Funko, Inc. (Funko) operates as a pop culture consumer products company that designs, sources, and distributes licensed pop culture products.
The company creates whimsical, fun, and unique products that enable fans to express who they are, which allows them to find their community and generate a sense of belonging and joy. The company achieves this through products that people display, wear, or carry of their favorite ‘something’—whether it is a movie, TV show, video game, musician, or sports t...
Funko, Inc. (Funko) operates as a pop culture consumer products company that designs, sources, and distributes licensed pop culture products.
The company creates whimsical, fun, and unique products that enable fans to express who they are, which allows them to find their community and generate a sense of belonging and joy. The company achieves this through products that people display, wear, or carry of their favorite ‘something’—whether it is a movie, TV show, video game, musician, or sports team. The company infuses its distinct designs and aesthetic sensibility into its extensive portfolio of licensed content over a wide variety of product categories, including figures, bags, wallets, apparel, accessories, plush, homewares, digital non-fungible tokens (‘NFTs’), vinyl records, and limited-edition posters, which it makes available at highly accessible price points under its Funko, Loungefly, and Mondo brands. The company is building out its sports, music, and video game fandoms; and diversifying its offering with personalized products, such as Pop! Yourself, micro collectibles, and blind boxes containing mystery figures.
Deep and Extensive Licensing Partnerships
The company has strong licensing relationships with many established content providers and strives to partner with content providers across multiple genres, such as movies, television, video games, anime, sports, and music. In 2024, the company had license agreements with over 250 content providers covering approximately 930 active licensed properties. Many of the company’s licensed properties are ‘evergreen’ in nature—properties that are not tied to a current or new content release, such as Mickey Mouse, Harry Potter, or classic Batman.
Broad Portfolio of Brands
The company creates products to attract a broad array of fans across consumer demographic groups. The company’s broad appeal comes from its large selection of licenses and properties that it applies across a variety of product categories and brands. The company strives to have something for everyone by offering figures and other product categories, including bags, wallets, apparel, plush, accessories, homewares, and more.
In addition to offering multiple properties and product categories, the company creates and sells a variety of unique brands that have their own look and feel. The company’s brand portfolio includes Core Collectible (which includes Pop! Vinyl, as well as other branded lines, such as Soda, Bitty Pop!, and Pop! Yourself), Loungefly (softlines, including bags, wallets, backpacks, and apparel), and Other (which includes its emerging brands, such as Digital Pop! and Mondo).
Broad Consumer Appeal and Engagement
The company’s fans routinely express their passion for its products and brands through social media and live pop culture events, such as Comic-Con or its own Funko-themed events. Additionally, the company seeks to drive direct engagement with its fans through in-person experiences at its flagship retail stores and fan events, as well as digitally through its websites, mobile application, and various social media platforms.
Diversified Global Distribution Network
The company sells its products through a diverse network of retail customers across multiple retail channels, including specialty retailers, mass-market retailers, and e-commerce sites, as well as directly to consumers primarily through its owned websites and three flagship retail stores.
The company’s key retail partners in the United States include Target, Amazon, Entertainment Earth, GameStop, and Hot Topic. Internationally, the company sells its products directly to similar retailers, primarily in Europe, through its subsidiary Funko UK, Ltd. The company’s key international retail customers include Amazon, GameStop, and Fnac.
Additionally, the company is continuing to invest in its direct-to-consumer channel to expand its reach and further strengthen its relationship with its fan base. The company’s direct-to-consumer channel includes its own e-commerce websites in the U.S. and Europe, as well as its three flagship retail stores located in the U.S.
Growth Strategies
The key elements of the company’s strategy are to grow its core pop culture business, extend Funko’s international reach, and increase its direct-to-consumer business.
Product Lines and Licenses
The company sells a broad array of licensed pop culture consumer products featuring characters from an extensive range of media and entertainment content, including movies, TV shows, video games, music, and sports. The company’s products combine its proprietary brands and distinct designs and aesthetic sensibilities into properties that it licenses from content providers. The company seeks to license content that will allow it to capitalize on the popularity of current movies, TV shows, video games, music, and other content releases, as well as classic evergreen properties, which are not tied to a current or new release, and which are less subject to pop culture trends. Additionally, by utilizing the company’s in-house creative team, it has the ability to develop its own content and intellectual property. The company’s products are principally figures, fashion accessories, apparel, plush products, accessories, homewares, NFTs, vinyl records, and limited-edition posters.
Brands and Designs
The company has multiple proprietary brands under which most of its products are marketed. The company’s principal proprietary brands include Pop!, Loungefly, and Mondo.
Pop!, introduced in 2010, is the company’s most well-recognized brand. The company’s standard Pop! Vinyl stylized design incorporates a rounded square head that typically consists of no mouth and a very simple nose, and stands about four inches tall. The Pop! brand has also been applied across many of its other product categories, including plush, accessories, apparel, and homewares.
The company’s Loungefly branded products are generally licensed fashion accessories, including stylized handbags, backpacks, wallets, clothing, and other accessories. Other brands marketed under the company include Mystery Minis, Bitty Pop!, and Pop! Yourself. In addition, the company develops product lines that it markets under the broader Funko brand, such as Funko action figures, Funko Soda, and Funko Plush product lines. In 2022, the company completed its acquisition of Mondo Collectibles, a boutique collectibles brand specializing in high-end collectibles, as well as limited-edition art prints and vinyl records.
Licenses
Licensors: The company has strong licensing relationships with many established content providers and seeks to establish new licensing relationships with content providers in order to capitalize on new and emerging trends in pop culture. The company also provides value to content providers by maximizing the lifetime value of their content by extending its relevance to consumers through ongoing fan engagement.
License Agreements: The company’s license agreements permit it to use the intellectual property of its licensors in connection with the products it designs and sells. The company’s license agreements typically have terms of between two and three years and are not automatically renewable.
In addition, the company’s license agreements usually require it to obtain the licensor’s approval of products it develops under the license prior to making any sales. They also typically provide for a minimum guarantee that covers all licensed properties under that license agreement, a portion of which is generally required to be paid in advance, and the amount of which is negotiated based on a variety of factors, including past and expected sales and the licensor’s expected line-up of new releases.
Licensed Properties: The company strives to license every pop culture property that is relevant to consumers. What the company considers to be a property will vary based on the terms of the underlying license agreement. In general, the company considers each content title to constitute a single property. In some instances, however, a property may consist of an entire franchise or even a single character, particularly in the company’s classic evergreen category. The company primarily divides its licensed properties between classic evergreen and current or new releases. The company also licenses certain properties that fall outside of these main categories.
Classic Evergreen: Properties in the classic evergreen category are based on movies, TV shows, video games, music, sports, or other entertainment content that is not tied to a new or current release at the time the company releases the product. As a result, products that the company designs and sells based on these properties generally do not have a defined duration of market demand. Examples of the company’s classic evergreen properties include Star Wars Classic, Harry Potter, DC Comics, Marvel Comics, Pokemon, and WWE.
Current Releases: Properties in the current release category typically are tied to new movie releases, current television series, or new video game titles. These properties are intended to capitalize on the excitement of fans surrounding the launch of new content. Products that the company designs and sells based on new movie releases are expected to have a limited duration of market demand, depending on the popularity of the title. Examples of new movie releases are Deadpool & Wolverine, Inside Out 2, and Moana 2. Additionally, products that the company designs and sells based on current television series or new video game titles are expected to have market demand depending on the popularity and longevity of the title, which is generally expected to be multiple years. Examples of the company’s TV properties include One Piece, The Mandalorian, Demon Slayer, Naruto, and Stranger Things. Examples of the company’s video game properties are Fortnite, Overwatch, and Five Nights at Freddy’s.
Sales
The company sells its products to a diverse network of customers throughout the world. Domestically, the company sells its products to specialty retailers, mass-market retailers, and e-commerce sites. The company’s key retail partners in the United States include Target, Amazon, Entertainment Earth, GameStop, and Hot Topic. Internationally, the company sells its products directly to similar retailers, primarily in Europe, through its subsidiary Funko UK, Ltd. The company’s key international retail customers include Amazon, GameStop, and Fnac. In addition to major retailers, the company also sells its products to distributors for sale to specialized retailers in the United States and in certain countries internationally.
The company also sells its products directly to consumers through its e-commerce business, three flagship retail stores, and to a lesser extent, at specialty licensing and comic book shows, conventions, and exhibitions in cities throughout the United States, including at Comic-Con events. The company’s direct-to-consumer sales accounted for approximately 24% of its sales for 2024. The company intends to continue to increase its focus on these efforts in the future. In 2023, the company relaunched its U.S. website platform that consolidated www.funko.com and www.loungefly.com under one online shopping cart. The company also utilizes www.funkoeurope.com to serve customers in the U.K. and Europe.
The company has a diverse customer base, with its top ten wholesale customers representing approximately 31% of its 2024 sales. The company maintains a full-time sales staff, many of whom make on-site visits to its customers for the purpose of showing products and soliciting orders. Many of the company’s retail customers view it as an expert in pop culture, and in some cases, the company helps manage their growing pop culture category within their stores, providing a curated experience by catering to their particular customer bases. The company also retains several independent sales representatives to sell and promote its products both domestically and internationally.
The company sells its products to its customers with payment terms typically varying from 30 to 90 days (average 57 days). The company contracts the manufacture of most of its products to third-party unaffiliated manufacturers primarily located in Vietnam, China, and Mexico; and ships those products to its warehouse or third-party logistics facilities in the United States, the United Kingdom, and the Netherlands. While most of the company’s sales originate in the United States and the United Kingdom from inventory it holds in its warehouses and third-party logistics locations, certain of the company’s customers may take title to its products upon shipment from the factory or at the port. The company establishes reserves for sales allowances, including promotional and other allowances, at the time of sale.
Marketing
The company continues to acquire new fans through high-profile social media sites, such as Facebook, X, Instagram, TikTok, and YouTube. The company continues to expand its reach globally through its compelling content, events, and personal engagement with its fan base. The company also plans to develop and implement new marketing programs aimed at driving traffic to its websites and new customer acquisition targeted to specific products and properties.
Intellectual Property
As of December 31, 2024, the company owned approximately 98 registered U.S. trademarks, 278 registered international trademarks, 12 pending U.S. trademark applications and 52 pending international trademark applications. Most of the company’s products are produced and sold under trademarks owned by or licensed to the company.
Government Regulation
The company’s products sold in the United States are subject to the provisions of multiple statutes, including the Consumer Product Safety Act (‘CPSA’), the Federal Hazardous Substances Act (‘FHSA’), the Consumer Product Safety Improvement Act of 2008 (‘CPSIA’), and the Flammable Fabrics Act (‘FFA’), and the regulations promulgated pursuant to such statutes.
The company uses independent third-party laboratories that employ testing and other procedures intended to maintain compliance with the CPSA, the FHSA, the CPSIA, the FFA, other applicable domestic and international product standards, as well as its own standards and those of some of its larger retail customers and licensors.
In relation to the company’s sales and marketing activities, the company is subject to various consumer protection rules and regulations promulgated and/or enforced by various federal and state regulators, such as the U.S. Federal Trade Commission, and state attorneys general, as well as non-U.S. regulatory authorities that relate to advertising, product delivery, and other consumer-facing practices. In addition, the company’s online products and services, including its e-commerce and digital communications activities, are or may be subject to the U.S. and non-U.S. data privacy and cybersecurity laws, such as the U.S. Children’s Online Privacy Protection Act, the California Consumer Privacy Act (‘CCPA’), and the EU/UK General Data Protection Regulation (‘GDPR’).
Seasonality
While the company’s customers in the retail industry, and many of its competitors, typically operate in highly seasonal businesses, the company has historically experienced only moderate seasonality in its business. For the year ended December 31, 2024, approximately 56% of its net sales were generated in the third and fourth quarters (year ended December 31, 2024), as its customers build up their inventories in anticipation of the holiday season. Generally, the first quarter of the year represents the lowest volume of shipments and sales in the company’s business and in the retail and toy industries generally.
History
Funko, Inc. was founded in 2017. The company was incorporated as a Delaware corporation in 2017.
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