Kartoon Studios(TOON) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Release Highlights 1.1. Executive Summary Kartoon Studios achieved its fifth consecutive quarter of revenue growth in Q2 2025, with a 23% year-over-year increase and significant streaming viewership, while double-digit cost reductions position the company for profitability by the end of 2025 - The company achieved its fifth consecutive quarter of revenue growth[2][3] - Q2 revenue increased by 23% year-over-year[2][3] - G&A expenses saw a double-digit decrease, with the company projecting profitability in 2025[2][3] - Kartoon Channel streaming service was rated as the top children's streaming app in the Apple App Store[2] - FAST viewership increased by 221% year-over-year[2] - Mainframe Studios revenue increased by 44% year-over-year[2] 1.2. Key Financial Performance The company reported strong Q2 revenue growth of 22.6% year-over-year to $10.3 million, with production services up 44.4%, alongside improved operational efficiency shown by a 31% narrower operating loss and 10.1% lower G&A expenses Q2 2025 Key Financial Metrics | Metric | Amount/Change | Year-over-Year Change (YoY) | Sequential Change | | :------------------------ | :---------- | :----------- | :------------------ | | Total Revenue | $10.3M | +22.6% | +8.2% | | Production Services Revenue | N/A | +44.4% | +12% | | Operating Loss | N/A | Narrowed 31% | N/A | | G&A Expenses | N/A | Decreased 10.1% | N/A | Operational Performance & Strategic Initiatives 2.1. Kartoon Channel! & Toon Media Networks Kartoon Channel! remains the top children's streaming app in the Apple App Store, leveraging its content and user experience, while Toon Media Networks strengthens Kartoon Studios' global leadership in children's entertainment, diversifying revenue and maximizing audience engagement - Kartoon Channel! consistently holds the position as the number one children's streaming app in the Apple App Store[5] - Its popular content library includes Super Mario Bros.™, Pac-Man and the Ghostly Adventures, Roblox Rumble, and original productions Shaq's Garage and Stan Lee's Superhero Kindergarten[8] - The company received the Amazon Operational Excellence Award, validating its performance on Prime Video[11] 2.1.1. App Performance & Content Library - Kartoon Channel! was rated as the number one children's streaming app in the Apple App Store, surpassing YouTube Kids, Netflix, and Disney+[5] - Users responded positively to popular shows and movies, highly curated channel safety, and user experience[5] - The content library includes Super Mario Bros.™, Pac-Man and the Ghostly Adventures, Roblox Rumble, and original productions Shaq's Garage and Stan Lee's Superhero Kindergarten[8] 2.1.2. Viewership & Subscription Growth - FAST viewership increased by 45% sequentially and 221% year-over-year, significantly expanding the audience[11] - Tubi watch time increased by 50% year-over-year, enhancing user engagement[11] - Kartoon Channel app viewership increased by 26% sequentially, strengthening digital footprint and user retention[11] - SVOD subscriptions grew for the seventh consecutive month as of July 2025, indicating strong subscription momentum[11] 2.2. Mainframe Studios Growth Mainframe Studios achieved 44% year-over-year revenue growth, fueled by strong demand from global partners, with over 90% of 2025 projected revenue secured and agreements extending to 2027, ensuring robust future visibility - Mainframe Studios revenue increased by 44% year-over-year[12] - Revenue growth was driven by strong demand from top global partners including Netflix, Mattel, Disney, PBS, Sony Kids, and Spin Master[12] - Over 90% of projected 2025 revenue is contractually locked, with production agreements extending into 2026 and 2027, ensuring strong future visibility[12] - Current productions include SuperKitties (Disney Channel), Unicorn Academy (Netflix), Phoebe & Jay (PBS), Barbie (Mattel/Netflix), and It's Andrew (ABC Australia, CBC Canada)[13] 2.3. Intellectual Property (IP) Pipeline Kartoon Studios plans to launch several key IP projects in H2 2025, including a Christmas special preview for Winnie-the-Pooh and Friends of the Hundred Acre Wood and the debut of Stan Lee's The Accelerators graphic novel - The Christmas special preview for Winnie-the-Pooh and Friends of the Hundred Acre Wood is scheduled for release on December 24, 2025[9] - Stan Lee's The Accelerators will debut as a graphic novel in Q4 2025, with television and audio versions under development[12] Financial Review & Outlook 3.1. Management Commentary Management emphasized the business model's strength, operational discipline, and global expansion driving margin improvement, with five consecutive quarters of revenue growth, strict cost control, and zero long-term debt supporting profitability, reflecting strong confidence through stock repurchases - CEO Andy Heyward emphasized the strength and scalability of the company's business model, along with operational discipline and global business expansion driving margin improvement[4] - CFO Brian Parisi noted the company achieved five consecutive quarters of revenue growth, highlighting strict cost control and zero long-term debt[13] - Management and board members purchased company stock in the open market, reflecting strong confidence in the company's strategic direction and business prospects[13] 3.2. Q2 2025 Financial Summary The company reported key financial data for Q2 2025, including $10.3 million in revenue, $25.5 million in current assets, and $29.7 million in shareholders' equity, with no long-term debt, demonstrating a robust financial position Q2 2025 Key Financial Data | Metric | Amount | | :------------------ | :---------- | | Revenue | $10.3 million | | Current Assets | $25.5 million | | Shareholders' Equity | $29.7 million | | Long-term Debt | None | - Complete financial results are available in the company's Form 10-Q report filed with the SEC[14] 3.3. Path to Profitability & Strategic Vision Kartoon Studios is confidently advancing towards profitability by late 2025, supported by Mainframe Studios' expanded production, a strengthened banking relationship, and new high-potential IP launches, while diversifying monetization across licensing, streaming, advertising, and digital platforms with globally relevant children's content - The company is confidently progressing towards profitability by the end of 2025[15] - The path to profitability is supported by Mainframe Studios' expanding production capabilities and a strengthened banking relationship with the National Bank of Canada[15] - Multiple high-potential franchise projects are planned for launch in 2025[15] - The company is expanding monetization capabilities through various channels including licensing, streaming, advertising, and digital platforms[15] Company Information 4.1. About Kartoon Studios Kartoon Studios (NYSE AMERICAN: TOON) is a global leader in children's and family entertainment, offering premium content and high-value IP, including Stan Lee's Superhero Kindergarten and Shaq's Garage, controlling Stan Lee Universe, operating Mainframe Studios, and reaching audiences in over 60 regions via Toon Media Networks, with Kartoon Channel! consistently ranked as the top children's streaming app - Kartoon Studios is a global leader in children's and family entertainment, providing premium content and high-value intellectual property[17] - The company's brand portfolio includes Stan Lee's Superhero Kindergarten, Shaq's Garage, Rainbow Rangers, and Llama Llama[17] - The company controls Stan Lee Universe and operates Mainframe Studios, one of North America's largest animation production companies[17] - Through its Toon Media Networks division, the company reaches audiences across cable, AVOD, SVOD, FAST channels, and top streaming platforms[18] - Kartoon Channel! is consistently rated as the number one children's streaming app in the Apple App Store[18] - The company has a distribution network in over 60 regions globally[18] 4.2. Forward-Looking Statements This section contains forward-looking statements regarding the company's future performance, profitability, content releases, and strategic initiatives, which are subject to various risks and uncertainties outlined in SEC filings, and the company undertakes no obligation to update these statements except as required by law - Statements regarding the company's 2025 profitability, content releases, and strategic initiatives are all forward-looking statements[19] - These statements are subject to various risks and uncertainties, including risk factors outlined in the company's annual report on Form 10-K and subsequent SEC filings[19] - Except as required by law, the company expressly disclaims any obligation to update or revise these statements[19] 4.3. Contact Information This section provides contact information for media and investor relations - Media Contact: pr@kartoonstudios.com[20] - Investor Relations Contact: ir@kartoonstudios.com[20]