Funko Q1 2026 Earnings: Net Loss Widens but Cash Flow Improves

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _____________

Commission file number: 001-38274

FUNKO, INC.

(Exact name of registrant as specified in its charter)

Delaware 35-2593276

(State or other jurisdiction of

incorporation or organization) (I.R.S. Employer

Identification No.)

2802 Wetmore Avenue 98201

Everett Washington

(Address of principal executive offices) (Zip Code)

(425) 783-3616

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Class A Common Stock,

$0.0001 par value per share FNKO The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated Filer ☒

Non-accelerated filer ☐ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 5, 2026, the registrant had 55,839,584 shares of Class A common stock, $0.0001 par value per share, and 91,276 shares of Class B common stock, $0.0001 par value per share, outstanding.

INDEX

Page

Part I

FINANCIAL INFORMATION

Item 1.

Financial Statements

3

Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2026 and 2025

3

Condensed Consolidated Statements of Comprehensive Loss (unaudited) for the Three Months Ended March 31, 2026 and 2025

4

Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025

5

Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2026 and 2025

6

Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2026 and 2025

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

Part II

OTHER INFORMATION

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

SIGNATURES

76

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, the expected impact of general economic and market conditions, including the imposition of tariffs and the uncertainty over U.S. trade and tariff policies, on our business, results of operations and financial condition, capital resources and our ability to generate cash to fund our operations, anticipated benefits from sales under our registration statement on Form S-3 and Sales Agreement, as defined herein, compliance with financial and negative covenants and related impacts to our business, our business strategy and plans, including plans to improve our liquidity and financial condition, plans for expansion in our international markets, plans for product line expansions, our review of strategic alternatives, potential acquisitions, market growth and trends, demand for our products, inventory expectations, anticipated future expenses and payments, future refinancing efforts, efforts to remediate our material weaknesses in internal control over financial reporting and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including the important factors described in this Quarterly Report on Form 10-Q under Part II, Item 1A. “Risk Factors,” and in our other filings with the Securities and Exchange Commission (“SEC”), that may cause our actual results, performance or achievements to differ materially and adversely from those expressed or implied by the forward-looking statements.

Any forward-looking statements made herein speak only as of the date of this Quarterly Report on Form 10-Q, and you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or achievements reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

1

Summary of Risk Factors

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. Some of the factors that could materially and adversely affect our business, financial condition, results of operations or prospects include, but are not limited to, the following:

•We are subject to risks related to the retail industry including, but not limited to, potential negative impacts of global and regional economic downturns, changes in retail practices, and our ability to maintain and further develop relationships with our retail customers and distributors.

•Our substantial sales and manufacturing operations outside the United States subject us to risks associated with international operations, including, but not limited to, changes in the global trade markets and policies, including tariffs, as well as fluctuations in foreign currency or tax rates.

•Our indebtedness could adversely affect our financial health and competitive position, and we may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.

•There can be no assurance that we will be successful in identifying or completing any strategic alternative, that any such strategic alternative will result in additional value for our stockholders or that the process will not have an adverse impact on our business.

•We are subject to risks related to the operation of our business, including, but not limited to, our ability to execute our business strategy, manage our growth and our inventories, and attract and retain qualified personnel.

•As a purveyor of licensed pop culture consumer products, we are largely dependent on content development and creation by third parties, and are subject to a number of related risks including, but not limited to, the creation of compelling content by licensors, and the market appeal of the properties we license and the products we create.

•We are subject to risks related to intellectual property, including our ability to obtain, protect and enforce our intellectual property rights and our ability to operate our business without violating the intellectual property rights of other parties.

•Our success is dependent on our ability to manage fluctuations in our business, including fluctuations in gross margin, seasonal impacts and fluctuations due to the timing and popularity of new product releases.

•Our business depends in large part on our vendors and outsourcers, and our reputation and ability to effectively operate our business may be harmed by actions taken by these third parties outside of our control.

•We are subject to potential legal risks including, but not limited to, ongoing securities class action litigation, future product liability suits or product recalls, or risks associated with failure to comply with the various laws and regulations to which we are subject, any of which could have a significant adverse effect on our financial condition and results of operations.

•We are subject to risks related to information technology including, but not limited to, risks related to the operation of our e-commerce business, our ability to operate our information systems and our compliance with laws related to privacy and the protection of data.

•TCG has significant influence over us, and its interests may conflict with the interests of our other stockholders.

•There are risks related to our organizational structure, including the Tax Receivable Agreement, which confers certain benefits upon the parties to the TRA (the "TRA Parties") that will not benefit Class A common stockholders to the same extent as it will benefit the TRA Parties.

•There are risks associated with the ownership of our Class A common stock including, but not limited to, potential dilution by future issuances and volatility in the price of our Class A common stock.

2

Part I – FINANCIAL INFORMATION

Item 1.

Financial Statements

FUNKO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended March 31,

2026 2025

(In thousands, except per share data)

Net sales $ 200,919 $ 190,739

Cost of sales (exclusive of depreciation and amortization) 112,092 113,868

Selling, general, and administrative expenses 83,687 84,807

Depreciation and amortization 14,774 15,262

Total operating expenses 210,553 213,937

Loss from operations (9,634) (23,198)

Interest expense, net 4,884 3,849

Other expense, net 456 168

Loss before income taxes (14,974) (27,215)

Income tax expense 3,153 844

Net loss (18,127) (28,059)

Less: net loss attributable to non-controlling interests

(52) (471)

Net loss attributable to Funko, Inc. $ (18,075) $ (27,588)

Loss per share of Class A common stock:

Basic $ (0.33) $ (0.52)

Diluted $ (0.33) $ (0.52)

Weighted average shares of Class A common stock outstanding:

Basic 55,425 53,530

Diluted 55,425 53,530

See accompanying notes to the unaudited condensed consolidated financial statements.

3

FUNKO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

Three Months Ended March 31,

2026 2025

(In thousands)

Net loss $ (18,127) $ (28,059)

Other comprehensive (loss) income:

Foreign currency translation (loss) gain for the three months ended March 31, 2026 and 2025, respectively

(1,017) 2,510

Comprehensive loss (19,144) (25,549)

Less: Comprehensive loss attributable to non-controlling interests

(56) (444)

Comprehensive loss attributable to Funko, Inc. $ (19,088) $ (25,105)

See accompanying notes to the unaudited condensed consolidated financial statements.

4

FUNKO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

2026 December 31,

2025

(In thousands, except per share data)

Assets

Current assets:

Cash and cash equivalents $ 34,295 $ 42,148

Accounts receivable, net 90,670 117,018

Inventories 76,816 83,136

Prepaid expenses and other current assets 39,318 48,094

Total current assets 241,099 290,396

Property and equipment, net 65,960 68,679

Operating lease right-of-use assets, net 43,845 46,928

Goodwill 133,829 133,900

Intangible assets, net 131,870 135,826

Other assets 9,267 9,505

Total assets $ 625,870 $ 685,234

Liabilities and Stockholders’ Equity

Current liabilities:

Revolving credit facility $ 1,500 $ 1,125

Current portion of term debt 18,182 21,932

Current portion of operating lease liabilities 17,841 18,792

Accounts payable 52,040 64,748

Accrued royalties 50,550 59,821

Accrued expenses and other current liabilities 70,186 77,499

Total current liabilities 210,299 243,917

Long-term debt 196,233 202,246

Operating lease liabilities 45,574 48,680

Other long-term liabilities 4,364 4,261

Commitments and Contingencies (Note 6)

Stockholders’ equity:

Class A common stock, par value $0.0001 per share, 200,000 shares authorized; 55,830 and 55,327 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

6 5

Class B common stock, par value $0.0001 per share, 50,000 shares authorized; 91 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

— —

Additional paid-in-capital 359,744 357,330

Accumulated other comprehensive income 3,608 4,621

Accumulated deficit (194,217) (176,142)

Total stockholders’ equity attributable to Funko, Inc. 169,141 185,814

Non-controlling interests 259 316

Total stockholders’ equity 169,400 186,130

Total liabilities and stockholders’ equity $ 625,870 $ 685,234

See accompanying notes to the unaudited condensed consolidated financial statements.

5

FUNKO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31,

2026 2025

(In thousands)

Operating Activities

Net loss $ (18,127) $ (28,059)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 14,774 15,262

Equity-based compensation 2,414 3,265

Other, net (29) 697

Changes in operating assets and liabilities:

Accounts receivable, net 26,351 29,939

Inventories 5,803 5,633

Prepaid expenses and other assets 11,621 9,936

Accounts payable (12,558) (8,318)

Accrued royalties (9,271) (18,405)

Accrued expenses and other liabilities (10,828) (32,212)

Net cash provided by (used in) operating activities 10,150 (22,262)

Investing Activities

Purchases of property and equipment (8,210) (6,552)

Other, net — 193

Net cash used in investing activities (8,210) (6,359)

Financing Activities

Borrowings on revolving credit facility — 25,000

Debt amendment costs (3,648) —

Payments of term debt (5,830) (5,756)

Other, net (1) 86

Net cash (used in) provided by financing activities (9,479) 19,330

Effect of exchange rates on cash and cash equivalents (314) 570

Net change in cash and cash equivalents (7,853) (8,721)

Cash and cash equivalents at beginning of period 42,148 34,655

Cash and cash equivalents at end of period $ 34,295 $ 25,934

See accompanying notes to the unaudited condensed consolidated financial statements.

6

FUNKO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Class A Common

Stock Class B Common

Stock Additional

Paid-In Capital Other

Comprehensive Income Accumulated Deficit Non-

Controlling Interests Total

(in thousands) Shares Amount Shares Amount

Period ended December 31, 2025 55,327 $ 5 91 $ — $ 357,330 $ 4,621 $ (176,142) $ 316 $ 186,130

Distribution to continuing equity owners — — — — — — — (1) (1)

Equity-based compensation — — — — 2,414 — — — 2,414

Activity under equity-based compensation plans 503 1 — — — — — — 1

Cumulative translation adjustment — — — — — (1,013) — (4) (1,017)

Redemption of common units of FAH, LLC — — — — — — — — —

Net loss — — — — — — (18,075) (52) (18,127)

Period ended March 31, 2026 55,830 $ 6 91 $ — $ 359,744 $ 3,608 $ (194,217) $ 259 $ 169,400

Class A Common

Stock Class B Common

Stock Additional

Paid-In Capital Other

Comprehensive (Loss) Income Accumulated Deficit Non-

Controlling Interests Total

(in thousands) Shares Amount Shares Amount

Period ended December 31, 2024 52,967 $ 5 1,430 $ — $ 343,472 $ (1,676) $ (108,782) $ 3,334 $ 236,353

Distributions to continuing equity owners — — — — — — — (24) (24)

Equity-based compensation — — — — 3,265 — — — 3,265

Activity under equity-based compensation plans 503 — — — 110 — — — 110

Cumulative translation adjustment — — — — — 2,483 — 27 2,510

Redemption of common units of FAH, LLC 782 — (782) — 1,511 — — (1,511) —

Net loss — — — — — — (27,588) (471) (28,059)

Period ended March 31, 2025 54,252 $ 5 648 $ — $ 348,358 $ 807 $ (136,370) $ 1,355 $ 214,155

See accompanying notes to the unaudited condensed consolidated financial statements.

7

FUNKO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Operations

The unaudited condensed consolidated financial statements include Funko, Inc. and its subsidiaries (together, the “Company”) and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. All intercompany balances and transactions have been eliminated.

The Company was formed as a Delaware corporation on April 21, 2017. The Company was formed for the purpose of completing an initial public offering (“IPO”) of its Class A common stock and related transactions in order to carry on the business of Funko Acquisition Holdings, L.L.C. (“FAH, LLC”) and its subsidiaries.

Funko, Inc. operates and controls all of FAH, LLC’s operations and, through FAH, LLC and its subsidiaries, conducts FAH, LLC’s business as the sole managing member. Accordingly, the Company consolidates the financial results of FAH, LLC and reports a non-controlling interest in its unaudited condensed consolidated financial statements representing the common units of FAH, LLC interests still held by other owners of FAH, LLC (collectively, the “Continuing Equity Owners”).

Interim Financial Information

In the opinion of management, all adjustments considered necessary for a fair statement of the results as of the date of and for the interim periods presented have been included, and such adjustments consist of normal recurring adjustments. Certain prior-year amounts have been reclassified to conform to the current year presentation. The unaudited condensed consolidated results of operations for the current interim period are not necessarily indicative of the results for the entire year ending December 31, 2026, due to seasonality and other factors. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”).

Liquidity