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DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Executive - Josh Simon
• Executive - Yves Le Pendeven
• Chief Product Officer - Husnal Shah
• Executive - Nik Rupp
• Executive - Andrew David Oddie

TAKEAWAYS

• Net Sales -- $207.7 million, representing an increase of 7% compared to $193.5 million in the prior year period.
• Core Collectibles Revenue -- $171.6 million, an increase of 9% year over year and the primary contributor to total sales growth.
• Loungefly Revenue -- $31.3 million, a decrease of 1.7% from $31.8 million last year, reflecting a strategic reduction of stock keeping units by approximately 50%.
• Gross Margin -- 56.6%, a record high that included a $25.4 million pre-tax benefit from expected tariff refunds and the release of accrued tariffs.
• Adjusted Gross Margin -- 44.4%, excluding the $25.4 million tariff-related credit, which represents an improvement from 32.1% last year.
• Adjusted EBITDA -- $40.9 million, compared to a negative $16.5 million in the second quarter of the previous year.
• Net Income -- $15.4 million, or $0.27 per diluted share, compared to a net loss of $40.5 million in the prior year period.
• United States Sales -- $121.8 million, an increase of 3.4% year over year.
• Europe Sales -- $69.0 million, growing 19.4% due to strong performance across multiple retail channels.
• Selling, General, and Administrative Expenses -- $79.7 million, improving to 38.4% of net sales compared to 42.5% last year.
• Total Debt -- $201.1 million at June 30, 2026, a reduction from $225.3 million at the end of 2025.
• Inventory -- $88.8 million, compared to $83.1 million as of Dec. 31, 2025.
• Full-Year Net Sales Guidance -- Flat to up 3%, which the company reiterated for the fiscal year 2026.
• Full-Year Adjusted EBITDA Guidance -- $100 million to $110 million, raised from the previous range of $70 million to $80 million.
• Third Quarter Net Sales Guidance -- Approximately flat year over year, reflecting normalized shipment comparisons.
• Third Quarter Adjusted EBITDA Guidance -- $25 million to $30 million.
• Wholesale Point of Sale Growth -- 6% in units globally year over year, with year-to-date point of sale growth reaching 9%.
• Concentration of Sales -- 32% of total second quarter sales were derived from the top 10 franchises and programs.
• Debt Reduction -- $15 million, funded in part by the sale of $22.1 million in tariff claims for $19.2 million in proceeds.
• European Point of Sale Trends -- Over 20% growth year to date, driven by expanded retail placement and entertainment releases.
• Loungefly SKU Productivity -- Sales decreased only 2% despite a 50% reduction in total stock keeping units, indicating higher productivity per item.
• Cash and Cash Equivalents -- $40.7 million at June 30, 2026, compared to $42.1 million at the end of 2025.
• Interest Expense -- $5.2 million for the quarter, compared to $4.5 million in the same period last year.
• Capital Expenditures -- $19.0 million for the first half of the year, primarily focused on property and equipment.

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RISKS

• Le Pendeven warned that "any kind of, you know, higher oil prices and things like that could negatively impact us" through higher freight or raw materials costs.
• Le Pendeven stated that while 10% to 12% tariffs are factored into guidance, "there can continue to be surprises on that front" regarding future trade restrictions.

SUMMARY

Funko, Inc. (FNKO +1.01%) reported second quarter results featuring 7% revenue growth and record gross margins, primarily driven by a $25.4 million tariff refund credit and a 9% increase in core collectibles. Management stated the company is transitioning from strategy to execution in its Make Culture Pop initiative, focusing on rapid product development, improved SKU productivity, and debt reduction. While raising full-year adjusted EBITDA guidance, the company maintained its sales outlook due to a cautious view of the broader consumer environment despite strong point-of-sale momentum in the United States and Europe.

• Husnal Shah announced the launch of the Pop! Mystery line, which features "the global 1-of-1 Chase, which is which is what differentiates us from the market and is extremely exciting."
• Management formalized a partnership with HP for additive manufacturing under its "hyperstrike" strategy, allowing for product creation in weeks instead of months.
• The company announced the appointment of Kristen Hamilton, formerly of Crunchyroll and Hasbro, as Chief Commercial Officer effective Aug. 24, 2026.
• Josh Simon noted that the core collectibles business is growing while "Loungefly is becoming healthier" following a 50% reduction in total stock keeping units.
• The company secured incremental shelf space in Europe, including diorama displays in 350 stores across retailers Smith's, HMV, and Gift Universe.
• Management confirmed that the Pop! Yourself experiential platform will expand to include geo-specific experiences with retail partners later this year.

INDUSTRY GLOSSARY

• EMEA: Europe, Middle East, and Africa.
• SKU: Stock Keeping Unit; a unique identifier for a specific product.
• POS: Point of Sale; the time and place where a retail transaction is completed.
• IP: Intellectual Property; creations of the mind, such as licensed characters or franchises.
• Loungefly: A Funko-owned brand specializing in fashion accessories like backpacks and wallets.
• Mondo: A Funko-owned brand focused on premium collector items and high-end figures.
• Pop!: Funko's flagship line of stylized vinyl collectible figures.
• Bitty Pop!: A miniature version of the standard Funko Pop! figures.
• Pop! Mystery: A line of collectible figures sold in blind-box packaging where contents are unknown until opened.
• Pop! Yourself: A customizable product line that allows customers to create a figure in their own likeness.
• Chase: A rare version of a collectible item randomly inserted into a production run of standard items.
• Mondoverse: A specific line of reimagined characters and storylines developed by the Mondo brand.
• Additive Manufacturing: The industrial production name for 3D printing, used by Funko to accelerate product development cycles.

Full Conference Call Transcript

Andre: Hi, everyone. I am here with Josh and Yves, and we are here at San Diego Comic-Con. Like the perfect place to have this discussion about Funko and his business because so much of Funko is here and has been here for the past 20 years.

Josh Simon: Yeah. I mean, I often think there would not be the Funko that exists today without Comic Con. So it is a massive highlight of the year for us. We are excited you were able to join us and Yeah. Excited to take a little bit of a walk around in a bit here.

Andre: Well, I have been your booth several times, several years. Now it makes sense to come together like this. But before we get to nitty gritty, that is something I want to talk about because you have been here for 20 years. The booth has grown. The product has grown. The fandom has grown. Just what is that general feeling? Does this feel like a celebration when you come to San Diego every year?

Josh Simon: It does. I mean, the you will see the folks who work in our booth are largely fans from all over the world. They were, like, taking time off of work and out of their lives to come in, hang out here and help interact. And it is also a great way for just these community of fans from all across the country and the world to come in, celebrate Funko, experience the brand, buy some incredibly coveted limited edition products. I mean, it is flattering and humbling and wild to see the lines, at our booth for people who are here to get the exclusive product you can only get here at Comic Con.

Andre: Absolutely. Well, it is obviously great to see this fandom that happens here. I have seen those exclusive get off those shelves. So I know some finances happen here as well. So let's get into that. How has this quarter been for Funko?

Yves Le Pendeven: Yep. Numbers have been great, and it is really a reflection of our make culture pop strategy gaining traction. So we are really pleased to report sales were up 7% in the quarter, and that is building on the growth from Q1. So for the first half of the year, we were up 6%. And the good news is it was not really 1 product or region or IP. It was really broad based. Right? So in The US, we were up 3%. In Europe, we were up 19%. And then from a product perspective, our core collectibles were up 9%.

And although Loungefly was down 2%, it was an improving trend from what we saw in Q1, and, we are really pleased with the better, SKU productivity.

Andre: Very nice. I am going to say that increase in The US about 0.045 That might just be me. Just so you know. So, yeah. But, no, that is great to hear. So, Josh, what are some highlights of this quarter with Funko?

Josh Simon: Well, I mean, Yves mentioned the momentum that we are seeing, and I think a big part of that is we have talked a lot about the make culture pop strategy, and I think we are really seeing that go from strategy to execution and take form. it is really about culture sensing and creating demand across the entertainment and pop culture landscape. Creativity, giving it form and products, and then commerce putting it in fans' hands all over the world. Yeah. You know, on the culture side, it is really about how we get faster at sensing what is happening and then turning that into products.

The last 2 quick things I will mention is creativity on the product side. We are gonna take a walk around in a little bit and you are gonna get to see our brand new Pop! Mystery platform. And, you know, that is really about taking what people love about pop and just turning it into a broader experience, you know, and a new product format. And so excited to show you how that is about to materialize. You know, it is great to sort of see that make culture pop strategy coming together and really moving from idea to execution in the quarter.

Andre: Yeah. And it is interesting because it seems like you obviously, there are some franchises you are ready and prepared for, like Avengers: Doomsday, for example, or something like that. But then you have these ones you got to kind of predict the popularity. And then you have an obsession like last year with K-Pop Demon Hunters where it is boom, this explosion out of nowhere, how do we jump on that as fast as possible? So is that a constant turning strategy between predicting versus following up?

Josh Simon: Or And I think because we cannot predict those things, what we really have to do is build this repeatable offense. So having sort of upstream teams in place that are really ready very quickly to make the licensing deals. The capacity internally to design the products and manufacture them and get them to shelves, and then those retail relationships either with wholesale partners or our own D2C channel to get those out to consumers quickly. Yeah. And I think the magic for us is that we have really sort of honed that engine of, you know, sensing demand turning it into products, and getting into our fans' hands in a really repeatable way.

And we are starting to see that happen more and more.

Andre: You only have to do that with movies, television, sports, anime. Only.

Josh Simon: Exactly. A video game. Exactly.

Andre: Exactly.

Josh Simon: Culture in general. Yeah.

Andre: And maybe, the raccoon that is taking the world historical right now.

Josh Simon: Well, should we go take a look at I think we should. I am very excited to see what you have here. On the show for you. Great.

Andre: Let's go check it out after you. Alright. Let's check out what is over here.

Josh Simon: So this is, Husnal, our chief product officer.

Andre: Hi, Husnal. Nice to meet you. Pleasure.

Josh Simon: Alright.

Andre: So, obviously, got some great products here, but there is special 1 here this Oh, yes. Top mystery. Can you tell us about that?

Husnal Shah: Yes. At San Diego Comic-Con over here, we are launching our Pop! Mystery line.

Andre: Hey! Yes.

Husnal Shah: And I see this is the Flora pack right here?

Andre: This is the flora pack. Okay.

Husnal Shah: So tell us about flora. Flora is a plant line that we started off as a, you know, a regular standard crop, and now we have made it into a mystery collection. Piece. And it is absolutely fabulous. I love that. And it seems here that you can get 1 of 6 possible ones in common So each drug has 6 commons with their credit card, and then we have the Chase as well as the global 1-of-1 Chase, which is which is what differentiates us from the market and is extremely exciting.

Andre: Did you say 1-of-1?

Husnal Shah: 1 of 1 of these out there. 1 of these, and imagine if you are a fan with the 1.

Andre: Oh my gosh. Yes. that is wow.

Husnal Shah: Well, got to see which 1 is inside. Right?

Andre: Open it.

Husnal Shah: Okay.

Andre: What if this is the worldwide chase? I mean, wow. What if Alright. Let's open this 1.

Husnal Shah: You got it. Let's see.

Andre: Oh, it is pretty. I like that. Oh, is that tula on the way? Oh, the tula is so cute. Cute. Not the 1-on-1, but it is 1-on-1, but I still like it. Look.

Husnal Shah: I think is great, and we are obviously revealing this here at Comic Con, but there is other sort of licensing partners. This, as you mentioned, is original IP that we have created. Yeah. And then, of course, we are also launching with some of the biggest IP in the world. Oh. Per chain. it is with 1 Piece. As well as with the Warner Brothers with the models line.

Andre: Speaking of Warner Brothers horror, 1 Piece and Flora, they have a little bit of an activation going over here. Right?

Husnal Shah: And we are giving away the in that activation, so you might want to go check it out.

Andre: I think I do want to check it out. Let's go do it. Let's see what this is here. Oh, got a knock. Give it a knock. Yeah. Let's Flora. Flora. Flora. Oh. Oh. Hey!

Nik Rupp: Hi, Andre. This is Nick.

Andre: How are you doing? How are you, Brad? Nice to meet you. Can I come in? Oh my gosh. Wow. This is beautiful.

Nik Rupp: Welcome to the Pop! Flora greenhouse.

Andre: Tell me about what it is like to create experiences for people at San Diego Comic Con when it comes to Funko. Obviously, Getting the pops, but you are giving a more immersive experience to them, right?

Nik Rupp: 100%. You know, this is such a special opportunity to be at San Diego Comic-Con. We really consider this sort of our World Cup, our Super Bowl all in 1.

Andre: Yeah.

Nik Rupp: It just provides us an amazing opportunity to be on the ground with our fans as part of the launch of Pop! Mystery we created these mystery game rooms This is the Pop! Flora Greenhouse. And we really wanted to bring our own IP and our fandom to life. This is not just a banner ad. This is not a shelf display. This is a greenhouse that you can stand into, experience this world yourself.

Andre: I really like that because it almost, like, brings more into the fandom when you are able to some kind of experience along with the product. 100%. Now let's see some more stuff here. Alright.

Nik Rupp: Thank you for stopping by. Yes. This is really cool. We also have a 1 Piece 1 here and a WBR and K-Pop Demon Hunters.

Andre: Thanks again, Nick. That was really cool.

Nik Rupp: Good. Good.

Andre: Yeah.

Josh Simon: Alright.

Andre: Let's take a look around this way.

Josh Simon: Okay.

Andre: You know, obviously, we talked about this earlier, but you know, selling a lot of exclusive products that you can only get here.

Josh Simon: Yes. Obviously, kind of massive lines people, which is, like, super humbling. And look, I think what you experience in saw over in the mystery room is sort of our first step into doing something that is more experiential. Yes. And then 1 of, like, the most compelling experiences that, you know, we have become known for both online and soon rolling out into some wholesale partners is the Pop! Yourself experience. I have been able to do that at Funko Hollywood. You can do it at the Hollywood store. A couple stores we will announce soon where you will be able to start doing it as well.

You can do it at, the Inner Miami Stadium with the football club there.

Andre: Okay.

Josh Simon: And then, of course, here celebrating the upcoming launch of Spider-Man: Brand New Day, we have a great Pop! Yourself experience as well for folks here at Comic Con.

Andre: You tell me I can pop myself a Spider Man right now?

Josh Simon: You sure can. A limited edition. You can only you can only get it here. Okay. Obviously, it is sort of a version of our kiosk experience. Where you can pick your body type, your skin tone, your hair, you know, your clothes, and like I said, some very specific Spidey outfits, that you can only get here at Comic Con.

Andre: Alright. You want to give it a try?

Josh Simon: I have to pop myself here.

Andre: Yep. Okay. Let me start building. You said this is an exclusive Spider-Man: Brand New Day Pop! Right?

Josh Simon: Exclusive only here to Comic Con.

Andre: Alright. Let me pick my body type here. Nice. Okay. Let's go with some skin tone. Love that.

Josh Simon: Yeah.

Andre: I get to really customize it here. Your lashes. Yes.

Josh Simon: Your hair. Lots of different hairstyles.

Andre: Oh, there we go. This looks like me. I like that. I like that. Very nice. Okay. Do the glasses. Glad you have some glasses options.

Josh Simon: it is your trademark. Yeah.

Andre: There we go. Okay. Yes.

Josh Simon: And then some exclusive accessories as well.

Andre: We got a VIP badge. Perfect for Spider Man going to Comic Con.

Josh Simon: Alright. You can hold the mask in his Yep.

Andre: And then we also got some web shooting here. Alright. Let me go with that mask. And then I can pick another 1, right?

Josh Simon: Yeah. Yeah.

Andre: Let's definitely do the webs. Very nice. what is really cool, I see you have a little hulk here. Is that also exclusive to here?

Josh Simon: It comes with a Bitty Pop! Hulk.

Andre: Oh, that is awesome. Alright. So I get a Bitty Pop Hulk with my Spider Man outfit here. Alright. Gotta package that pop. Top. There you go. Look at that 1. Wow. it is me in the Spider Man outfit. there is the web shooting. there is the mask. there is the exclusive Hulk Bitty Pop! in there. Oh, that is great. And that is a really cool experience to come here if you are excited for Spider-Man: Brand New Day, you are excited for Pop! Yourself, and you get to have this experience right here at San Diego Comic-Con.

Josh Simon: And, obviously, the ability to create these sort of geo specific experiences is something that we will start to roll out, and test later this year with some retail partners.

Andre: Oh.

Josh Simon: So you can imagine something like this starting to kind of pop up in other parts of the world and really create something unique and specific to a location.

Andre: Oh, that is really great. Because I was thinking you could do this at the Funko stores, now you are saying there might be other stores and places around the world to do this too?

Josh Simon: Yeah.

Andre: Alright. Stay tuned for that.

Josh Simon: Alright.

Andre: Let's go. Let's check out the next part of the booth here. Alright. Alright.

Josh Simon: Let's go by the, the Mondo booth.

Andre: Oh, yes.

Josh Simon: Do not know. As you know, like, Mondo is sort of our premium collector toy line. Yes. These guys are amazing artists. I have got I have got some fair figures in my home right now. Okay. Great. And we are going to kind of cut through crowds here. Hey! How's it going, man? Good to see you. Yeah. Yeah. Okay.

Analyst: I am a huge Ninja Turtles fan, so I am very excited about what is going on here. Yes.

Andrew David Oddie: This is the TMNT Mondoverse where our partnership with Paramount has given us permission and access to create our own what if scenario sequel story to the nineties film. We are bringing in all the characters and whimsy and wildness of the comics, video games, and cartoons. Into this real world, gritty, like a man in a suit vibe that the movies have. Paramount has given us the blessing to reimagine all of the character history. So for example, we are introducing new versions of the punk frogs. As kid brothers that Mikey finds in the sewers. Nice. And that is the kind of story expansion that we are able to do with our Mondoverse, our Sam Monks.

I was curious about that because you have Funko and Mondo under the same roof, but, obviously, you are doing, like, different types of products. Have you seen this interesting transition in any of way of from Funko to Mondo as far as, like, getting figures more detailed? Or Oh, well, it is just it is like we have the artist in house to do all the technique. Right? Right. What we get from Funko is the support, the credibility, and the doors being blasted open for us. To get licenses and access and relationships that we otherwise might not be able to get. Yes. So it is really an amazing pairing that creates another, like, collectible through line.

So you might have been collecting Funko Pops for a long time, and you have a beautiful collection of them, and you are just like, I am a turtles guy. I got all the turtles pops. But I also want a realistic 6 scale. Yeah. So you can stay in house at Funko through Mondo have, like, a really diverse collection. Oh, thank you for stopping by, man. We are so proud of it. cannot wait to show you guys more.

Analyst: This is awesome, man. Oh my gosh. it is so much nostalgia here too, man. Real Ghostbusters match the universe. Street Sharks. Yes. Alright.

Josh Simon: 1 more. 1 more stop. 1 more stop on this tour. We have seen the booths. We have seen the fans having a wonderful time buying the pops and enjoying the experiences.

Andre: This feels like a good out to go on in San Diego.

Josh Simon: It does. And we are we are in the big, you know, pop mystery box. I think the mystery is gonna be where we end up. After this after this box closes. But for now, should we go and take some investment questions? I think we should. Thank you so much, bro. Yeah. You ruined the mystery. Oh, I just remembered. They told me that 1 exclusive IP is coming up soon. it is going to be Well, that was fast.

Andre: 1 minute, we are dodging crowds at Comic Con, and next we are here in the Funko office. And somehow, Josh, you made it all the way to London.

Josh Simon: I am. I am across the pond, some time with our EMEA team and partners, but it is a late night, but, you know, excited to be reunited with you here live.

Andre: Absolutely. The magic mystery box can do multiple locations apparently with multiple drop offs. So now that we shared all the fun stuff at Comic Con, Yves, can you tell us a little bit more about the financials?

Yves Le Pendeven: Sure. I would be happy to. So like I mentioned earlier, sales were up 7% in Q2 and 6% in the first half. In addition to that, we reported a gross margin of 6.6% compared to 32.1% last year. And to be clear, our Q2 gross margin benefited from the recognition of a $25 million credit that was related to the expected tariff refunds and release of accrued tariffs. So just for the sake of comparison, to our guidance range, of 42% to 44%, our gross margin normalized for that $25 million credit was 44.4%, which was still a record high for Funko.

SG and A expenses improved as a percentage of sales by over 400 basis points compared to last year, And finally, adjusted EBITDA was $40.9 million compared to negative adjusted EBITDA of $16.5 million last year. Again, excluding that tariff related benefit, we delivered adjusted EBITDA of $15 million well above our guidance range. I would also like to highlight that in the quarter, we executed a sale of our IEEPA tariff claims, a total of $22 million for proceeds of $19 million, and we use that to pay down debt by a total of $15 million. Making more progress on deleveraging our balance sheet.

Andre: Sounds like great results. And what about the outlook?

Yves Le Pendeven: Yeah. So for the outlook, we are reiterating our net sales guidance. Of flat to up 3%, and we are raising our adjusted EBITDA guidance to $100 million to $110 million, and that raise is driven by again, that $25 million tariff credit from Q2 as well as $5 million from improved profitability.

Andre: that is great. Thank you, Yves. Now, Josh, what can investors expect in the second half of the year from Funko?

Josh Simon: I mean, look, I think the results that Yves just talked about this quarter really highlight the model that we are building. You know, sensing demand earlier, creating more repeatable ways, sort of take that demand and you know, create products that can scale selectively through the right retail channels around the world. Look, I think in the second half, our consolidated sales will reflect you know, more of a normalized year over year shipment comparison. And, you know, I think we will continue to be prudent just sort of given some of the broader consumer environment that is out there.

And I also, just to kind of double back on 1 of the things you have mentioned earlier about lounge fly and the SKU reductions that we have discussed, Now we have made some meaningful progress in that area. I definitely would not declare the work there finished. We have an exciting plans, but still, you know, ways to go. The encouraging signal in Q2 was that, as Yves said, sales were down 2% with approximately 50% fewer SKUs. So really seeing that in increased productivity. For the remainder of the year, importantly, you know, I think the headlines that we definitely expect the core collectibles to continue growing in the second half.

You know, when you step back from it, the core is growing. Loungefly is becoming healthier, our underlying earnings power is improving, and Q2 is really a strong and early proof point that, you know, everything we have talked about out of the make culture pop strategy, is underway, and our focus is now just about consistent execution.

Andre: Nice. And what are you excited for the rest of the year, particularly in terms of how the way the company is evolving?

Josh Simon: Well, I mean, there is a lot to choose from, that I am super excited about. I guess, a couple of things that I would highlight. First, overall, is just speed. You know, I have talked about this a lot. How do we make sure that we are part of these really great cultural or entertainment moments while they are happening? And, you know, really, the key to speed is being able to sort of sense demand earlier and respond quickly, and hopefully, in some cases, with even less inventory exposure. So 1 thing I have mentioned a couple times, but excited to kind of more formally announce now.

We, you know, formalized a partnership with HP on the additive manufacturing front. This is part of our hyperstrike strategy, which means we are able to create products in a matter of weeks instead of, you know, months or sometimes years that go into the traditional manufacturing process. We have already sort of launched our first product with this partnership at Fanatics Fest a couple of weeks ago. We did a really awesome mashup between WWE and the Garbage Pail Kids The products sold out at Fanatics Fest. They are selling for multiples more than what we originally sold them for on eBay. So, you know, we are really excited to work with HP on that front.

By the way, our normal QuickStrike offerings from a speed standpoint has also, you know, continue to be off and running. We had preorders for heated rivalry, off campus, and obsession. So a lot of, like, surprise hits out there that we have been able to get after pretty quickly. Including a preorder when the Knicks won the NBA championships. The night that they won, we went live with a championship 5 pack. And so we are really kind of building that repeatable speed capability. The second thing I will mention is we actually are announcing today that we are hiring a new chief commercial officer. it is a role that we have had open for a little bit now.

Kristen Hamilton. She joins us most recently from Crunchyroll where she was senior vice president, head of global ecommerce and direct to consumer. Obviously, excited about her, you know, commercial experience there and her experience in the anime world, which is obviously a huge fandom for us. Before Crunchyroll, she spent about 15 years at Hasbro across a ton of different leadership roles, globally, ecommerce, consumer product strategy, transformation, brand management, and marketing. She's done a ton there. She officially starts on August 24, and so I guess that is another big exciting thing for me in the second half of the year.

Andre: Alright. Well, the second half is looking promising. Nice. So we are gonna take some questions from some analysts. Right now. First 1 is from Eric Christian Wold at Texas Capital.

Eric Christian Wold: How would you characterize the level of wholesale order demand in the third quarter of 26 into the upcoming holiday season.

Yves Le Pendeven: Sure. So I will take that 1. I think what we are seeing this year, you know, we continue to have about 3 or 4 months visibility with our wholesale customers placing orders. I would say compared to last year, we are seeing a return of a little bit more normalized seasonality, like Josh mentioned. Last year, Q2 was pretty disrupted post Liberate Liberation Day announcement. And then there was an element of kind of catching up With people's orders in Q3 and into Q4. This year, obviously, we are kind of shipping orders as our customers want them. We are seeing great POS trends. In our wholesale channel globally. Our POS sales were up 6%. Year over year.

So, again, always looking for that balance between sell in and sell through. Which we saw in Q2. So, you know, by all the metrics that we gauge, the business is healthy, inventory in the channel is healthy, and we see that there is a good demand from our wholesale partners and from our end customers as well.

Andre: Okay.

Eric Christian Wold: Another question, what are you seeing from your major retail partners around shelf space allocation in recent quarters and into the holiday season and what categories are likely to see the most benefit from those gains.

Josh Simon: Let's see. Well, look. I think I will I will start off just kind of by the fact that I am here in Europe and have been spending some time with our European retailers. You know, we have secured extra diorama displays in about 350 stores across Smith's, which is you know, 1 of the most, like, preeminent toy retailers in Europe and certainly even, I would say, in the world. HMV, Gift Universe, a bunch of independent retailers, And, look, those are sort of, like, fully designed kind of built out displays that are really a showcase of our product out of the packaging. On shelves. We are also seeing increased some end-cap displays at Smith's for Bitty Pop!

You know, if you walk around the city right now, we have pretty high profile windows. At Hamleys is another iconic toy retailer that sort of is a Disney and Funko collaboration that is really giving us a lot of high visibility in, like, prime tourist destinations. And, actually, right now, even we have another partnership across Sony, Disney, with HMV. On a big Spider Man activation at HMV Oxford Street. So, you know, look, we things like Bitty Pop! have continued to lead incremental shelf space for us. Things like Spider Man have led to incremental placement, you know, with, like, pallet trains at, you know, at Walmart.

So I think, you know, alongside these big entertainment releases and alongside our, you know, new and growing product lines, we are seeing it generate incremental shelf space for us at retail.

Andre: Nice. Look forward to seeing people post some photos with photo ops with all those displays there. Alright. Well, now we have some questions from Keegan Tierney Cox at DA Davidson.

Keegan Tierney Cox: In regards to the strong entertainment slate we have had this year, which franchises or categories are generating the strongest demand? Any highlights this quarter And what properties are you most excited for in the second half of the year?

Josh Simon: Well, thanks. Thank you, Keegan, for the question. Look. I mean, look, for us, obviously, a strong content slate always helps. And, you know, we knew going into this year, at least suspected that there would be some big, you know, some big hits, and I think you are really seeing that in box office attendance and box office records overall. But we have a pretty-- I will first, I will just say, like, broad based across fandoms. We have seen momentum for us across anime, gaming, obviously, theatrical, sports, and some of our own programs. I will remind everyone in this quarter, I think our top 10 franchises and programs represented about 32% of Q2 sales.

So our business is not necessarily dependent on, like, any 1 property. But they obviously help. So, you know, Mando, Grogu was great for us. Toy Story 5, which was a massive hit for Disney, also doing really well for us. You saw our Spider-Man: Brand New Day activation at Comic Con. That has, you know, has recently proven to be huge for us, and we are really glad that we made a bet on that film early on. Then, you know, could not be more excited for Avengers: Doomsday and what the Russo brothers and Marvel and Disney are gonna kinda bring to screens at the end of the year.

But look beyond that, 1 Piece and Pokemon and in sort of the anime and gaming space continue to be huge. Sports delivered. I mentioned I mean, the excitement around the Knicks was somewhat, you know, unprecedented for us in this sort of certainly, in the world of NBA championships compared to past seasons. The excitement around the World Cup, I think, was, you know, was palpable and reflected in some, you know, some strong sales for us. And then, look, I have to just sort of mention it again on the QuickStrike front, but you know, you have movies like Obsession. Which, you know, kind of came from out of nowhere as a surprise.

And know, was a major record setting box office. And so we were able to, you know, very quickly go on presale for, you know, for that film. Along with things like heated rivalry and off campus I will even say a personal favorite of mine in this past quarter, a great line of products celebrating the Spice Girls And I am not just saying that because I am over in The UK right now. I would have said that if I were in as well. But across Loungefly and Funko, you know, a dream come true, honestly, to be to be able to collaborate with those folks. So a pretty broad representation of franchises, Keegan.

Andre: Alright. Save me a male b Funko Pop. I need that. So alright.

Keegan Tierney Cox: And put and takes on the guidance. What are the assumptions that you get to the high and low ends of your guidance? Have you seen any impact from higher input costs like freight?

Yves Le Pendeven: Sure, so I would start by, you know, to the upside, especially on sales. I mentioned our order book visibility in Q3, so we feel good about that. Obviously, then the holiday period in Q4, we have a bit less visibility too, but we are excited about the content slate. You know, I think, obviously, any upside would depend on continued sell through performance, We are hoping the consumer stays resilient through the holiday period. You know, to the downside, we have I would call out tariffs Obviously, we factored in the latest announced tariffs that are in effect of 10% to 12%.

But for everyone who is following the news that there can continue to be surprises on that front. So again, chose to be prudent within our gross margin guidance in particular. And then as far as, you know, freight costs or raw materials costs, We are cautiously optimistic, but any kind of, you know, higher oil prices and things like that could negatively impact us as well.

Andre: Understood. Alright. Here's some questions from Stephen Laszczyk at Goldman Sachs.

Stephen Laszczyk: So Funko noted that point of sale tailwinds from the first quarter entertainment slate carried into early second quarter. This positive trend continued through the remainder of the quarter And what gives management confidence that these trends are sustainable through 2026?

Yves Le Pendeven: Sure. I mean, I will start with the trends that we saw in Q2. So, I mentioned in the wholesale channel, 6% growth in units year over year POS sales. For the year to date, it is 9% growth. And, again, for the year to date in The US, up mid single digit. In Europe, slightly over 20%. POS growth. So it is a really strong trend. We are loving to see that momentum. I believe, you know, based on the content slate and some of the products that we have coming up in the lineup that we, should see that trends continue. And that is kind of what we factored into our guidance.

Andre: Okay.

Stephen Laszczyk: Now to what extent does management expect new formats like Bitty Pop!, Top Mystery, and the sports related launches to be revenue contributors in 2026? And what does management view as the key growth levers for Funko in 2026 and beyond outside of the core pop products.

Josh Simon: Well, I will I will jump in. I mean, I think first on pop mystery, it is it is a little bit too early to, you know, to sort of size that 1 responsibly. But what I think is most important about it, and I think kind of signals a lot of what we have been talking about as part of our strategy, is that just sort of the platform potential of it. So, you know, if you think about pop mystery just as another dimension and a part of the core pop product, it can send it can really extend across, like, any entertainment franchise, sports.

We are doing it with our own IP that you saw sort of down at Comic Con with the Flora line. It can go in, you know, multiple channels, markets you know, around the world, I would say, sort of that blind box craze is showing no signs of slowing down. And for us, I think it is a unique way that kind of, you know, encourages what our fans have always loved, that, like, thrill of the chase discovery, and then that sort of motivation for, you know, repeat participation. Like, they wanna try and seek out that, you know, that 1 specific item that they love.

So you know, we will keep a close eye on sort of the initial launch and judge, you know, sell through and reorders consumer behavior and scale based on that. But I would say from a licensor standpoint, we have, like, a pretty exciting and awesome lineup of pop mystery products going all the way through next year. So I am feeling encouraged about that 1. And then, you know, you mentioned sort of a--you know, Steven, in your question, sort of Bitty Pop! is just sort of another example that you know, I mentioned we are, you know, we are seeing incremental placement now at Smith's around Europe.

Another extension of what people love about pop and what makes it iconic, but it is sort of it is becoming its own platform appealing to a slightly different consumer, getting us incremental placement. We will continue to look at new ways to dimensionalize pop. We have we have a few different ideas that are in development that we will roll out end of this year and early next year. And then, look, honestly, there is about, I would say, half a dozen totally brand new formats that we have in development that will start to roll out early next year and beyond.

And the idea with all of those is you know, trying to establish new platforms for our fans to engage sort of capitalizing on what we know best around sort of, you know, culture and our licensor relationships, and being part of these iconic, you know, entertainment and cultural moments. But in new and exciting ways that I think, hopefully, will, you know, will set the stage for hopefully the next, you know, pop franchise to come.

Andre: Alright. Well, we will look forward to all of that. I definitely look forward to seeing who gets a 1 of 1 worldwide chase out there with these mystery pops. Alright. Well, that is all the time we have for questions for today. Yves and Josh, thank you so much. For all your information about the success as well as how you handle certain challenges. So, Josh, are there any thoughts before we let everyone go today?

Josh Simon: Yes. Well, first of all, thank you for, you know, for being with us down at Comic Con and in the office there in Burbank. And, look, I for me, I would just say the financial highlights that this quarter shows us is really early evidence that the make culture pop strategy is beginning to take hold. And it is really becoming a more deliberate and, you know, disciplined growth engine for us. Ultimately, you know, we are I think we are getting better at sensing, you know, where fan demand is coming from. You know, moving faster to turn those signals into distinctive products and in repeatable ways and building platforms like I was just talking about.

And then scaling them through, you know, channels all over the world. So, look, this quarter, I think, was an early proof point not the end of the work. But I think, you know, the SKU productivity and certainly that record underlying gross margin gives us confidence that we are on the right track. And so and look, other than that, I just wanna say thank you to our shareholders for your continued confidence. Most importantly, thank you to our fans for showing up in the way that you always do. I loved, you know, sort of the energy and everyone who made their way down Comic Con this year.

I love talking with everyone and hearing their ideas. it is just an awesome reminder of, you know, why we do this. And we are certainly excited for the rest of the year. So I will just say again, Andre, thanks to everyone for joining us, and we will see you all next quarter.