The third quarter exceeded expectations for Washington-based Funko Inc.
The maker of pop culture collectibles, games, and other consumer lifestyle products reported its Q3 earnings today with a 40% spike in net sales and a net income increase of 17.8%. While net margin saw a slight decline, the positive performance amid continuing issues in the supply chain resulted in revised full-year guidance that sets the bar even higher for a positive 2021.
“This performance caps off a tremendous first nine months of the year for Funko and demonstrates our ability to proactively manage through challenging supply chain dynamics and inflation while driving profitable growth,” says Funko President Andrew Perlmutter. “It is also a reflection of our extremely loyal fan base.”
That fan base was out in force during Q3 as demand for pop culture products kicked in amid a surge of renewed interest in theatrical film releases and other entertainment offerings.
U.S. net sales have driven what the company calls “all-time high demand levels” with a 35.7% increase over the same period last year. International sales spiked 19.1% as global sales for Pop! branded products grew 41.3% in the quarter. According to Funko, 66% of its Pop! sales were attributed to evergreen properties.
Funko Games, Loungefly, and plus products increased 33.8% in the quarter led by a 36.3% boom in the Loungefly division of fashion and accessories. Additionally, the company’s entry into the NFT space was met with excitement with multiple Pop! NFT collections selling out in minutes. The company is also building out its digital business through the launch of Droppp.io, a digital marketplace that it launched in collaboration with TokenWave.
Looking ahead, Funko CEO Brian Mariotti expects momentum to continue through the fourth quarter.
“As we look to the balance of this fiscal year, we are confident in our ability to execute effectively against our core operating strategies to drive continued growth while continuing to adapt quickly to any ongoing supply chain challenges,” Mariotti says. “As a credit to our brand, we are continuing to expand our product categories and fan base, increasing fan engagement and bringing innovative new products to market.”
A large component in Funko’s growth strategy continues to be in the direct-to-consumer (D2C) space. The company experienced an 88% spike in D2C business in Q3 alongside three digital events: Alice In Wonderland Black Light, FunKon, and Batman Day.
As previously reported, Funko will shuffle its leadership ranks effective January 3, 2022. Andrew Perlmutter will take the helm as CEO while current CEO Brian Mariotti will assume the new position of chief creative officer (CCO) and continue to serve on the company’s board of directors while building out new businesses, such as NFTs.