Funko (NASDAQ:FNKO) Reports Sales Below Analyst Estimates in Third Quarter Earnings, But Shares Soar 15.9%

Pop culture collectibles maker Funko (NASDAQ:FNKO) missed market revenue expectations in the third quarter of fiscal 2025, with sales falling 14.3% year over year to $250.9 million. Its non-GAAP earnings of $0.06 per share were significantly above analysts’ consensus estimates.

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• Revenue: $250.9 million vs. analyst estimates of $262 million (14.3% year-on-year decline, 4.2% default)

• Adjusted EPS: $0.06 vs. analyst estimates of -$0.09 (significant beat)

• Adjusted EBITDA: $24.43M vs. Analyst Estimates of $15M (9.7% Margin, 62.9% Beat)

• Operating margin: 2.6%, compared to 4% in the same quarter last year

• free cash flow was $3.38 million, compared to -$4.08 million in the same quarter last year

• Market capitalization: $217.6 million

“We delivered a strong performance in the third quarter of 2025, with net sales in line with internal expectations and gross margin and bottom line profitability well above expectations,” said Josh Simon, CEO of Funko.

Funko (NASDAQ:FNKO), which has partnerships with media franchises such as Marvel and One Piece, is a company that specializes in the creation and distribution of licensed pop culture collectibles.

Examining a company’s long-term performance can provide clues about its quality. Even a bad business may shine for a quarter or two, but a top-notch business grows for years. Unfortunately, Funko’s 7.7% annualized revenue growth over the past five years was sluggish. This was below our standard for the consumer discretionary sector and is a rough starting point for our analysis.

Long-term growth is most important, but within consumer discretionary, product cycles are short and revenues can be affected due to rapid changes in consumer trends and preferences. Funko’s performance shows that it has grown in the past, but gave up its profits in the last two years as its revenue fell 9.7% annually.

This quarter, Funko missed Wall Street estimates and reported a rather dull 14.3% year-over-year revenue decline, generating $250.9 million in revenue.

Looking ahead, sell-side analysts expect revenue to grow 7.4% over the next 12 months. While this projection indicates that its newer products and services will drive better top-line performance, it is still below the industry average.

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Funko’s operating margin has shrunk over the past 12 months and has averaged negative 2.1% over the past two years. Unprofitable consumer discretionary companies with declining margins deserve additional scrutiny because they are spending a ton of money to stay relevant, an unsustainable practice.

This quarter, Funko generated an operating profit margin of 2.6%, a year-over-year drop of 1.4 percentage points. This reduction is quite minuscule and indicates that the company’s overall cost structure has remained relatively stable.

We track long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. However, compared to revenue, EPS highlights whether a company’s growth is profitable.

Unfortunately for Funko, its EPS declined 36.2% annually over the past five years, while its revenue grew 7.7%. This tells us that the company became less profitable per share as it expanded.

In the third quarter, Funko reported adjusted EPS of $0.06, up from $0.14 in the same quarter last year. Despite falling year over year, this figure easily exceeded analyst estimates. Over the next 12 months, Wall Street expects Funko to improve its profit losses. Analysts forecast its full-year EPS of negative -$0.67 will advance to negative -$0.12.

It was good to see Funko beat analysts’ EPS expectations this quarter. We were also excited that its EBITDA beat Wall Street estimates by a wide margin. On the other hand, their income was not enough. Overall, we believe this was a solid quarter with some key areas of upside. The stock rose 15.9% to $3.50 immediately following the report.

Funko posted solid profits, but a quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it is important to consider your valuation, your business qualities, as well as what happened in the last quarter. We cover that in our comprehensive, actionable research report which you can read here; It’s free for active Edge members.