Funko, Inc. Q4 FY2024 earnings call

Key Points

• In 2024, stabilized net sales over $1B, drove gross profit and adjusted EBITDA growth. Q4 net sales $294M, top end of guidance, up over 1% YOY; DTC at 29% of sales.
• Major wins in sports, Pop Yourself, Biddy Pop; core collectibles up >10%, sales outside US up 23%.
• Sports product launches, NBA and NFL partnerships, Biddy City revealed at NY Toy Fair.
• DTC channel: 29% of gross sales, Pop Yourself up 110% YOY in Q4, 185% in 2024; Fan Rewards added 120k members in 2024.
• Strengthened leadership team with key additions: Jason Herenstein joined board, Jen Reeves as SVP of Brand, Glenn Abell as SVP of North America Sales, Zvi Geffen as VP of Business Development.

In 2024, Funko stabilized net sales at over $1 billion. For the 2024 fourth quarter, total net sales were $293.7 million, up 1% year-over-year and at the top end of guidance. Direct-to-consumer sales were 29% of overall sales. Gross margin reached 42%, and adjusted EBITDA was $26.3 million. For the full year 2024, net sales were $1.05 billion, and adjusted EBITDA significantly improved to $94.7 million compared to negative adjusted EBITDA of $11.8 million in 2023.

2025 Outlook

• Expect 2025 full-year net sales modestly up over 2024, adjusted EBITDA slightly lower at midpoint.
• Q1 2025 guidance: net sales between $188 million and $198 million, gross margin ~39%, SG&A expense ~$91 million, adjusted net loss between $25 million or $0.48 per share and $22 million or $0.40 per share, and negative adjusted EBITDA between $14 million and $9 million.
• Accounted for 20% tariffs on imports from China through Feb 27, 2025; plans to give stronger guidance after initial 10% tariffs if further tariffs are announced.

• Softening consumer behavior in the US market.
• Uncertainty of further tariffs beyond Feb 27, 2025.
• Border disruption in Mexico affecting delivery times of Pop Yourself components.

Q: Could you speak about the assumptions underwriting and guidance for 2025, including headwinds and tailwinds?

A: Cynthia mentioned green shoots like positive reaction to Biddy City at NY Toy Fair, strong POS in Europe; Yves noted guidance accounts for 20% tariffs and soft US consumer sentiment, with mitigation strategies in place.

Q: Talk about the sports strategy and margin profile of sports items?

A: Cynthia said sports is a growing area with positive reaction to activations, runway for growth long; margin profile of sports items similar to other Funko IP.

Q: Give sense of US retail POS, sell-in and sell-through?

A: POS up 4% YOY globally, 1% in US, double-digit in Europe; soft US consumer sentiment and border disruption affecting.

Q: Discuss Mexico tariffs and guidance?

A: Disruption at border affecting Pop Yourself delivery, guidance accounts for tariffs on China components, pricing adjustments considered in guidance.