Executive Summary

Q3 delivered sequential recovery: Net sales $250.9M (-14.3% YoY, +29.7% QoQ), gross margin 40.2% (vs 32.1% in Q2), and adjusted EBITDA $24.4M, all ahead of internal expectations; GAAP diluted EPS $0.02 and adjusted EPS $0.06 .
Versus S&P Global consensus, revenue modestly missed while profitability beat: Revenue $250.9M vs $262.0M consensus (miss); Primary EPS $0.06 vs -$0.09 consensus (beat); EBITDA ~$22.0M vs $15.0M consensus (beat). Management cited price increases and tariff-mitigation actions for margin resilience (see Estimates Context). Values retrieved from S&P Global.*
Q4 outlook calls for modest sales growth vs Q3, ~40% gross margin, and adjusted EBITDA margin in the mid- to high-single digits—reiterating H2 profitability aims with more specificity for Q4 .
Strategic highlights: Bitty Pop! named to Walmart’s 2025 Top Toy list; anime now ~30% of sales; multi‑year renewals with Disney, Warner Bros., NBCUniversal, 20th Century Studios, and Paramount; planned AI-powered “Pop Yourself” builder and retail kiosks support DTC and experiential growth .
Risk watch: Going-concern language remains; covenant waivers secured and Moelis engaged for refinancing; total debt ~$241M with higher revolver draw—liquidity and refinancing execution are critical near-term stock catalysts .

What Went Well and What Went Wrong

What Went Well

Margin restoration and profitability beat: Gross margin 40.2% (better than expected); adjusted EBITDA $24.4M ahead of plan as price increases fully offset tariff impact outside Q2 spike .
Product and retail momentum: Bitty Pop! added to Walmart’s Top Toy list; rollout in the toy aisle and planned out‑of‑aisle placement in ~1,800 stores supports holiday sell-through .
Strategic positioning: CEO announced multi‑year licensing renewals with Disney, Warner Bros., NBCUniversal, 20th Century Studios, and Paramount—fortifying IP access and pipeline; expanding Pop Yourself in Europe and planning AI-powered builder .

Quote: “We delivered a solid 2025 third quarter…gross margin and bottom-line profitability well ahead of expectations…swift implementation earlier this year of our tariff mitigation plans.” — CEO Josh Simon .

What Went Wrong

Top-line pressure: Net sales declined 14.3% YoY to $250.9M, with Core Collectibles -12% and U.S. down 20.1% amid tariff disruption, SKU rationalization, and cautious specialty/mom-and-pop channels .
DTC moderation: DTC mix fell to 18% (from 20% LY) due to deliberate marketing pullback; Europe also saw minor production delays tied to Vietnam migration, pushing shipments into Q4 .
Balance sheet strain and financing risk: Total debt ~$241.0M (vs $182.8M at YE24) and going‑concern disclosure persists; although covenants waived for Q2–Q3 and Moelis engaged, refinancing remains a key overhang .

Financial Results

Consolidated P&L snapshot (chronological: oldest → newest)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Sales ($M)	$292.8	$190.7	$193.5	$250.9
Gross Margin %	40.9%	40.3%	32.1%	40.2%
SG&A ($M)	$92.7	$84.8	$82.3	$79.8
Operating Income ($M)	$11.7	$(23.2)	$(34.7)	$6.4
Net Income ($M)	$4.6	$(28.1)	$(41.0)	$0.9
Diluted EPS ($)	$0.08	$(0.52)	$(0.74)	$0.02
Adjusted Net Income ($M)	$8.0	$(17.8)	$(26.7)	$3.2
Adjusted EPS ($)	$0.14	$(0.33)	$(0.48)	$0.06
EBITDA ($M)	$26.1	$(8.1)	$(21.1)	$22.3
Adjusted EBITDA ($M)	$31.0	$(4.7)	$(16.5)	$24.4
Adjusted EBITDA Margin %	10.6%	(2.4)%	(8.5)%	9.7%

Non-GAAP items include equity-based comp, acquisition/other items, FX, and tax effects as detailed in reconciliations .

Net Sales by Category (Q3 2025 vs Q3 2024)

Category	Q3 2024 ($000s)	Q3 2025 ($000s)	YoY %
Core Collectible	227,845	200,414	(12.0)%
Loungefly	47,310	44,685	(5.5)%
Other	17,610	5,806	(67.0)%
Total	292,765	250,905	(14.3)%

Net Sales by Geography (Q3 2025 vs Q3 2024)

Geography	Q3 2024 ($000s)	Q3 2025 ($000s)	YoY %
United States	194,416	155,415	(20.1)%
Europe	74,473	74,196	(0.4)%
Other International	23,876	21,294	(10.8)%
Total	292,765	250,905	(14.3)%

KPIs and Balance Sheet Highlights

KPI / Balance	Q3 2025	Prior/Context
DTC Mix of Gross Sales	18%	20% in Q3 2024
POS (units) YoY	Global: (3)%; U.S.: mid–high single-digit decline; EMEA: low double-digit growth	—
Anime share of sales	~30% of Q3 sales	—
Cash & Cash Equivalents	$39.2M	$34.7M at 12/31/24
Inventory	$99.8M	$92.6M at 12/31/24
Total Debt	$241.0M	$182.8M at 12/31/24

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	Q4 2025	“Q4 results to ramp up over Q3” (H2 down high-single-digits YoY)	“Increase modestly from Q3 2025”	Clarified magnitude
Gross Margin	Q4 2025	Not specified for Q4; H2 recovery implied	~40%	New specificity
Adjusted EBITDA Margin	H2 2025 / Q4 2025	Mid- to high-single-digits (H2)	Mid- to high-single-digits (Q4)	Maintained for Q4
Assumptions (Q4)	Q4 2025	—	SBC ≈ $4M; D&A ≈ $15M; Interest ≈ $6M	New disclosure

Non-GAAP reconciliation for forward margins not provided due to unreasonable efforts; itemized Q4 SBC/D&A/Interest disclosed to aid modeling .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 and Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs & Pricing	Withdrew FY outlook; tariff task force; accelerate sourcing to ~5% of US-bound from China by YE; plan to offset ~$45M via pricing/sourcing/costs	Price increases fully offset tariffs; GM ≥40% in 6 of last 7 quarters excluding tariff-hit Q2	Improving margin control
Supply Chain	Shift production to Vietnam/Cambodia; ocean freight renegotiation	Minor production delays for Europe due to Vietnam shift; shipments to catch up in Q4	Transitional but manageable
Product Performance	DTC engagement, Pop! Yourself growth; sports/license wins	Bitty Pop! Walmart Top Toy; K‑pop Demon Hunters “lightning-fast” launch for holidays	Positive catalysts
Regional Trends	Europe POS outpacing toy market	POS: Global -3% units; U.S. softer; EMEA strong double-digit POS	EMEA strength; US cautious
DTC & Experiential	Fan Rewards; Pop! Yourself expansion	Pop Yourself launched in Europe; planning AI-powered builder; kiosks/vending pilots	Building
Licensing	—	Multi-year renewals with Disney, Warner, NBCU, 20th, Paramount	Strengthened moat
Capital Structure	Going‑concern; evaluating refinancing; covenant relief sought	Covenants waived Q2–Q3; Moelis advising; credit amendment executed	Stabilizing, execution pending

Management Commentary

Strategy focus: “Make Culture Pop” across culture, creativity, commerce—with speed-to-market exemplified by K‑pop Demon Hunters; renewed focus on anime, music, sports, and collectors through limited editions .
Licensing moat: “We’ve recently signed several multi‑year renewal agreements…Walt Disney Company (Pixar, Marvel, Lucasfilm), Warner Bros., NBCUniversal, 20th Century Studios, Paramount” .
Margin execution: “Gross profit…40.2%, which was better than expected. Price increases helped fully offset the impact of increased tariffs.” — CFO .
Retail dynamics: “Global POS in units was down only 3%…U.S. mid to high single-digit decline…EMEA up low double digits” — CFO .
Product momentum: “Biddy Pop…introduced in Walmart’s toy aisle…Top Toy list…out‑of‑aisle placement in 1,800 stores” — CEO .
Capital structure: “10‑Q includes disclosures about the company’s ability to continue as a going concern…amendment waived financial covenants for Q2 and Q3…Moelis…refinancing process is ongoing.” — CFO ; see covenant press release .

Q&A Highlights

Near-term priorities: Operationalize “Quick Strike” capabilities, accelerate in music/sports/anime; expand retail partnerships in Asia/LatAm; leverage newly extended studio licenses .
Holiday setup: Retailers more cautious in U.S.; stronger mass channel momentum (Bitty Pop); EMEA remains resilient; Stranger Things final season and Wicked 2 products slated .
DTC/Experiential: Unique Pop Yourself kiosks/AI builder to deepen engagement; conversations underway with major retailers .
Supply chain: Vietnam shift caused some European shipment delays that should recover in Q4 .
Pricing impact: No meaningful drop in unit volumes attributed to price increases; ecommerce sell-through healthy .

Estimates Context

Q3 2025 actuals vs S&P Global consensus:

Metric	Consensus Mean*	# of Est.*	Actual	Result
Revenue ($)	$262,016,500*	2*	$250,905,000	Miss
Primary EPS ($)	-$0.09*	2*	$0.06	Beat
EBITDA ($)	$15,000,000*	—	$22,316,000	Beat

Values retrieved from S&P Global.*

Interpretation: Despite a revenue miss, better-than-expected gross margin and lower SG&A drove meaningful EPS/EBITDA beats; estimate revisions should reflect improved profitability trajectory and Q4 margin guidance .

Key Takeaways for Investors

Profitability over volume: Mix, pricing, and cost actions restored 40%+ gross margins and produced an EPS/EBITDA beat despite softer revenue—evidence of tariff mitigation efficacy .
Holiday catalysts: Bitty Pop shelf space at Walmart, Pop Yourself Europe, K‑pop Demon Hunters, and marquee IP (Stranger Things, Wicked 2) support Q4 guide for modest sales lift and ~40% GM .
U.S. caution vs EMEA strength: Expect continued divergence near term; watch mass channel momentum vs specialty caution and European shipment recovery from Vietnam transition .
Licensing and brand moat: Multi-year renewals across major studios reduce pipeline risk and should sustain content breadth heading into 2026 .
Balance sheet is the swing factor: Covenants waived and Moelis engaged, but ~$241M debt and going‑concern language keep refinancing/ATM execution central to equity risk/reward .
Estimate implications: Street likely nudges profitability higher for Q4/H2 given gross margin resilience; revenue expectations may temper given U.S. sell-in caution and SKU rationalization .
Trading angle: Stock likely reacts to earnings quality (EPS/EBITDA beat and 40% GM) vs balance sheet/refinancing overhang; catalysts include any refinancing milestones, holiday sell-through checks, and DTC/AI builder updates .

Appendix: Additional Data Points and Reconciliations

Non-GAAP reconciliations and footnotes (equity-based comp, acquisitions/other, FX, tax effect) detailed in exhibits; Q3 adjusted net income $3.219M; adjusted EPS $0.06; adjusted EBITDA $24.432M .
Q3 balance sheet: Cash $39.2M; Inventory $99.8M; Total debt $241.0M; revolver and current debt classifications reflect amendment and refinancing context .
H2 framework reiterated in Q2 materials: H2 sales down high single-digits YoY; Q4 > Q3; H2 adjusted EBITDA margin mid–high single digits .

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