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    FNKO
    Earnings call· Jun 2026(Q2 FY26)

    Funko Q2 FY26 earnings call FNKO

    Aug 6, 2026 Source

    Executive summary

    Funko Q2 FY26 — Strong Sales Growth and Record Gross Margin Driven by 'Make Culture Pop' Strategy

    Funko delivered strong Q2 FY26 results, driven by broad-based sales growth across regions and product categories, and significant margin expansion. The "Make Culture Pop" strategy is gaining traction, focusing on speed to market and product innovation, exemplified by new platforms like Pop Mystery and strategic partnerships. The company is actively deleveraging its balance sheet and remains focused on consistent execution and improving underlying earnings power.

    Highlights

    5

    • Sales increased 7% in Q2 FY26, building on Q1 growth, with first-half sales up 6%.

    • Reported gross margin was 56.6%, with a normalized gross margin of 44.4% (excluding a $25M tariff credit), marking a record high for Funko.

    • Adjusted EBITDA reached $40.9M, significantly improving from negative $16.5M last year, and $15M normalized for the tariff credit, exceeding guidance.

    • SG&A expenses improved by over 400 basis points as a percentage of sales compared to last year.

    • Successfully sold IEPA tariff claims for $19M in proceeds, using $15M to pay down debt and advance deleveraging.

    Concerns

    3

    • Loungefly sales were down 2% in Q2 FY26, despite an improving trend and better SKU productivity with 50% fewer SKUs.

    • Management noted potential downside risks from continued consumer spending sensitivity and unexpected new tariffs beyond the 10-12% already factored in.

    • Potential for negative impact from higher oil prices, freight costs, or raw material costs.

    Guidance & targets

    2
    CategoryTargetConfidence
    Full-year Net Sales
    flat to up 3%
    high materiality
    High
    Full-year Adjusted EBITDA
    $100M to $110M
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    United States
    Sales growth in the US market.
    		—up 3%——
    Europe
    Strong sales growth in the European market.
    		—up 19%——
    Core Collectibles
    Growth in the core collectibles product category.
    		—up 9%——
    Loungefly
    Sales were down, but showed an improving trend from Q1 with better SKU productivity (50% fewer SKUs).
    		—down 2%——

    Operational metrics

    11
    Gross Margin (Normalized)
    44.4%
    Q2 FY26

    Gross margin normalized for a one-time tariff credit, exceeding guidance range of 42%-44%.

    Adjusted EBITDA (Normalized)
    $15M
    Q2 FY26

    Adjusted EBITDA excluding the tariff-related benefit, significantly exceeding the guidance range.

    IEPA Tariff Claims Sale Proceeds
    $19M
    Q2 FY26

    Proceeds received from the sale of IEPA tariff claims.

    Debt Paydown
    $15M
    Q2 FY26

    Amount of debt paid down using proceeds from the IEPA tariff claims sale.

    Wholesale POS Sales Growth (Units)
    6%YoY
    Q2 FY26

    Year-over-year growth in point-of-sale units in the global wholesale channel.

    Wholesale POS Sales Growth (Units)
    9%YTD
    YTD

    Year-to-date growth in point-of-sale units in the global wholesale channel.

    Wholesale POS Sales Growth (Units)
    mid-single digitYTD
    YTD

    Year-to-date growth in point-of-sale units in the US wholesale channel.

    Wholesale POS Sales Growth (Units)
    slightly over 20%YTD
    YTD

    Year-to-date growth in point-of-sale units in the European wholesale channel.

    Loungefly SKU Reduction
    50%YoY
    Q2 FY26

    Loungefly sales were down 2% with approximately 50% fewer SKUs, indicating increased productivity.

    Top 10 Franchises Contribution to Sales
    32%
    Q2 FY26

    The top 10 franchises and programs represented 32% of Q2 sales, indicating diversification.

    Wholesale Order Visibility
    3-4 months
    Q3 FY26

    Visibility into wholesale customer orders for the upcoming quarter.

    Industry KPIs

    4
    MetricValueDetails
    Revenue—
    Gross margin56.6%%
    Adjusted EBITDA ebita$40.9MUSD
    Tariff impact mitigation$25MUSD

    Product announcements

    3
    ProductTypeDetails
    Pop Mystery Platformlaunch
    Bitty Pop!expansion
    New Formats (unnamed)roadmap

    Deals & partnerships

    1
    HPAdditive manufacturing for 'hyper strike' strategy

    Formalized a partnership with HP on additive manufacturing to enable the 'hyper strike' strategy, allowing products to be created in weeks instead of months or years. This has already resulted in a successful product launch at Fanatics test (WWE and Garbage Pail Kids mashup) that sold out and resold for multiples on eBay.

    Risks & headwinds

    4
    Consumer Spending SensitivityH2 FY26, holiday period

    unquantified

    Mitigation: Continuing to be prudent given the broader consumer environment; hoping for consumer resilience through the holiday period.

    Tariff Surprisesongoing

    10-12% tariffs factored in, but potential for further surprises

    Mitigation: Prudent gross margin guidance; actively managing tariff exposure.

    Input Cost Inflationongoing

    unquantified

    Mitigation: Cautiously optimistic, but acknowledging potential negative impact from higher oil prices, freight costs, or raw materials.

    Loungefly SKU Productivityongoing

    Work not yet finished

    Mitigation: Exciting plans in place to continue improving SKU productivity and overall health of the Loungefly business.

    What to watch in Q3 FY26

    5

    Consumer Resilience through Holiday

    holiday period (Q4 FY26)
    Currenthoping the consumer stays resilient
    Targetcontinued consumer resilience

    Why it matters

    Consumer spending directly impacts sales, especially during the critical holiday season, influencing the company's ability to meet full-year guidance.

    We're hoping the consumer stays resilient through the holiday period.

    Q&A highlights

    6

    How would you characterize the level of wholesale order demand in Q3 FY26 and into the upcoming holiday season?

    Management stated they have 3-4 months of visibility with wholesale customers, noting a return to more normalized seasonality compared to last year. They reported healthy POS trends, with sales up 6% year-over-year in units globally, and healthy inventory levels, indicating good demand from partners and end customers.

    “I think what we're seeing this year, we continue to have about 3 or 4 months visibility with our wholesale customers placing orders. I would say compared to last year, we're a return of a little bit more normalized seasonality, like Josh mentioned. Last year, Q2 was pretty disrupted post liberation Day announcement. And then we -- there was an element of kind of catching up with people's orders in Q3 and into Q4. This year, obviously, we're kind of shipping orders as our customers want them. We're seeing great POS trends in our wholesale channel globally. Our POS sales were up 6% year-over-year.”

    asked by Eric Wold · answered by Yves Le Pendeven

    2 min read7 chapters

    Detailed Narrative

    01

    Make Culture Pop Strategy Execution

    Management highlighted the successful transition of their "Make Culture Pop" strategy from idea to execution, focusing on sensing cultural trends, rapid product creation, and efficient distribution. This repeatable offense is seen as key to their momentum, enabling them to quickly turn demand signals into scalable products for fans globally. The strategy is driving consistent execution and improving underlying earnings power.

    02

    Product Innovation and Speed to Market

    Funko is investing in new product formats such as the Pop Mystery platform and Bitty Pop!, which are driving incremental shelf space and fan engagement. A strategic partnership with HP for additive manufacturing, part of their "hyper strike" strategy, allows for product creation in weeks instead of months or years. This enhanced speed enables Funko to capitalize on trending cultural moments more effectively, as demonstrated by successful quick-strike offerings.

    03

    Financial Performance Drivers

    Strong Q2 performance was attributed to broad-based growth across regions, with US sales up 3% and Europe up 19%, and product categories, notably Core Collectibles up 9%. Gross margin saw a significant boost from a $25 million tariff credit, and even when normalized, achieved a record high of 44.4%. Adjusted EBITDA also saw substantial improvement, exceeding guidance after normalization for the tariff credit.

    04

    Loungefly Health and SKU Productivity

    While Loungefly sales were down 2% in Q2, this represented an improving trend from Q1 and was achieved with approximately 50% fewer SKUs. This indicates increased productivity and a healthier business for the brand. Management acknowledged that further work is needed but expressed confidence in the progress made towards optimizing the Loungefly segment.

    05

    Deleveraging and Capital Allocation

    Funko made tangible progress on deleveraging its balance sheet by selling its IEPA tariff claims for $19 million in proceeds. Of these proceeds, $15 million was used to pay down debt, demonstrating a clear focus on strengthening the company's financial position and reducing leverage.

    06

    Wholesale and Retail Partner Engagement

    The company reported healthy wholesale channel point-of-sale (POS) trends, with units up 6% year-over-year and 9% year-to-date. Funko is actively securing increased shelf space and prominent displays with major European retailers like Smith's and Hamleys, as well as with Walmart in the US. These efforts are driven by new product lines and major entertainment releases, enhancing product visibility.

    07

    New Chief Commercial Officer Appointment

    Funko announced the hiring of Kristin Hamilton as its new Chief Commercial Officer, effective August 24. Ms. Hamilton brings extensive experience from Crunchyroll and Hasbro in global e-commerce, consumer product strategy, and brand management. Her appointment is expected to further strengthen Funko's commercial capabilities and drive future growth, particularly in key areas like anime fandom.

    AI-generated summary of the company’s earnings call. Not investment advice.