brunocoelhopt/Depositphotos.com
August 12, 2025
Does the Future Still Look Bright for Funko?
Funko, responsible for the broad assortment of simplistic pop culture Funko POP! figurines which became a hot collectible over the past decade or more, recently dropped a sobering Q2 2025 financial report.
Some key metrics outlined in the report include:
- Net sales fell to $193.5 million versus $247.7 million, a 22% drop YoY.
- Gross profit registered at $62 million, equal to a gross margin of 32.1%, set against YoY figures of $104 million, equal to a gross margin of 42%.
- Net loss was posted at $41 million, or $0.74 per share, to be compared against year-prior net income of $5.4 million, or $0.10 per share.
- Negative adjusted EBITDA was pegged at $16.5 million, against EBITDA of $27.9 million YoY.
In remarks attached to the report, Mike Lunsford — interim CEO for Funko — indicated that tariff uncertainty had hampered sales, and that ongoing headwinds were necessarily leading to cost-cutting measures.
“As expected, our 2025 second quarter performance was impacted by a dynamic and uncertain tariff environment,” Lunsford said.
“Looking ahead, we expect headwinds to moderate and our business to improve as a result of the actions we’ve taken to cut costs, diversify product sourcing and adjust prices. The team is focused on stabilizing the business, accelerating execution on growth initiatives and unlocking Funko’s long-term potential,” he added.
According to a 2023 KING 5 report, Funko had been exhibiting “a slow decline” even as of that date, far from the heights of its explosive popularity enjoyed just years prior.
Funko Looks To Cut Costs, Focusing on Stabilization and Growth Potential
And as Retail Dive outlined, Funko had been working to streamline its operations during the second quarter of the year, trimming its workforce by about 20% while concurrently raising prices and shifting production from China to other nations less harried by tariffs.
The brand has also filed paperwork with the SEC concerning an at-the-market equity offering, wherein Funko would be permitted to sell common stock shares worth up to $40 million. Finally, Funko has hired financial services company Moelis & Company to assist with the refinancing of its debt, per CFO Yves LePendeven.
Funko loyalists on Reddit offered casual analysis of the situation, with the top-rated comment suggesting that demand wasn’t the problem — overhead was.
“Demand is there. People want Funkos. They don’t do $194 million in sales if people don’t like them,” wrote user TechnologyOk3922.
“Their expenses are high. Way too high. And that’s what’s killing them. They did $194m in sales but spent $235 million. They need to figure out how to lower cost. Tariffs is a big one,” they concluded.
Other commenters issued criticism of scalpers hewing close to Funko, hurting broader distribution among loyal collectors, as well as complaints related to the restricted nature of NFT distribution.
Discussion Questions
Will Funko’s cost-cutting measures be enough to return it to profitability? Has consumer interest in the brand’s Funko POP! lineup abated to a concerning degree, or are tariff pressures more pertinent?
What measures could Funko take to reignite interest in its lineup of collectibles, especially considering the broader renewed interest in the category among “kidults”?
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David Biernbaum
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Funko’s latest results were very weak, and the big question is whether this is just a blip or the start of something more serious. On the cost side, tariffs are biting thanks to the company’s heavy reliance on Chinese manufacturing. That’s a fixable problem, and Funko is already working to move some production elsewhere. The real worry is on the sales front. Yes, the company is still coming down from the pandemic high, when demand for collectibles surged. But the bigger issue is the hit to discretionary spending, which is squeezing categories like collectibles harder than most. To me, all of this is about Funko needing to adjust its model so that it’s aligned with the new dynamics of supply and demand.
It’s foolish to base an analysis on a single pair of Y-on-Y comparisons, but…
but any company that has its future tied up in a line of products that can be fairly summarized as “were popular a decade ago” has existential issues. You can only cut your way to profitability if a viable business remains after the cutting is done; I’ve yet to see that is true.
A 22% revenue drop and a swing from a $5.4M profit to a $41M loss is a lot more than a “blip.” Have we reached peak collectible moment? A pure discretionary spend category with no functional utility is the first casualty in any economic downturn. Funko’s business model is fundamentally based on IP rental, serving as a manufacturing middleman between Disney/Marvel and others on one side and the speculative fervor of pop culture trends on the other. Could they pivot to more experiences over objects (e.g., Funko theme cafes, pop-up experiences, community events)?
It remains uncertain whether Funko’s cost-cutting measures will fully restore profitability without addressing consumer demand, despite the fact that they may improve the company’s financial standing. Innovation and an expansion of the brand’s product line will be essential to reigniting interest among collectors and new customers.
The business results definately show a weak trend for the brand, but the bigger issue is consumer demand and willingness to pay more to off-set rising product costs. The brand is reliant on pop culture which is suffering from the demise of the movie theater and dilution of content over many streaming and media outlets. Characters from blockbuster movies and popular fiction characters are the lifeline of the pop figures. Branching out into expanded product lines may expand sales, but I can see more of a resale collectors segment helping to keep the brand relevant.
They had recently gone through the private-equity wringer with Gladstone and spun out just a couple years ago – which stripped out a lot of the first generation know-how from the company and sucked out the cash flow that would have gone into improving the business & developing new product lines.
Much of the current situation is out of their control – and their results are very similar to most of the private small-medium size toy companies I hear from. The culling is already starting though much of it doesn’t reach the financial news beat at this point. We will probably lose 30+% of the SMEs on the vendor side and a similar number of indy toy & collectible retailers by this time next year. So even a best-case scenario now is “hunker down and try to survive the next couple years.”
Also see the utter mess in comic-book & collectibles market, where the main 3P, Diamond Distributors, went bankrupt & the new ownership is trying to finance it on the backs of the vendors.