Funko sees record first quarter as games, plush, and Loungefly all achieve sales growth

Funko has seen record first quarter net sales increases across both its US and European markets, reflecting what the pop culture specialist has cited as ‘broad-based strength across geographies, products, and channels.’

Net sales grew 38 per cent to $189.2 million compared to $136.7 million in the first quarter of 2020. The firm also saw the number of active properties increase by 12 per cent to 762 from 681 the year prior, with net sales per active property increasing 24 per cent.

US sales grew 39 per cent to $136.5 million, while Europe saw its net sales increase a full 55 per cent to $39.8 million. Other international regions saw a more modest growth of two per cent to $12.9 million, but Funko has highlighted the ongoing disruptions that many of those regions are experiences due to Covid-19.

Funko’s Pop! branded products grew 33 per cent while net sales across its Other segment – meaning non-figure products – increased by 52 per cent, led by Loungefly branded products which grew 82 per cent in the quarter. Funko has also been strengthened by its recent developments in games and plush.

Direct-to-consumer sales increased more than 160 per cent driven by continued strong demand on the Company’s Funko and Loungefly e-commerce sites, while 66 per cent of the company’s sales were attributed to evergreen content.

“Improving consumer demand in the US and Europe contributed to broad-based strength within our brands, products and distribution channels, leading to a record first quarter,” said Brian Mariotti, chief executive officer.

“Throughout the pandemic, our teams have maintained a relentless focus on delivering innovation and engaging with our fans around the world, positioning the business to drive topline growth as the demand environment strengthens.

“In the first quarter, this enabled us to achieve sales growth of 38 per cent, strong Adjusted EBITDA margins and a substantial increase on the bottom line.

“We are confident that our innovation pipeline, strategic focus and experienced teams will enable us to deliver continued growth and expansion in the dynamic macro environment. We’re investing behind our key strategic priorities and expect to achieve topline growth of 33 per cent to 38 per cent in 2021, above our previously stated range, while also driving increased profitability.”

On a brand basis, Pop! branded products grew 33 per cent to $150.3 million, reflecting strong growth in the US and Europe. Loungefly branded products grew 82 per cent to $24.5 million. Both brands generated strong demand in the US and Europe, as well as strength across our direct-to-consumer channels.

Net sales of other branded products increased 41 per cent to $14.3 million driven by board games, plush and action figures.

Direct to consumer and expanded toy offering helps Funko to strong Q4 2020 finish

A bolstered direct to consumer platform, the launch of new games and toys, and an expanded presence across its key retail partners have helped Funko to strong fourth quarters results for 2020.

The pop culture specialist has reported a six per cent sales growth to $226.5 million, reflecting what CEO Brian Mariotti has described as a “better than expected performance across brands, products, channels, and geographies.”

Net sales for the firm grew in the fourth quarter 2020 from the $213.6 million in the same period the year prior. The increase is reflective of the business’ strength in its domestic market in the US, which was partially off-set by the impact of Covid-19, particularly within Europe.

Funko grew its number of active properties to 724 from 667 in the fourth quarter of 2019. On a geographical basis, net sales in the United States increased 18 per cent to $171.5 million, while net sales in Europe decreased 24 per cent to $40.3 million.

Net sales in other international regions decreased seven per cent to $14.7 million, both primarily driven by continued impacts from COVID-19.

“We are pleased to finish the year with strong fourth quarter results, including six per cent sales growth, which reflects better than expected performance across our brands, products, channels and geographies,” said Mariotti.

“Against a challenging environment in 2020, our teams were resilient, quickly adapted to the dynamic environment and remained focused on executing our strategic growth priorities. During the year, we successfully strengthened our direct-to-consumer platform, launched new games and toys that extended our reach, expanded our presence among key retail partners in mass and digital, and drove robust fan engagement through global virtual events.

“We believe the Company is strongly positioned to deliver solid top line growth and improved profitability in 2021. We are remaining focused on our strategies to maximize Funko’s core pop culture platform, drive further category diversification, expand internationally and accelerate our direct-to-consumer business.

“For the full year, we expect to achieve revenue growth of 25 per cent to 30 per cent versus 2020, which also reflects growth from pre-pandemic levels in 2019.”

On a product category basis, net sales of figures were flat at $170.2 million reflecting strength within the domestic market which was offset by international performance.

Net sales of other products increased 30 per cent to $56.3 million versus the fourth quarter of 2019, primarily reflecting strong growth in the company’s Loungefly branded products, as well as strength within our games, plush and accessory categories.

Pop! branded products grew one per cent to $169.4 million, while Loungefly branded products grew 51 per cent to $31.6 million in the quarter reflecting strength in both its wholesale and direct-to-consumer channels.

Net sales of other branded products increased five per cent to $25.5 million, reflecting a strengthening board game, toy and figure offering from the firm.

primarily reflecting strength in Funko’s expanded board game, toy and figure offerings.

“We feel confident about the trajectory of the business and believe we are well-positioned from a strategic, operational and financial perspective,” said Jennifer Fall Jung, CFO.

“We expect to continue investing for growth in 2021 while also driving strong Adjusted EBITDA margins and improvement on the bottom line.”

Funko Games: “The future of gaming? Things are going to get weird”

Jay Wheatley, general manager of Funko Games has a simple vision of the future of tabletop gaming as it continues to push boundaries and draw in new audiences, and that’s that things are going to ‘get weird.’

It’s an idea that strikes a particularly sweet chord with the man now heading up Funko’s recently acquired games division. It was, after all, in a former life that Wheatley once took particular pleasure in imposing ‘weird and uncomfortable’ scenarios upon diners back in the days of his experiential restaurant business Entros.

He recounts to ToyNews a time he instigated a game between two players who were given the roles of a car salesman and a car buyer, each with their own backstory and specified amount they had to sell and buy a car for. The pair would then spend the evening negotiating, in a back and forth game play. This all took place in the middle of his packed out Seattle restaurant; subverting social constructs like awkwardness to turn it into entertainment.

This is the kind of ‘weird future’ Wheatley envisions for the tabletop gaming hobby. And this is the kind of man now presiding over Funko’s boldest move for the board gaming space today.

It should come as no surprise, of course. Wheatley – and the team of creative thinkers, game designers, and all-round play creators around him – has made quite the career out of tinkering with gaming mechanics to develop and innovate the tabletop gaming genre for some 20 odd years now. In doing so, he has also led a team that has produced and licensed games to some of the biggest names in the space today, the likes of Spin Master, Mattel, Asmodee, Hasbro, and Goliath included.

“In fact,” he recalls, “we have probably made around 400 to 500 games.” And that even extends to some of the most recent New York Toy Fair launches in Disney’s Villainous, Jaws, and Universal Monster’s Horrified, all of which were licensed to Ravensburger back before his team was acquired by Funko at the end of 2018. If there’s one man who knows the business of board gaming – and how to continue to push the boundaries within it – it’s going to be Wheatley.

The move came just a couple of months into a commissioned project to develop a strategy game that used the Funko Pop! figures by bringing them into a common universe, or Funkoverse, for tabletop gameplay. Having taken a shine to the output, ethics, and methodology of this team of game creators, and with an eye on making a concerted move into the board gaming arena, Funko’s Andrew Perlmutter and Brian Mariotti tabled a deal to acquire this unit of creatives.

“To us, it sounded like heaven,” Wheatley tells ToyNews. “Funko was the embodiment of what we love. We were making non-licensed games, but we were also making a lot of licensed games, and we love all of that kind of stuff . This was a deal that was about like-mindedness and culture, and we immediately saw that synergy with Funko.

“This is a company that is extraordinarily passionate about pop culture and properties, brands, stories, and characters, and bringing those to life and celebrating all of the touchstones that we have grown up with.”

By 2019, the team had been acquired and Funko Games had been established, and Wheatley had been given a new remit to explore a world of pop culture IP – a library literally in its thousands – and what it could mean for the tabletop gaming space.

“It’s wonderful to be with Funko,” Wheatley continues. “As great as our relationships have always been with Ravensburger, Asmodee etc, the companies we highly respect, deeply, there is a certain distance that creates between us and the consumer.

“If they are doing the marketing, or making the decision around customer service or they’re between the creation of the items and the retailers that they are presenting it to, all those elements of distance are things that we can close now, as we are able to have that direct relationship with the consumers – we are able to present the games directly as we intended them in the creation of them, and we are able to develop a brand that is recognised by everyone.”

For Wheatley, it means making decisions on what licenses the unit develops games for, from what he calls Funko’s “playground of licensed properties that it is working with.” It also means being able to have a real conversation with the end user, the gaming audience itself, as well as licensors – an asset that, he realises, is integral in pushing the envelope in gaming today.

“Funko does a lot of business with licensors, and it allows a certain amount of partnership that we haven’t experienced in the past that the licensors see what Funko has done in terms of licensing and product categories,” says Wheatley. “I can’t think of any company other than Funko who could come up with a game system of multiple different licenses that you can place within one kind of universe, I think that would have been a hard sell for most publishers.”

Of course, Funko Games’ board gaming output may start with Funkoverse, but it certainly doesn’t end there. Wheatley tells ToyNews of the excitement around New York Toy Fair earlier this year, when it finally got to reveal a raft of signature games, including Back to the Future, Godzilla, Yacht Rock, and a Pan Am licensed title, all of which go a very long well to not only establish Funko’s credentials in the tabletop gaming arena, but reflect the fascinating relationship that tabletop gaming now has with society today.

“And that really is a fascinating subject,” says Wheatley. “There was a time in the mid 2000s when we thought we were going to go out of business because of the rise of app games. It was an existential time for board games. People began playing games everywhere and all of the time, whether in mass transit or before they went to bed.

“But actually, we think it whetted the appetite and made game playing more of a constant part of people’s worlds and lifestyle, and so today, board gaming has never been stronger.

“In the last year or two, we have seen the adoption of more complex or interesting games (what we used to call Eurostyle games, but now days are coming from all corners of the world), we are seeing game nights become a standard part of people’s social behaviour, and there is a robust world of gaming happening.

“It reminds me of the quote from [Canadian philosopher] Marshall McLuhan that ‘the medium is the message.’ For me, I think of ‘what does the medium say here?’ What does game playing say about society and our culture, irrespective of the content? What does this medium say about us in this time and place of human existence?”

What it says, Wheatley answers, is that people want to spend time together.

“They want to sit across a table and share experiences, laugh, have fun in a big shared space together, and how great is that?” he says. “Tabletop gaming is one of the healthiest things people can be doing – spending social time together, engaging their intellect, their imagination, and sharing all of these wonderful things.”

Then there is what this newest ilk of board game developers are bringing to the space by exploring an IP’s narrative to its fullest and bringing it to life on the board and in game play.

Wheatley continues: “We love diving deep into the content and the licenses. It is one thing to have a game that is filled with imagery and words, and ideas and characters that people recognise, but that is not enough. It’s very important that the actual structural experience of the game, the mechanics of the game, support the message or theme, or principals of the property itself.”

Wheatley takes the work he and his team put into Jaws prior to the Funko acquisition as an example. Jaws is a hidden movement game which builds up a lot of tension through its cat and mouse gameplay.

“And that’s great, because that is what the movie is about. You could take a game and put a shark on it, and a few touchstones from the movie, but it is not good enough unless you’re putting players into something evocative of the emotional and psychological experience that the property offers,” the game designer explains.

Wheatley breaks it down into three elements; diegetic, extra-diegetic, and nondiegetic, these being elements from the property itself – many of which you will find in Funko Games’ Back to the Future board game; elements not from the property but built into the game’s narrative in order to enhance the gaming experience and still rooted in that world; and elements such as randomisers (like dice) and point scoring systems, respectively.

According to Wheatley, a successful game knows how to strike the right balance or cook up the right recipe with the correct quantities of each of these elements.

“It can be challenging, editorially, to make all of these components work together in order to keep players immersed in the IP’s narrative and not distracted by those elements that are necessary, yet have the ability to take them out of the narrative if the balance isn’t right.”

The technicalities in this regard can run deep, and it is obvious that this is a favoured topic of talk for Wheatley, a man who self-professes ‘feels like he has studied a Phd in board games’ simply through the number of hours he has dedicated to the craft.

We, however, stop short, to tackle the topic of where tabletop gaming is heading from here.

“The bar is constantly being raised, and everyone in this industry is super energised about delivering for gamers these incredible experiences that are authentic and feel immersive,” he explains. “It is a great time to be a gamer because everyone is trying to deliver that deeper and better experience.

“I think we are going to see more innovative and interesting ideas, and I don’t just mean what’s happening with the variables and equipment at the table, but things that produce unique behaviours; things where the gameplay is taking place not just in the same room, not just in the same time space, but taking place over longer periods of time, or connecting people in different ways.

“I think we are going to see more experimentation and they’re not all going to work, but that is the way it is when you try new things. We are going to see more exotic, meta experiences happening. We have a couple of things in the works – things we started before we became Funko Games that will come out through other channels, but that is an area to keep your eye out for because there is going to be some weird games, in the very best of ways.”

Funko launches new licensed board games, opens shop-in-shop with Hamleys and moves for the kids toy space

Funko has now partnered with Hamleys Russia to launch a new Funko shop-in-shop in the toy retailer’s flagship Moscow store – helping the firm step its international efforts up a level.

The partnership between the two titans kicked off with a launch party to amplify the shop within a shop model being rolled out in store this February. The Moscow shop-in-shop – also known as the Funko Zone, launched on February 21st to media and influencers, followed by a grand opening for the public on February, 22nd.

 Key press and taste makers took part in photo opportunities at the opening of the new permanent shop-in-shop, which plans to offer an immersive experience, allowing customers to experience and celebrate a world of Funko through a life sized Pop! box, large statues of Disney’s Maleficent, Harry Potter’s Hagrid, and a Star Wars Storm Trooper.

There will also be screen takeovers with Funko’s own animations of Disney’s Frozen and Star Wars.

 The space, which will be a tribute to the Funko stores in Seattle and Hollywood, will be home to new Funko launches including Loungefly (fashion accessories), Funkoverse (board games), a wealth of Pop!, and more, but to kickstart it all – will be the launch of the following Hamleys Russia exclusives; Overwatch D. Va Pop! (Diamond Edition), Cruella De Vil Pop! (Diamond Edition) and Pennywise with Glow Bug Pop!

 Andy Oddie, managing director at Funko, EMEA, said: “Launching a shop-in-shop in Moscow’s iconic Hamleys store is an absolute honour and a key milestone for us. The famous store and brand is the perfect home for a Funko Zone, bringing our pop culture retail experience to Moscow’s city centre.”

 Sveta Farnieva, brand director of Hamleys Russia, added: “Partnering with the pop culture giants of today to bring their collectibles and apparel via the vessel that is our store is just the beginning of amazing things to come. Watch this Funko space.”

Funko has been expanding its brand depth in recent weeks, culminating with the recent unveiling of the newest titles to emerge from its Funko Games umbrella. It was at this year’s New York Toy Fair that Funko Games, the board game group of the Washington-based pop-culture firm, unveiled a diverse lineup of games.

Among its first wave were the likes of Back to the Future: Back in Time, Godzilla: Tokyo Clash, and a new title making use of the Pan Am license.

“The Funko Games new releases span from deep strategy board games to collaborative family fun to quintessential party picks that are all rooted in clever stories, nostalgic pop-culture touchstones, and fan-favourite licenses,” read a statement from the outfit.

On top of this, Funko also used the New York Toy Fair as the launch pad for its debut into the toy category via its newest product line called Snapsies. Through Snapsies, Funko has developed a toy line specifically for the younger market, featuring patent pending snap-and-match technology which allows kids to add personalisation to a diverse lineup of characters like rock star unicorn Jett, super-athletic mountain goat Billie, and hedgehog Boe, the baker.

Eva Verhaak, head of marketing and strategic sales at Funko, EMEA, added: “We are ecstatic to launch into toys with Snapsies, a product that heroes friendship, creativity and being an individual.

“The fact this is intertwined with a new snapping technology makes it a unique proposition for retailers and consumers. Additionally, all characters were brought to life with beautiful animations created by our in-house team at Funko Animation Studios. Collectively, we can’t wait to see kids ‘snapping and matching’ away this year and building their collections.”

Snapsies  will be available in the UK this summer.