Funko kicked off 2022 in a big way with a massive, net sales spike of 63% versus the first three months of 2021. The Washington-based maker of toys, games, collectibles, and pop culture-infused lifestyle products says that net income grew 31% to $14.45 million on the rebound from pandemic era comps last year.
The positive earnings report comes alongside news that The Chernin Group (TCG) is making a $263 million strategic investment in Funko in a secondary transaction. TCG and its investor consortium will own 25% of the company following the transaction. Members of the consortium include former Disney Chairman and CEO Robert A. Iger, Rich Paul (CEO and founder of Klutch Sports Group, Head of Sports at United Talent Agency), and eBay. TCG has found success with other companies in the pop culture space, including Exploding Kittens and Crunchyroll. TCG’s investment was made by purchasing 80% of ACON Investments’ shares in the company.
“We are very pleased with our first quarter results, which build on the strength and momentum we achieved in 2021. We continue to outperform expectations, effectively navigating ongoing headwinds in the global supply chain and demonstrating the strength of Funko’s pop culture platform,” says Andrew Perlmutter, Funko CEO. “Our results in the first quarter were broad-based, with ongoing strength across brand categories, geographies, and channels. Looking ahead, we remain intently focused on executing against our strategic growth pillars including innovating within our core collectibles category, revenue diversification, growing our direct-to-consumer (D2C) business and international opportunities.”
As part of TCG’s investment, the group is adding a pair of directors to Funko’s board, including TCG Co-founder and Partner Jesse Jacobs and another individual to be named at a later date. Iger and TCG Co-founder and Partner Peter Chernin will serve as strategic advisors.
“This is a very exciting time to be a part of Funko. This investment from TCG validates Funko as a leading lifestyle brand with a pulse on what’s trending in pop culture,” Perlmutter says. “TCG is an ideal partner for Funko based on its expertise, deep understanding of the markets we serve, and track record of working successfully with companies in the pop culture and entertainment space to create value and drive growth. With their support, we are even better positioned to continue developing great products that delight our fans and broadening our base through expanded offerings and new categories.”
Additionally, Funko and eBay have inked a commercial agreement under which eBay will become the preferred secondary marketplace for Funko products. The companies will also partner on exclusive product releases and Rich Paul will help to guide Funko’s expansion in music and sports.
More on Q1 Success, Updated Guidance:
Funko’s success in Q1 was an international affair, with a 70.1% spike in U.S. net sales, a 43.5% gain in Europe, and other international sales growing 48.3%.
Core collectibles, including Pop!, Soda, Vinyl Gold, and Popsies net sales grew 58%. Loungefly net sales spiked 103.5% while the combined toy and game brands and digital brands increased grew 140%. Additionally, D2C sales spiked 36%. In the developing NFT space, Funko cited its collaboration with Warner Bros. on a Scooby-Doo offering as being a highlight for the quarter.
Looking ahead, Funko says that it expects 2022 net sales of $1.275 to $1.325 billion, an increase of 24-29% over 2021. That said, supply chain issues, particularly freight costs, will take a hit on margin.
