Funko, Inc. Class A Common Stock 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Funko reported Q2 sales up 7% and 6% growth in the first half of the year, with broad-based increases across regions and products.
- US sales increased 3%, Europe sales rose 19%, core collectibles were up 9%, and Loungefly declined 2% but showed improving trends.
- Gross margin was 56.6% in Q2, benefiting from a $25 million tariff credit; normalized gross margin was 44.4%, a record high for Funko.
- Selling, general and administrative expenses improved by over 400 basis points as a percentage of sales year over year.
- Adjusted EBITDA was $40.9 million in Q2 compared to negative $16.5 million last year; excluding tariff benefits, adjusted EBITDA was $15 million, above guidance.
- Funko executed a sale of tariff claims for $19 million proceeds and used $15 million to pay down debt, advancing deleveraging efforts.
- The company highlighted strong momentum in its make culture pop strategy, with new product launches including the pop mystery platform and experiential activations at Comic-Con.
- Funko's Mondo line offers premium collectible figures with detailed designs, complementing the core Funko Pop products.
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Transcript
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Hi, everyone. I'm here with Josh and Eve. We're here at San Diego Comic-Con. Seems like 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 wouldn't be the Funko that exists today without Comic-Con. It's a massive highlight of the year for us. We're excited you were able to join us.
Yeah. Excited to take a little bit of a walk around in a bit here.
Well, I've been to your booth several times over the years and now we finally come together like this. Before we get into the nitty-gritty, that's something I want to talk about, because you've been here for 20 years. The booth has grown, the product has grown, the fandom has grown. Just what is that general feeling? Does it 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, who are taking time off of work and out of their lives to come and hang out here and help interact. It's also a great way for just these community of fans from all across the country and the world to come and celebrate Funko, experience the brand, buy some incredibly coveted limited edition products. It's flattering and humbling and wild to see the lines at our booth for people who are here to get the exclusive product you can only get here at Comic-Con.
Absolutely. It's obviously great to see this fandom that happens here, but I've seen those exclusives get off those shelves, I know some finances happen here as well. Let's get into that. How has this quarter been for Funko?
Yep. Numbers have been great, it's really a reflection of our Make Culture POP! strategy gaining traction. We're really pleased to report sales were up 7% in the quarter, that's building on the growth from Q1. For the first half of the year, we were up 6%. The good news is it wasn't really 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, we're really pleased with the better SKU productivity.
Very nice. I'm going to say that increase in the U.S., about 0.045%. That might just be me. No, that's great to hear. Josh, what are some highlights of this quarter with Funko?
Well, Eve mentioned the momentum that we're seeing. I think a big part of that is we talked a lot about the Make Culture POP! strategy, and I think we're really seeing that go from strategy to execution and take form. It's really about culture sensing and creating demand across the entertainment and pop culture landscape, creativity, giving it form and products, then commerce, putting it in fans' hands all over the world.
Yeah. On the culture side, it's really about how we get faster at sensing what's happening and then turning that into product.
The last two quick things I'll mention is creativity on the product side. We're going to take a walk around in a little bit, and you're going to get to see our brand new Pop! Mystery platform. That's really about taking what people love about Pop! and just turning it into a broader experience, and a new product format. So excited to show you how that's about to materialize. It's great to sort of see that Make Culture POP! strategy coming together and really moving from idea to execution in the quarter.
Yeah. It's interesting because it seems like you, obviously there's some franchises you're ready and prepared for, like Avengers: Doomsday, for example, or something like that. You've got to kind of predict the popularity, and then you have Obsession or like last year with Demon Slayer, where it's like, boom, this explosion out of nowhere. How do we jump on that as fast as possible? Is that a constant turning strategy between predicting versus following up on a trend?
It is. I think because we can't predict those things, what we really have to do is build this repeatable offense. Having sort of upstream teams in place that are really ready very quickly to make the licensing deals, the capacity internally to design the product, to manufacture them, and get them to shelves, then those retail relationships, either with wholesale partners or our own D2C channel, to get those out to consumers quickly.
Yeah. I think the magic for us is that we've really sort of honed that engine of sensing demand, turning it into products, and getting into our fans' hands in a really repeatable way, and we're starting to see that happen more and more.
You only have to do that with movies, television, sports, anime.
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