Funko (FNKO) Q4 2025 earnings summary

Executive summary

• Q4 net sales reached $273.1 million, exceeding expectations and up 9% sequentially from Q3, driven by strong entertainment property sales and successful European launches.

• Gross margin for Q4 was 40.9%, slightly above guidance and continuing a positive trend, with adjusted EBITDA at $23.3 million, at the high end of expectations.

• Advanced 'Make Culture POP!' strategy, expanded partnerships, and renewed key licensing deals, including Disney, Netflix, Paramount, and Universal.

• Inventory levels were reduced and $16 million of debt was paid down in Q4, with credit agreement maturity extended to December 2027.

• Strong brand momentum observed at major toy fairs and events, with notable product launches and cultural moments driving engagement.

Financial highlights

• Q4 net sales were $273.1 million, up 9% sequentially but down from $293.7 million year-over-year.

• Gross margin was 40.9% in Q4, slightly above guidance but down from 42.4% last year.

• Adjusted EBITDA was $23.3 million (8.5% margin), at the high end of guidance but below $26.3 million (8.9%) last year.

• SG&A expenses in Q4 were $90.9 million, down 12% year-over-year.

• Paid down $16 million of debt in Q4 and extended credit agreement maturity to December 2027.

Outlook and guidance

• 2026 net sales expected to be flat to up 3% year-over-year, with substantial improvement in profitability and adjusted EBITDA guidance of $70–80 million.

• Gross margin expected to rise to 41–43% in 2026, driven by renewed licensing agreements and lower minimum guaranteed royalties.

• Q1 2026 net sales guidance is flat to down 2% year-over-year, with adjusted EBITDA expected to be approximately break-even.

• Funko core product lines projected to grow high single digits, offset by double-digit decline in Loungefly due to SKU cuts.

• No additional borrowing expected in 2026; continued debt paydown planned.