FNKO - Funko stock flies higher on lighter than expected loss raised EBITDA guide

2023-05-04 17:24:27 ET

Funko ( NASDAQ: FNKO ) shares surged to a double-digit percentage gain in after hours trading on Thursday after posting better than expected Q1 results.

The Washington-based toy manufacturer reported a $0.49 per share loss as revenue decline 18.3% year over year to $251.9M. Both figures were significantly better than the consensus expectations of a $0.92 loss on $235.62M in sales. Inventories at the close of Q1 reached $191.6M, down 22.3% sequentially, but still nearly 20% higher than Q1 2022.

“We are off to a strong start in 2023, with progress on our cost-savings initiatives and continued innovation in our product lineup. Enthusiasm for the brand remains strong, highlighted by our 61% sales increase in our direct-to-consumer channel, the success of our recent product launches, and the early promise of our recent commercial partnership with Fanatics,” CEO Brian Mariotti said. “Due to our actions to reduce our cost structure, we are raising the midpoint of our outlook for adjusted EBITDA for the full year to between $65M and $75M.”

Alongside the hiked EBITDA forecast, management projected net sales to decline year-over-year between 10% and 5%.

“We have made strong progress in reducing costs and right-sizing our business,” CFO Steve Nave explained. “We are raising our full year adjusted EBITDA outlook due to that progress, but revising our net sales outlook to reflect the well documented retail inventory destocking. While Funko’s success, built on fan enthusiasm, has shown resilience to volatility in the broader market, we are not immune to these external factors in the short term.”

For Q2, net sales are expected to range from $240M to $260M against a $284M consensus expectation. Adjusted EBITDA for the quarter is anticipated to be between a $10M loss and break-even.

Shares of Funko ( FNKO ) ripped 13% higher shortly after the results were reported before retreating to a 7.17% gain as the extended session progressed.

Read more on the details of the results .

For further details see: