Funko Reports 21.9% Decline in Q2 2025 Net Sales, Widening Net Loss

Funko, Inc. reported a significant decline in financial performance for the second quarter of 2025, with net sales of $193.5 million, a decrease of 21.9% from $247.7 million in the same period of 2024. The company's net loss for the quarter was $41.0 million, compared to a net income of $5.4 million in the prior year. For the first half of 2025, Funko's net sales totaled $384.2 million, down 17.1% from $463.4 million in the first half of 2024, while the net loss widened to $69.1 million from $18.2 million year-over-year. The decline in sales was attributed to tariff disruptions and macroeconomic uncertainties affecting consumer spending.

In terms of operational metrics, Funko's gross margin fell to 32.1% in the second quarter of 2025, down from 42.0% in the same quarter of 2024, primarily due to increased inventory reserves and higher shipping costs. Selling, general, and administrative expenses rose by 5.6% to $82.3 million, driven by increased personnel costs and professional fees. The company also reported a decrease in interest expenses, which fell to $4.5 million from $5.1 million, reflecting a reduction in debt levels.

Strategically, Funko is navigating a challenging retail environment, with retailers reducing inventory levels and canceling orders. The company has implemented a plan to mitigate these challenges, which includes adjusting its inventory buy-in strategy and focusing on non-exclusive core products. Funko is also exploring potential strategic alternatives, including a possible sale of the company, as it faces substantial doubt about its ability to continue as a going concern due to financial covenant pressures arising from the current retail landscape.

Geographically, Funko's sales in the United States decreased by 27.7% to $117.9 million, while sales in Europe saw a smaller decline of 4.3% to $57.8 million. The company reported a notable drop in sales from its "Other" branded category, which fell by 78.7% to $4.1 million. As of June 30, 2025, Funko had $49.2 million in cash and cash equivalents, an increase from $34.7 million at the end of 2024, but its working capital remained negative at $(161.7) million.

Looking ahead, Funko anticipates continued challenges due to the impact of tariffs and economic conditions on its operations. The company is actively seeking to raise additional capital and refinance its existing debt to ensure liquidity. Management has expressed confidence in its ability to implement its liquidity plan, although it acknowledges the uncertainty surrounding the execution of these strategies and the potential need for further financing.