Funko, Inc. · NASDAQ:FNKO
Funko — Investor Presentation (November 2023)
30 slides from Funko's investor presentation, Nov 2, 2023
Slide 1: Company Overview Presentation November 2023
PRESENTATION ‘COMPANY OVERVIEW NOVEMBER: 2023
Slide 2: Cautionary Notes
Cautionary Notes This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation that do not relate to matters of historical fact should be considered forward-looking statements, including
Slide 3: Funko is a Pop Culture Collectibles Company
Funko is a Pop Culture Collectibles Company The company designs, sources and distributes licensed pop culture products for consumers who seek tangible ways to connect with their favorite pop culture brands and characters. Product categories include vinyl figures, action toys, apparel and accessories
Slide 4: At a Glance
At a Glance 2022 Sales by... Ticker: Nasdaq: FNKO + IPO:2017 * Founded: 1998 EOGRAPHY Net Sales 2022: $1.3 Billion Gross Margin 2022: ~33% Muttiple Sales Channels: Two Flagship retail stores \ + E-commerce sites: Funko.com, FunkoEurope.com, Loungefly.com, Mondoshop.com ) * 1,000+ Retail Partners * I
Slide 5: Core Collectibles, Loungefly and Mondo brands
Core Collectibles, includes Pop! Vinyl, company’s best- known product line; thousands of licensed characters BRANDS Pop culture fashion items, soft-lines including backpacks, bags, wallets and apparel High-end, limited edition collectible figures, posters and vinyl records
Slide 6: Investing in the Rise of Pop Culture
INVESTING IN THE RISE OF POP CULTURE Ey 2017 | 2021 | | 2023 | Funko launches Launches FIRSTPOP! PRODUCT aay arn Digital Pop! NFTs Bitty Pop! PRODUCED Pop! Yourself Online (FOR: 2009 OBTAINS DISNEY | 2017 | | 2019 | 2022 LICENSES: D Funko completes ae Funko completes ISNE; acquisitions of Loungefly
Slide 7: At Funko we believe everyone is a fan of something
- y at Funkd’ WE BELIEVE THAT EVERYONE ISA OF SOMETHING
Slide 8: Sampling of current portfolio offerings
Note: Represents a sampling of ourcurrent portfolio offerings as of August 2023. 8
Slide 9: Funko
> Finké
Slide 10: We Have a Broad and Deeply Engaged Fanbase
WE HAVE A BROAD AND DEEPLY ENGAGED FANBASE CONSUMER COMPOSITION Our products have broad appeal across age and gender. AGE RANGE 18-45 Our customers range in their interests and attitudes toward Pop Culture and Collecting. Pop Culture CONSUMER ENGAGEMENT Social Media Following a o88oO 4 2s Total Tota
Slide 11: Global Distribution Across Multiple Channels
GLOBAL DISTRIBUTION ACROSS MULTIPLE CHANNELS Mass © Walmart >'< C4 Carrefour Direct-to-Consumeris our largest distribution channelat 11%* E-Comm amazon ) Walmart com Specialty HOTTOPIC GameStop BOXLUNCH %. cs , No otherretailer is Z Value B five BEEW [>Jf.) greater than 7%* Distributors § @GaALLIANC
Slide 12: Sales Growth Since IPO
SALES GROWTH SINCE IPO 1400 a lo 250 ojo ng Koy oS Rom of oe OC CO 700 — 125 ——— ° LL = ° 7 | 2017-2022 2017-2022 201%, 2022" 2017-2022 2017 2022 ED Funko, LLC © 2023 12
Slide 13: Funko Aims to Return to Historical Profitability
FUNKO AIMS TO RETURN TO HISTORICAL PROFITABILITY $1,323 17% | [ 7% 2017 2018 2019 2020 2021 2022 mmmNet Sales |——Adjusted EBITDA Margin After years of focusing on driving topline growth, in Controlled 2023 anew leadership team began implementing a Profitable more comprehensive business strategy.....
Slide 14: Build Long-Term Profitable Growth
BUILD LONG-TERM PROFITABLE GROWTH ADD NEW REVENUE STREAMS FOCUS ON STABILIZE OPERATIONS CORE PRODUC LINES Lay the foundation for renewed growth and keep the flywheel turning Invest in adjacent categories we can control and grow profitably Focus on fewer products, done extremely well Run the business
Slide 15: Strategy Elements: Stabilize Operations
STRATEGY ELEMENTS STABILIZE » FOCUS ON Pay CORE PRODUCT LINES Overhauled Funko’s Supply Chain: Eliminated extremely expensive short-term storage costs + Implemented phase 1 of Warehouse Management System (WMS), July 2023 Improved order fulfillment timelines and reduced labor costs + Re-negotiated ke
Slide 16: Focus on Core Product Lines
FOCUS ON CORE PRODUCT LINES Simplify the business, focus on most profitable core products SKUs have been rationalized by approximately 30% Allowing us to be: Responsive to rapidly changing pop culture Quicker to market Nimble and creative in product design Evergreen product line: Always Fresh 365 Co
Slide 17: Add New Revenue Streams
Selectively invest in key value driving initiatives + Natural extensions of core product lines + Develop margin-accretive products like Pop! Yourself ($30 MSRP withno royalties) + Create product and customer segmentation opportunities with Bitty Pop! + Data driven approach Expand into new verticals
Slide 18: Strategy Elements: DTC and International
STRATEGY ELEMENTS BUILD crapuze NY, focutoN Ny, soNew RI OPERATIONS PROFITABLE LINES STREAMS arse Direct to Consumer (DTC) International Continue to Improve Customer Experience Expand beyond US and EMEA: Connect with Customers: + Latin America, Asia-Pacific, Australia, Canada - Deliverimmersive expe
Slide 19: Profit Improvement Actions
PROFIT IMPROVEMENT ACTIONS Profit Improvement Action SG&A, Fulfillment Costs Cash . Preservation ED Funko, LLC © 2023, Disposal of 9 million units of inventory Headcount reductions (two rounds) and other SG&A cuts Implementation phase 1 of WMS Delaying of newinitiatives Expanding Evergreen mixto sav
Slide 20: Historical Financial Performance
HISTORICAL FINANCIAL PERFORMANCE Net Sales Gross Margin *$ Millions $1,323 38.5% 37.2% 35.5% 38.2% 37.0% 32.8% 2017 2018 2019 2020 2021 2022 2017 2018 «2019 2020 2021 2022 Adjusted EBITDA Margin” Adjusted Net Income” : *$ Millions $76 174% 16.5% 15.5% 14.6% $50 123% $40 74% $30 | a1 2017 2018 =2019
Slide 21: Historical Financial Performance
HISTORICAL FINANCIAL PERFORMANCE Cre eee EE! *S Millions *$Millions $234 $247 $2a2 $246 sal $191 $173 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 “SMilions *SMillions $109 $59 $50 O A ia = = 2017 2018 «2019 2020 2021 2017 «2018 §=2019 2020 2021 2022 Funko, LLC © 2023
Slide 22: Experienced Management Team with a Deep Bench
WE HAVE AN EXPERIENCED MANAGEMENT TEAM WITH A DEEP BENCH MICHAEL STEVE ANDREW ANDY TRACY SARAH LUNSFORD NAVE PERLMUTTER ODDIE DAW MARTINEZ CFOand COO President Chief Commercial Officer Chief Legal Officer Senior VP, People and Culture MARC HUSNAL MALCOLM ROB JOHANNA YVES SIEGEL SHAH OTTLEY CASSIDY G
Slide 23: Powerful pop culture platform with passionate fans
Powerful pop culture platform with passionate fans Results-oriented management team with a deep bench
Slide 24: Thank You
THANK YOU
Slide 25: 25
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Slide 26: Q3-2023 Gross Margin Bridge
Q3-2023 Gross Margin Bridge Lol 35.0% 35.3% 33.2% 2) ca 0 309 e° 8) (1) su oo” é oo ed yo aor oo > of io 6 as ve 5 Oo RX at X oe ELK! _ go eae oe oe oO s' or 8 wh Ha oe sor Oo oo ps (1) Gross Marginis defined as Net Sales less Cast of Goods Sold, dvided by Net Sales. (2) Adjusted Gross Margin is ano
Slide 27: Adjusted net income reconciliation 2017-2019
27 2019 2018 2017 Net income (loss) attributable to Funko, Inc. $ 11,725 $ 7,463 $ 3,939 Reallocation of net income attributable ton on-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (1) 16,095 17,599 2,047 Monitoring fees (2) — — 1,676 Equity-ba
Slide 28: Adjusted net income reconciliation 2020-2022
28 2022 2021 2020 Net income (loss) attributable to Funko, Inc. $ (8,035) $ 43,900 $ 3,961 Reallocation of net income attributable ton on-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (1) 2,795 23,954 5,802 Equity-based compensation (2) 16,591 1
Slide 29: Adjusted EBITDA reconciliation 2017-2019
29 2019 2018 2017 Net income $ 27,820 $ 25,062 $ 5,986 Interest expense, net 14,342 21,739 30,636 Income tax expense 4,476 5,432 1,266 Depreciation and amortization 42,126 39,116 31,975 EBITDA $ 88,764 $ 91,349 $ 69,863 Adjustments: Monitoring fees (2) — — 1,676 Equity-based compensation (3) 13,044
Slide 30: Adjusted EBITDA margin definition
30 *Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Net Sales.