Distribution revenue increases 15%  from prior year Karton Channel! expands engagement

Kartoon channel signs content licensing agreement for Mattel’s Masters of the Universe and American Girl

Hundred Acre Wood and Stan Lee Universe move toward commercialization

Beverly Hills, CA — Kartoon Studios reported financial results for the first quarter ended March 31, 2026, building on the operational momentum established in 2025 as the Company executes its transition to an intellectual property-driven growth model.

The Company’s franchise initiatives are anchored by ‘Hundred Acre Wood’, inspired by A.A. Milne’s Winnie-the-Pooh, and ’Stan Lee Universe’ based on IP from the iconic superhero creator Stan Lee.

During the quarter, the Company strengthened performance across its distribution network through its streaming services, Kartoon Channel, and Ameba, improved operating efficiency, and continued advancing its flagship franchise initiatives. This reflects the impact of prior investments in platform, content, and infrastructure, supporting a more scalable operating foundation and the broader commercialization of the Company’s intellectual property portfolio.

For the quarter, the Company reported total revenue of $7.2 million, with distribution revenue increasing 15% as compared to the same quarter last year, while total operating expenses declined 20%, contributing to improved operating performance.

Q1 2026 FINANCIAL HIGHLIGHTS

“We are now entering the phase where Kartoon Studios is translating years of investment in our platform into measurable operating performance,” commented Andy Heyward, Chairman & CEO of Kartoon Studios. “This quarter reflects continued momentum across our distribution business, where we are seeing growth in both engagement and monetization, alongside meaningful progress in improving our cost structure. Our channel system continues to grow and is still ranked #1 in the Apple app store by users above all our competitors.”

“At the same time, our strategy is increasingly centered on the development and commercialization of our owned intellectual property. Our flagship franchises, Hundred Acre Wood and the Stan Lee Universe, are advancing as multi-platform initiatives designed to extend across content, licensing, and consumer products.”

“With our platform in place and our key franchises progressing, our focus is on execution, bringing these properties to market and converting them into scalable, higher-margin revenue opportunities that we believe will drive long-term value for the Company.”

Kartoon Studios continued to expand its owned distribution ecosystem during the quarter, with Kartoon Channel! and Ameba driving higher engagement and revenue contribution. During the first quarter, both Kartoon Channel! and Ameba achieved record paid subscriber levels, while also delivering breakout increases in viewer engagement across the Company’s subscription streaming platforms. Subscriber engagement on Kartoon Channel! increased more than 80% year-over-year during Q1 2026, while Ameba subscriber engagement increased more than 200% year-over-year.

The Company’s broader digital distribution strategy continues to gain traction, with YouTube, FAST, and VOD increasingly functioning as a discovery, engagement, and monetization flywheel. Broad audience reach and discoverability across these platforms are helping drive subscriber engagement, conversion, and monetization across the Company’s owned streaming services. This momentum is being supported by strong performance from recently acquired content, increasingly data-informed acquisition and programming decisions, and the Company’s operational expertise in driving reach and engagement across digital media platforms.

“Kartoon Channel is extremely proud to have closed a deal with Mattel to license the animated programs of both Masters of the Universe (2002) and American Girl (2016) for our premiere streaming service,” commented Mr. Heyward. Todd Steinman, President of Toon Media Networks, added, “Our strategy at Kartoon Channel is to continually align ourselves with globally recognized franchises and culturally resonant properties that already possess deep audience affinity and multi-generational appeal. The additions of Masters of the Universe (2002) and American Girl (2016) significantly strengthen that strategy.”

The 15% increase in distribution revenue reflects improved performance across the Company’s owned platforms alongside continued licensing of the Company’s intellectual property to third-party services. These results highlight the value of Kartoon Studios’ strategy of combining owned distribution with broader third-party platform reach to expand audience engagement and monetization opportunities. As the ecosystem continues to scale, the Company expects these combined revenue streams to play an increasingly important role in supporting recurring revenue growth.

The year-over-year change in total revenue primarily reflects the timing of production deliveries at Mainframe Studios, with several projects shifting from the first quarter into later periods in 2026. This timing variability is consistent with the nature of animation production schedules and does not reflect any loss of business or change in underlying demand.

Mainframe Studios continues to maintain an active production pipeline with leading broadcast, streaming, and production partners, including recent and upcoming releases such as It’s Andrew, co-produced with Pirate Size Productions and Infinite Studios for CBC/SRC and ABC Australia; Unicorn Academy: Secrets Revealed for Spin Master on Netflix; and Phoebe & Jay for PBS. The Company maintains visibility into its production pipeline and expects these revenues to be recognized in future periods. 

Kartoon Studios continued to improve its cost structure during the quarter, contributing to stronger operating performance. Lower operating expenses reflect efficiencies achieved as the Company moves beyond its peak investment phase and aligns its cost base with current operations. Reduced general and administrative expenses, along with broader operational improvements, supported a narrowing of operating losses year-over-year. These improvements position the Company to benefit from future revenue growth as higher-margin activities become a larger part of the business. 

Kartoon Studios continues to advance its intellectual property portfolio through scalable, multi-platform franchise initiatives, anchored by its flagship properties Hundred Acre Wood and the Stan Lee Universe.

With its core infrastructure in place, the Company is increasingly focused on execution, bringing its properties to market and expanding opportunities across content, licensing, and consumer products. 

Hundred Acre Wood, inspired by the classic works of A.A. Milne, remains a central component of the Company’s franchise strategy, designed as a multi-platform brand spanning episodic content, short-form programming, holiday specials, and consumer products.

The franchise is being developed with a broad content strategy that extends across both long-form and short-form programming, tailored for global distribution across streaming and digital platforms, while also supporting expansion into consumer products and licensing.

The series is being developed by a highly experienced creative team, including Executive Producer, Linda Woolverton, Composer, Danny Elfman, and Story Editor, Elise Allen. The brand has generated strong early audience response through previews and live events, and broadcast partners will be announced shortly.

As the property moves toward launch, the Company is focused on aligning content, distribution, and consumer products initiatives to support a coordinated global rollout. 

Complementing this initiative, Kartoon Studios is also advancing the Stan Lee Universe, built around the legacy of one of the most influential creators in modern entertainment.

The initiative is focused on building a portfolio of original properties inspired by Stan Lee’s creative vision, including titles such as The Excelsiors and SuperHero Pets, with planned expansion across animation, publishing, licensing, and consumer products.

Development is centered on creating a cohesive slate of character-driven franchises designed for introduction across multiple formats and platforms, with an emphasis on long-term brand development and sustained audience engagement.

As these properties move closer to market, the Company is focused on aligning creative development with distribution, licensing, and consumer products strategies, positioning the Stan Lee Universe as a scalable portfolio of original intellectual property.

Kartoon Studios’ vertically integrated model continues to support its franchise strategy, enabling the Company to develop, distribute, and monetize content across multiple channels. By combining production capabilities, owned distribution platforms, marketing infrastructure, and licensing operations, the Company is positioned to capture value across the full lifecycle of its intellectual property.

“We are seeing a shift in our business and are quickly moving towards a tech-forward strategy focused on developing and deploying valuable IP across our media platform. We have the foundation in place, and our core business is shifting to align with this strategy. Overall, we are seeing the pivot of the company which is our competitive advantage – meaning we can move quicker and with purpose faster than our competitors” commented Brian Parisi, Chief Financial Officer. “We have foundational stability in our production, distribution and media advisory business, which remains an important driver of recurring revenue and long-term value for the IP we develop.”

“Looking ahead, our focus remains on executing against our platform while continuing to expand higher-margin, IP-driven revenue streams. As these initiatives scale, we expect further improvement in operating performance and margin profile over time,” concluded Parisi.