Funko, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales increased 3.0% year-over-year to $258.3 million for the quarter ended September 30, 2026, compared to $250.9 million in the prior year period.
• Gross profit was $116.9 million, representing a gross margin of 45.2%, an improvement from $100.8 million (40.2%) in the prior year.
• SG&A expenses were $86.9 million (33.6% of sales), up from $79.8 million (31.8%) in the prior year.
• Net income was $7.5 million ($0.13 per diluted share), compared to $0.9 million ($0.02 per diluted share) in the prior year.
• Adjusted net income was $9.2 million ($0.16 per diluted share), compared to $3.2 million ($0.06 per diluted share) in the prior year.
• Adjusted EBITDA was $32.1 million, compared to $24.4 million in the prior year.
• Total debt decreased to $195.9 million at September 30, 2026, from $241.0 million at September 30, 2025, and $225.3 million at December 31, 2025.
• Cash and cash equivalents were $41.6 million at September 30, 2026, compared to $39.2 million at September 30, 2025.
• Inventories were $91.6 million at September 30, 2026, up from $83.1 million at December 31, 2025, but down from $99.8 million at September 30, 2025.
• For the nine months ended September 30, 2026, net income was $4.8 million compared to a net loss of $68.1 million in the prior year period.

Guidance and Future Outlook:

• The company reiterated its full-year 2026 guidance for net sales growth of flat to up 3%.
• Full-year 2026 gross margin guidance remains 46% to 47%, inclusive of a $25.4 million Q2 tariff-related benefit.
• Full-year 2026 Adjusted EBITDA guidance remains $100 million to $110 million, inclusive of the $25.4 million Q2 tariff-related benefit.
• Future growth is expected to be driven by continued growth in Core Collectibles and a rationalization of Loungefly's SKU count to focus on products with stronger demand and return potential.
• Management expects equity-based compensation of approximately $4 million, depreciation and amortization of $14 million, and interest expense of $5 million for Q4 2026.
• For the full year 2026, management expects equity-based compensation of approximately $12 million, depreciation and amortization of $60 million, and interest expense of $20 million.

Business Segments and Product Lines:

• Core Collectibles sales grew 4.8% year-over-year to $210.1 million.
• Loungefly sales decreased 9.8% year-over-year to $40.3 million.
• Other categories increased 37.0% year-over-year to $8.0 million.
• International markets, specifically Europe (up 11.5%) and Other International (up 12.1%), drove growth, while United States sales declined 2.4% to $151.7 million.
• Strategic initiatives include WWE integrating Funko into its storytelling, expansion into the "A Court of Thorns and Roses" franchise, and the launch of a dedicated Funko shop at FAO Schwarz.
• The company noted a "bidding frenzy" around the POP! 250 milestone product.

Market and Competitive Landscape:

• The company describes its strategy as "Make Culture Pop!" becoming a more deliberate and disciplined growth engine.
• Management reported sensing demand earlier and successfully translating cultural moments and emerging fandoms into distinctive products.
• Growth is being expanded through retail and experiences, specifically citing the FAO Schwarz shop and WWE integration.

Risks and Challenges:

• Forward-looking statements cite risks including economic downturns, changes in the retail industry, and risks associated with international operations such as tariffs and trade restrictions.
• Risks related to indebtedness include the ability to comply with financial and negative covenants under the Credit Agreement.
• The company faces risks regarding inventory management, dependence on third-party content development, and the ability to protect intellectual property rights.
• Potential conflicts of interest may arise between the interests of significant stockholder TCG and other stockholders.
• The Tax Receivable Agreement (TRA) confers benefits on TRA Parties that do not benefit Class A common stockholders to the same extent.

Management Commentary and Tone:

• CEO Josh Simon characterized the quarter as "strong," citing net sales growth, continued gross margin strength, and Adjusted EBITDA above guidance.
• Management expressed confidence that the strategy is "coming together" and remains "rigorously focused on scaling what works."
• The tone indicates a shift toward a "more focused and profitable business" with deliberate execution of the growth strategy.

Other Key Points:

• The company paid $249,000 under the tax receivable agreement during the nine months ended September 30, 2026.
• Proceeds from the sale of a tariff receivable were $19.2 million, with payments under the tariff receivable sales agreement totaling $17.4 million for the nine-month period.
• Third-party debt amendment fees of $3.7 million were recorded for the nine months ended September 30, 2026, related to the Fifth Amendment to the Credit Agreement.
• The company hosts a webcast conference call on November 5, 2026, at 4:30 p.m. Eastern Time to discuss results.
• Non-GAAP financial measures used include Adjusted Net Income and Adjusted EBITDA, which exclude equity-based compensation, acquisition costs, foreign currency transaction losses/gains, and tax receivable agreement adjustments.