WildBrain is betting big on WildBrain Spark’s growth potential, even after implementing cost cutting measures, including furloughing some employees in that division just last month.

CEO Eric Ellenbogen (pictured) announced $25 million in financing for growth initiatives. The money is earmarked exclusively for growth capital “to fund strategic, accretive transactions across the company, with a special focus on our AVOD business, WildBrain Spark.” The money will not serve as capital for the entire business, and as such WildBrain announced several cost cutting measures only a few weeks ago. Beyond furloughing employees, the company has temporarily reduced senior management salaries by 20%, in response to the COVID-19 pandemic.

WildBrain took a big net loss this month at $221.7 million, compared with last year’s Q3 2019 net loss of only $18.4 million. The loss was due largely to a non-cash goodwill impairment of $184.5 million. The charge was taken due to the impact on advertising revenue from YouTube’s changes to targeted ads on kids content, as well as potential effects from COVID-19. That makes the company’s year-to-date net loss $240 million.

Revenue was down 11% in Q3 2019 reaching $98.3 million, compared to last year’s $110 million. The drop in revenue was mainly driven by the global distribution segment, including WildBrain Spark. Year to date revenue meanwhile, grew to $332.7 million, up from $331 million last year at this time.

WildBrain Spark’s revenue was down 36% to $9.5 million in Q3 2020 versus $14.9 million the year prior. The decline is attributing this to YouTube changes to advertising on kids’ content as well as the effects of the COVID-pandemic.

WildBrain Spark in Q2 experienced a 40% year-over-year revenue dip due to YouTube changing its rules, to stop serving personalized ads on content “made for kids.” Despite these declines, Ellenbogen is placing a lot of stock in the AVOD, saying that it’s “not only a rich source of emerging IP and promotion” but also a “beneficiary of advertising dollars migrating from linear to non-linear TV.” In some good news for the network, WildBrain Spark’s views grew 19% to over 10.3 billion in Q3 2020 versus Q3 2019, and its year to date views grew 42% to 59.1 billion. Watch times are up 71% as well throughout April, according to Ellenbogen. (This falls in line with what many in the YouTube space are reporting as a time of big views, but very little advertising dollars. Distributor Jetpack, for instance, said that it has seen a drop in revenue and started uploading additional content from its back catalogue to offset its channel’s losses.)

In Q3 2020 distribution revenue (excluding WildBrain Spark) was $15.6 million compared with $20.7 million in Q3 2019. WildBrain is attributing the fluctuations in revenue to timing of deals.

Over on the production side, Ellenbogen says WildBrain’s studio is producing at over 95% capacity, including its new Johnny Test series for Netflix, which Kidscreen announced last week. The reboot has a refreshed look and will include an interactive special.

However, he says, global pullbacks in advertising due to the COVID-19 pandemic affected revenue in late Q3 and those changes are anticipated to affect WildBrain’s revenue into fiscal 2021.

This story originally appeared in Kidscreen