Executive Summary

Q4 net sales were $293.7M (+0.9% y/y) at the top end of guidance; gross margin expanded 480 bps y/y to 42.4% on favorable mix, lower product costs, and reduced freight/inventory reserve charges; adjusted EBITDA of $26.3M exceeded guidance, while SG&A overshot plan due to higher marketing to fuel DTC growth .
DTC rose to 29% of gross sales in Q4 (from 25% in Q4’23), with DTC sales +20% y/y; Europe sales +21% y/y offset U.S. softness as mass retailers ended with lean inventories .
2025 outlook embeds a 20% China tariff assumption through Feb 27, 2025; management expects H1 down y/y and H2 up y/y as mitigation (pricing, sourcing shift, vendor cost-sharing) and DTC expansion ramp; FY25 guide: net sales $1.050–$1.082B, adj. EBITDA $80–$100M; Q1’25 guide: net sales $188–$198M, GM ~39%, SG&A ~$91M, adj. net loss $25–$22M, negative adj. EBITDA $14–$9M .
Consensus estimates from S&P Global were unavailable at time of writing due to request limit; however, Q4 results beat company guidance on gross margin, adjusted EPS and adjusted EBITDA, a likely positive narrative offset by cautious H1’25 setup and tariff risk .

What Went Well and What Went Wrong

What Went Well

Mix/Cost tailwinds expanded Q4 gross margin to 42.4% (vs. 37.6% y/y), aided by lower product costs and reduced freight/reserve charges; adjusted EBITDA of $26.3M exceeded guidance .
DTC strength: DTC rose to 29% of gross sales in Q4 (25% in Q4’23), +20% y/y, with Pop! Yourself +110% y/y in Q4 and +185% for 2024, adding ~800k new fans; Bitty Pop! grew 83% y/y in Q4 .
International momentum: Europe grew >20% in Q4; management cited double‑digit POS growth across major European retailers and strong fan/retailed feedback for Bitty City! .

Selected management quote:

“We closed the year strong… adjusted EBITDA exceeding expectations, fueled by momentum of our Pop! Yourself and Bitty Pop!... DTC, EMEA and core collectibles…” .

What Went Wrong

U.S. softness: Mass retailers limited purchases to end the year lean; U.S. net sales fell 9.7% y/y in Q4; management also cited lower U.S. foot traffic and a value‑seeking consumer .
SG&A higher than guided in Q4 ($102.8M vs. $93–$99M) due to elevated marketing to drive DTC through peak promotional periods .
2025 near‑term headwinds: 20% China tariffs (about one‑third of product sourced from China) and U.S. consumer caution drive H1 down y/y before H2 recovery; border delays for Mexico‑assembled Pop! Yourself also disrupted deliveries/marketing cadence .

Financial Results

P&L vs prior year and prior quarter

Metric	Q4 2023	Q3 2024	Q4 2024
Net Sales ($M)	$291.236	$292.765	$293.729
Gross Profit ($M)	$109.4	$119.8	$124.4
Gross Margin %	37.6%	40.9%	42.4%
SG&A ($M)	$97.380	$92.662	$102.804
GAAP Diluted EPS	$(0.21)	$0.08	$(0.03)
Adjusted EPS	— (approx. $0.00)	$0.14	$0.08
Adjusted EBITDA ($M)	$23.069	$30.985	$26.265

Notes: Q4 gross margin improved on more favorable sales mix, lower product costs, reduced freight and inventory reserve charges . Q4 SG&A exceeded guidance due to higher marketing to fuel DTC .

Q4 2024 Segment/Geography Breakdown

Category Net Sales ($000s)	Q4 2023	Q4 2024	YoY %
Core Collectible	210,404	232,703	10.6%
Loungefly	57,952	42,364	(26.9%)
Other	22,880	18,662	(18.4%)
Total	291,236	293,729	0.9%

Geography Net Sales ($000s)	Q4 2023	Q4 2024	YoY %
United States	197,370	178,183	(9.7%)
Europe	78,138	94,694	21.2%
Other International	15,728	20,852	32.6%
Total	291,236	293,729	0.9%

KPIs and Operating Metrics

KPI	Q3 2024	Q4 2024
DTC as % of gross sales	20%	29%
DTC y/y growth	(7%)	+20%
Pop! Yourself growth y/y	Modest up (Q3 commentary)	+110% (Q4)
Bitty Pop! growth y/y	n/a disclosed Q3	+83% (Q4)
Europe sales y/y	(9.1%) (Q3)	+21.2% (Q4)
U.S. sales y/y	(7.4%) (Q3)	(9.7%) (Q4)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	Q4 2024	$280–$294 (from 11/7/24)	$293.7 actual	Result: Above high end vs midpoint
Gross Margin %	Q4 2024	38–40%	42.4% actual	Result: Above
SG&A ($M)	Q4 2024	$93–$99	$102.8 actual	Result: Above (overspend on marketing)
Adjusted Net Income ($M)	Q4 2024	($3) to $1	$4.409 actual	Result: Above
Adjusted EBITDA ($M)	Q4 2024	$17–$22	$26.265 actual	Result: Above
Net Sales ($B)	FY 2025	—	$1.050–$1.082	New
Adjusted EBITDA ($M)	FY 2025	—	$80–$100	New
Net Sales ($M)	Q1 2025	—	$188–$198	New
Gross Margin %	Q1 2025	—	~39%	New
SG&A ($M)	Q1 2025	—	~$91	New
Adjusted Net Loss ($M)	Q1 2025	—	$25–$22	New
Adjusted EBITDA ($M)	Q1 2025	—	($14)–($9)	New

Context: FY25 and Q1’25 guidance incorporate 20% China tariffs (through Feb 27, 2025) and softer U.S. consumer; H1 expected down y/y, H2 up y/y with mitigations and DTC expansion .

Earnings Call Themes & Trends

Topic	Q2 2024 (Q‑2)	Q3 2024 (Q‑1)	Q4 2024 (Current)	Trend
DTC & Pop! Yourself	DTC strength cited; Q2 GM beat aided by value‑channel margin/reserve relief	DTC customers more promotion‑responsive; DTC to rebound in Q4; Canada DTC shipping added	DTC 29% of sales; +20% y/y; Pop! Yourself +110% y/y; ~800k new fans in 2024	Improving
Europe performance	+20.8% y/y Q2 Europe	EMEA double‑digit POS growth; Q3 Europe down y/y on comps	Europe sales +21% y/y; continued POS strength	Improving
U.S. retail/macro	n/a	U.S. POS down; buyers cautious, holiday promo pull‑forward	U.S. softness; mass retailers ended lean; foot traffic lower	Softening
Tariffs/sourcing	n/a	Scenario planning; ~1/3 sourcing from China	FY25 guide embeds 20% China tariffs; mitigation via pricing, vendor cost, sourcing diversification	Headwind with mitigation
Brand/channel health	n/a	Using value channel with above‑cost margin; reserve relief	“All but eliminated” discount channel Pop! sales to protect brand value	Improving
Sports/music/gaming	n/a	NFL Pop! Yourself, sports campaigns, Mondo growth	Sports ~4% of rev; NFL/NBA activations; Bitty City! excitement; music collabs	Expanding

Management Commentary

Strategy and 2025 setup: “We expect measured top‑line growth in 2025, weighted toward the second half… expanding our presence in sports, music, and gaming… prioritizes sustainable, long‑term value creation.” .
On H1/H2 cadence and tariff mitigation: “We now expect both net sales and adjusted EBITDA to be down y/y in the first half of 2025 and then up in the second half… mitigating tariffs… renegotiating factory costs… shifting production… pricing adjustments… expanding Pop! Yourself into new territories…” .
Brand/channel discipline: “We have all but eliminated sales of our Funko Pop! products into discount channels, which we anticipate will revitalize our brand value…” .

Q&A Highlights

Guidance assumptions and risk balance: Management embedded 20% China tariffs and softer U.S. consumer; upside from potential tariff delays/exemptions; downside from further escalation .
Sports runway and margins: Sports currently ~4% of revenue with a long runway; margin profile broadly similar to core; Pop! Yourself accessories carry higher margin .
U.S. POS and sell‑in vs sell‑through: Global POS +4% in Q4 (U.S. +1%, Europe +17%); U.S. mass retailers targeted healthy year‑end inventories rather than heavy discounting .
Q1 softness drivers: Lower U.S. foot traffic and more cautious DTC customer, plus temporary U.S.‑Mexico border disruptions impacting Pop! Yourself deliveries/marketing .
Pricing and sourcing mitigation: Pricing adjustments under evaluation; vendor cost‑sharing and further supply chain diversification in motion .

Estimates Context

S&P Global consensus estimates were unavailable due to a temporary request‑limit error at query time; as such, we cannot provide definitive “vs. consensus” comparisons for Q4, FY24, Q1’25, or FY25 at this time. However, relative to its own guidance, Funko delivered Q4 revenue at the high end and beat on gross margin, adjusted EPS, and adjusted EBITDA; SG&A was higher than guided on purposeful marketing investments .
Implications: Street models may need to reflect stronger gross margin execution exiting 2024 and higher DTC mix, offset by H1’25 tariff and U.S. demand headwinds embedded in guidance .

Key Takeaways for Investors

Execution beat: Q4 margin/adj. EBITDA outperformance despite U.S. softness underscores progress in mix, cost, and inventory discipline; brand health improving as discount‑channel sell‑through is curtailed .
DTC flywheel: DTC at 29% with strong unit economics; Pop! Yourself scaling (110% y/y in Q4) suggests sustained customer acquisition and mix benefits into H2’25 as international expansion begins .
Geographic mix: EMEA strength (+21% y/y) offset U.S. retail caution; continued European POS momentum into early 2025 supports the H2 up‑year outlook .
Near‑term caution: FY25 guide embeds H1 down/H2 up with 20% tariff assumption and weaker U.S. consumer; watch mitigation levers (pricing, sourcing shift) and any tariff policy updates .
Category evolution: Sports, music, and gaming initiatives (NFL/NBA Pop! Yourself, artist collaborations, Mondo) broaden TAM and support diversified growth vectors beyond core collectibles .
Non‑GAAP presentation change: Post‑SEC correspondence, Funko no longer adjusts non‑GAAP for one‑time inventory costs; this raised 2023 adjusted net loss by $29.3M and lowered 2023 adjusted EBITDA by $39.0M, improving comparability going forward .
What to monitor: Q1’25 gross margin near 39%, DTC growth vs. elevated SG&A, U.S. retail traffic/replenishment cadence, tariff developments, and EMEA POS trends .

Appendix: Balance Sheet and Cash Flow Highlights

Year‑end 2024: Cash $34.7M; inventories $92.6M (down vs. $119.5M in 2023); total debt $182.8M (down from $273.6M in 2023) .
2024 cash from operations: $123.5M; capex $(32.8)M; net financing cash flow $(99.2)M with line‑of‑credit paydown and long‑term debt payments .

Non‑GAAP and Adjustments

Adjusted net income (loss) and adjusted EBITDA are non‑GAAP; 2023 non‑GAAP no longer adjusts for inventory‑related one‑time costs after SEC correspondence, lowering 2023 adjusted EBITDA by $39.0M and increasing adjusted net loss by $29.3M .

Funko, Inc. (FNKO)·Q4 2024 Earnings Summary