Funko, Inc. Q1 FY2026 Earnings Call

Hi, everybody. I'm Tristan, but most people know me online as Top Pops. Today, we are here on Hollywood Boulevard in front of Funko Hollywood. This is the only store that you can find on the Walk of Fame that has literally every corner of entertainment, music, TV, anime, gaming, sports, all in one place. Today, I'm here to host Funko's first quarter financial results. So let's go inside. Joining me are Josh Simon, CEO of Funko; Yves Le Pendeven, CFO; and Jessica Kong, the GM of Loungefly.

Tristan, T Pop, thanks for being here. Now just so everyone knows, you are a super creator influencer in the world of collectibles. You cover the space more broadly. I think you know more about Funko and Pop! than probably all of us combined at the table. So we thought it would be great to have you here and bring a new perspective to our earnings call. Is this your first earnings call? Okay, just to confirm — I figured. Well, awesome having you here. We appreciate it.

No, it's so great to be here. Guys, I've spent a lot of time talking about Funko from the fan side. And today, I get to ask the questions from the business side. So let's get right into it. How was Q1 for Funko?

Great business question. You nailed it at the top. Q1 was really strong. I think it was an example of our Make Culture Pop! strategy kind of starting to really manifest itself in the market. We ended Q4 with some momentum, and we saw that continue into the year. Overall, our sales were up 5% in the quarter. And if you look at just the Core Collectibles business, we're up 17%.

And if I can jump in, we're obviously pleased about the sales growth, but we also reported our highest gross margin ever at 44%, and that drove an adjusted EBITDA of $11 million, which was way better than we expected.

Wow, that's great. Now let's talk about what's new on the product side. Josh, you've talked about Funko being at the center of culture. What did that look like this quarter?

So I go back to the Make Culture Pop! strategy: culture, creativity and commerce. On the culture side, we want to be part of all of these fan entertainment moments, pop culture moments that are going on around the world while they're happening. Some awesome examples of that in Q1: the big movers were KPop Demon Hunters, the final season of Stranger Things, One Piece, which is always really strong for us. We're also starting to see other great dimensions of the business with Mando and Grogu coming out; our Star Wars business is really showing some nice growth. And then I'll even just use a more recent example of Michael Jackson. This is one of my favorites — the "Smooth Criminal" vibe that's sort of iconic leaning look that always mesmerized me growing up; how did you do it? But it's great to be part of that moment with the Michael biopic out right now. From a creativity standpoint, it's really about how we take those moments and turn them into products and, frankly, adding some more newness and dimension to our product line. I think Bitty Pop! is a great example of that. We saw strength in the quarter coming off of Q4 rolling out into Walmart. From a seasonal basis, I'll give a great example, which is this Bitty Bouquet for your Valentine's Day lover. You can put the bouquet stand together and swap out whatever Bitty Pop! you're interested in there, which I think is a great evolution of a moment that we can play on with Bitty Pop!. I'll point out something in the world of Demon Slayer, which is obviously a great IP for us — like a sumi-ink paint deco to the Pop!, which helps bring freshness and newness to fans of Demon Slayer. From a commerce standpoint, it's about how we bring these products to life for fans. We like to say "turning shelves into stages." Some really fun examples this quarter: I went a few weeks ago to WrestleMania 42 in Las Vegas. Awesome weekend. Those guys always do a great job. We came to life at the WWE Fan Expo at the Las Vegas Convention Center with a Pop! Yourself experience, where you could customize yourself in exclusive WWE gear that you could only get there. We built the Pop! on site. We also launched a limited edition WWE cover on our D2C site as part of WrestleMania weekend, which was awesome. I think it's selling for 3 to 4x on secondary sites right now, which is cool to see. In sports, I had the chance to go to Miami. We have a brand-new shop-in-shop that opened at the new Inter Miami Stadium. I attended the second game in that stadium. Also an awesome Pop! Yourself experience there, and an exclusive Messi Pop! that you can only get at the stadium. We also had some incredible Loungefly product there. Yves brought some items from his bag of tricks. There's a great example of some of the Loungefly products that we're selling in the stadium for Inter Miami.

Yes, that's right, Josh. This is our Iconic Me backpack for Inter Miami, along with one of the many bag charms that are available. So a super fun collection.

I love that colorway — it brings back memories. I grew up in Florida, so it reminds me of Miami Vice in the '80s, and we get to live out our Crockett and Tubbs duo here. So it's a good one.

Now speaking of Loungefly, Jessica, is there anything else new that you have?

Well, I'm so glad you asked. Loungefly has a really strong base. We have an exceptionally loyal fan base, high brand equity, and best-of-the-best product placement in all of the Disney parks. We also have really great relationships with key retailers like BoxLunch and Hot Topic, and we're getting into premium. I can show you our very first Swarovski collection that launched last year. This is a piece that was part of the collection, selling at $400, which is well above the average $80 to $90 price point that we normally hit. This sold out within hours, so we're super excited to do more of these going forward. That being said, this year is really an important business reset for us. We cut our SKUs back by 50%, so sales will be down as planned this year. That's to improve SKU productivity and overall profitability. We're already seeing results of that, so we're super encouraged. We're doubling down on wearable storytelling: one, expanding the styles beyond the iconic mini backpack. For example, Heihei from Moana is a figural; she was actually our #1 SKU last year, and we'll continue to do more of these going forward. Two, we're doubling down on accessories: bag charms and pins are categories driving double-digit growth for us. Yves showed Mickey and Minnie new figural bag charms that are launching later this year, and they hold hands. Three, we're expanding our reach with Gen Z and will be launching a new diffusion line that is much more everyday functional at a much more affordable price point.

This is all really great. Also welcome to the team. Thank you. But now I've got to ask: is there any other changes you made to the management team?

Yes. We just had a brand-new Head of Marketing and Brand start a couple of weeks ago. Nik Rupp joins us from Nike. Awesome to have him on board. I mentioned last quarter that Andy Oddie, who's been with Funko for a long time and is an industry expert, moved into a new role as our Chief International Officer, giving dedicated focus to growing the business in Latin America and Asia. He and I spent a couple of weeks touring the region about a month ago. We met with our distributors and licensors and spent time with some retail partners in Korea and Japan and a few other locations. I came away really encouraged. From an IP standpoint, we already work with some of the biggest partners in the region. For example, Zootopia from Disney was the highest-grossing import movie ever in the history of China this year, doing about $630 million at the box office there, and we have a long-standing relationship with Disney. Anime is another example — it's popular in the region and an area we're into more broadly. There's a lot of potential. It will take time to build the foundation and plans to supercharge that growth, but I definitely came away encouraged about the opportunity in the region and Andy helping lead the charge.

Yves, anything you want to add about the broader economic environment and what the rest of the outlook is for the year?

Yes. We're pleased with Q1; it was a strong start to the year. We expect that momentum to continue in Q2. Today, we issued guidance for Q2: we think sales will be up low single digits to mid-single digits, and adjusted EBITDA between $5 million and $10 million. Looking to the second half of the year, it's a little bit too soon to say, but there are some favorable things: current tariff rates in effect are a little lower than we planned, which is good news, and we hope that continues. On the flip side, we're watching the news about oil prices closely. We have not been negatively impacted yet, but it's too soon to say. With that in mind, we're reiterating our original guidance for the year: sales flat to up 3% and adjusted EBITDA between $70 million and $80 million.

Thanks so much. And now, Josh, I've got to ask: is there anything that you're excited about coming up later this year?

Is there anything I'm not excited about? There's a lot this year. I mentioned last quarter too that it's an awesome film slate this year from beginning to end: Mando, Grogu, Toy Story, and Avengers: The Kang Dynasty at the end of the year. We actually just spent some time across the street from our offices in Burbank with the Head of DC Studios last week, and I'm super excited for Supergirl. Sports is obviously huge this year because of the World Cup. We have the French, English and U.S. national teams, and we have great relationships with a lot of athletes. I mentioned Messi earlier, who's playing for Argentina; Yamal for Spain; Haaland for Norway; and a few others. We even have the mascots — the three mascots that represent the U.S., Canada and Mexico who are hosting the tournament. We're covering it from all dimensions. We also talk a lot about the importance of speed, getting products to market faster. We just had an awesome execution with WrestleMania: a surprise appearance from IShowSpeed, one of the biggest creators in the world. He has something like 50 million followers on YouTube, Instagram and TikTok. Right as he was walking out to the ring, we dropped an IShowSpeed Pop! on our site and on fanatics.com. You can expect a lot more from us in that creator space and in coming to market much faster, in the moment for our fans throughout the year.

This is all really super exciting. Now let's turn to a couple of questions that we have from a few analysts as well as some fans maybe even watching right now. First one we have here is coming in from Stephen Laszczyk, Goldman Sachs. He asks: what gives you confidence that the improving POS trends you saw in Q4 will continue in 2026?

We had a great continuation of the Q4 trend. POS globally was up 6% in Q1. In the wholesale channel, it was up 12%. By territory, POS was up 6% in the U.S. and up 28% in Europe. You can see that's aligned to sell-in, so it's a very healthy trend — sell-in and sell-through — and we're pleased with that trend.

Great. Now actually another question from Stephen: what level of upside could we see from potential refunds and tariffs?

We've shared that we've paid approximately $20 million in IEEPA tariffs. We're taking all the steps we need to obtain a refund and are following the instructions. Timing is a bit uncertain. There is also a market to monetize tariff claims, and we're exploring all of our options at this point. So more to come on that.

Okay. Next question we have here is coming in from Keegan Cox at D.A. Davidson. He asked: can you talk about gross margin drivers for Q1 and Q2?

Sure. We reported our highest gross margin ever, and it's not because of some accounting adjustment — it's the result of many initiatives we've worked on for the past six months to a year. We reduced discounting and promotional activity. We renewed licensing agreements with major partners. Channel and sales mix all contributed to that 44% gross margin. Our guidance for the year is 42% to 44%, and we expect that trend should hold for the rest of the year.

OK, perfect. Next up, we're going to get into some fan questions here. The first one is coming in from TheBearsCollection142. They ask: What future Funko are you excited for?

For me, there are a few. Coming up at San Diego Comic-Con this year, we're launching and rolling out our Pop! Mystery lineup. That's a brand-new lineup of people's favorite 4-inch Pop! vinyl figures, but putting them into a blind box mystery format. We're starting off with some fun lines from Warner Bros. Horror and our Pop! Flora line. We have some really big IP coming in the future that I'll tease. There are also unique and compelling chase elements to it, so that's one I'm particularly excited about. We've continued to see traction in the world of BookTok and Romantasy. If you indulge like I do, we have some of the biggest titles in that world coming, and we'll be announcing some of that soon. That's a brand-new category of fandom for us that I'm excited about.

I'll be honest, I'm pretty excited to make some videos on those, too. Next one we have coming in from FuntoCollect. They ask: with Pop! from The Fox and the Hound, Oliver & Company, and Atlantis already out, are you looking to keep expanding into older Disney films?

Does Freaky Friday count? That would be a personal favorite. We work with Disney a lot, obviously, so we're constantly coming up with fun ways to bring some of their characters to life. I think that's definitely something we think about a lot on the Loungefly front as well.

Yes, for sure. Our fans love Disney Classics — that's core to our portfolio, and we'll always continue to develop in that area.

Cool. This next question is a joint one from Wasatch Pop and Chad Beaton. They are asking about the possibility of retail footprint expansions.

You're here in the Hollywood store today. The next step we really think about from a retail experiential standpoint is what we could do with our partners. We're currently working on revitalizing and reconceiving our space with FAO Schwarz in New York. We're in the early stages, but that's an incredible global flagship shopping destination that does experiential retail better than anyone, and they've been an incredible partner. We're working on expanding how we think about the Pop! Yourself kiosk experience and how that could come to life with some retail partners. We'll be testing that later this year with some partners and will announce more when ready. We'll continue to experiment here in this store — we have a lot of space — and introduce and refine concepts that, if successful, we can imagine rolling out to more places around the world.

Sounds pretty good. Now this next one is coming in from Noah MTV. He asked: what's your favorite comic book character you'd like to see become a Pop!?

We do a lot in that space, and that goes back to the core DNA of the company. Across the team, we're all really excited about DC's Absolute Universe — it's a fresh take on that world. The books have been great and chart-topping. That's an area we continue to explore.

I'll be honest, I'm excited about those. That pretty much wraps up the questions. I don't know if you have any final words?

A couple of things. First, thanks again for being here. For the World Cup, we are kicking off a bespoke Pop! Yourself experience. Right now, with Pop! Yourself you can get yourself popped in a U.S. World Cup kit. Next week, we're launching additional accessories. It's not out yet, but we did do a version of Top Pops for you here — you can accessorize yourself with the World Cup trophy. That's a little thank you for being here today and a token of gratitude for your first earnings call. Also, a lot of the information we talked about today, some additional investor materials and the presentation are available on our Investor Relations website, along with the recording for anyone who wants to watch it again.

That is exactly what I want. Thank you.

No, we appreciate it.

Thank you.