pop' strategy is underway; our focus now is consistent execution.

Nice. What are you excited for the rest of the year, particularly in terms of how the company is evolving?

There is a lot I am excited about. First is speed: how we make sure we are part of cultural and entertainment moments while they are happening. Speed depends on sensing demand earlier and responding quickly, sometimes with less inventory exposure. We formalized a partnership with HP on additive manufacturing as part of our Hyperstrike strategy, allowing us to create products in weeks instead of months. We already launched our first product with HP at Fanatics Fest: a mashup between WWE and Garbage Pail Kids that sold out and is reselling at multiples on secondary markets. Our QuickStrike offerings continue to perform; we had preorders for Heated Rivalry, Off Campus, and Obsession, including a preorder when the Knicks won the NBA Championship — the night they won we went live with a championship 5-pack. We are building that repeatable speed capability. Second, we are hiring a new Chief Commercial Officer: Kristen Hamilton, most recently senior vice president, head of global e-commerce and direct-to-consumer at Crunchyroll. She brings significant commercial experience and anime expertise, and before Crunchyroll she spent about 15 years at Hasbro in leadership roles across global e-commerce, CP strategy, transformation, brand management, and marketing. She starts on August 24, which is another exciting development for the second half.

The second half is looking promising. We are going to take some questions from analysts. First is Eric Christian Wold at Texas Capital.

How would you characterize the level of wholesale order demand in the third quarter and into the upcoming holiday season?

I will take that one. We continue to have about three to four months visibility with our wholesale customers placing orders. Compared to last year, we are seeing a return of more normalized seasonality. Last year, Q2 was disrupted post-Liberation Day announcement, and there was an element of catching up with people's orders in Q3 and into Q4. This year, we are shipping orders as customers want them. We are seeing great POS trends in our wholesale channel globally — POS sales were up 6% year over year. We always look for a balance between sell-in and sell-through, which we saw in Q2. By all the metrics we gauge, the business is healthy, inventory in the channel is healthy, and we see good demand from our wholesale partners and end customers.

Okay.

What are you seeing from your major retail partners around shelf space allocation in recent quarters and into the holiday season, and what categories are likely to see the most benefit from those gains?

I will start. I have been spending time with our European retailers. We have secured extra diorama displays in about 350 stores across Smyths, which is one of the most preeminent toy retailers in Europe and globally. We have additional presence in HMV, Gift Universe, and many independent retailers. Those are fully designed displays showcasing our products out of the packaging. We are also seeing increased end-cap displays at Smyths for Bitty Pop! — high-profile windows and prime tourist destinations like Hamleys are giving us visibility. We have a partnership across Sony and Disney with HMV on a big Spider-Man activation at HMV Oxford Street. Bitty Pop! has led to incremental shelf space. Spider-Man has led to incremental placement like pallet trains at Walmart. Alongside big entertainment releases and our growing product lines, we are seeing incremental shelf space at retail.

Look forward to people posting photos with those displays. Now some questions from Keegan Tierney Cox at DA Davidson.

Regarding the strong entertainment slate this year, which franchises or categories are generating the strongest demand? Any highlights this quarter and what properties are you most excited for in the second half of the year?

A strong content slate always helps. We suspected there would be some big hits this year, and we are seeing that in box office attendance and records. We have broad-based momentum across anime, gaming, theatrical, sports, and some of our own programs. Our top 10 franchises and programs represented about 32% of Q2 sales, so our business is not dependent on any single property, but they do help. Grogu and Mando were great for us. Toy Story 5 was a massive hit for Disney and did well. Our Spider-Man: Brand New Day activation at Comic-Con was huge, and we are glad we made that bet early. I am very excited for Avengers: Doomsday from Marvel and Disney at the end of the year. One Piece and Pokémon in anime and gaming remain huge. Sports delivered strongly — the excitement around the Knicks' championship was unprecedented for us; we went live with a championship 5-pack the night the Knicks won. The World Cup also generated strong sales. On QuickStrike, surprise hits like Obsession — a record-setting box office film — allowed us to go live quickly. We also had products for Heated Rivalry and Off Campus. A personal highlight was a line of products celebrating the Spice Girls across Loungefly and Funko — a dream come true to collaborate with them.

Save me a male B Funko Pop — I need that.

On the guidance, what are the assumptions that get you to the high and low ends of your guidance? Have you seen any impact from higher input costs like freight?

To the upside on sales, our order book visibility for Q3 makes us feel good. For the holiday period in Q4 we have less visibility, but we are excited about the content slate. Any upside depends on continued sell-through performance and a resilient consumer through the holiday period. To the downside, tariffs are a factor. We have factored in the latest announced tariffs of 10% to 12%, but surprises could occur, so we chose to be prudent in our gross margin guidance. As for freight or raw material costs, we are cautiously optimistic, but higher oil prices and related increases could negatively impact us.

Understood. Now some questions from Stephen Laszczyk at Goldman Sachs.

Funko noted point-of-sale tailwinds from the first-quarter entertainment slate carried into early second quarter and continued through the remainder of the quarter. What gives management confidence that these trends are sustainable through 2026?

I will start. In Q2, our wholesale channel POS sales were up 6% year over year. For the year-to-date, POS sales are up 9%. Year-to-date in the U.S. we are up mid-single digits and in Europe slightly over 20% POS growth. Those are strong trends. Based on the content slate and products in our lineup, we believe those trends should continue, and that is what we factored into our guidance.

To what extent do you expect new formats like Bitty Pop!, Pop! Mystery, and sports-related launches to be revenue contributors in 2026? What are the key growth levers outside of core Pop products?

On Pop! Mystery, it is too early to size that responsibly, but the platform potential is what's most important. Pop! Mystery can extend across any entertainment franchise and sports. We are doing it with our own IP like Flora, and it can go into multiple channels and markets worldwide. The blind-box craze is showing no signs of slowing, and this format encourages the thrill of the chase and repeat participation. We will judge initial launch performance by sell-through and reorders and scale based on that. From a licensor standpoint, we have an exciting lineup of Pop! Mystery products through next year. Bitty Pop! is another extension that is generating incremental placement, such as at Smyths in Europe. We will continue to dimensionalize Pop with a few new ideas rolling out at the end of this year and early next year. We have about half a dozen totally new formats in development for rollout early next year and beyond. The aim is to establish new platforms for fans to engage, capitalizing on our cultural and licensor relationships and being part of iconic entertainment moments in new ways that could set the stage for the next big franchise.

We will look forward to all of that. I look forward to seeing who gets a one-of-one worldwide chase with these mystery Pops. That is all the time we have for questions today. Yves and Josh, thank you for all your information about the successes and how you handled challenges. Josh, any closing thoughts before we let everyone go?

Thank you for joining us at Comic-Con and in the office in Burbank. The financial highlights this quarter are early evidence that the 'make culture pop' strategy is beginning to take hold. It is becoming a more deliberate and disciplined growth engine. We are getting better at sensing where fan demand is coming from, moving faster to turn those signals into distinctive products in repeatable ways, building platforms, and scaling them through channels globally. This quarter is an early proof point, not the end of the work, but SKU productivity and the record underlying gross margin give us confidence that we are on the right track. Thank you to our shareholders for your continued confidence, and most importantly, thank you to our fans for showing up the way you always do. I loved the energy at Comic-Con and hearing fans' ideas — it is an awesome reminder of why we do this. We are excited for the rest of the year and will see you next quarter.