Funko, Inc.
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
FNKO$6.72+9.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001704711-25-000119
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001704711-25-000136
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 149 current paragraphs.
87 unchanged; 47 reworded; 14 added; 8 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Interest expense, net was $5.6 million for the three months ended September 30, 2025, an increase of 12.9%, compared to $5.0 million for the three months ended September 30, 2024. The increase in interest expense, net was due primarily to increased interest rates on outstanding borrowings during the three months ended September 30, 2025.
Current report
Other (Income) Expense, Net
Current report
Income tax expense was $1.2 million for both the three months ended September 30, 2025 and 2024, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.
Current report
Net Income
Current report
Net income was $0.9 million and $4.6 million for the three months ended September 30, 2025 and 2024, respectively. The decrease in net income was primarily due to the decrease in net sales as compared to the three months ended September 30, 2024.
Current report
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Current report
Other (Income) Expense, Net
Current report
Income tax expense was $2.9 million for both the nine months ended September 30, 2025 and 2024, respectively. The Company’s tax expense primarily reflects foreign income taxes in jurisdictions where the Company generates taxable income under its transfer pricing arrangements. The U.S. operations continue to be in a full valuation allowance position, resulting in no material U.S. federal or state income tax expense.
Current report
Form S-3 Registration Statement
Current report
Our registration statement on Form S-3 was declared effective by the SEC on August 15, 2025 and will remain effective through August 15, 2028. The Form S-3 allows us to offer and sell from time-to-time up to $100.0 million of Class A common stock, preferred stock, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 12,626,024 shares of Class A common stock in one or more offerings. The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.
Current report
The Form S-3 is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any future offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.
Current report
At-the-Market Sales Agreement
Current report
On August 15, 2025, we entered into an At-the-Market Sales Agreement (the “Sales Agreement”) with BTIG, LLC (the “Agent”) relating to shares of our Class A common stock. In accordance with the terms of the Sales Agreement, from time to time we may offer and sell shares of our Class A common stock having an aggregate gross sales price of up to $40.0 million through or to the Agent, acting as sales agent or principal, pursuant to the prospectus supplement. In the quarter ended September 30, 2025, no sales were made under the Sales Agreement.
Current report
In addition, as described above, on August 15, 2025, we filed a registration statement on Form S-3 for the sale from time-to-time of up to $100.0 million of certain of our securities and for certain selling stockholders to offer and sell shares of Class A common stock in one or more offerings. We also entered into the Sales Agreement to offer and sell shares of our Class A common stock having an aggregate gross sales price of up to $40.0 million, pursuant to the prospectus supplement.
Removed paragraphs (8)
Previous report
Interest expense, net was $4.5 million for the three months ended June 30, 2025, a decrease of 11.0%, compared to $5.1 million for the three months ended June 30, 2024. The decrease in interest expense, net was due primarily to interest expense related to a tax receivable agreement liability accrued during the three months ended June 30, 2024.
Previous report
Other Expense (Income), Net
Previous report
Income tax expense was $0.8 million for the three months ended June 30, 2025 and 2024, respectively.
Previous report
Net Loss (Income)
Previous report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Previous report
Other Expense, Net
Previous report
Income tax expense was $1.7 million for both the six months ended June 30, 2025 and 2024.
Previous report
We have evaluated potential goodwill impairment triggering events as of June 30, 2025, and determined it was more likely than not that the fair value of the reporting unit was above carrying value of the net assets. We will continue to evaluate for other-than-temporary impairment triggering events due to the substantive changes in circumstances, such as market capitalization, which could indicate a potential impairment. We also expect to assess the recoverability of the carrying value our identified intangible and other long-lived assets, to the extent conditions necessitate an impairment assessment.
Reworded paragraphs (47)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) (the “2024 10-K”). This discussion and analysis contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in this Quarterly Report on Form 10-Q.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in Exhibit 99.1 to the Current Report on Form 8-K filed on August 7, 2025. This discussion and analysis contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors” included in this Quarterly Report on Form 10-Q.
Previous wording
•“ACON Sale”refers to the sale by ACON and certain of its affiliates to TCG of an aggregate of 12,520,559 shares of our Class A common stock pursuant to a Stock Purchase Agreement, dated as of May 3, 2022, by and among ACON, certain affiliates of ACON and TCG.
Current wording
•“ACON Sale”refers to the sale by ACON and certain of its affiliates to TCG of an aggregate of 12,520,559 shares of our Class A common stock, $0.0001 par value per share (“Class A common stock”) pursuant to a Stock Purchase Agreement, dated as of May 3, 2022, by and among ACON, certain affiliates of ACON and TCG.
Previous wording
We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 39% of our net sales in the six months ended June 30, 2025 generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China and Mexico. As such, we are exposed to and impacted by global macroeconomic factors. Current macroeconomic factors remain very dynamic, including greater political uncertainty, new or increasing tariffs and general uncertainty over U.S. trade and tariff policies, unrest or instability in the United States, Central and Eastern Europe (including the ongoing Russia-Ukraine War), the Middle East (including the Israel–Hamas War), and certain Southeast Asia regions as well as financial instability, rising interest rates and heightened inflation that could reduce our net sales or have impacts to our gross margin (as defined below), net income and cash flows.
Current wording
We sell our products in numerous countries across North America, Europe, Latin America, Asia and Africa, with approximately 39% of our net sales in the nine months ended September 30, 2025 generated outside of the United States. We also source, procure and assemble inventory, primarily out of Vietnam, China and Mexico. As such, we are exposed to and impacted by global macroeconomic factors. Current macroeconomic factors remain very dynamic, including greater political uncertainty, new or increasing tariffs and general uncertainty over U.S. trade and tariff policies, unrest or instability in the United States, Central and Eastern Europe (including the ongoing Russia-Ukraine War), the Middle East (including the Israel–Hamas War), and certain Southeast Asia regions as well as financial instability, rising interest rates and heightened inflation that could reduce our net sales or have impacts to our gross margin (as defined below), net income and cash flows.
Previous wording
(1)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), or non-GAAP financial measures. For a reconciliation of EBITDA and Adjusted EBITDA to net (loss) income, the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” below.
Current wording
(1)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), or non-GAAP financial measures. For a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” below.
Previous wording
The following table sets forth information comparing the components of net (loss) income for the three months ended June 30, 2025 and 2024:
Current wording
The following table sets forth information comparing the components of net income (loss) for the three months ended September 30, 2025 and 2024:
Previous wording
Net sales were $193.5 million for the three months ended June 30, 2025, a decrease of 21.9%, compared to $247.7 million for the three months ended June 30, 2024. The decrease in net sales was across all distribution channels as a result of tariff disruption and general macroeconomic uncertainty for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.
Current wording
Net sales were $250.9 million for the three months ended September 30, 2025, a decrease of 14.3%, compared to $292.8 million for the three months ended September 30, 2024. The decrease in net sales was across all distribution channels as a result of tariff disruption and general macroeconomic uncertainty for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
Previous wording
On a geographical basis, net sales in the United States decreased 27.7% to $117.9 million in the three months ended June 30, 2025 as compared to $163.0 million in the three months ended June 30, 2024. Net sales in Europe decreased 4.3% to $57.8 million in the three months ended June 30, 2025 as compared to $60.4 million in the three months ended June 30, 2024, primarily as a result of $4.0 million nonrecurring net sales in other branded category including Funko Games. Net sales in other international locations decreased 26.6% to $17.8 million in the three months ended June 30, 2025 as compared to $24.3 million in the three months ended June 30, 2024.
Current wording
On a geographical basis, net sales in the United States decreased 20.1% to $155.4 million in the three months ended September 30, 2025 as compared to $194.4 million in the three months ended September 30, 2024. Net sales in Europe decreased 0.4% to $74.2 million in the three months ended September 30, 2025 as compared to $74.5 million in the three months ended September 30, 2024. Net sales in other international locations decreased 10.8% to $21.3 million in the three months ended September 30, 2025 as compared to $23.9 million in the three months ended September 30, 2024.
Previous wording
On a branded category basis, net sales of the Core Collectible branded category decreased 15.7% to $157.5 million in the three months ended June 30, 2025 as compared to $186.7 million in the three months ended June 30, 2024. Loungefly branded category net sales decreased 23.2% to $31.8 million in the three months ended June 30, 2025 as compared to $41.5 million in the three months ended June 30, 2024. Other branded category net sales decreased 78.7% to $4.1 million in the three months ended June 30, 2025 as compared to $19.4 million in the three months ended June 30, 2024.
Current wording
On a branded category basis, net sales of the Core Collectible branded category decreased 12.0% to $200.4 million in the three months ended September 30, 2025 as compared to $227.8 million in the three months ended September 30, 2024. Loungefly branded category net sales decreased 5.5% to $44.7 million in the three months ended September 30, 2025 as compared to $47.3 million in the three months ended September 30, 2024. Other branded category net sales decreased 67.0% to $5.8 million in the three months ended September 30, 2025 as compared to $17.6 million in the three months ended September 30, 2024, primarily as a result of rationalizing underperforming items and product lines.
Previous wording
Cost of sales (exclusive of depreciation and amortization) was $131.4 million for the three months ended June 30, 2025, a decrease of 8.5%, compared to $143.6 million for the three months ended June 30, 2024. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of decreased sales, as discussed above.
Current wording
Cost of sales (exclusive of depreciation and amortization) was $150.2 million for the three months ended September 30, 2025, a decrease of 13.2%, compared to $173.0 million for the three months ended September 30, 2024. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of decreased sales, as discussed above, offset by increased duty costs.
Previous wording
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 32.1% for the three months ended June 30, 2025, compared to 42.0% for the three months ended June 30, 2024. The decrease in gross margin (exclusive of depreciation and amortization) for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was driven primarily by increased inventory reserves as well as increased shipping, freight and duty costs.
Current wording
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 40.2% for the three months ended September 30, 2025, compared to 40.9% for the three months ended September 30, 2024. The decrease in gross margin (exclusive of depreciation and amortization) for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was driven primarily by increased shipping, freight and duty costs, offset by price increases and decreased sales to discount channel partners.
Previous wording
Selling, general, and administrative expenses were $167.1 million for the six months ended June 30, 2025, an increase of 2.2%, compared to $163.5 million for the six months ended June 30, 2024. The increase was driven primarily by a $3.8 million increase in advertising and marketing fees, a $2.8 million increase in software fees, offset by a $2.0 million decrease in facilities and rent, related to decreased usage of third-party logistics sites. Selling, general and administrative expenses were 43.5% and 35.3% of net sales for each of the six months ended June 30, 2025 and 2024, respectively.
Current wording
Selling, general, and administrative expenses were $79.8 million for the three months ended September 30, 2025, a decrease of 13.9%, compared to $92.7 million for the three months ended September 30, 2024. The decrease was driven primarily by a $5.1 million decrease in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation), a $4.6 million decrease in advertising and marketing fees and a $1.4 million decrease in facilities and rent related to decreased usage of third-party logistics sites. Selling, general and administrative expenses were 31.8% and 31.7% of net sales for each of the three months ended September 30, 2025 and 2024, respectively.
Previous wording
Depreciation and amortization expense was $14.5 million for the three months ended June 30, 2025, a decrease of 5.8%, compared to $15.4 million for the three months ended June 30, 2024, primarily related to the type and timing of assets placed in service.
Current wording
Depreciation and amortization expense was $14.5 million for the three months ended September 30, 2025, a decrease of 5.7%, compared to $15.4 million for the three months ended September 30, 2024, primarily related to the type and timing of assets placed in service.
Previous wording
Other expense, net was $0.9 million and other income, net was $0.6 million for the three months ended June 30, 2025 and 2024, respectively. Other expense (income), net for the three months ended June 30, 2025 and 2024 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.
Current wording
Other income, net was $1.4 million and other expense, net was $1.0 million for the three months ended September 30, 2025 and 2024, respectively. Other (income) expense, net for the three months ended September 30, 2025 and 2024 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.
Previous wording
The following table sets forth information comparing the components of net loss for the six months ended June 30, 2025 and 2024:
Current wording
The following table sets forth information comparing the components of net loss for the nine months ended September 30, 2025 and 2024:
Previous wording
Net sales were $384.2 million for the six months ended June 30, 2025, a decrease of 17.1%, compared to $463.4 million for the six months ended June 30, 2024. The decrease in net sales was due primarily to decreased sales to specialty and mass market retailers as a result of tariff disruption and general macroeconomic uncertainty for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.
Current wording
Net sales were $635.1 million for the nine months ended September 30, 2025, a decrease of 16.0%, compared to $756.1 million for the nine months ended September 30, 2024. The decrease in net sales was across all distribution channels as a result of tariff disruption and general macroeconomic uncertainty for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
Previous wording
On a geographical basis, net sales in the United States decreased 24.3% to $234.2 million in the six months ended June 30, 2025 as compared to $309.4 million in the six months ended June 30, 2024. Net sales in Europe increased 2.9% to $117.9 million in the six months ended June 30, 2025 as compared to $114.6 million in the six months ended June 30, 2024. Net sales in other international locations decreased 18.4% to $32.1 million in the six months ended June 30, 2025 as compared to $39.3 million in the six months ended June 30, 2024.
Current wording
On a geographical basis, net sales in the United States decreased 22.7% to $389.6 million in the nine months ended September 30, 2025 as compared to $503.8 million in the nine months ended September 30, 2024. Net sales in Europe increased 1.6% to $192.1 million in the nine months ended September 30, 2025 as compared to $189.1 million in the nine months ended September 30, 2024. Net sales in other international locations decreased 15.5% to $53.4 million in the nine months ended September 30, 2025 as compared to $63.2 million in the nine months ended September 30, 2024.
Previous wording
On a branded category basis, net sales of the Core Collectible branded category decreased 12.2% to $302.0 million in the six months ended June 30, 2025 as compared to $343.9 million in the six months ended June 30, 2024. Loungefly branded category net sales decreased 18.2% to $67.2 million in the six months ended June 30, 2025 as compared to $82.2 million in the six months ended June 30, 2024. Other branded category net sales decreased 59.7% to $15.0 million in the six months ended June 30, 2025 as compared to $37.3 million in the six months ended June 30, 2024.
Current wording
On a branded category basis, net sales of the Core Collectible branded category decreased 12.1% to $502.4 million in the nine months ended September 30, 2025 as compared to $571.7 million in the nine months ended September 30, 2024. Loungefly branded category net sales decreased 13.6% to $111.9 million in the nine months ended September 30, 2025 as compared to $129.5 million in the nine months ended September 30, 2024. Other branded category net sales decreased 62.1% to $20.8 million in the nine months ended September 30, 2025 as compared to $54.9 million in the nine months ended September 30, 2024.
Previous wording
Cost of sales (exclusive of depreciation and amortization) was $245.3 million for the six months ended June 30, 2025, a decrease of 10.2%, compared to $273.0 million for the six months ended June 30, 2024. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of decreased sales, as discussed above.
Current wording
Cost of sales (exclusive of depreciation and amortization) was $395.5 million for the nine months ended September 30, 2025, a decrease of 11.3%, compared to $446.0 million for the nine months ended September 30, 2024. Cost of sales (exclusive of depreciation and amortization) decreased primarily as a result of decreased sales, as discussed above, offset by increased duty costs.
Previous wording
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 36.2% for the six months ended June 30, 2025, compared to 41.1% for the six months ended June 30, 2024. The decrease in gross margin (exclusive of depreciation and amortization) for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was driven primarily by increased inventory reserves as well as increased shipping, freight and duty costs.
Current wording
Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of net sales, was 37.7% for the nine months ended September 30, 2025, compared to 41.0% for the nine months ended September 30, 2024. The decrease in gross margin (exclusive of depreciation and amortization) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was driven primarily by increased shipping, freight and duty costs and increased inventory reserves as a result of comparable nine months ended September 30, 2024 product mix sell-through and related inventory reserve benefit.
Previous wording
Selling, general, and administrative expenses were $82.3 million for the three months ended June 30, 2025, an increase of 5.6%, compared to $77.9 million for the three months ended June 30, 2024. The increase was driven primarily by a $3.2 million increase in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation), a $2.4 million increase in professional fees, related to a net one-time legal settlement gain of $1.4 million related to a previously disclosed Loungefly customs-related matter for the three months ended June 30, 2024, a $2.0 million increase in software fees, offset by a $1.9 million decrease in facilities and rent related to decreased usage of third-party logistics sites. Selling, general and administrative expenses were 42.5% and 31.5% of net sales for each of the three months ended June 30, 2025 and 2024, respectively.
Current wording
Selling, general, and administrative expenses were $246.9 million for the nine months ended September 30, 2025, a decrease of 3.6%, compared to $256.2 million for the nine months ended September 30, 2024. The decrease was driven primarily by a $4.7 million decrease in personnel and related costs (including salary and related taxes/benefits, commissions and equity-based compensation), a $3.4 million decrease in facilities and rent related to decreased usage of third-party logistics sites, a $3.0 million decrease in administrative fees, offset by a $3.6 million increase in software expenses to support direct-to-consumer growth initiatives. Selling, general and administrative expenses were 38.9% and 33.9% of net sales for each of the nine months ended September 30, 2025 and 2024, respectively.
Previous wording
Depreciation and amortization expense was $29.8 million for the six months ended June 30, 2025, a decrease of 3.9%, compared to $31.0 million for the six months ended June 30, 2024, primarily related to the type and timing of assets placed in service.
Current wording
Depreciation and amortization expense was $44.3 million for the nine months ended September 30, 2025, a decrease of 4.5%, compared to $46.4 million for the nine months ended September 30, 2024, primarily related to the type and timing of assets placed in service.
Previous wording
Interest expense, net was $8.4 million for the six months ended June 30, 2025, a decrease of 26.5%, compared to $11.4 million for the six months ended June 30, 2024. The decrease in interest expense, net was due primarily to lower average balance of debt outstanding during the six months ended June 30, 2025.
Current wording
Interest expense, net was $14.0 million for the nine months ended September 30, 2025, a decrease of 14.6%, compared to $16.4 million for the nine months ended September 30, 2024. The decrease in interest expense, net was due primarily to lower average balance of debt outstanding during the nine months ended September 30, 2025.
Previous wording
Other expense, net was $1.1 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively. Other expense, net for the six months ended June 30, 2025 and 2024 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.
Current wording
Other income, net was $0.3 million and other expense, net was $2.0 million for the nine months ended September 30, 2025 and 2024, respectively. Other (income) expense, net for the nine months ended September 30, 2025 and 2024 was primarily related to foreign currency gains and losses relating to transactions denominated in currencies other than the U.S. dollar.
Previous wording
Net loss was $69.1 million for the six months ended June 30, 2025, compared to $18.2 million for the six months ended June 30, 2024. The increase in net loss was primarily due to the decrease in net sales outpacing the decrease in operating expenses as compared to the six months ended June 30, 2024.
Current wording
Net loss was $68.1 million for the nine months ended September 30, 2025, compared to $13.7 million for the nine months ended September 30, 2024. The increase in net loss was primarily due to the decrease in net sales outpacing the decrease in operating expenses as compared to the nine months ended September 30, 2024.
Previous wording
EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted (Loss) Earnings per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. The Non-GAAP Financial Measures are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net (loss) income, (loss) income per share or any other performance measure derived in accordance with U.S. GAAP. We define EBITDA as net (loss) income before interest expense, net, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, acquisition costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and other unusual or one-time items. We define Adjusted Net (Loss) Income as net (loss) income attributable to Funko, Inc. adjusted for the reallocation of (loss) income attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, non-cash charges related to equity-based compensation programs, acquisition costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and the income tax expense (benefit) effect of these adjustments. We define Adjusted (Loss) Earnings per Diluted Share as Adjusted Net (Loss) Income divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any. We caution investors that amounts presented in accordance with our definitions of the Non-GAAP Financial Measures may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate the Non-GAAP Financial Measures in the same manner. We present the Non-GAAP Financial Measures because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.
Current wording
EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Earnings (Loss) per Diluted Share (collectively the “Non-GAAP Financial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. The Non-GAAP Financial Measures are not measurements of our financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss), income (loss) per share or any other performance measure derived in accordance with U.S. GAAP. We define EBITDA as net income (loss) before interest expense, net, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjusted for non-cash charges related to equity-based compensation programs, acquisition costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and other unusual or one-time items. We define Adjusted Net Income (Loss) as net income (loss) attributable to Funko, Inc. adjusted for the reallocation of income (loss) attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for the impact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance. These items include, among other things, non-cash charges related to equity-based compensation programs, acquisition costs and other expenses, certain severance, relocation and related costs, foreign currency transaction gains and losses and the income tax expense (benefit) effect of these adjustments. We define Adjusted Earnings (Loss) per Diluted Share as Adjusted Net Income (Loss) divided by the weighted-average shares of Class A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC for newly issued-shares of Class A common stock of Funko, Inc. and (2) the dilutive effect of stock options and unvested common units, if any. We caution investors that amounts presented in accordance with our definitions of the Non-GAAP Financial Measures may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate the Non-GAAP Financial Measures in the same manner. We present the Non-GAAP Financial Measures because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAP Financial Measures as a reasonable basis for comparing our ongoing results of operations.
Previous wording
By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. The Non-GAAP Financial Measures have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net (loss) income or other financial statement data presented in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) as indicators of financial performance. Some of the limitations are:
Current wording
By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. The Non-GAAP Financial Measures have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income (loss) or other financial statement data presented in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) as indicators of financial performance. Some of the limitations are:
Previous wording
The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S. GAAP financial performance measure, which is net (loss) income, for the periods presented:
Current wording
The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S. GAAP financial performance measure, which is net income (loss), for the periods presented:
Previous wording
(3)For the three months ended June 30, 2024, includes a net one-time legal settlement gain of $1.4 million related to a previously disclosed Loungefly customs-related matter. For the six months ended June 30, 2024, also includes $3.2 million related to contract settlement agreements and related services for assets held for sale (including fair market value adjustments of $135,000) related to a potential business initiative and the sale of certain assets under Funko Games.
Current wording
(3)For the three and nine months ended September 30, 2025, includes charges related to fair market value adjustments for certain assets held for sale. For the three months ended September 30, 2024, includes charges related to contract settlement agreements for warehouse leased space. For the nine months ended September 30, 2024, includes a net one-time legal settlement gain of $1.4 million related to a previously disclosed Loungefly customs-related matter offset by $3.2 million related to contract settlement agreements and related services for assets held for sale (including fair market value adjustments of $135,000) related to a potential business initiative and the sale of certain assets under Funko Games.
Previous wording
(4)For the three and six months ended June 30, 2024, includes charges related to severance and benefit costs related to certain management departures.
Current wording
(4)For the three and nine months ended September 30, 2024, includes charges related to severance and benefit costs related to certain management departures.
Previous wording
(6)Represents the income tax expense (benefit) effect of the above adjustments including net (loss) income. This adjustment uses an effective tax rate of 25% for all periods presented.
Current wording
(6)Represents the income tax expense (benefit) effect of the above adjustments including net income (loss). This adjustment uses an effective tax rate of 25% for all periods presented.
Previous wording
In connection with preparing the unaudited consolidated financial statements for the three months ended June 30, 2025, management evaluated our future liquidity, forecasted operating results and ability to comply with the covenants under our Credit Agreement for the twelve months from the date of issuance of these financial statements and determined that, principally based on our forecast of the expected effects of the announced tariffs and other facts and conditions, we are forecasting that we will not be in compliance with the maximum Net Leverage Ratio and minimum Fixed Charge Coverage Ratio (each as defined in the Credit Agreement) covenants as of the end of the quarter ending December 31, 2025 and future quarters. Failure to satisfy the covenants under the Credit Agreement, without a timely cure, waiver or amendment, would be considered an event of default. If an event of default occurs and is not cured or waived, the Required Lenders (as defined in the Credit Agreement) could elect to declare all amounts outstanding under the Credit Agreement immediately due and payable and exercise other remedies as set forth in the Credit Agreement. In addition, the Required Lenders would have the right to proceed against the collateral pledged to them, which includes substantially all of our assets.
Current wording
In connection with preparing the unaudited consolidated financial statements for the three months ended September 30, 2025, management evaluated our future liquidity, forecasted operating results and ability to comply with the covenants under its Credit Agreement, for the twelve months from the date of issuance of these financial statements and determined that there is substantial doubt about our ability to continue as a going concern for the next twelve months from the date of issuance of these financial statements, principally based on our forecast of the expected effects of the announced tariffs and other facts and conditions, anticipated non-compliance with the maximum Net Leverage Ratio and minimum Fixed Charge Coverage Ratio (each as defined in the Credit Agreement) covenants as of the end of the quarter ending December 31, 2025 and future quarters and our potential non-compliance with the covenants with respect to a Refinancing Transaction or a Sale Transaction (each as defined the Fourth Amendment).
Previous wording
The challenging retail environment, in particular as a result of the current tariff environment, has adversely impacted and is expected to adversely impact our performance. On July 16, 2025, we entered into Amendment No. 4 (the “Fourth Amendment”) to our Credit Agreement, dated September 17, 2021 with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (as amended, the “Credit Agreement”), that among other things, amends the Credit Agreement by waiving compliance with (x) the maximum Net Leverage Ratio and (y) the minimum Fixed Charge Coverage Ratio financial covenants, in each case, for the fiscal quarters ended June 30, 2025 and ending September 30, 2025.
Current wording
The challenging retail environment, in particular as a result of the current tariff environment, has adversely impacted and is expected to adversely impact our performance. On July 16, 2025, we entered into Amendment No. 4 (the “Fourth Amendment”) to our Credit Agreement, dated September 17, 2021 with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (as amended, the “Credit Agreement”), that among other things, amends the Credit Agreement by waiving compliance with (x) the maximum Net Leverage Ratio and (y) the minimum Fixed Charge Coverage Ratio financial covenants, in each case, for the fiscal quarters ended June 30, 2025 and September 30, 2025. The Fourth Amendment also contains covenants that we shall take certain actions in furtherance of a Refinancing Transaction or a Sale Transaction (each as defined in the Fourth Amendment), and certain milestone covenants have not been satisfied as of the date of this Quarterly Report (such covenants, the “Outstanding Milestone Covenants”). The administrative agent under the Credit Agreement has the discretion to extend the compliance dates for the Outstanding Milestone Covenants. On November 5, 2025, the Administrative Agent, in its sole discretion, and the Credit Agreement Parties confirmed the first of the Outstanding Milestone Covenants has been extended until November 25, 2025. If the first of the Outstanding Milestone Covenants has not been met by November 25, 2025, the Administrative Agent has the right to secure a financial advisor on behalf of itself and other secured parties, at the Company’s expense, to assist in the refinancing process. As long as the financial advisor remains engaged, the Company would receive automatic periodic extensions until the Outstanding Milestone Covenants are satisfied. If the Outstanding Milestone Covenants are not satisfied by us or extended by the Administrative Agent, the Company would be in default under the Credit Agreement and if such default is not cured within 15 days, it would mature into an event of default under the Credit Agreement.
Previous wording
The Credit Agreement matures in September 2026, however, we are not forecasted to have sufficient cash reserves to fully repay the loans outstanding under the Credit Agreement at that time, and as such, the Credit Agreement will need to be refinanced. See Part I, Item 1, “Financial Statements - Note 4, “Debt” for additional information.
Current wording
The Credit Agreement matures in September 2026, however, we are not forecasted to have sufficient cash reserves to fully repay the loans outstanding under the Credit Agreement at that time, or an earlier date, if applicable, and as such, the Credit Agreement will need to be refinanced. See Part I, Item 1, “Financial Statements - Note 4, “Debt” for additional information.
Previous wording
While management believes that the measures described in the above plan will be adequate to satisfy our liquidity requirements, there can be no assurance that management’s liquidity plan will be successfully implemented, our lenders will agree to waive, modify and/or amend the maximum Net Leverage Ratio and minimum Fixed Charge Coverage Ratio covenants for the periods of forecasted covenant noncompliance, or that the Credit Agreement can be refinanced before its maturity date, which all raise substantial doubt about our ability to continue as a going concern for the next twelve months.
Current wording
While management believes that the measures described in the above plan will be adequate to satisfy our liquidity requirements, there can be no assurance that management’s liquidity plan will be successfully implemented, our lenders will agree to waive, modify and/or amend the maximum Net Leverage Ratio and minimum Fixed Charge Coverage Ratio covenants for the periods of forecasted covenant noncompliance, the Administrative Agent will agree to further extend the compliance dates related to the Outstanding Milestone Covenants, if necessary, or that the Credit Agreement can be refinanced before its maturity date, which all raise substantial doubt about our ability to continue as a going concern for the next twelve months.
Previous wording
See Part I, Item 1, “Financial Statements - Note 1, “Organization and Operations” and Part II, Item 1A, Risk Factors – “There is substantial doubt about our ability to continue as a going concern due to pressure on our financial covenants arising from the current retail environment” for additional information.
Current wording
See Part I, Item 1, “Financial Statements - Note 1, “Organization and Operations” and Part II, Item 1A, Risk Factors – “There is substantial doubt about our ability to continue as a going concern due to pressure on our financial covenants arising from the current retail environment and potentially insufficient working capital and potential non-compliance with other covenants as defined within the Credit Agreement” for additional information.
Previous wording
We expect to have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. In addition, the Board has initiated a formal review process to evaluate strategic alternatives for the Company, including a potential sale of the Company. The Company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any particular outcome.
Current wording
We expect it will be necessary to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. In addition, our Board of Directors has initiated a formal review process to evaluate strategic alternatives for the Company, including a potential sale of the Company. The Company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any particular outcome.
Previous wording
The following table shows summary cash flow information for the six months ended June 30, 2025 and 2024 (in thousands):
Current wording
The following table shows summary cash flow information for the nine months ended September 30, 2025 and 2024 (in thousands):
Previous wording
Operating Activities. Net cash used in operating activities was $44.4 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $60.4 million for the six months ended June 30, 2024. Changes in net cash used in or provided by operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors. Other drivers of the changes in net cash provided by operating activities include shipping and freight costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our short-term borrowings and long-term debt. Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 62 days).
Current wording
Operating Activities. Net cash used in operating activities was $33.2 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $63.7 million for the nine months ended September 30, 2024. Changes in net cash used in or provided by operating activities resulted primarily from cash received from net sales and cash payments for product costs and royalty expenses paid to our licensors. Other drivers of the changes in net cash provided by operating activities include shipping and freight costs, selling, general and administrative expenses (including personnel expenses and commissions and rent and facilities costs) and interest payments made for our short-term borrowings and long-term debt. Our accounts receivable typically are short term and settle in approximately 30 to 90 days (average 59 days).
Previous wording
The increase in net cash used in operating activities for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to changes in working capital that increased net cash used in operating activities by $52.8 million, an increase in net loss of $50.8 million and changes in depreciation and amortization, equity-based compensation and other, net of $1.3 million. Within working capital, the primary drivers were increases in accrued expenses and other current liabilities of $10.0 million, and, accrued royalties of $12.6 million and decreases to prepaid expenses and other assets of $23.1 million and inventory of $15.9 million.
Current wording
The increase in net cash used in operating activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to changes in working capital that increased net cash used in operating activities by $36.7 million, an increase in net loss of $54.5 million and changes in depreciation and amortization, equity-based compensation and other, net of $5.7 million. Within working capital, the primary drivers were increases in accounts payable of $24.0 million, accrued expenses and other current liabilities of $14.4 million, and accrued royalties of $10.4 million. Prepaid expenses and other assets decreased $12.8 million and inventory decreased $8.1 million. This was offset by an increase in accounts receivable of $32.9 million.
Previous wording
Investing Activities. Our net cash used in investing activities primarily consists of purchases of property and equipment. For the six months ended June 30, 2025, net cash used in investing activities was $15.2 million and was primarily related to purchases of tooling and molds used for production of our product lines. For the six months ended June 30, 2024, net cash provided by investing activities was $6.0 million related to the sale of inventory and certain intellectual property marketed under and related to Funko Games of $6.8 million, offset by purchases of tooling and molds used for production of our product lines of $13.3 million.
Current wording
Investing Activities. Our net cash used in investing activities primarily consists of purchases of property and equipment. For the nine months ended September 30, 2025, net cash used in investing activities was $23.0 million and was primarily related to purchases of tooling and molds used for production of our product lines. For the nine months ended September 30, 2024, net cash used in investing activities was $13.4 million related to purchases of tooling and molds used for production of our product lines of $20.8 million, offset by proceeds from the sale of inventory and certain intellectual property marketed under and related to Funko Games of $6.8 million.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
If an event of default under the Credit Agreement occurs and is not cured or waived, the Required Lenders (as defined in the Credit Agreement) could elect to declare all amounts outstanding under the Credit Agreement immediately due and payable and exercise other remedies as set forth in the Credit Agreement. In addition, the Required Lenders would have the right to proceed against the collateral pledged to them, which includes substantially all of our assets.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net loss was $41.0 million for the three months ended June 30, 2025, compared to net income of $5.4 million for the three months ended June 30, 2024. The increase in net loss was primarily due to the decrease in net sales outpacing the decrease in operating expenses as compared to the three months ended June 30, 2024.