--Q4 Net Sales at Upper End of Expectations, Gross Margin and Adjusted EBITDA Exceed Expectations, Driven by Strong DTC and EMEA Sales--

EVERETT, Wash.--(BUSINESS WIRE)--Mar. 6, 2025-- Funko, Inc. (Nasdaq: FNKO), a leading pop culture lifestyle brand, today reported its consolidated financial results for the fourth quarter and full year ended December 31, 2024. The company also provided financial guidance for the 2025 first quarter and full year.

Fourth-Quarter Financial Results Summary: 2024 vs 2023

• Net sales were $293.7 million versus $291.2 million
• Gross profit was $124.4 million, equal to gross margin of 42.4%, compared with $109.4 million, equal to gross margin of 37.6%
• SG&A expenses were $102.8 million, which included $1.6 million of non-recurring charges. This compares with $97.4 million, which included $8.0 million of non-recurring charges. Details related to the non-recurring charges can be found in footnotes 3 and 4 of the attached reconciliations
• Net loss was $1.5 million, or $0.03 per share, versus $10.8 million, or $0.21 per share
• Adjusted net income* was $4.4 million, or $0.08 per diluted share, versus $0.1 million, or $— per diluted share
• Adjusted EBITDA* was $26.3 million versus adjusted EBITDA* of $23.1 million

Full-Year Financial Results Summary: 2024 vs 2023

• Net sales were $1.05 billion versus $1.10 billion
• Gross profit was $434.5 million, equal to gross margin of 41.4%. This compares with $333.0 million, equal to gross margin of 30.4%.
• SG&A expenses were $359.0 million, which included $5.5 million of non-recurring charges. This compares with $377.1 million, which included $20.7 million of non-recurring charges. Details related to the non-recurring charges can be found in footnotes 3 and 4 of the attached reconciliations
• Net loss was $14.7 million, or $0.28 per share, compared with $154.1 million, or $3.19 per share
• Adjusted net income* was $8.7 million, or $0.16 per diluted share, versus adjusted net loss* of $74.7 million, or $1.43 per share
• Adjusted EBITDA* was $94.7 million compared to negative adjusted EBITDA of $11.8 million. Following correspondence with the SEC, the Company no longer adjusts its non-GAAP financial measures for one-time costs related to inventory. This change in presentation increases adjusted net loss by $29.3 million and lowers adjusted EBITDA by $39.0 million for the year ended December 31, 2023.

"2024 was a pivotal year for Funko. We strengthened our business, delivered on key financial goals and positioned the company for long-term success,” said Cynthia Williams, Chief Executive Officer of Funko. “We closed the year strong, with Q4 net sales up 1% and at the top end of our guidance range and adjusted EBITDA exceeding expectations, fueled by momentum of our Pop! Yourself and Bitty Pop! product lines, and growth of our direct-to-consumer, EMEA and core collectibles businesses. For the full year, both gross profit and adjusted EBITDA improved by more than $100 million, and we reduced total debt by $90 million.

"Now, we are focused on executing our strategic growth plan that revolves around financial discipline and intentional diversification. We are expanding our presence in sports, music, and gaming, all high potential categories, and our approach prioritizes sustainable, long-term value creation. We expect measured top-line growth in 2025, weighted toward the second half of the year, and we are confident that our initiatives will drive meaningful acceleration over time. Funko has a strong foundation, a clear strategy and a committed leadership team - we are excited about the opportunities ahead."

Fourth Quarter 2024 Net Sales by Category and Geography

The tables below show the breakdown of net sales on a brand category and geographical basis (in thousands):

Balance Sheet Highlights - At December 31, 2024 vs December 31, 2023

• Total cash and cash equivalents were $34.7 million at December 31, 2024 versus $36.5 million at December 31, 2023
• Inventories were $92.6 million at December 31, 2024 versus $119.5 million at December 31, 2023
• Total debt was $182.8 million at December 31, 2024 versus $273.6 million at December 31, 2023. Total debt includes the amount outstanding under the company's term loan facility, net of unamortized discounts, revolving line of credit and the company's equipment finance loan

Outlook for 2025

The Company's current outlook includes the anticipated impact of 20% tariffs on imports from China that have been announced through February 27, 2025. However, it does not account for any further tariff actions, as the impacts of such actions remain uncertain.

The Company provided its 2025 full-year outlook and 2025 first-quarter guidance, as follows:

*Adjusted net income (loss), adjusted net income (loss) per diluted share and adjusted EBITDA are non-GAAP financial measures. For a reconciliation of historical adjusted net income (loss), adjusted income (loss) per diluted share, and adjusted EBITDA, to the most directly comparable U.S. GAAP financial measures, please refer to the “Non-GAAP Financial Measures” section of this press release. A reconciliation of adjusted net loss, adjusted net loss per diluted share and adjusted EBITDA outlook to the corresponding GAAP measure on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to certain items. However, for the first quarter of 2025 the company expects equity-based compensation of approximately $4 million, depreciation and amortization of approximately $16 million and interest expense of approximately $4 million. For the full year 2025, the company expects equity-based compensation of approximately $15 million, depreciation and amortization of approximately $63 million and interest expense of approximately $15 million, each of which is a reconciling item to net loss. See "Use of Non-GAAP Financial Measures" and the attached reconciliations for more information.

Conference Call and Webcast

The company will host a conference call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) today, March 6, 2025, to further discuss its fourth-quarter and full-year results and business update. A live webcast, presentation materials and a replay of the event will be available on the Investor Relations section on the Company’s website at investor.funko.com. The replay of the webcast will be available for one year.

Use of Non-GAAP Financial Measures

This release contains references to non-GAAP financial measures, including adjusted net income (loss), including per share amounts, adjusted EBITDA, adjusted EBITDA margin and adjusted net income (loss) margin, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). Management uses these measures internally for evaluating its operating performance, for planning purposes, including the preparation of our annual operating budget and financials projections, to assess incentive compensation for our employees, and to evaluate our capacity to expand our business. The company's management believes that the presentation of non-GAAP financial measures provides useful supplementary information regarding operational performance because it enhances an investor's overall understanding of the financial results for the company's core business. Additionally, it provides a basis for the comparison of the financial results for the company's core business between current, past and future periods as they remove the impact of items not directly resulting from our core operations. The company also believes that including adjusted EBITDA and the other non-GAAP financial measures presented in this release is appropriate to provide additional information to investors and help to compare against other companies in our industry. Non-GAAP financial measures have limitations as analytical tools and should be considered only as a supplement to, and not as a substitute for or as a superior measure to, financial measures prepared in accordance with U.S. GAAP. We caution investors that amounts presented in accordance with our definitions of adjusted net income (loss), including per share amounts, adjusted EBITDA and adjusted EBITDA margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate these measures in the same manner.

Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables following this release.

About Funko

Headquartered in Everett, Washington, Funko is a leading pop culture lifestyle brand. Funko designs, sources and distributes licensed pop culture products across multiple categories, including vinyl figures, action toys, plush, apparel, housewares and accessories for consumers who seek tangible ways to connect with their favorite pop culture brands and characters. Learn more at www.funko.com and follow us on X (Twitter) (@OriginalFunko) and Instagram (@OriginalFunko).

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our product offerings and strategic plan, anticipated financial results, including without limitation, equity-based compensation and financial position. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our ability to execute our business strategy; our ability to manage our inventories and growth; our ability to maintain and realize the full value of our license agreements; impacts from economic downturns; changes in the retail industry and markets for our consumer products; our ability to maintain our relationships with retail customers and distributors; our ability to compete effectively; fluctuations in our gross margin; our dependence on content development and creation by third parties; the ongoing level of popularity of our products with consumers; our ability to develop and introduce products in a timely and cost-effective manner; our ability to obtain, maintain and protect our intellectual property rights or those of our licensors; potential violations of the intellectual property rights of others; risks associated with counterfeit versions of our products; our ability to attract and retain qualified employees and maintain our corporate culture; our use of third-party manufacturing; risks associated with climate change; increased attention to sustainability and environmental, social and governance initiatives; geographic concentration of our operations; risks associated with our international operations; changes in effective tax rates or tax law; our dependence on vendors and outsourcers; risks relating to government regulation; risks relating to litigation, including products liability claims and securities class action litigation; any failure to successfully integrate or realize the anticipated benefits of acquisitions or investments; future development and acceptance of blockchain networks; risks associated with receiving payments in digital assets; risk resulting from our e-commerce business and social media presence; our ability to successfully operate our information systems and implement new technology; risks relating to our indebtedness, including our ability to comply with financial and negative covenants under our Credit Agreement, as amended; our ability to secure additional financing on favorable terms or at all; the potential for our or our third-party providers’ electronic data or the electronic data of our customers to be compromised; the influence of our significant stockholder, TCG, and the possibility that TCG’s interests may conflict with the interests of our other stockholders; risks relating to our organizational structure; including the Tax Receivable Agreement ("TRA") which confers certain benefits upon the parties to the TRA ("TRA Parties") that will not benefit Class A common stockholders to the same extent as it will benefit the TRA Parties; volatility in the price of our Class A common stock; and risks associated with our internal control over financial reporting. These and other important factors discussed under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2024 and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S. GAAP financial performance measure, which is net income (loss), for the periods presented:

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Investor Relations:
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Media:
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Source: Funko, Inc.