0001704711-26-000020
SEC filingFunko, Inc. reported net sales of $908.2 million for FY 2025, representing a decline from $1,049.9 million in FY 2024. The company incurred a net loss of $68.3 million, significantly wider than the $15.1 million net loss in the prior year. Key drivers of the loss included a $45.5 million operating loss, $19.2 million in net interest expense, and $4.4 million in income tax expense. The company generated negative operating cash flow of $5.1 million, offset by $42.0 million in net cash from financing activities, resulting in a net cash increase of $7.5 million. Total assets stood at $685.2 million with total debt of $219.9 million. The company's performance reflects challenges in the retail environment, inventory management, and macroeconomic pressures.
Funko reported challenging financial results for FY 2025 with net sales declining 13.5% to $908.2 million from $1,049.9 million in FY 2024. The company's net loss widened significantly to $68.3 million compared to $15.1 million in the prior year. Operating loss was $45.5 million, driven by total operating expenses of $953.8 million exceeding net sales. Gross profit was $351.3 million (calculated as net sales of $908.2M minus cost of sales of $556.9M). The company reported negative operating cash flow of $5.1 million, partially offset by $42.0 million in net cash from financing activities, resulting in a net cash increase of $7.5 million for the year.
Revenue declined across the business, with the company citing a challenging retail environment where retailers slowed restocking, prioritized lower inventory levels, and in some cases negotiated additional discounting or canceled orders. The company's revenue mix showed Core Collectible products (including Pop! Vinyl) representing 80% of sales, up from 77% in FY 2024. Loungefly products accounted for 17% of sales, up from 16% in the prior year. Geographic diversification improved with international sales increasing to 40% of total sales from 35% in FY 2024. Direct-to-consumer sales remained stable at 24% of total sales. No single property accounted for more than 5% of sales, and the top five third-party properties represented 19% of sales.
Gross margin was 38.7% for FY 2025 (calculated as gross profit of $351.3M divided by net sales of $908.2M). The company experienced margin pressure from tariffs on imports, which adversely impacted costs, leading to price increases for certain products. Operating margin was negative 5.0%, reflecting the operating loss of $45.5 million. Selling, general, and administrative expenses were $337.7 million, while depreciation and amortization totaled $59.1 million. Royalty expenses were $158.5 million for FY 2025, with an average royalty rate of 17.4%. The company strategically adjusted inventory buy-in to focus on non-exclusive core products to help mitigate margin impacts.
Operating activities used $5.1 million in cash, primarily due to the net loss of $68.3 million, partially offset by $59.1 million in depreciation and amortization and $11.5 million in equity-based compensation. Investing activities used $31.9 million, mainly for $33.0 million in property and equipment purchases. Financing activities provided $42.0 million, including $85.0 million in borrowings on the revolving credit facility offset by $20.0 million in payments on the revolving credit facility and $23.1 million in term debt payments. Total assets were $685.2 million, with current assets of $290.4 million including $42.1 million in cash. Total debt was $219.9 million, consisting of $94.9 million in term debt and $125.0 million in revolving credit facility borrowings.
The company faces significant challenges including global economic uncertainty, retail industry volatility, and competitive pressures. Management cited macroeconomic factors such as political uncertainty, unrest in various regions, tariff policies, rising interest rates, and inflation that could reduce net sales or impact margins. The company has $219.9 million of indebtedness outstanding under credit facilities maturing December 31, 2027, with financial covenants including a maximum Net Leverage Ratio and minimum Fixed Charge Coverage Ratio. The company amended its credit agreement in February 2026 to extend the maturity date and modify financial covenants. Strategic priorities include expanding international presence, enhancing direct-to-consumer capabilities, and managing inventory levels in response to changing consumer preferences and retail dynamics.