Earnings call transcript: Funko beats EPS forecast, stock dips in Q3 2025

Funko Inc. reported its third-quarter 2025 earnings, surpassing expectations with an EPS of $0.06 against a forecasted loss of $0.07. Despite this earnings beat, the company's revenue fell short of projections, leading to a 5.03% decline in stock prices during the trading session. The revenue for the quarter stood at $250.9 million, slightly below the anticipated $260.53 million. Investors reacted to the mixed results, with shares trading at $3.16 in the aftermarket, down 0.63%.

Key Takeaways

• Funko reported an EPS of $0.06, exceeding expectations.
• Revenue came in at $250.9 million, missing forecasts by 3.7%.
• Stock fell by 5.03% following the earnings release.
• Direct-to-consumer sales mix decreased to 18%.
• Gross margin remained strong at 40.2%.

Company Performance

Funko's performance in Q3 2025 was marked by a strategic focus on maintaining profitability, despite a decline in net sales due to SKU rationalizations. The company's gross margin stayed robust at 40.2%, reflecting effective cost management. However, the dip in direct-to-consumer sales and overall revenue shortfall highlighted challenges in market conditions and consumer engagement.

Financial Highlights

• Revenue: $250.9 million, down from forecasted $260.53 million.
• Earnings per share: $0.06, beating the forecasted -$0.07.
• Gross profit: $100.8 million (40.2% gross margin).
• Adjusted net income: $3.2 million.
• Adjusted EBITDA: $24.4 million.

Earnings vs. Forecast

Funko's EPS of $0.06 significantly outperformed the expected loss of $0.07, marking a surprise of -185.71%. However, the revenue miss of 3.7% was a setback, as the company failed to meet the $260.53 million forecast. This mixed performance highlights a need for strategic adjustments to meet market expectations consistently.

Market Reaction

The market reacted negatively to Funko's mixed earnings report, with the stock price dropping 5.03% to $3.18 by the close of the trading session. This movement places Funko shares closer to their 52-week low of $2.22, reflecting investor concerns over revenue shortfalls despite the EPS beat. The aftermarket trading saw a further slight decline of 0.63%.

Outlook & Guidance

For Q4 2025, Funko anticipates a modest increase in net sales compared to Q3, with a continued focus on maintaining a gross margin around 40%. The company plans to expand its presence in Asia and Latin America and enhance its direct-to-consumer capabilities as part of its "Make Culture Pop" strategy.

Executive Commentary

CEO Josh Simon emphasized Funko's strategic advantage, stating, "We have a strategic advantage from building this company over the last 27 years." CFO Yves LePendeven noted, "We continue to see the consumer demand for our products," underscoring the company's resilience despite market challenges.

Risks and Challenges

• Revenue shortfalls due to SKU rationalizations.
• Decreased direct-to-consumer sales mix.
• Potential impacts of production shifts from China to Vietnam.
• Market saturation and competitive pressures.
• Macroeconomic factors affecting consumer spending.

Q&A

During the earnings call, analysts queried Funko's international growth strategies, pricing adjustments, and the impact of tariffs. Executives highlighted the company's strong content slate, including popular franchises like "Stranger Things" and "Wicked," and discussed potential new retail experiences to drive future growth.

Full transcript - Funko Inc (FNKO) Q3 2025:

Conference Call Operator: Good afternoon and welcome to Funko's 2025 Third Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand, star six to unmute. Please be advised that reproduction of this call, in whole or in part, is not permitted without written authorization from the company. As a reminder, this call is being recorded. I will now hand the conference over to Funko's Director of Investor Relations, Rob Jaffe. Please proceed.

Rob Jaffe, Director of Investor Relations, Funko: Hello everyone, and thank you for joining us today to discuss Funko's 2025 Third Quarter Financial Results. On the call are Josh Simon, our recently appointed Chief Executive Officer, and Yves LePendeven, the company's Chief Financial Officer. This call is being broadcast live at investor.funko.com. A playback will be available for at least one year on the company's website. I want to remind everyone that during the course of this call, management's discussion will include forward-looking information. These statements represent our best judgment, as of today, about the company's future results and performance. Our actual results are subject to many risks and uncertainties that may differ materially from those stated or implied, including those discussed in our earnings release. Additional information concerning factors that could cause actual results to differ materially is contained in our most recently filed SEC reports.

In addition, during this call, we refer to non-GAAP financial measures that are not prepared in accordance with U.S. generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Funko's press release announcing its 2025 Third Quarter financial results for the company's reasons for presenting non-GAAP financial measures. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is also attached to the company's earnings press release issued earlier today. Also, we have posted supplemental financial information on the investor relations section of the company's website, which includes, among other things, a net sales bridge, a gross margin bridge, and key IP and product drivers. I will now turn the call over to Josh Simon. Josh.

Josh Simon, Chief Executive Officer, Funko: Thanks, Rob. Good afternoon, everyone, and thank you for joining us. This is my first earnings conference call at Funko, and I want to start by saying I couldn't be more thrilled to be joining the team at this exciting time. Over the course of my career, I've seen this industry from a variety of perspectives, making movies at Disney, creating products at Nike, and most recently leading the global consumer products and live experiences division at Netflix. Now, across all those worlds, I gained a strong understanding for fandom, the culture of entertainment, and how it translates into physical products. I can unequivocally say there is no one better at it than Funko. There's one clear trend I saw across my years in entertainment and consumer products. Almost every filmmaker, creator, or celebrity with whom I've worked inevitably asked if they would get their own Funko Pop.

It's seen as a sign of having made it in the entertainment world among the biggest Hollywood talent. From the outside, that love for Funko and its brand and products was energizing. Now, I want to begin with some takeaways from my first 60 days after diving deep into the business and speaking with our customers, licensors, and employees. Then I'll outline some of what I think it will take to get back to growth. I had the opportunity to meet with some of our most passionate fans at our retail stores and at New York Comic-Con. I've been able to spend time with our employees in the U.S. and Europe, and we've engaged in senior leadership strategy sessions with key retailers like Hot Topic, Walmart, and Target, licensors like Disney, Warner Bros., NBCUniversal, and Netflix.

I have a deep, long-standing set of relationships with most of these partners and welcomed an honest dialogue. In talking with our partners, I heard two consistent themes. First, and most importantly, they see the growth opportunity together and are energized by the far-reaching scope of our brand and products. Second, they suggested some very clear areas where we can improve. We definitely appreciate and value their feedback and will use it to further strengthen our competitive advantages. Namely, first, we have a passionate and broad fan base. In September, at a fan event at our Hollywood store, I was able to celebrate an important milestone for the company: 1 billion units sold. This amazing achievement puts us in very rare company among the most successful toy brands in the world. Membership in our fan loyalty program has grown 27% since the start of the year.

We have a strong footprint of 9 million followers across our social media channels, and our customer base is highly diversified and evenly split between male and female, with purchasers across an 18 to 55-year-old demographic, many of whom are buying for kids. Second, we work with the world's biggest IP and serve fans across every corner of the pop culture universe. Our robust relationships across multiple genres, more than 900 active licensed properties, and 250-plus content providers create a strong moat around this industry-leading portfolio of licenses. Our product offering is highly diversified. We're not reliant on one character or single franchise. Now, I'm pleased to announce that we've recently signed several multi-year renewal agreements with major licensing partners: Warner Bros., NBCUniversal, 20th Century Studios, Paramount, and our biggest partner, the Walt Disney Company, which includes Pixar, Marvel, and Lucasfilm.

Third, our products are sold everywhere fans shop through a large and diversified global network of retailers, including more than 1,400 mass market specialty e-commerce and mom-and-pop partners around the world, as well as our own websites and flagship stores. There are very few brands that are equally relevant across a mass retailer like Walmart and that can spark a robust resale market on eBay at the same time. I'm still early into my tenure here, but my leadership team and I have identified our areas of focus and are ready to act immediately. Our growth will be driven by what we're calling our Make Culture Pop strategy, built at the intersection of three pillars: culture, creativity, and commerce. This is where Funko has excelled and will align our priorities and organization to maximize the opportunity in these three focus areas. Let's start with culture.

We aim to be the definitive brand for transforming pop culture into products. That includes fandoms that are existing strengths, like film and TV, along with exploring new corners of pop culture through categories like footwear, cosmetics, and food. We can do more in the areas of K-pop, sports, music tours, and fashion, and working with relevant content creators to expand into newer areas of fandoms like Twitch streamers, YouTubers, and influencers. We want our products to be at the center of the moments everyone is talking about, created by us or with us. Now, some examples of what that means. We will look to identify trends even faster and supercharge our speed to market. Let me give you a quick example of what I mean through the lens of K-pop Demon Hunters, Netflix's most popular movie ever.

Our team was among the first to recognize the appeal of this property for both mass audiences and collectors. We moved quickly to create an exciting lineup of products that has become one of our biggest pre-sale items ever when it launched on Funko.com a month ago. The Funko team was able to bring this product offering to market within just a couple of months across Pop figures, backpacks, and accessories, compared with much longer lead times by other major toy companies. This speed to market is one of our unique advantages and we will be one of the only toy companies to have K-pop Demon Hunters products on retail shelves this holiday season. We're operationalizing our quick strike and hyper strike offense across our entire value chain to make this more repeatable.

By operating at a faster pace and being more on trend, we also aim to position our products at the center of what everyone is talking about across all corners of pop culture. For example, we partnered with The Late Show with Stephen Colbert for a surprise on-air product reveal timed to the show's 10th anniversary in September. The episode featured Stephen Colbert unveiling a brand new Funko Pop and marked a major crossover moment between late-night television and fandom culture. The launch included a live studio audience giveaway, creating a shared moment of celebration between Colbert, his millions of at-home viewers, and Funko collectors around the world. In music, we added to our Funko Pop music artist collection with Feid, a Latin American sensation with nearly 30 million fans across Instagram and TikTok.

In just a few weeks, our partnership has driven more than 5.7 million views on social media and is representative of our efforts to work with more artists who are in the global zeitgeist and create touch points for our growing customer base outside of the U.S. In addition to Feid, we've recently added a number of other artists to our Funko Pop music artist collection, including the K-pop band BTS, the Swedish rock band Ghost, Sabrina Carpenter, and classic artists like Tom Petty, Metallica, and Ozzy Osbourne. Now, an important part of cultural relevance also comes from embracing our community of passionate collectors around the world. Just as I saw at Nike, supporting the collectors market through exclusive drops and giving them something special is critical to building fan communities and driving brand awareness and excitement.

It's a major priority for us to rebuild credibility and enthusiasm with core collectors and mega fans who have been loyal to us for years by improving execution around limited editions, storytelling, and drop cadence. In the third quarter, we dropped a number of limited edition collectible Pop figures with various tiers of rarity: Dunharrow from The Lord of the Rings, Starkiller from Star Wars, Sonic, Spider-Cat, Bob's Big Boy, and Phantasm. Each of these one-of-a-kind Pops sold out within one hour. For the community of sports fans, we expanded our relationship with Inter Miami of Major League Soccer.

At the start of this MLS season, we have dedicated retail space at the team's new state-of-the-art home stadium where fans will be able to purchase on-site a Pop! Yourself with Inter Miami's official logo, standard Funko Pop figures of the team's most famous players, and exclusive products only available at the store. Or take the growing global fandom of anime. We have even more opportunity to grow this business, which represented 30% of our sales in Q3 and is now our second largest fan vertical. The U.S. market for anime remains very strong, and we've only scratched the surface with expansions in Europe, Asia, and Latin America. Now let's talk about creativity. The goal is to continue innovating new form factors, expanding our product offering, and obsessing over the details across design, development, and storytelling so our products feel meaningful for fans.

We've built a beloved and truly unique franchise with Pop, and we're working on adding additional dimensions for fans, more excitement, and bringing compelling new products to market. One example already showing traction is Biddy Pop, our mini vinyl figures. Biddy Pop is integral to our evolving strategic partnership with Walmart. Last month, Biddy Pop was officially introduced in their toy aisle. It made Walmart's 2025 top toy list and was featured in Walmart's toy book catalog, which went out to over 40 million homes in the U.S., just in time for the upcoming holiday season. On top of that, an out-of-aisle placement of Biddy Pop is expected to land in 1,800 Walmart stores later this month. We have built out the Biddy Pop line to include the ability to world build.

We intend to further expand the line to include more licensed than original characters and environments that allow fans to create realistic worlds or use their imagination to create new ones. As the blind box format continues to grow in popularity around the world, we're planning to expand our existing blind box offering, Mystery Minis. These collectible figures, which have been on the market for the last 12 years, are smaller than our Pop vinyl and larger than our Biddy Pop figures. We see additional growth potential in the blind box space across new IPs, genres, and fandoms spanning film, series, and social media, and our own original characters. Earlier this week, we initiated a limited launch with several of our specialty retail partners for our new premium blind box collection, an artist-driven product line that gives fans the opportunity to discover bold and imaginative new designs.

Beginning with two entries in this category, we intend to expand into new IP over the course of 2026. Our premium blind box line includes a chase variant, and we're looking to add more offerings for both internal and external artists. Now, it's also important to note we have a diverse product archive of formats going back 25 years, many of which I think can be leveraged in more relevant ways to capture the hearts of today's fans and collectors. Now, let's talk about commerce. We see a significant opportunity to expand internationally, particularly in Asia and Latin America, enhance our presence with existing retail partners, and deepen our digital and direct-to-consumer capabilities. To start, there's a significant opportunity to grow our international business with a more dedicated focus in Asia and Latin America.

This was an area of particular focus for me at Netflix, and there is a clear lane for Funko to excel in these important geographies. With our D2C business, we intend to simplify the experience on our e-commerce site and app. This includes a more intuitive design, improved functionality around limited edition drops, wish lists, and loyalty programs. Pop Yourself, which just launched in Europe, is a great example of the unique experience only we can offer. We are planning to add a new AI-powered builder later this year, which allows the user to upload a picture and recommends options to more quickly build a customized pop, which we think will be transformative. We are also planning new innovative retail experiences, such as selling Biddy Pop products through vending machines with a surprise or mystery element to the purchase experience.

In addition to the Pop Yourself kiosk at Inter Miami's new stadium, beginning early next year, we plan to add more Pop Yourself kiosks to support other year-round retail experiences and pop-up activations both in the U.S. and in Europe. We also plan to refresh existing kiosks in our flagship stores with enhanced capabilities, including the AI-powered builder. Now, to summarize, our Make Culture Pop strategy is focused on maximizing opportunities at the intersection of culture, being at the center of the moments everyone is talking about across more fandoms, creativity through new products and form factors, and commerce by being more strategic with partners in the U.S., Europe, Latin America, and Asia, and direct-to-consumer. Now, to be clear, we already have many ongoing initiatives against this plan underway. We're building the right team and capabilities to attack these opportunities in a focused manner and drive growth.

Now, that said, I'm only 60 days in, and we have a lot more to come. I'm excited and confident about our team and the opportunity working with our partners to ignite growth and to sell the next 1 billion Pop products. With that, I'll turn it over to Yves to review our Q3 results. Thanks, Josh. Hey, everyone. Thanks for joining us today. For the third quarter, total net sales were $250.9 million, in line with our expectations. Compared with Q3 of last year, approximately $11 million of the decrease in net sales can be attributed to SKU rationalizations, as well as a reduction of clearance sales. As a reminder, we posted supplemental financial information on our website, which includes net sales as well as a gross margin bridge.

Direct-to-consumer sales mix in the quarter was 18% of our gross sales, down from 20% in last year's Q3, due in part to a pullback in marketing spend. Gross profit was $100.8 million, equal to a gross margin of 40.2%, which was better than expected. Price increases helped fully offset the impact of increased tariffs. It's worth noting that with the exception of our 2025 second quarter, which was significantly impacted by tariffs, we have maintained a gross margin in the 40% plus range since the first quarter of 2024, or in six of the last seven quarters. SG&A expenses were $79.8 million, compared to $92.7 million last year. Approximately half of the reduction came from a full quarter benefit of cost reduction actions taken in Q2, and the other half came from a reduction in marketing spend. Adjusted net income was $3.2 million, or 6 cents per diluted share.

Finally, adjusted EBITDA was $24.4 million, which was higher than our expectations. Turning to our balance sheet, at September 30, we had cash and cash equivalents of $39.2 million. Net inventory was $99.8 million. Our total debt was approximately $241 million. Turning now to our outlook, we're pleased with our Q3 results and the progress made against the second-half outlook, which we shared last quarter. We now expect for the 2025 fourth quarter, net sales to increase modestly from Q3 2025, driven in part by the launch of Pop Yourself in Europe and sales of our K-pop Demon Hunters product lines. Gross margin of approximately 40%. Adjusted EBITDA margin to be in the mid to high single digits range. A few comments on our refinancing process. Our 10Q filing for the 2025 third quarter includes disclosures about the company's ability to continue as a going concern.

As previously announced, we executed an amendment to our existing credit facilities, which mature in September of 2026. The amendment waived financial covenants for Q2 and Q3 and introduced a minimum cash requirement and a series of milestones to demonstrate progress against a refinancing transaction. We've engaged Mullis & Company to advise the company on our refinancing process, and that process is ongoing. With that, I'll turn it back over to Josh. Thanks, Yves. Compared with where we were two years ago, we've made progress on improving the quality of our business. Our gross margin trend has largely improved. We have a stronger retail footprint. We've fully implemented a price increase, and inventory owned and in the channel is lower and at healthier levels.

Now, I want to reiterate the sense of urgency and opportunity around our Make Culture Pop strategy, executing across the intersection of culture, creativity, and commerce. In the short term, I'm looking to maintain the momentum Yves discussed. Over the long term, what's most exciting to me, and I hope is equally exciting to our investors, are the multiple opportunities to transform the company for substantial growth. We have a strategic advantage from building this company over the last 27 years, and we intend to leverage that legacy and relationship with our community of fans to take advantage of the huge opportunity in the increasingly global world of entertainment and pop culture fandom. I'm incredibly excited about joining Funko. From my perspective, the company has lots of potential, on which we've already begun acting. With that, we'll open the call for questions, Operator.

We will now begin the question and answer session. If you would like to ask a question, please use the raise hand function now. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Steven Lachick with Goldman Sachs. Your line is open. Please go ahead. Hey, guys. Thanks for taking the question. Josh, welcome. Thank you for all those thoughtful highlights on the strategy. I'm curious, as you look out ahead against some of those opportunities that you outlined, how you're thinking about what opportunities exist over the next 12 months to execute against how investors should be thinking about what you're prioritizing, the sizing of some of those opportunities.

Perhaps what points of the strategy you feel like you need to get correct here over the next year or so before it unlocks the option value over the longer term to take Funko to the next level, so to speak. Any top priorities that come to mind, I think, would be helpful for us to understand. I have a follow-up. Thank you. Great, great. Thanks, Steven. Appreciate the question. I mean, look, I'd say in the short term our focus is on continuing the performance momentum that we've been talking about. Over the long term, obviously, transforming for more growth. I do really think it comes down to, and I'll give you some specifics around the Make Culture Pop strategy. In the short term of the area of culture, I think there's really some areas of fandom where we can continue to expand.

Obviously, as you know, we've been doing a lot in the areas of sports and music. There are opportunities to move quicker in those areas. As an example, we just recently were able to launch the Dodgers Championship Five Pack. There are some really great details to it. It even includes them sort of wearing their alternate road uniforms. Really, how we think about operationalizing Quick Strike, end-to-end capabilities, sensing trends, designing and manufacturing more quickly, and getting it to consumers in new ways is a really important part of the cultural impact that we're looking to drive. Obviously, we can share more details about that in the future. On the creativity side, I mean, we're really focusing on how we bring more dimensions to our core franchise, which is Pop. Biddy is a really great example of that.

Obviously, we mentioned how it's rolling out into Walmart now. I'm spending a lot of time engaging more broadly with the creative community. Bringing people internally to help think about new sort of evolutions of products that we can launch, leveraging my relationships across the entertainment industry and the product space, thinking about how we can more closely collaborate with talent. Those are all sort of immediate things that we can do to continue to evolve our form factors and creative product strategy. On the commerce side, I mean, I've been able to engage with some really great strategic meetings with some of our biggest retailers over the last couple of months. International is a huge component of that. I think.

Particularly based on pre-existing relationships I have there, we'll look to come back next quarter and talk in a little bit more specifics about some goals that we're immediately looking to get after with retail partners in Asia and Latin America. I should also note on the, because I think this is an important point to highlight on the commerce side as well, we were able to execute some really great extensions of our licensing deals with all the biggest studios in the last few months. I think that puts us on really firm footing to kind of take everything that we talked about as part of our Make Culture Pop strategy and drive growth through those relationships as well. That's great. Thanks. That's really helpful. If I could just.

Ask a question, maybe more in the near term in the quarter and the broader retail environment, maybe for both Josh and Yves on 4Q, just as you have conversations with retailers heading into this holiday season, anything you'd point out in terms of the cadence of stocking, how they're approaching restocking this year, how they're particularly engaging with Funko as a brand, as a partner. This holiday season that differs from perhaps what you've seen in historic years, or perhaps where the levers are as we get deeper into the holiday on where restocking could come from, upside, downside, and the model, et cetera. Hey, Steven, this is Yves. I'll start by saying I think we're kind of encouraged by our POS trend, which has remained relatively strong and stable. In Q3, our global kind of POS in units was down only 3% year over year.

Now, we are continuing to see a pretty big difference in our various territories that we operate in. U.S. was more like down mid to high single digits in units, and then EMEA was up in low double digits. We continue to see the consumer demand for our products. That being said, obviously, the tariff announcements earlier this year pretty significantly disrupted in Q2 the kind of shipping of our orders out of Asia. In Q3, I'd say we kind of continue to have a bit of a hangover effect from that. What you have to keep in mind is that retailers were placing their buys for Q3 and early Q4 shipments during what I'd call kind of peak uncertainty about what the tariff rates are going to be, how the consumer is going to hold up through the holiday period.

That was in part why our sell-in was down over last year in Q3. I would say as we head into the holiday period, it's a bit of a mix depending on the channel and the retailer, but I would say that we continue to have good momentum in Europe. In the U.S., a little bit more cautiousness, I think, from buyers. We do see a little bit more strength and momentum in the mass channel. Josh mentioned the growth in Biddy Pop sales there. We are encouraged by that. It feels like for the smaller kind of specialty, mom-and-pops, distributors, maybe a little bit of speculation here, but it feels like they might be more kind of financially impacted by the tariffs or just generally more cautious about overcommitting to inventory. What I would continue with is the content slate.

Is pretty big for us in Q4. The final season of Stranger Things will launch. That is a big priority for some of our biggest retail partners as well as us. Obviously, the sequel or the part two of Wicked will also be in the market. We have products there. I think most importantly, just as a reminder, we really will have a lot of unique shelf space through our K-pop Demon Hunters assortment across both Funko and Loungefly. I think some good sort of content slate strength and shared priorities with our retail partners on that front. Very helpful. Thank you both. Thanks, Steven. Our next question comes from the line of Keegan Cox with DA Davidson. Your line is open. Please go ahead. Hi, guys. I just wanted to ask a little bit as you open up this creativity in commerce.

I know you talked a little bit about the vending machines and kiosks. I was just wondering, how do you look at that market? It seems pretty competitive. I've seen a few of your competitors moving in there just in my mall visits and retail visits. Just curious to how you see that market and how you plan to attack it. Yeah. I think for us, the primary driver and excitement is around the Pop Yourself experience, which is pretty unique to us. The ability for a fan to go and create a customized Funko Pop of themselves or a friend as a gift is something that I think we are uniquely able to offer. When we talk about the kiosk strategy, we have examples of those kiosks that currently exist in a couple of locations, primarily in our flagship stores.

We have already been deep into conversations with some of our bigger retail partners about how we can start to create experiences within their real estate footprint and bring that experience to more of our fans around the country and around the world. I think we offer a pretty unique angle there. Got it. As I was just looking at the results, Europe sales down slightly versus an easier comparison last year. I know you are launching Pop Yourself in the fourth quarter, but what are you seeing outside of that in Europe? Like I mentioned previously, our POS trend is pretty strong in Europe. I would say one of the factors that is not super material, but we did have a little bit of production delays that.

Impacted our European sales in the quarter, just some orders that just couldn't make it out of the factory in time. As a reminder, we moved pretty aggressively to move production from China to Vietnam. That was a bit of a result of that. We expect those orders to ship in Q4. Along with the launch of Pop Yourself in Europe, which happened a few weeks ago, we expect Europe to be back to growth in the fourth quarter. Got it. One more, if I can, just on pricing. I know you were able to essentially offset all of the tariff costs. Are you seeing that impact demand? I mean, the POS for the U.S. is actually a little weak. I'm wondering how pricing played into that. We've actually been pleasantly surprised by that. We rolled out the price increases.

They were in effect on the shelf in early July. I mean, we did anticipate that there would be slightly lower unit volumes. It's hard to attribute that directly to the price increase and not to the other kind of factors going on in the U.S. market. Generally, it's been in line with our expectations. I mentioned the POS trend, so the unit sales have held up pretty well. The price increases are fully in effect. It's gone pretty well for us. Thank you. Thanks, Keegan. There are no further questions at this time. I will now turn the call back to management for closing remarks. Thanks, everyone, for joining us on the call today. We look forward to sharing our progress on our next call. This concludes today's call. Thank you for attending. You may now disconnect.

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