I often think there wouldn't be the Funko that exists today without Comic-Con. It's a massive highlight of the year for us.

We're excited you were able to join us

excited to take a little bit of a walk around in a bit here.

It does. You'll see the folks who work in our booth are largely fans from all over the world who are taking time off of work and out of their lives to come and hang out here and help interact.

It's also a great way for just this community of fans from all across the country and the world to come and celebrate Funko, experience the brand, buy some incredibly coveted, limited-edition products. It's flattering and humbling and wild to see the lines at our booth for people who are here to kind of get the exclusive product you can only get here at Comic-Con.

Numbers have been great, and it's really a reflection of our Make Culture Pop strategy gaining traction. We were really pleased to report sales were up 7% in the quarter, and that's building on the growth from Q1.

For the first half of the year, we were up 6%. The good news is it wasn't really one product or region or IP.

It was really broad-based, right? In the US, we were up 3%, in Europe, we were up 19%.

Then from a product perspective, our core collectibles were up 9%. Although Loungefly was down 2%, it was an improving trend from what we saw in Q1, and we're really pleased with the better SKU productivity.

Yves mentioned the momentum that we're seeing, and I think a big part of that is we've talked a lot about the Make Culture Pop strategy, and I think we're really seeing that go from strategy to execution and take form. It's really about culture, sensing and creating demand across the entertainment and pop culture landscape; creativity, giving it form in products; and then commerce, putting it in fans' hands all over the world.

On the culture side, it's really about how we get faster at sensing what's happening and then turning that into products. The last two quick things I'll mention is creativity on the product side.

We're going to take a walk around in a little bit, and you're going to get to see our brand-new Pop! Mystery platform.

That's really about taking what people love about Pop! and just turning it into kind of a broader experience, and a new product format.

Excited to show you how that's about to materialize. It's great to sort of see that Make Culture Pop strategy coming together and really moving from idea to execution in the quarter.

It is. I think because we can't predict those things, what we really have to do is build this repeatable offense.

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. I think the magic for us is that we've really sort of honed that engine of sensing demand, turning it into products, and getting into our fans' hands in a really repeatable way, and we're starting to see that happen more and more.

Only. Exactly.

Exactly. Exactly.

Yeah. Maybe Jimothy, the raccoon that's taking the world by storm right now.

Should we go take a look at...?

All right, great. Let's go check it out.

After you.

This is Husnal, our Chief Product Officer.

Yes. At San Diego Comic-Con over here, we are launching our Pop!

Mystery line.

Yes, this is a Flora pack.

Flora is a plant line that we started off as a regular standard Pop!, and now we've made it into a mystery collection piece,

it is absolutely fabulous.

commons, but then there... Yes.

Each pack has six commons with rarity cards, and then we have the chase, as well as the global 1-of-1 chase, which is what differentiates us from the market and is extremely exciting.

Only one of these. Imagine if you're a fan with the one.

Let's open it.

Here you go. Let's see.

the Flora. Oh, my gosh, it is cute.

a lot. It's one I think is great.

We're obviously revealing this here at Comic-Con. There's other sort of licensing partners.

This, as you mentioned, is original IP that we created,

of course, we're also launching with some of the biggest IP in the world as well.

with One Piece, as well as with the Warner Brothers with the horror line.

right? Right.

We are giving away the Flora line in that activation, you might want to go check it out.

All right,

Give it a knock. Let's see.

Oh!

All right, this is Nick, our Head of Marketing and Brands. Nice to meet you.

What's up?

Come on in. Come on in.

Welcome to the Pop! Flora greenhouse.

100%. 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 one. It just provides us with 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 isn't just a banner ad, this isn't a shelf display, this is a greenhouse that you can stand into experience this world yourself.

100%. Now

Let's get you out of here. Thank you for stopping by.

All right, let's take a look around this way. Obviously, we talked about this earlier, but selling a lot of exclusive products that you can only get here, obviously kind of massive lines of people, which is super humbling.

Look, I think what you experienced and saw over in the mystery room is sort of our first step into doing something that's more experiential.

one of the most compelling experiences that we've become known for both online and soon rolling out into some wholesale partners is the Pop! Yourself experience.

You can do it at the Hollywood store. There's a couple stores we'll announce soon where you'll be able to start doing it as well.

You can do it at the Inter Miami stadium with the football club there.

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.

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

All right, you want to give it a try?

Exclusive, only here to Comic-Con.

You get to really customize it here: your lashes,

your hair.

Of course, you have to. It's your trademark.

me see. Then some exclusive accessories as well.

Like it. Yep.

Then

It comes with a Bitty Pop! Hulk.

Look at that, that's cool.

Obviously the ability to create these sort of geo-specific experiences is something that we'll start to roll out and test later this year with some retail partners. 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.

because

Yeah.

All right, let's check out the next part of the booth here.

All right, let's go by the Mondo booth.

As Mondo's sort of our premium collector toy line. These guys are amazing artists.

Great. We're going to kind of cut through the crowds here.

Yes, 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 '90s films. We're bringing in all the characters and whimsy and wildness of the comics, video games, and cartoons into this real-world, gritty, man-in-a-suit vibe

the movie fans. Paramount has given us a blessing to reimagine all of the character history.

For example, we're introducing new versions of the Punk Frogs as kid brothers that Mikey finds in the sewers. That's the kind of story expansion that we're able to do with the Mondoverse, with our sandbox.

We have the artists in-house to do all the technique,

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. It's really an amazing pairing that creates another collectible through-line.

You might have been collecting Funko Pops for a long time and you have a beautiful collection of them, and you're just like, "I'm a Turtles guy, I got all the Turtles Pops, but I also want a realistic 1/6th scale." You can stay in-house at Funko through Mondo and have a really diverse collection.

Thank you for stopping by, man. We're so proud of it.

I can't wait to show you guys more.

Yes.

one more stop on the tour.

It does. We're in the big Pop!

Mystery box. I think the mystery is going to be where we end up after this box closes.

For now, should we go and take some investor questions?

You ruined the mystery. Oh,

I am. I'm across the pond, spending some time with our EMEA team and partners.

It's a late night, but excited to be reunited with you here live.

Sure, I'd be happy to. 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 56.6%, compared to 32.1% last year. 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.

Just for 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&A expenses improved as a percentage of sales by over 400 basis points compared to last year.

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'd 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 used that to pay down debt by a total of $15 million, making more progress on deleveraging our balance sheet.

For the outlook, we're reiterating our net sales guidance of flat to up 3%, and we're raising our adjusted EBITDA guidance to $100 million to $110 million. That raise is driven by, again, that $25 million tariff credit from Q2, as well as $5 million from improved profitability.

Look, I think the results that Yves just talked about this quarter really highlight the model that we're building: sensing demand earlier, creating more repeatable ways to sort of take that demand and 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 more of a normalized year-over-year shipment comparison.

I think we'll continue to be prudent, just sort of given some of the broader consumer environment that's out there. Also just to kind of double back on one of the things Yves mentioned earlier about Loungefly and the SKU reductions that we've discussed.

Now, we've made some meaningful progress in that area. I definitely would not declare the work there finished.

We have exciting plans, but still a ways to go. The encouraging signal in Q2 was that, as Yves said, sales were down 2% with approximately 50% fewer SKUs, really seeing that increased productivity.

For the remainder of the year, importantly, I think the headline is that we definitely expect the core collectibles to continue growing in the second half. 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 everything we've talked about in the Make Culture Pop strategy is underway and our focus is now just about consistent execution.

There's a lot to choose from, an amount super excited about. I guess a couple things that I would highlight.

First, overall, is just speed. I've talked about this a lot: How do we make sure that we're part of these really great cultural or entertainment moments while they're happening?

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. One thing I've mentioned a couple times, but excited to kind of more formally announce now, we have formalized a partnership with HP on the additive manufacturing front.

This is part of our HyperStrike strategy, which means we're able to create products in a matter of weeks instead of months or sometimes years that go into the traditional manufacturing process. We've 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 product sold out at Fanatics Fest.

They're selling for multiples more than what we originally sold them for on eBay. We're really excited to work with HP on that front.

By the way, our normal Quick Strike offense from the speed standpoint has also continued to be off and running. We had pre-orders for Heated Rivalry, Off Campus, and Obsession.

A lot of surprise entertainment hits out there that we've been able to get after pretty quickly, including a pre-order when the Knicks won the NBA Championship. The night that they won, we went live with a championship five-pack.

We're really kind of building that repeatable speed capability. The second thing I'll mention is we actually are announcing today that we're hiring a new Chief Commercial Officer.

It's a role that we've had open for a little bit now, Crispin Hamilton. She joins us most recently from Crunchyroll, where she was Senior Vice President, Head of Global E-Commerce and Direct-to-Consumer.

Obviously excited about her 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: global e-commerce, consumer product strategy, transformation, brand management, marketing.

She's done a ton there. She officially starts on August 24th.

I guess that's another big exciting thing for me in the second half of the year.

Sure, I'll take that one. I think what we're seeing this year, we continue to have about three or four months visibility with our wholesale customers placing orders.

I would say compared to last year, we're seeing a return of a little bit more normalized seasonality, like Josh mentioned. Last year Q2 was pretty disrupted post-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're kind of shipping orders as our customers want them. We're seeing great POS trends in our wholesale channel globally.

Our POS sales were up 6% year-over-year. Again, always looking for that balance between sell-in and sell-through, which we saw in Q2.

By all the metrics that we gauge, the business is healthy, inventory in the channel is healthy, and we see that there's good demand from our wholesale partners and from our end customers as well.

Let's see. Look, I think I'll start off just kind of by the fact that I'm here in Europe and have been spending some time with our European retailers.

We've secured extra diorama displays in about 350 stores across Smyths, which is one of the most preeminent toy retailers in Europe and certainly even I would say in the world, HMV, Geek Universe, a bunch of independent retailers. Look, those are sort of fully designed kind of built-out displays that are really showcase our product out of the packaging on shelves.

We're also seeing some end-cap displays at Smyths for Bitty Pop!. If you walk around the city right now, we have pretty high-profile windows at Hamleys, another iconic toy retailer, that sort of is a Disney and Funko collaboration that's really giving us a lot of high visibility and prime tourist destinations.

Actually right now even we have another partnership across Sony, Disney with HMV on a big Spider-Man activation at HMV Oxford Street. Look, things like Bitty Pop!

have continued to lead to incremental shelf space for us. Things like Spider-Man have led to incremental placement with pallet trains at Walmart.

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

Thank you, Keegan, for the question. Look, for us, obviously a strong content slate always helps, and we knew going into this year, at least suspected, that there would be some big hits, and I think you're really seeing that in box office attendance and box office records overall.

First I'll just say broad-based across fandoms. We've seen momentum for us across anime, gaming, obviously theatrical, sports, and some of our own programs.

I'll remind everyone in this quarter I think our top 10 franchises and programs represented about 32% of Q2 sales, our business is not necessarily dependent on any one property, but they obviously help. Mando Grogu was great for us, Toy Story 5, which is 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 recently proven to be huge for us, and we're really glad that we made a bet on that film early on. Then couldn't be more excited for Avengers: Doomsday and what the Russo brothers and Marvel and Disney are going to kind of bring to screens at the end of the year.

Look, beyond that, One Piece and Pokémon in sort of the anime and gaming space continue to be huge. Sports delivered.

The excitement around the Knicks was somewhat unprecedented for us certainly in the world of NBA Championships compared to past seasons. The excitement around the World Cup I think was palpable and reflected in some strong sales for us.

Then, look, I have to just sort of mention again on the Quick Strike front, but you have movies like Obsession, which kind of came from out of nowhere as a surprise and was a major record-setting box office, and so we were able to very quickly go on presale for that film, along with things like Heated Rivalry and Off Campus. I'll even say a personal favorite of mine in this past quarter, a great line of products celebrating the Spice Girls.

I'm not just saying that because I'm over in the UK right now; I would have said that if I were in America as well. Across Loungefly and Funko, a dream come true, honestly, to be able to collaborate with those folks.

A pretty broad representation of franchises, Keegan.

Sure. I would start to the upside, especially on sales, I mentioned our order book visibility in Q3, we feel good about that.

Obviously, then the holiday period in Q4, we have a bit less visibility too, but we're excited about the content slate. I think obviously any upside would depend on continued sell-through performance.

We're hoping the consumer stays resilient through the holiday period. To the downside, 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's following the news that there can continue to be surprises on that front. Again, chose to be prudent within our gross margin guidance in particular.

Then as far as freight costs or raw materials costs, we're cautiously optimistic, but obviously any kind of higher oil prices and things like that could negatively impact us as well.

I'll start with the trends that we saw in Q2. Again, I mentioned in the wholesale channel, 6% growth in units year-over-year in POS sales.

For the year-to-date, it's 9% growth. Again, for the year-to-date in the US up mid-single digit, in Europe slightly over 20% POS growth.

It's a really strong trend. We're loving to see that momentum.

I believe, based on the content slate and some of the products that we have coming up in the lineup that we should see that trend continue, and that's kind of what we've factored into our guidance.

I'll jump in. I think first on Pop!

Mystery, it's a little bit too early to sort of size that one responsibly. What I think is most important about it, and I think kind of signals a lot of what we've been talking about as part of our strategy, is that it's just sort of the platform potential of it.

If you think about Pop! Mystery just as another dimension and extension of the core Pop!

product, it can really extend across any entertainment franchise, sports. We're doing it with our own IP that you saw sort of down at Comic-Con with the Flora line.

It can go in multiple channels, markets around the world. I would say sort of that blind box craze is showing no signs of slowing down.

For us, I think it's a unique way that kind of encourages what our fans have always loved: that thrill of the chase, discovery, and then that sort of motivation for repeat participation, they want to try and seek out that one specific item that they love. We'll keep a close eye on sort of the initial launch and judge sell-through and reorders and consumer behavior and scale based on that.

I'd say from a licensor standpoint, we have a pretty exciting and awesome lineup of Pop! Mystery products going all the way through next year.

I am feeling encouraged about that one. Then you mentioned sort of, Stephen, in your question sort of Bitty is just sort of another example that I mentioned we're seeing incremental placement now at Smyths around Europe, another extension of what people love about Pop!

and what makes it iconic, but it's sort of becoming its own platform, appealing to a slightly different consumer, getting us incremental placement. We'll continue to look at new ways to dimensionalize Pop!.

We have a few different ideas that are in development that will roll out end of this year and early next year. Then look, honestly, there's 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.

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

Yes. Thank you for being with us down at Comic-Con and in the office there in Burbank.

Look, 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's really becoming a more deliberate and disciplined growth engine for us. Ultimately, I think we're getting better at sensing where fan demand is coming from, 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 channels all over the world.

Look, this quarter I think was an early proof point, not the end of the work, but I think the growth in SKU productivity and certainly that record underlying gross margin gives us confidence that we're on the right track. Look, other than that, I just want to 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 sort of the energy and everyone who made their way down to Comic-Con this year.

I loved talking with everyone and hearing their ideas. It's just an awesome reminder of why we do this.

We're certainly excited for the rest of the year. I'll just say again, André, thanks to everyone for joining us, and we will see you all next quarter.