As Christmas approaches, shelves in toy aisles and in online collector’s stores seem to have even more Funko items than usual, but that may not be the case for much longer, as the company’s recent financial reporting has revealed mounting debts, steep declines in profits, and a dire warning to investors that they may not be around in another year if things don’t change rapidly.
In Q2, Funko lost a massive $41 million. In their new Q3 figures, losses were just under $1 million. This may have been a massive improvement over the previous three months, but is still devastating compared to the $8.9 million profit in the same quarter in 2024. This loss comes as a result of a year-on-year decline in profits ($250.9 million vs $292.8 million), almost all of which came from the U.S. markets.
Previously, it was reported that the company had renegotiated terms on several outstanding loans following the devastating losses earlier in the year, but now it looks like even those terms may not be met. According to an SEC filing by the company, “”[T]here is substantial doubt about our ability to continue as a going concern for the next twelve months.”
The company described a “…challenging retail environment where retailers have slowed their restocking, prioritized lower inventory levels, and, in some cases, have canceled their orders.” Like many companies, Funko is putting a lot of the difficulties down to tariffs. They continued, “Tariffs reduce net sales, gross margin, and net income, and could impact consumer discretionary spending in future periods,” the company said.
Funko Is Not Giving Up Yet, and Looking to Netflix for a Christmas Hit
Along with the challenges of tariffs and such matters, Funko’s excessive range of licensed IPs, from Marvel and DC, to Muppets and Stranger Things, there are very few franchises and genres that Funko has not thrown a lot of money into. It seems though, people are either no longer looking to spend money on dozens of new releases that come frequently, or have simply run out of room to do so.
However, the company is not about to simply give up. As CEO Josh Simon said in a statement, smaller lines are being looked at to support the company’s future along with a worldwide Netflix phenomenon.
“We delivered a solid 2025 third quarter performance, with net sales in line with internal expectations and gross margin and bottom-line profitability well ahead of expectations. Sales of our Bitty Pop! line, which made Walmart’s 2025 Top Toy List, was a key contributor, and our strong gross margin benefited from the swift implementation earlier this year of our tariff mitigation plans.
“I’m only 60 days into the role, but it’s already clear how powerful the Funko brand is and how much growth opportunity lies ahead. Our Make Culture POP! strategy is all about being at the center of the moments everyone is talking about. Beginning with lightning-fast launches like KPop Demon Hunters—where we’ll be one of the only licensees on shelves this holiday season—we’re moving fast to turn pop culture into products, expanding into new fandoms, delivering bold retail experiences, and celebrating the creativity that makes Funko unique.”
Despite this rather positive outlook given the circumstances, the company has admitted that consideration is being given to several strategic moves, which could include the potential sale of the company.