BEVERLY HILLS, Calif. - Kartoon Studios (NYSE American: TOON) has reported a significant increase in the number of paid subscribers for its Kartoon Channel! on Amazon (NASDAQ:AMZN) Prime Video, marking a 120% year-over-year growth from June 2023 to June 2024. The company, which aims to establish itself as a "Netflix (NASDAQ:NFLX) for Kids," has also seen a 28% increase in paid direct-to-consumer streaming subscribers across all its platforms.
Andy Heyward, Chairman & CEO of Kartoon Studios, attributed this growth to a focused strategy and the expansion of network coverage. The channel offers a mix of original content and curated acquisitions, emphasizing safety and quality for its young audience. Top performers on Kartoon Channel! include "Super Mario 3," "Shaq’s Garage," "Rainbow Rangers," "Peppa Pig," and "Angry Birds."
The ad-supported Kartoon Channel! app also features a commercial-free subscription tier on Amazon Prime at $3.99/month. The content is curated to ensure it is free from violence, negative stereotypes, and inappropriate language, aiming to provide an optimistic and authentic viewing experience for children and their parents.
Kartoon Studios highlighted the operational efficiency and cost control measures that have contributed to the growth, including prudent marketing budgets. The company's streaming business, which includes Ameba, is expected to become a key revenue driver moving forward.
Looking ahead, Kartoon Studios is preparing for the launch of "KARTOON STUDIOS’ WINNIE-THE-POOH" in 2025, anticipating another surge in growth as exclusive episodes of the beloved property will be available on Kartoon Channel! on Amazon Prime Video.
The information in this article is based on a press release statement from Kartoon Studios.
In other recent news, Kartoon Studios Inc. has announced a registered direct offering with the aim to raise an estimated $7 million. This offering comprises of up to 7 million shares of common stock and/or pre-funded warrants, primarily targeting institutional investors.
The initial tranche of the offering, consisting of 4 million shares and/or pre-funded warrants, is anticipated to generate approximately $4 million in gross proceeds for Kartoon Studios, before placement agent fees and related expenses.
Investors participating in this offering will also have the option, for up to 180 days post the securities purchase agreement (SPA) date, to acquire an additional 3 million shares and/or pre-funded warrants, potentially adding another $3 million in gross proceeds for the company.
EF Hutton LLC is acting as the exclusive placement agent for the offering. In other developments, Kartoon Studios has expanded its operations by acquiring Canada's WOW! Unlimited Media and becoming the largest shareholder in Germany's Your Family Entertainment AG.
InvestingPro Insights
Kartoon Studios (NYSE American: TOON), despite its impressive growth in paid subscribers, faces significant financial challenges as reflected in the latest data from InvestingPro. With a market capitalization of just $38.07 million and a concerning revenue decline of over 52% in the last twelve months as of Q1 2024, the company's financial health warrants investor attention. The substantial negative return on assets of -41.68% during the same period further underscores the urgency for operational improvements.
InvestingPro Tips suggest that Kartoon Studios is quickly burning through cash and operates with a moderate level of debt. Moreover, the company's stock price has been quite volatile and has performed poorly, with a decline of over 47% in the last three months alone. These factors may be of interest to investors looking at the long-term viability of the company's "Netflix for Kids" strategy.
Despite these financial headwinds, Kartoon Studios has managed to maintain a gross profit margin of 26.26% in the last twelve months as of Q1 2024. This indicates some degree of resilience in its operational model, particularly in light of its recent subscriber growth. However, with the company not being profitable over the last twelve months and not paying dividends to shareholders, potential investors should consider the full picture presented by these metrics.
For those interested in a deeper analysis, InvestingPro offers additional insights and tips on Kartoon Studios. Subscribers can use the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes access to a total of 10 InvestingPro Tips for TOON, helping to inform investment decisions with comprehensive data and expert analysis.
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