Funko, Inc. (NASDAQ:FNKO) Q3 2020 Earnings Conference Call October 5, 2020 4:20 PM ET

Company Participants

Andrew Harless – Manager, Investor Relations

Brian Mariotti – Chief Executive Officer

Andrew Perlmutter – President

Jennifer Jung – Chief Financial Officer

Conference Call Participants

Erinn Murphy – Piper Sandler

Alex Perry – Bank of America

Tami Zakaria – J.P. Morgan

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Operator

[00:00:05] Good afternoon and welcome to Funko conference calls to discuss financial results for the third quarter of Twenty Erin at this time, all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow. At that time, please be advised that reproduction of this call in whole or in part is not permitted without authorization from the company. As a reminder, this call is being recorded. I will now turn the call over to Andrew Harless, manager of Investor Relations, to get started. Please proceed.

Andrew Harless

[00:00:37] Thank you. Good afternoon. With something called the management are Brian Mariotti, chief executive officer, Andrew Perlmutter, President Jennifer Fire Chief Financial Officer. A press release covering the company’s third quarter twenty Mariotte financial results was issued this afternoon and is available on our investor relations website. Investor don’t dotcom. Before we begin, I need to remind you that management’s remarks in this call making forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially, as indicated by these forward looking statements. The results of various important factors, including those discussed and the risk factors section of our form. Thank you. The three months ended September 30th, Twenty twenty. In our other filings with the FCC, any forward looking statements made on this call represent our views. Only as of today, we undertake no obligation to update them. You’ll be referring to certain financial measures on today’s call, which is adjusted EBITDA just to give it a margin, which we believe may be important to investors to assess our operating performance, reconciliation of financial measures to the most directly comparable financial measures, including our earnings release. We’ve also prepared a visual presentation for investors to consult, to follow along with that discussion, and it can be accessed at investor post.com. Now, turn the call over, Brian.

Brian Mariotti

[00:01:54] Thank you for joining the call today, and I hope that everyone is staying safe and healthy before I jump in. I’d like to thank the entire fungo team for their tireless efforts, which has allowed us to deliver a solid quarter highlighted by revenue above our expectations and improve profitability versus a year ago. During this dynamic time, our teams are ensuring that we will continue to innovate and connect with our fans while making progress against our four key growth initiatives in the third quarter, we deliver net sales of 191 million and strong gross margins while maintaining prudent cost control. This adjusted EBITDA margins of eighteen point nine percent of 70 basis points over a year over year basis. We also continue to strengthen our balance sheet and increase our liquidity position over 50 percent compared to last year to 170 million from a top line perspective. There are a number of positive indicators across the business and we believe Funchal is well-positioned heading into the fourth quarter and Twenty twenty one. In the face of pandemic headwinds and virtually zero theatrical releases, we drove strong consumer engagement and demand in Q3. So noteworthy Call-out one Evergreen products represented 70 percent of our revenue. This demonstrates our ability to connect with fans through nostalgic and beloved characters across multiple genres and underscores that Funchal is not reliant on new tentpole movies.

[00:03:20] To deliver products our fans love to, we continue to outperform and see strong demand within the domestic mass market and third party e-commerce channels in the quarter, both of which grew over 15 percent compared to prior year three. More and more consumers are turning to Buncombe and Loung Wired.com for their pop culture products. In the quarter, we saw sales driven by our own e-commerce platforms again grow by over triple digits as investments we have made into our platforms and capabilities begin to pay dividends for. We are seeing positive consumer response in many of our new launch games. For instance, this week Funchal Games had over 10 titles on Amazon’s top 100 hot new releases for the games and accessories category. And lastly, fan engagement with Funchal remains strong, highlighted by the tremendous participation we saw in our last virtual Köln during October. More on the shortlist. Now let’s turn to third quarter performance and our expectations for the balance of the year. Region and channel mix continue to be primary drivers for our top line performance in the corporate environment. Our U.S. business declined four percent in the quarter, reflecting a slower recovery within our specialty channel, which is partially offset by strength in our third party, ecommerce, mass market and direct consumer channels. As I mentioned previously, strong consumer demand drove over performance within our domestic third party, e-commerce and mass retailers.

[00:04:51] Growth in these channels is attributed to strength within our core collection of products as well as our expanded game and Loutfy offerings. As the third quarter progressed, we began to see modest improvements in trends within the specialty channel, driven by store openings in retail or shifting their inventory to their e-commerce sites. Additionally, we are seeing ongoing momentum in our direct consumer channel, which nearly doubled in Q3, driven by an increase in our own e-commerce site, which had another quarter of triple digit growth. Arvydas, in business of the of eight percent of our sales in Q3, up from four percent a year ago. Turning now to our international performance, as expected, good recovery in Europe has been more gradual than the U.S., given that our customer base in the region is more heavily weighted, especially channel. During Q3, covid headwinds persisted in both India and LatAm, with Oceania and Canada regions performing well better than the U.S., in fact. Looking forward, we expect to see continued pressure in the European region in Q4 as a result of new restrictions that briefly took effect in multiple countries. We are navigating the macro uncertainty by operating and planning our business conservatively. As always, we are laser focused on innovating and delighting our fans.

[00:06:11] Equally important, we are remaining nimble so that we are prepared to manage through potential closures within the U.S. and international markets. Currently, we expect Q4 net sales to decline 10 to eight percent, which includes almost 20 million or eight points of pressure. They the new restrictions and closures throughout Europe, notwithstanding the global uncertainty around potential pandemic restrictions. We expect to see strong performance within our domestic mass market, third party e-commerce and the U.S. channels offset by continued softness within the European region and U.S. specialty channel. Importantly, we feel good about Fonkoze positioning heading into the holiday season when we will have our most diverse product offering in the market, yet this is enabling us to expand our relationship with key retail customers as we partner with them to deliver an expanded product offering, which includes Funchal games and youth collectibles. At the same time, we expect to drive consumers to our own e-commerce sites through creative marketing programs supported by a broad product offering. The investments we are making in our own digital capabilities and B2C fulfillment leave us well prepared to meet the anticipated demand, even today’s highly dynamic environment. We are continuing to see bands actively engage and seek out Funchal products in-store and online. As I previously mentioned, just a few weeks ago, we wrapped up our Funchal virtual con in conjunction with New York City Comic-Con and could not be more enthusiastic about the level of engagement and passion we received from the Functio family.

[00:07:48] Not only did we see our engagement levels tripled compared to last year’s in-person Comic-Con, but we were also able to drive higher sell through of Comic-Con items at our retail partners, the broad base love of pop culture. We have been witnessing for many years now has not been through the pandemic. Consumers and mega fans alike are continuing to view, engage and create communities around their favorite properties, content and teams over the long term. We are confident that Bunko is positioned to drive growth as we continue to diversify our business across new product categories, geographies and channels. We are continuously working to bring new fans into the Funchal ecosystem by harnessing our innovative culture to create new products and leverage new licenses. This year certainly come with a unique set of challenges for everyone. I want to again give my thanks and appreciation to the entire Funchal team for helping us bring joy, our fans also. Thank you, partners, fans and shareholders for your continued support. I hope everyone has a wonderful and safe holiday season and the years I turn the call over to and to discuss our strategic initiatives.

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Andrew Perlmutter

[00:08:57] Thanks, Brian. In the third quarter, we made good progress against our key strategies to drive growth and diversification. As a reminder, these include building upon our core business, further diversifying our product portfolio, expanding our international reach and increasing the share of our business through our own direct to consumer channels. First, maximizing the core pop culture business. This includes creating fun and nostalgic programs with a heightened focus on Evergreen Properties, as well as expanding our consumer base by growing under penetrated content genres. Evergreen properties in the quarter made of 70 percent of the business, compared to 58 percent last year and on a daily basis grew three percent compared to last Q3. Additionally, nine out of our top ten properties were evergreen in the quarter. We continue to see strong demand with mainstay properties such as Harry Potter, Marvel Comics, Pokemon’s, DC Comics, Disney and Star Wars. Some other notable programs in the quarter were the nightmare before Christmas, which was our fourth largest property, was and was driven by strong retail programs that included pop bottle advent calendars and games. Marvel X-Men, the 10th largest property, was primarily driven by a retail program commemorating X-Men and films over the past 20 years, as well as the inclusion of X-Men characters in our Marvel Zombies program that included pop, vinyl and a collector retail box. Back to the Future, which was just outside our top 10, saw success through a broad selection of products, including vinyl for games, apparel bags, pins and accessories.

[00:10:37] We will continue to focus on having a strong mix of evergreen content going forward and creating fun and established programs at retail. Additionally, we intend to place emphasis on expanding the anime, music and sports genre by broadening our license base and product offerings. Strategy number two driving category diversification by harnessing our innovative culture to launch new products and reach new consumers. During the third quarter, we saw strong performance of our nonsecure products, primarily due to the performance of our expanded game offerings as well as our long flight items. Within games, we launched Marvel Barloworld Mystery of the Fantasy Stone late in Q2, which targets a younger demographic and combines micro collectibles, cards and gaming of note. We saw stronger than anticipated consumer demand for these products, which resulted in a low inside position that had us chasing replenishment throughout Q3. We believe we are now in a good inventory position at retail for the holidays. While we initially lost Marvel Battle World at Target in the U.S., we have now expanded to other key mass e-commerce, specialty and drug partners around the world. We could not be more excited about the positive reaction we are seeing from the market on this line and look forward to expanding it in 2021. We are seeing good traction with the additional game offerings we lost this year. Many of our key titles appearing on top new release lists and generating positive response from both consumers and retailers.

[00:12:10] While our board game category is currently a small piece of the overall pie, we plan to expand our offerings in the coming years and believe it will become a meaningful contributor to our business over the long term. Also in the quarter we saw exceptionally strong momentum with our CloudFlare products, which grew 25 percent compared to last year. This strength was driven by demand on Loungers website and at wholesale, where retailers chased orders they had pushed out from Q2. The resiliency and performance of the CloudFlare brand demonstrates the importance of having a diverse product statement at retail and online to continue bringing fans into the Funchal ecosystem for Q4. We are very excited about the launch businesses. Our new non licensees use collectible line that utilizes Fonkoze patent pending snappin match technology to allow kids to create a custom character with each. Now, this line is a great example of how Funchal can utilize its creativity and innovation within the collectible category to target a new consumer. Going forward, we will continue to invest and expand within games, soft lines and use collectibles category to ensure we are offering fans across the world an increasingly diverse portfolio of items. Now moving on to our third area of focus, international expansion. As you heard from Brian, the pandemic has been a headwind to our international business. That said, we believe there is a significant amount of growth potential in overseas markets and feel confident that Funchal is well positioned to capture this when macro conditions begin to improve, particularly across Amaia, Latin America and Canada.

[00:13:52] We expect the recent launch of Functio Europe Dotcom to provide us with an additional growth lever, as well as another method to expand our reach and broaden our relationship with fans across the region. That leads me to our fourth area of strategic focus the expansion of our direct to consumer business. We’ve made significant strides growing this channel on twenty twenty by investing in our digital and fulfillment capabilities. As Brian mentioned, our Disney Channel almost doubled in the quarter, led by ongoing momentum on our e-commerce sites, which grew more than one hundred and fifty percent. The investments we made earlier in the year to expand our product offerings and improve the customer experience of bearing fruit on functio dotcom, we are continuing to strategically invest within the business to reach new consumers. As I just mentioned, we strategically launched Funchal Europe, the. Last month, approximately 18 to 24 months ahead of schedule, we made the strategic decision to fast track this opportunity in light of the current environment, and the team did a tremendous job getting this across the finish line ahead of schedule. Currently, we are shipping to the UK, Ireland and Spain and expect to expand to Germany, France and Italy by the end of the year with additional countries coming online in 2021. While we are pleased with the substantial progress we made on the digital front, there’s still more work to be done as we continue to build our e-commerce platform. We plan to continue to enhance our site, to further strengthen the customer journey and experience, as well as invest in our digital platform to ensure we can scale the business alongside demand despite the dynamic environment we’ve seen this year. We’ve stayed focused on executing against the strategies that we believe will best position the business for 20, 21 and beyond. I will now turn the call over to Jim for you, to the financials.

Jennifer Jung

[00:15:41] Thanks, Andrew, and good afternoon, everyone. As noted, Q3 came in better than anticipated. Across the P.A., net sales declined 14 percent ahead of our initial expectations, gross margin improved and we maintained strong cost controls. Our actions allowed us to improve profitability, increase cash flow and maintain a strong liquidity position. Throughout the quarter. Q3 net sales of one hundred ninety one million largely reflects the ongoing impact of covid-19 within specific channels region. The outperformance relative to our expectations is primarily attributable to strength in the U.S. within their party, e-commerce, mass market and the U.S. channel. The number of active properties in Q3 was 715, which increased 14 percent from prior year net sales for active property for two hundred fifty seven thousand on a quarter, down twenty five percent compared to last year, reflecting the pressure on net sales from the pandemic in the quarter. The top 10 performing properties were the Mandalorian Harry Potter. Marvel Comics. The nightmare before Christmas. Him on. DC Comics, Disney Classic. So Wars Classic Dragon Boldly and Marvel’s X-Men.

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[00:17:00] Third quarter net sales in the U.S. decreased four percent, reflecting the continued softness in specialty channels, which was partially offset by strength in third party e-commerce, mass markets and our own DVC channels, international sales decreased 34 percent, reflecting the ongoing effects of covid-19 on overseas markets within the quarter, particularly in Europe. On a product category basis to witness sales of figures were down 18 percent to 145 million. Other sales decrease just one percent to 46 million, reflecting strength in landslide branded items which grew 25 percent in the quarter. Additionally, sales of our branded products were down 16 percent in the quarter, in line with the total business performance. There’s quarter gross margins came in at thirty eight point six percent, up 30 basis points versus a year ago. The increase primarily reflects improved product margins due to higher percentage of DTC sales in the quarter. This is partially offset by an increase in shipping related expenses related to a higher mix of orders being fulfilled out of our distribution centers versus direct shipments from our factories. In Q4, we anticipate gross margins will be approximately flat compared to thirty seven point one percent last year, which excludes the one time inventory write down in 2019. This expectation reflects a benefit from higher see sales offset by region income. Estimate in the quarter came in at forty one million, down 11 million versus the prior year. Lower than expected costs in the quarter were partially timing related within hiring, marketing, spend and other administrative costs. Looking at Q4, we anticipate that SGV million will decline in the mid to high single digits compared to a year ago as a result of the Cost-Cutting actions we’ve taken this year on a sequential basis compared to Q3.

[00:18:55] We anticipate that fewer dollars will be up due to increased fulfillment costs, marketing spend to support holiday and new product initiatives, as well as other administrative costs. Turning now to profitability are strong gross margin performance and better than expected, Aschiana enables us to deliver improved profitability in the quarter. Justin EBITDA came in at thirty six million, which represents an adjusted EBITDA margin of eighteen point nine percent of 70 basis points from last year. Looking at the balance sheet, we ended the third quarter with total liquidity of one hundred seven million, which consisted of 32 million of cash and cash equivalents and 75 million of availability under our revolver as we repaid all outstanding borrowings under our line of credit during the quarter. Total debt net of unsanitized discount was two hundred eight million, down 12 percent compared to last year. Inventory totals 73 million, down 23 percent versus a year ago. The business generates strong cash flow from operations of 28 million in Q3, an increase of 87 percent from a year ago, using cash flow from operations with 60 million. As we look at the balance of the year, we continue to plan conservatively given the dynamic environment. Considering the current landscape, as Brian mentioned, we expect Q4 net sales to be down 10 to eight percent compared to last year, as a reminder, this includes almost 20 million or eight points of pressure coming from European restrictions. Additional or prolonged closures could further impact performance in the quarter while uncertainty persists. We are taking the steps needed to remain agile and best positioned in business for the long term. We appreciate your time this afternoon. Now, Brand, Andrew and I would be glad to take questions.

Question-and-Answer Session

Operator

[00:20:49] At this time, we will be conducting our question and answer session in order to ask a question, please, press star, then the number one on your telephone keypad. Your first question comes from the line of Erinn Murphy with Piper Sandler. Your line is open.

Erinn Murphy

[00:21:04] Great. Thank you. And good afternoon. I guess my first question is just around what you’re currently seeing in Europe and maybe what exactly is embedded in the 20 million dollar headwind that you’re seeing about X number of weeks across certain countries. And then as you think about spring 2021, are any of the retailers in Europe starting to cancel orders?

Brian Mariotti

[00:21:25] You know, Jenny, you want to start with that, I can add it.

Jennifer Jung

[00:21:28] Absolutely. Hey, Erin, how are you? Yeah, so you know, as we’ve been talking with the European business partners, what we’re really seeing is that the shutdown came very quick and very swift. And we have modeled in to our forecast based on what we are seeing across the board. There has been, you know, a lot among several countries. There have been not only restrictions on openings, but also in terms of what can be sold. So it’s it’s a pretty big hit to the quarter just based on what we’re seeing currently within the business model.

Brian Mariotti

[00:22:00] Yeah, also, they add a little color here and, you know, no one obviously is a Catholic anything for spring of next year. And we are still working with the assumption with some of the retailers that we will be able to start shipping again as early as December 2nd on some of the countries that are shut down for the 30 day shutdown. So we’re doing everything we possibly can to mitigate the possible shutdown for 30 days, in addition to obviously having our own e-commerce direct consumer platform up and running. So, OK, that’s helpful.

Erinn Murphy

[00:22:29] And then maybe just to that latter point on the European dotcom opportunity, can you just help us think about at least the U.S. dotcom business? What percent of the overall U.S. mix is that? And is that like the right benchmark to use of how big the European dotcom business could be, at least as a percentage over time?

Jennifer Jung

[00:22:51] Yeah, our entire D.C. business represented eight percent of the business over the corner that does include our two stores. You know, as we think about Guffawed, we just launched, I think, for two weeks and with our European with a European site. And over the course of the quarter, we will be opening up more country. So we do expect that to grow, but it’s still a pretty small part of the business. And that being said, as Andrew mentioned in his his remarks, this is a major priority and we will continue to invest in this initiative to continue to grow it as an overall piece of the business on both sides, both both internationally and domestically.

Erinn Murphy

[00:23:25] And then just my last question is just you guys have done a really good job in the absence of new releases, just leveraging that evergreen content. So I guess the question for Brian, what is your confidence level that you can kind of keep this evergreen engine going? And then how do you feel about the new release schedule for 2021? Thank you.

Brian Mariotti

[00:23:43] Yeah, thanks, Jeremy. Either today or as of Monday, he changed again. You know, we are you know, I think the last couple of years gives us a lot of confidence. If you look at Harry Potter, it has been the number one license we’ve had over the last four years combined. And it’s evergreen. So you look at the last quarter in this quarter, nine of the top 10 have been evergreen in nature. We’ve always said the one time we kind of got away from that because it came back to bite us, which was core Q4 of nineteen when we were to have the Star Wars have gone too heavy and frozen, too. So, you know, I think the ability to just continually find interesting retail stories and products with evergreen content is going to continue to grow very strong for us for the next couple of years. I think the lesson learned in Q4 will keep us always hungry to make sure we’re developing these great evergreen properties and building really cool retail programs around that. And then you layer in. We take a really strong content year next year. And I think, you know, I think there’s still some there’s some liquidity and that is fluidity in that in the first half of the year. But it’s still much stronger than what we have in Twenty twenty, Twenty twenty, which is there. It’s got it. Considering a global pandemic and almost no new content besides the Mandalorian, and we’re doing exceptionally well.

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Erinn Murphy

[00:25:07] Thank you for that.

Operator

[00:25:12] Your next question comes from the line of stuff, Wissink with Jefferies. That’s your line is open.

Unidentified Analyst

[00:25:17] Good afternoon, this is actually in Bompas. Thanks for taking our question to start. We were wondering if you could update us or give a little bit more color on the games initiatives, given the strength in the category today and then any base allocation changes or new distribution about. Thanks.

Andrew Perlmutter

[00:25:35] I could jump in on that one if you guys want to talk a little bit about the games business, so are our game plan is going, you know, according to plan, we are increasing our shelf space with our retail partners. You know, as I mentioned on the call, it’s still a pretty small piece of the overall pie. But that being said, we are seeing growth. We are seeing additional shelf space at our retailers. We’re seeing a tremendous reaction from our online e-commerce partners. You know, one of the one of the fun, fun ways to track that is by, you know, looking at all the lists that they have on Amazon. I reference that on my online talking points. And so, yeah, we’re really excited about we’re excited about it both at retail and at Ekom as well. And so we continue to grow it. I think that, you know, it’s a fresh take on the category. The category is doing very well. As you as you pointed out, it’s perfect for, you know, when people are spending more time at home, you know, better, better for some categories than others. Party games, obviously, as you know, it’s taking a little bit of that because of the people getting together around the table. But, you know, the strategy category is a lot of the other categories are doing really well. So we’re excited about it. We’ve seen a lot of success this year and we look forward to building on that in the years to come.

Unidentified Analyst

[00:27:05] Great, thanks. And then my next question is any state allocation changes which you know about redistribution, which should be a model?

Brian Mariotti

[00:27:14] Yeah, I don’t think that there’s anything of note. I can tell you that we are we are seeing, you know, you know, continuing to see additional space allocated to us retail of our retailer. You know, we mentioned that before. We’re growing our space both and by diversifying our categories and retail, but then also just taking over more incremental space within our department. So, you know, that’s continuing to happen. And we mentioned large businesses, which is obviously incremental space and a completely different department for us coming out in Q4. Very excited about that. Just launched in in Europe at Tesco last, I think, Monday of this week. So, you know, we’re excited to see how that goes. And, you know, we’re getting more and more interest as the as the weeks go on. So we’re very bullish on that. But, yeah, I mean, that’s an incremental space for us as well in the new department store.

Unidentified Analyst

[00:28:15] Ok, great, thanks so much for joining us. Thank you.

Operator

[00:28:20] Your next question comes from the line, Alex Perry with Bank of America. Alex, your line is open.

Alex Perry

[00:28:27] Thanks for taking my question. Some other retailers in the space have called out sort of a different cadence to holiday this year, you know, sort of extended promotional timeline. Just can you give your outlook on any possible promotional environment to the extent you see on that? That’s my first question.

Jennifer Jung

[00:28:50] You know, as we enter into the holiday season, you know, right now we’re feeling very optimistic despite, you know, some of the pressures that we are seeing in the European business. You know, if you look across just the core business, you know, within the US, we are seeing some positive signs. And as we noted in our guidance, you know, we are down 10 to eight percent in a dozen, eight point hit from the European business. So you’re feeling very bullish as we move into Q4, at least domestically, that we anticipate seeing some very strong business within the quarter from a promotional perspective. And you feel free to China, but we haven’t seen necessarily anything different from our perspective. It’s been, you know, the success of our e-commerce sites, our own e-commerce site, as well as mass remains strong.

Alex Perry

[00:29:38] Perfect, and then I guess just my second one, can you just give us an update on how you’re seeing the trends, progress within your specialty channel? It seems like you have seen some sort of sequential improvement there. And then just any comments on how much the demand recapture you think you’re getting from, you know, specialty channel customers within your own e-commerce business?

Brian Mariotti

[00:30:01] I can start obviously, you know, stores are opening for traffic is obviously down considerably in the malls. But, you know, some of our retailers are doing curb pick up. Some retailers are limited by how many people could be in the store. A lot of their business is shifting to direct to consumer online. So, you know, each one of our partners are taking to the strategy a little bit differently. But we are starting to see the foot traffic rebound and obviously orders continuing to build into the holiday season. So we’re very excited about what that means. You know, and again, I think the the D.C. journey, I mean, it probably mirrors, you know, what the mall experience is going to be post pandemic. I mean, it’s going to be different. And those are the businesses that don’t make it. And, you know, we’ve always felt like our products are channel agnostic. They can flow from channel to channel retailer. Retailer need be. But we’re definitely seeing a better situation in specialty and we did a few months ago.

Alex Perry

[00:30:59] I think that’s really helpful, but I’ve gotten for it. Thank you. Thanks.

Operator

[00:31:21] So your next question comes from the line of Candy Zakaria with J.P. Morgan. Your line is open.

Tami Zakaria

[00:31:27] Hi, thank you so much. My first question is, have you seen any volatility in demand in the U.S. market as as covid cases saw some spikes in some geographies?

Brian Mariotti

[00:31:44] And not not domestically, no, we’ve seen no no fluctuations at all, in matter of fact, demand stronger than ever and our focus is getting the product out of the warehouse as quickly as possible, again into the retailers hands and into our fans and hands. No, nothing. Nothing domestically.

Tami Zakaria

[00:32:00] Got it. And my second question is, can you remind us of the size of the landslide business relative to the poor pop segment?

Brian Mariotti

[00:32:16] You want to take that one?

Jennifer Jung

[00:32:18] Yeah, sure. You know, else I have continued to grow for us. We feel really good about the position of the business. And then it’s still, you know, either sub 20 percent of the business in total. It’s you know, it’s grown from a percentage penetration perspective. It’s grown about 50 percent. So, you know, it’s in the mid teens as a piece of the overall business.

Tami Zakaria

[00:32:42] Got it super helpful and one one last question, I think you’ve guided to mid to high single digit growth and as Ginny expands, so does that include DNA or just as genetic?

Jennifer Jung

[00:33:01] That was an EU dollar, a guidance question, and really what we were talking about is, you know, as we’re coming off of Q3 and we get into Q4, you will see an increase in our estimate coming off the Q3 quarter.

Tami Zakaria

[00:33:16] God, it’s so engineer excluding DNA, that’s the guide,

Jennifer Jung

[00:33:21] Correct?

Tami Zakaria

[00:33:22] Got it. OK, thank you so much.

Jennifer Jung

[00:33:27] Thank you.

Operator

[00:33:33] Ladies and gentlemen, this concludes today’s conference call on behalf of Funko. We appreciate your participation. You may now disconnect.



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