Funko has reiterated that there is “substantial doubt” about its ability to continue operating over the next 12 months, after warning that cash flow may fall short of its working-capital needs and that it expects to breach its debt covenants by year-end.
In a filing with the U.S. Securities and Exchange Commission, the company said leadership had assessed its liquidity outlook, anticipated tariff impacts and compliance with its credit agreement, concluding it is unlikely to meet covenant requirements as of 31 December.
Funko also said that, based on newly announced tariffs and wider operating pressures, it does not expect to generate enough cash to support its working-capital needs through the next year.
The company added that it does not currently forecast having sufficient cash to repay loans under a credit facility maturing in September 2026, and will need to refinance.
Funko has hired Moelis & Company to advise on the process, CFO Yves LePendeven told analysts.
The warning marks a deepening of concerns first flagged in May, when the company said it was still covenant-compliant and held “ample” liquidity.
Since then, Funko has appointed a new chief executive, Josh Simon, who joined from Netflix after serving as vice president of consumer products.
Third-quarter results underscored the mounting financial pressure. Net sales fell more than 14% year on year to $251 million, while net income tumbled nearly 80% to $948,000.
Total current liabilities jumped almost 50% to $457.4 million.
Despite the strain, Funko said it remains committed to its “Make Culture Pop” strategy, aimed at sharpening its cultural relevance, expanding its product range and building out its international footprint, particularly in Asia and Latin America.
“I’m only 60 days into the role, but it’s already clear how powerful the Funko brand is and how much growth opportunity lies ahead,” Simon said.
“Our Make Culture POP! strategy is all about being at the center of the moments everyone is talking about. Beginning with lightning-fast launches like KPop Demon Hunters — where we’ll be one of the only licensees on shelves this holiday season — we’re moving fast to turn pop culture into products, expanding into new fandoms, delivering bold retail experiences, and celebrating the creativity that makes Funko unique.”
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