Funko reported this afternoon as the last of the “Big Five” publicly traded toy and collectibles companies to report third-quarter earnings.
The company’s net sales fell 6.4% to $292.8 million from $312.9 million in the third quarter of last year, beating Wall Street expectations. The numbers are in line with expectations, as the real progress in Funko’s turnaround is behind the scenes. The Washington-based company reported gross profit of $119.9 million and a gross margin of 40.9%. This is an improvement from $104 million and equates to a gross margin of 33.2% in the third quarter of 2023.
We reported solid financial performance in the third quarter of 2024. As expected, net sales were down compared to the year-ago quarter but remained at the high end of our guidance range. On the other hand, as we did in the first two quarters of the year, our profitability was better than expected due to improved gross margin."
— Cynthia Williams, CEO, Funko
Funko, facing the same cautious, price-conscious consumer environment currently affecting nearly every company in the toys and games space, updated its full-year guidance to reflect a slight decline in 2024 net sales of $1.037 billion to $1.05 billion. Instead, the company raised its adjusted EBITDA forecast to $85-90 million.
In the third quarter, sales of core collections fell 2.3%, Loungefly sales fell 17.6%, and sales of other merchandise fell 20.8%. In the third quarter, Funko grew 13.5% in international markets outside the United States and Europe.
“We are deep into our strategic plan for 2025 and beyond and are pleased that we have already begun executing several elements of that plan,” Williams added. “Recently, we enabled direct-to-consumer shipping capacity to Canada and expanded Collaboration with the National Football League (NFL) and its fan base of over 200 million includes customizing Pop! to feature any NFL team logo. Plus, just in time for the holidays, we’re announcing that Harry Potter accessories will be available to customize Pop! ! Start yourself tomorrow.
During tonight’s earnings call, Williams praised the NFL for the immediate success of the launch, with more than 40% of Pop!’s sales from launch to the end of the third quarter including NFL-branded accessories. In addition, “Pop!”‘s daily sales of Yourself products soared by 150%. Dallas Cowboys wide receiver CeeDee Lamb has partnered with Funko on an advertising campaign tied to exclusive characters delivered directly to consumers through Funko.com. Other hits for Season 3 include exclusives related to the World Series champion Los Angeles Dodgers and country music star Reba McEntire, as well as funko fusion video games.
new route
During the earnings call, Williams revealed that certain responsibilities within the company’s senior management team have been realigned.
- Chief commercial officer Andy Oddie will now oversee global sales and business development efforts in addition to overseeing licensing relationships. He has moved to Los Angeles to maintain a physical presence closer to the majority of Funko’s licensing partners and its US sales team.
- Johanna Gepford, Senior Vice President, Growth Initiatives, is fully dedicated to overseeing growth initiatives and new business lines. This includes managing the global direct-to-consumer pipeline Pop!Yourself, Mondo and digital collectibles.
The company is actively recruiting talent in key areas, including creative product development, brand management and marketing, as well as business development related to organically growing Funko’s reach and fan base.
Festival promotions and political influence
Funko Chief Financial Officer Yves LePendeven said the company plans to launch a series of holiday retail promotions and marketing spending in the coming weeks. Williams added that major retailers have indicated that Black Friday sales are expected to begin around November 22 and continue through Cyber Monday.
As Donald J. Trump begins his second term as president next year, the threat of looming tariffs and other supply chain issues is back on the table. Williams noted that the company has been shifting its supply chain away from China and towards markets such as Vietnam for several years. Currently, about a third of Funko’s products come from China, with just under 10% used in the company’s Loungefly fashion accessories business and already subject to tariffs. That said, the company understands how the impact of tariffs will be felt and will continue to work to diversify its supply chain and mitigate any potential tariff threats.
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