Beverly Hills-based children’s content creator and distributor Kartoon Studios Inc. has had a busy few months.
In May, the company struck a deal with GFM Animation Ltd., in Surrey, England, to produce a series of five animated feature length films based on stories and characters of the late Stan Lee, one of the main creatives behind Marvel Comics.
The company also released an update on its finances in May.
Andy Heyward, the founder and chief executive of Kartoon Studios, said that following a transformative 2023 in which Kartoon set a foundation for long-term growth and sustainable profitability, it reduced operational losses in the most recent quarter and now projects profitability in the next year as the animated brands and channels continue to expand and grow.
“Our Chief Financial Officer Brian Parisi’s rapid implementation of strict cost discipline since joining us in September continues to positively affect our bottom line,” Heyward said in a statement.
In the first quarter, the company reduced direct operating costs by over 60% compared to the same period a year ago, Parisi said.
“To further help move towards profitability, we continued to manage general and administrative expenses, with costs declining by 18% over the same period last year,” he said. “With the implementation of AI in production, we will continue to see margins increase and opportunities to expand our catalog of evergreen animation. Concurrent with the above, the company maintains a healthy balance sheet with no long-term debt.”
Heyward said he was also excited about the traction each of the company’s operating subsidiaries are experiencing.
“Specifically, newly greenlit projects are projected to generate over $40 million of revenue,” he said.
In the first quarter, the company’s direct-to-consumer streaming services achieved profitability, driven by sustained subscriber growth and streamlined operations, Heyward said.
The licensing and royalties business has the most upside and potential for the company, it said in its earnings release from May 15.
“We are looking to take advantage of our incredible set of Stan Lee assets to drive consumer products, both digitally and physically,” the company said. “We will be focused on utilizing all of our IP assets further in 2024 and beyond.”
The Stan Lee assets include over 100 original Stan Lee creations, from which the company plans to develop and license multiple properties each year.
That includes the five animated feature films being done in partnership with GFM Animation.
