Funko Inc (FNKO) Reports Q3 2023 Earnings: Net Sales Down 14.4% YoY, Net Loss of $15.0 Million
Funko Inc (NASDAQ:FNKO) reported Q3 2023 net sales of $312.9 million, a decrease from $365.6 million in Q3 2022
The company posted a net loss of $15.0 million, compared to a net income of $9.6 million in the same period last year
Funko's gross profit was $104.0 million, with a gross margin of 33.2%, slightly down from 35.0% in Q3 2022
Adjusted EBITDA for Q3 2023 was $25.4 million, down from $35.7 million in Q3 2022
On November 2, 2023, Funko Inc (NASDAQ:FNKO), a leading pop culture lifestyle brand, released its third-quarter financial results for the period ending September 30, 2023. Despite facing several challenges, the company's performance exceeded expectations, driven by strong direct-to-consumer sales and ongoing efforts to reduce costs and enhance efficiencies.
Financial Performance Overview
For Q3 2023, Funko reported net sales of $312.9 million, a decrease from $365.6 million in the same period last year. The company's gross profit was $104.0 million, representing a gross margin of 33.2%, which included $6.4 million of charges related to factory purchase order cancellations. This is slightly down from a gross margin of 35.0% in Q3 2022.
Funko posted a net loss of $15.0 million, or $0.31 per share, for the third quarter of 2023, compared to a net income of $9.6 million, or $0.19 per diluted share, for the same period in 2022. Adjusted net income was $1.7 million, or $0.03 per diluted share, for the third quarter of 2023, compared with $15.1 million, or $0.28 per diluted share, for the same period in 2022.
Key Financial Highlights
Despite the decrease in net sales, Funko's direct-to-consumer sales remained strong, bolstered by the successful online launch of Pop! Yourself and growing sales of Bitty Pop!. The company also made progress in reducing the number of product lines and complexity in its business, and re-aligned its senior management team to streamline decision making and improve cross-functional communication.
As of September 30, 2023, Funko's total cash and cash equivalents were $31.9 million, up from $19.2 million at the end of 2022. Inventories were $162.1 million, down from $246.4 million at the end of 2022. Total debt stood at $299.5 million, up from $245.8 million at the end of 2022.
Outlook for Fiscal 2023
Based on its current outlook, Funko has narrowed the net sales range of its 2023 full-year outlook to $1.065 billion to $1.105 billion, from the previous range of $1.05 billion to $1.12 billion. The company expects its 2023 fourth quarter net sales to be between $260 million and $300 million.
Despite the challenges faced in Q3 2023, Funko's performance exceeded expectations, demonstrating the company's resilience and adaptability in a challenging market environment. The company's ongoing efforts to reduce costs and enhance efficiencies, coupled with strong direct-to-consumer sales, provide a solid foundation for future growth.
Explore the complete 8-K earnings release (here) from Funko Inc for further details.
This article first appeared on GuruFocus.
