Executive Summary

Q2 2025 was materially disrupted by tariff policy changes and a pause in direct-import orders; net sales of $193.5M declined 21.9% YoY, while gross margin fell to 32.1% from 42.0% due to royalty minimum shortfalls, higher duties, and inventory reserves .
Revenue modestly exceeded Wall Street consensus, but adjusted EPS and EBITDA missed: Revenue $193.5M vs $183.9M*, adjusted EPS −$0.48 vs −$0.43*, EBITDA −$21.1M vs −$10.5M*; management highlighted resumed shipments, price increases, and sourcing shifts for H2 .
Guidance framework pivoted to H2-only commentary: net sales down high-single digits vs H2’24, adjusted EBITDA margin mid-to-high single digits, and Q4 to ramp over Q3; FY 2025 guidance remains withdrawn due to tariff uncertainty .
Near-term stock catalysts: evidence of resumed orders and price realization in Q3, H2 margin trajectory, international POS strength, and balance sheet actions (credit amendment; ATM shelf) vs overhangs from liquidity constraints and going-concern disclosure .

What Went Well and What Went Wrong

What Went Well

Resumed shipments to direct-import customers in June and implemented U.S. price increases; e-commerce showed “no negative impact on unit volumes” post-price changes, supporting realization initiatives .
International momentum: POS sales up 18% in H1 and up 28% in Q2, with plans to launch Pop! Yourself in Europe for holiday season; sports products and Bitty Pop lines showed growth .
Management actions to offset incremental tariff costs in 2025 (~$40M vs prior ~$45M estimate) via pricing, sourcing shifts to Vietnam/other countries, and SG&A reductions (including ~20% workforce reduction) .

“Looking ahead, we expect headwinds to moderate and our business to improve as a result of the actions we've taken to cut costs, diversify product sourcing and adjust prices.” — Interim CEO Mike Lunsford .

What Went Wrong

Gross margin compressed 990 bps YoY to 32.1% driven by royalty minimum guarantee shortfall, tripling of tariffs on imports, and inventory reserve build; supplemental margin bridge quantified negative impacts from tariffs/reserves despite improved product margins .
SG&A held elevated at $82.3M vs $77.9M last year (which benefited from a $1.5M non-recurring net benefit), reflecting disruption costs and the ongoing transition period .
Liquidity and leverage concerns: total debt rose to $256.6M and liquidity stood at ~$54.2M; company received covenant waivers for Q2–Q3 and filed an ATM for up to $40M while disclosing going-concern risks in the 10-Q .

Financial Results

Income Statement and Profitability

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$293.7	$190.7	$193.5
GAAP Diluted EPS ($)	$0.03-	$(0.52)	$(0.74)
Adjusted Diluted EPS ($)	$0.08	$(0.33)	$(0.48)
Gross Margin %	42.4%	40.3%	32.1%
Adjusted EBITDA ($USD Millions)	$26.3	$(4.7)	$(16.5)
Adjusted EBITDA Margin %	8.9%	(2.4)%	(8.5)%

Notes: Q2 2025 adjusted net loss of $26.7M; adjusted net loss margin (13.8%) .

Segment Net Sales (Brand Category)

Category ($USD Thousands)	Q4 2024	Q1 2025	Q2 2025
Core Collectible	$232,703	$144,479	$157,477
Loungefly	$42,364	$35,374	$31,847
Other	$18,662	$10,886	$4,145
Total Net Sales	$293,729	$190,739	$193,469

Net Sales by Geography

Geography ($USD Thousands)	Q4 2024	Q1 2025	Q2 2025
United States	$178,183	$121,909	$117,874
Europe	$94,694	$54,205	$57,784
Other International	$20,852	$14,625	$17,811
Total Net Sales	$293,729	$190,739	$193,469

KPIs and Balance Sheet

KPI / Balance Metric	Q4 2024	Q1 2025	Q2 2025
DTC Share of Gross Sales (%)	—	—	21% (vs 23% LY)
U.S. POS Unit Trends	—	H1: down ~5% YoY	Q2: up 3% YoY
International POS Unit Trends	—	H1: up 18% YoY	Q2: up 28% YoY
Cash and Equivalents ($USD Millions)	$34.7	$25.9	$49.2
Inventories ($USD Millions)	$92.6	$87.7	$101.3
Total Debt ($USD Millions)	$182.8	$202.2	$256.6
Liquidity ($USD Millions)	—	—	$54.2 (cash $49.2 + $5.0 revolver availability)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2025	$1.05B–$1.082B (3/6/25)	Guidance withdrawn (5/8/25)	Withdrawn
Adjusted EBITDA	FY 2025	$80M–$100M (3/6/25)	Guidance withdrawn (5/8/25)	Withdrawn
Net Sales	H2 2025	—	Down high single digits vs H2 2024	Directional provided
Adjusted EBITDA Margin	H2 2025	—	Mid-to-high single digits; Q4 > Q3	Directional provided
Reconciling Items (H2)	H2 2025	—	Equity comp ~$8M; D&A ~$27M; Interest ~$11M	New disclosure
Q1 2025 Specifics	Q1 2025	Net sales $188–$198M; GM ~39%; SG&A ~$91M; Adjusted net loss $25–$22M; Adj. EBITDA −$14M to −$9M	Actual net sales $190.7M; GM 40.3%; Adjusted net loss $17.8M; Adj. EBITDA −$4.7M	Beat on margin/adj. EBITDA vs guidance

Earnings Call Themes & Trends

Topic	Q4 2024 (Press release)	Q1 2025 (Press release)	Q2 2025 (Call/PR)	Trend
Tariffs / Trade Policy	Noted uncertainty into 2025 outlook	Withdrew FY 2025 outlook due to escalating/volatile tariffs; intensified in April	Tripling of tariffs; paused direct-import orders; resumed in June; plan to fully offset ~$40M duties	Elevated headwind, mitigation underway
Pricing Actions	—	Initiated pricing adjustments	U.S. price increases implemented; no unit volume dip in e-commerce	Positive realization
Sourcing Diversification	—	Accelerating diversification (expect ~5% US-bound from China by YE)	Shift production to Vietnam/others progressing	Execution progress
DTC / International	Q4 driven by DTC and EMEA strength	International continued strength; gaining share	International POS +28% in Q2; Pop! Yourself Europe launch planned	Strengthening
Product Momentum	Pop! Yourself, Bitty Pop momentum	—	Growth in Bitty Pop; sports products expansion	Sustained
Gross Margin Dynamics	42.4% in Q4	40.3% in Q1	32.1% in Q2; margin bridge shows tariff/reserve/royalty impacts	Compression from external/internal factors
Liquidity/Leverage	Reduced total debt in 2024	Debt up; compliance maintained	Covenant waivers for Q2–Q3; ATM shelf up to $40M; going-concern disclosure	Risk management actions
Management / Strategy	—	—	Interim CEO appointed (7/5/25) to stabilize, explore options	Leadership transition

Management Commentary

“As expected, our 2025 second quarter performance was impacted by a dynamic and uncertain tariff environment… we expect headwinds to moderate… [through] actions we've taken to cut costs, diversify product sourcing and adjust prices.” — Mike Lunsford, Interim CEO .
“Gross margin was favorably impacted by ~350 bps from reduced discounting… offset by shortfall in minimum guaranteed royalties, tripling of tariffs, and inventory reserves.” — Yves Le Pendeven, CFO .
“We expect second half net sales to be down high single digits… adjusted EBITDA margin in the mid- to high-single digits… Q4 to ramp up over Q3.” — CFO .
“We executed an amendment to our existing credit facilities… waivers for net leverage and fixed charge coverage for Q2 and Q3 2025… filed an ATM of up to $40M.” — CFO .

Q&A Highlights

EBITDA and margin drivers: Management pointed to ~5 pts margin decline tied directly to tariff announcement and related disruptions; adjusted EBITDA excludes standard non-GAAP items, but SG&A reflected disruption costs .
Orders and shipping cadence: Pause concentrated in April–May; pricing arrangements allowed resumed shipments in June; some Q2 orders rolled into early Q3; “normal shipping patterns” resuming absent new tariff changes .
Pricing impact: Early July price increases showed no negative e-commerce unit impact; wholesale POS trends mixed as old vs new price SKUs coexisted, but no meaningful unit dip attributed to pricing .
Liquidity outlook: Covenant waivers and ATM provide flexibility; focus on refinancing before year-end amid cash collections lag from Q2 disruption .

Estimates Context

Metric	Q4 2024 Consensus*	Q4 2024 Actual	Q1 2025 Consensus*	Q1 2025 Actual	Q2 2025 Consensus*	Q2 2025 Actual
Revenue ($USD Millions)	286.118*	$293.729	191.958*	$190.739	183.876*	$193.469
Primary EPS ($)	0.00*	$0.08	(0.435)*	$(0.33)	(0.43)*	$(0.48)
EBITDA ($USD Millions)	21.5*	$23.692	(11.3)*	$(7.936)	(10.5)*	$(21.106)
# of Estimates (Rev, EPS)	2, 2	—	2, 2	—	2, 2	—

Highlights:

Q2 2025: Revenue beat; adjusted EPS missed; EBITDA missed materially versus consensus*.
Q1 2025: Revenue roughly in-line; adjusted EPS beat; EBITDA beat versus consensus*.
Q4 2024: Both revenue and EPS beat modestly; EBITDA above consensus*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

Execution in H2 is critical: watch for sustained order flow post-resumption, price realization without unit degradation, and margin recovery toward mid-to-high single-digit adjusted EBITDA margins .
International strength offsets U.S. sell-in disruption: robust POS trends and Europe launch of Pop! Yourself can support top-line stability into holiday .
Margin path will signal trajectory: improvement from tariff cost offsets (pricing, sourcing, SG&A) vs headwinds (royalty minimum shortfalls, reserves) should drive stock narrative .
Balance sheet actions reduce near-term risk but add overhang: covenant waivers and ATM enhance flexibility; refinancing efforts and going-concern disclosure require monitoring for dilution or cost of capital outcomes .
Product/IP momentum remains a lever: Bitty Pop and sports categories plus MLB Pop! Yourself tie-ins can support mix and DTC growth .
Estimate revisions: Expect models to incorporate lower H1 margins and H2 directional guidance; consensus likely needs tighter EBITDA assumptions and tariff offsets, despite a Q2 revenue beat*.
Near-term trading lens: headlines around pricing resilience, Q3 order cadence, and H2 margin proof points are potential upside catalysts; any signs of additional tariff shocks or liquidity stress would be downside risks .

Citations: Press release Q2 2025 ; Form 8-K Q2 2025 ; Earnings call transcript Q2 2025 ; Q1 2025 press release/8-K ; Q4 2024 press release/8-K ; Credit agreement amendment ; Interim CEO appointment ; MLB Pop! Yourself .

Funko, Inc. (FNKO)·Q2 2025 Earnings Summary