Shares of Funko (NASDAQ:FNKO) sank today, down by 13% as of 12:15 p.m. EST, after the company reported third-quarter earnings. The results beat Wall Street's expectations, but the company warned that revenue would decline in the fourth quarter.
Revenue in the third quarter was $191.2 million, easily topping the consensus estimate of $169.3 million. That resulted in adjusted net income of $16.1 million, or $0.31 per share. Analysts were modeling for just $0.10 per share in adjusted profits. The consumer discretionary company, which makes collectible bobble-head figures, said direct-to-consumer e-commerce sales soared by over 150%.
"Our teams have executed well in 2020 despite the challenges presented by the pandemic," CEO Brian Mariotti said in a statement. "In the third quarter, we outperformed revenue expectations, reflecting strength within our domestic mass market and digital channels."
Funko expects sales to fall by 8% to 10% in the fourth quarter due to the COVID-19 pandemic, which translates into revenue of $192.2 million to $196.5 million. The company attributed 8 percentage points of the expected decline to a new wave of pandemic-related closures and restrictions in Europe, which is seeing a troubling rise in coronavirus cases. International revenue represented 26% of total sales in the third quarter.
"While we expect to face continued headwinds in specific channels and regions in the fourth quarter, we believe we are well positioned for the holiday season with our most diverse product offering yet and an expanded presence within key retail partners," Mariotti added.