Funko’s Sales Recovery Entered A Second Quarter
A $25.4 million tariff-related benefit bolstered second-quarter profit and accompanied a higher full-year adjusted EBITDA forecast.
Funko, Inc. (FNKO), the pop culture and collectibles brand, extended its sales recovery in the second quarter, with year-over-year growth reaching 7.4% after 5.3% in the first quarter and a 7% decline in the closing quarter of 2025. The company raised its full-year adjusted EBITDA forecast while holding its sales outlook steady.
Quarterly net sales totaled $207.7 million. Core Collectibles remained the center of the business, generating $171.6 million, with the increase attributed to Standard Pop! and Bitty Pop! products. The Other category contributed $4.8 million. Funko also reported point-of-sale momentum across theatrical releases, anime, gaming and sports, alongside rapid-response products tied to live cultural moments and the launch of POP! Mystery.
Loungefly’s retreat eased substantially, helping explain the improvement in overall sales growth. Loungefly recorded sales of $31.3 million, down 1.7%, following a 23.1% year-over-year decline in the first quarter. The company said the latest performance came despite an approximately 50% reduction in stock-keeping units, reflecting improved assortment productivity and strong sales of exclusive products.
Sales across European and North American wholesale channels were strong. United States revenue was $121.8 million, Europe contributed $69.0 million and Other International sales totaled $16.9 million. Funko tightened assortments, improved productivity across individual products and concentrated resources on the products, fandoms and channels with the greatest demand and return potential.
The profit figures carried a substantial tariff-related component. Reported gross margin reached a record 56.6%, including the recognition of expected tariff refunds and the release of accrued tariffs. Excluding that benefit, gross margin was 44%. The year-over-year margin improvement reflected the tariff credit, price adjustments, sales mix, reduced discounting and promotional activity, and renewed licensing agreements with lower minimum guaranteed royalties. Lower-than-expected tariffs accounted for margin performance above the forecast.
Adjusted EBITDA was $40.9 million. Even excluding the tariff benefit, the company reported approximately $15 million, exceeding its earlier guidance of $5 million to $10 million. The performance reflected sales above expectations, gross margin performance and discipline in selling, general and administrative spending. The tariff benefit remained included in the reported adjusted earnings measure.
Net income attributable to Funko was $15.4 million, or $0.27 a share. Selling, general and administrative expenses were $79.7 million, representing 38.4% of sales. The company’s recognition of the tariff benefit affected net income as well as gross margin and adjusted EBITDA, making it a material component across the quarter’s principal profit measures.
For the full year, adjusted EBITDA guidance is $100 million to $110 million, raised from $70 million to $80 million. The updated forecast includes the second-quarter tariff benefit. Funko said the revised outlook reflected the quarter’s performance, expected continued growth in Core Collectibles and the decision to narrow Loungefly’s assortment around products with stronger demand and return potential.
Tariff claims also featured in the company’s debt repayment. During the quarter, Funko sold a participation in $22.1 million of claims for $19.2 million and used half the proceeds to pay down its term loan. Total debt stood at $201.1 million at June 30, while cash and cash equivalents were $40.7 million. The transaction converted part of the claims into cash for repayment.
The sales outlook put a limit on the recovery’s expected near-term pace. Full-year revenue guidance remains flat to up 3%. For the third quarter, Funko expects approximately flat year-over-year sales, with gross margin of approximately 43% to 44% and adjusted EBITDA of $25 million to $30 million. That revenue forecast points to a pause in growth after two consecutive quarters of expansion.
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