Funko, Inc. ("Funko,” or the “Company”) (Nasdaq: FNKO), a leading pop culture consumer products company, today reported its consolidated financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights
Net sales increased 38% to $189.2 million
Gross margin1 expanded 100 basis points to 41.4%
SG&A expenses increased 8% to $51.3 million; as a percent of net sales, SG&A declined 750 basis points to 27.1%
Net income increased $16.8 million to $11.1 million
Net income margin expanded 1,000 basis points to 5.9%
Adjusted EBITDA2 increased $19.2 million to $29.8 million
Adjusted EBITDA margin2 expanded 790 basis points to 15.7%
Cash flow from operations of $37.5 million
Total liquidity3 increased 47% to $149.7 million
First Quarter 2021 Operating Highlights
U.S. net sales increased 39% to $136.5 million and Europe net sales increased 55% to $39.8 million, reflecting a strong demand recovery in both regions
Pop! branded products grew 33% as our broad license portfolio continues to enable our fans to connect with their favorite pop culture icons
Net sales of Other (non-figure) products increased 52%, led by Loungefly branded products which grew 82% in the quarter, as well as strength in games, plush and accessories
Direct-to-consumer sales increased more than 160% driven by continued strong demand on the Company’s Funko and Loungefly e-commerce sites
66% of sales were attributable to evergreen content
Completed the acquisition of a majority stake in TokenWave, providing the Company with strategic entry into the NFT market
“Improving consumer demand in the U.S. and Europe contributed to broad-based strength within our brands, products and distribution channels, leading to a record first quarter,” said Brian Mariotti, Chief Executive Officer. “Throughout the pandemic, our teams have maintained a relentless focus on delivering innovation and engaging with our fans around the world, positioning the business to drive topline growth as the demand environment strengthens. In the first quarter, this enabled us to achieve sales growth of 38%, strong Adjusted EBITDA margins2 and a substantial increase on the bottom line.”
“We are confident that our innovation pipeline, strategic focus and experienced teams will enable us to deliver continued growth and expansion in the dynamic macro environment,” continued Mariotti. “We’re investing behind our key strategic priorities and expect to achieve topline growth of 33% to 38% in 2021, above our previously stated range, while also driving increased profitability.”
First Quarter 2021 Financial Results
Net sales increased 38% to $189.2 million in the first quarter of 2021 compared to $136.7 million in the first quarter of 2020. The year-over-year increase reflects broad-based strength across geographies, products and channels.
In the first quarter of 2021, the number of active properties increased 12% to 762 from 681 in the first quarter of 2020 and net sales per active property increased 24%.
On a geographical basis, net sales in the United States increased 39% to $136.5 million and net sales in Europe increased 55% to $39.8 million. Net sales in other international regions increased 2% to $12.9 million, as several countries continue to experience disruptions from COVID-19.
On a product category basis, net sales of Figures grew 35% to $150.6 million, reflecting strength in the U.S. and Europe, as well as the Company’s Funko and Loungefly e-commerce sites. Net sales of Other (non-figure) products increased 52% to $38.5 million, reflecting strength in Loungefly branded products as well as double-digit growth in games, accessories, and plush.
On a brand basis, Pop! branded products grew 33% to $150.3 million, reflecting strong growth in the U.S. and Europe. Loungefly branded products grew 82% to $24.5 million. Both brands generated strong demand in the U.S. and Europe, as well as strength across our direct-to-consumer channels. Net sales of other branded products increased 41% to $14.3 million driven by board games, plush and action figures.
The tables below show the breakdown of net sales on a geographical, product category and branded product basis (in thousands):
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