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Kartoon Studios, Inc. (TOON)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue grew 13% year-over-year to $9.9M, with year-to-date revenue up 28%; sequential revenue declined ~4% versus Q2 as production timing shifted, while loss from operations improved 10% quarter-over-quarter .
  • Mainframe Studios was the growth engine, with revenue up 45% YoY and contracts extending through 2027, reinforcing forward visibility .
  • Toon Media Networks posted a record October for Kartoon Channel! subscriptions and watch time, strengthening the streaming monetization narrative into 2026 .
  • Liquidity improved via a $7.3M October financing from an institutional investor (with an additional $7.3M potential via warrant exercise) and an investor lock-up above $1.00 through year-end 2025 .
  • No Wall Street consensus was available to measure beats/misses; lack of coverage remains a gating factor for near-term stock reaction despite operational improvements [GetEstimates S&P Global]*.

What Went Well and What Went Wrong

What Went Well

  • Double-digit topline growth persisted: “we’re growing, we’re disciplined, and we’re aligned,” with Q3 revenue +13% YoY and YTD +28% underscoring scale benefits in production and streaming .
  • Mainframe Studios momentum: +45% YoY revenue growth, multi-year contract book through 2027 (Sony, Disney, SpinMaster) supports predictable growth and margin improvement .
  • Streaming KPIs inflected: Kartoon Channel! achieved its strongest month ever in October for subscriptions, with all-time highs in subscriber growth and watch time; Frederator merchandise sold out for Bee and PuppyCat .
  • CFO tone: “continued improvement in operating efficiency and financial flexibility,” entering 2026 “from a position of strength,” backed by reduced overhead and improved liquidity .

What Went Wrong

  • Profitability remains elusive: EPS and EBITDA stayed negative, and net loss increased sequentially versus Q2 despite operational progress [GetFinancials S&P Global]*.
  • Sequential revenue decline versus Q2 suggests production mix/timing variability; the company did not provide explicit revenue guidance ranges to frame seasonality .
  • Continued reliance on equity capital (financing and warrants) implies potential dilution; investor lock-up mitigates near-term supply but highlights capital needs ahead of sustained profitability .

Financial Results

Note: Company press release rounded Q3 revenue to $9.9M; S&P Global shows $9.877M. Asterisks mark values retrieved from S&P Global.

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$8.708*$9.504* $10.279* $9.877*
Diluted EPS ($USD)-$0.052*-$0.14*-$0.13*-$0.14*
EBITDA ($USD Millions)-$1.957*-$2.429*-$2.588*-$2.245*
EBITDA Margin (%)-22.47%*-25.56%*-25.18%*-22.73%*
Net Income ($USD Millions)-$2.057*-$6.526*-$6.163*-$6.570*

Values retrieved from S&P Global.*

Segment and KPI details:

Segment/KPIQ3 2024Q1 2025Q2 2025Q3 2025
Mainframe Studios Revenue YoY—+137.9% +44.4% +45%
Mainframe Revenue Visibility—>90% of 2025 budget under contract >90% of 2025 revenue under contract; agreements extend to 2027 Multi-year contracts extend through 2027
Kartoon Channel! App Rating#1 kids’ app Apple App Store [Q3 2024 basis]#1 kids’ app #1 kids’ app Maintained #1 kids’ app
Streaming FAST Views——+45% QoQ; +221% YoY Record October subscriptions & watch time highs
Tubi Watch Hours——+50% YoY —
App Views——+26% QoQ —
SVOD Subscriptions——Increased for 7th consecutive month through July 2025 Record October subscription metrics
Balance Sheet Highlights—Current assets $25.1M; stockholders’ equity $30.1M; no long-term debt Current assets $25.5M; stockholders’ equity $29.7M; no long-term debt Current assets $27.1M; stockholders’ equity $24.0M

Actual vs Consensus (Q3 2025):

MetricActualConsensusSurprise
Revenue ($USD Millions)$9.877*N/A*N/A*
Primary EPS ($USD)-$0.14*N/A*N/A*
EBITDA ($USD Millions)-$2.245*N/A*N/A*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company-wide profitability timingFY 2025Target profitability by Q4 2025 “Profitability remaining within reach” (forward-looking statements) Maintained trajectory
Revenue growth momentumFY 2025 → 2026Five consecutive quarters of growth as of Q2; +23% YoY in Q2 +13% YoY Q3; momentum “expected to continue into 2026” Maintained
Mainframe contracted visibility2025–2027>90% of 2025 revenue under contract; agreements into 2026/2027 Multi-year contracts through 2027; premium clients (Sony, Disney, SpinMaster) Maintained/Expanded
Operating efficiency (OpEx)FY 2025G&A down 24.9% YoY in Q1; down 10.1% YoY in Q2 Continued overhead reduction, improved liquidity (no explicit Q3 G&A figure) Maintained
Capital structureQ4 2025No long-term debt; share repurchases and insider buying (Q2 commentary) $7.3M financing; investor agreed not to sell below $1.00 until 12/31/25 Strengthened liquidity; potential dilution

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was found after searching company documents and the investor site; prior discussions reflect the evolving narrative. [SearchDocuments Q3 transcript unavailable]

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q3)Trend
AI/technology initiativesLimited mention in Q1/Q2 PRs“STAN A.I.” unit, built after Nvidia engagements; expected to transform animation speed and cost Increasing strategic focus
Production engine (Mainframe)Q1: profitability achieved; >90% 2025 under contract ; Q2: +44% YoY; visibility through 2027 +45% YoY; contracts extend through 2027 Strengthening
Streaming performanceQ2: FAST views +45% QoQ/+221% YoY; Tubi +50% YoY; app views +26% QoQ; SVOD momentum Record October subscriptions/watch time for Kartoon Channel! Improving engagement
Macro/tariffs/supply chainNot highlightedNot discussedNeutral/Not discussed
IP pipelineQ1/Q2: Winnie & Friends (Dec 24 preview), Stan Lee’s The Excelsiors Winnie & Friends preview timing reiterated; Stan Lee Universe licensing partnerships expand Building toward 2026
Leadership—Appointment of Jeffrey Schlesinger to Board Governance/Distribution expertise added

Management Commentary

  • CEO: “Our message to shareholders is simple: we’re growing, we’re disciplined, and we’re aligned… we look forward to Hundred Acre Wood’s Winnie & Friends, and Stan Lee Universe becoming significant growth drivers.”
  • CEO on AI: “From the Company’s first meetings with Nvidia… create first quality content at a speed and cost never before possible… We are in the 1st pitch of the 1st inning.”
  • CFO: “Our Q3 results reflect continued improvement in operating efficiency and financial flexibility… With contracted revenue visibility through 2027 and a stronger balance sheet, Kartoon Studios enters 2026 from a position of strength.”

Q&A Highlights

  • No Q3 2025 earnings call transcript or Q&A was available at the time of analysis; the company’s investor site and filings did not include a Q3 call transcript. We relied on the Q3 earnings release and prior quarter commentary for themes.

Estimates Context

  • S&P Global consensus coverage appears limited or unavailable for TOON in Q3 2025; Primary EPS Consensus Mean and # of Estimates were not provided. As a result, beats/misses versus consensus cannot be determined for EPS/Revenue/EBITDA. [GetEstimates S&P Global]*
  • Actual revenue was $9.877M* and EBITDA -$2.245M*; with no published consensus, we recommend monitoring initiation of coverage and future estimate revisions to frame inflection points. [GetEstimates S&P Global]*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Operational execution continued: YoY revenue growth and sequential improvement in operating loss point to disciplined cost control and expanding production/streaming scale .
  • Mainframe Studios is the observable driver, with 2027 contract visibility underpinning forward revenue and margin trajectories; this derisks near-term cash generation assumptions .
  • Streaming KPIs inflected positively (record October), strengthening the case for diversified monetization beyond production services .
  • Liquidity enhanced via October financing and lock-up; monitor potential warrant exercises and dilution against acceleration in cash generation .
  • Profitability narrative intact but still unproven at the consolidated level; watch G&A and opex cadence alongside revenue mix to gauge timing to breakeven .
  • Coverage gap is material: absence of consensus estimates may limit near-term institutional participation and “beat/miss” catalysts; investor relations efforts and governance additions (Schlesinger) could help bridge this gap .
  • Near-term trading: catalysts include incremental contract wins, updates on “STAN A.I.” deployment, and concrete milestones for Winnie & Friends/Stan Lee Universe licensing; medium-term thesis centers on execution converting visibility into sustained FCF and margin expansion .

Footnotes:

  • Revenues, EPS, EBITDA, EBITDA Margin %, Net Income figures marked with * are values retrieved from S&P Global.
  • No Q3 2025 earnings call transcript was found; analysis synthesizes the Q3 earnings press release and prior quarter releases.