Webtoon Entertainment Inc. ((WBTN)) has held its Q4 earnings call. Read on for the main highlights of the call.
WEBTOON Entertainment’s recent earnings call revealed a mixed sentiment, highlighting both robust revenue growth and strategic successes, particularly in Japan and advertising, alongside challenges such as net loss and a decline in monthly active users (MAU) due to external factors. While the company celebrated notable achievements, it also faced significant hurdles, reflecting a complex performance landscape.
Record Annual Revenue and Profitability
WEBTOON reported a record annual revenue of $1.35 billion, marking a 5% increase on a reported basis and 13% on a constant currency basis. The company also saw its adjusted EBITDA soar by over 600% to $67.9 million compared to 2023, showcasing significant profitability improvements.
Success in Japan Market
The company achieved remarkable success in the Japanese market, securing the top position in the non-game app market for the second half of 2024. This success was driven by effective content exports and investments in the local creator ecosystem.
Strong Q4 Revenue Growth
In the fourth quarter, WEBTOON experienced a 10.4% revenue growth on a constant currency basis, with a reported year-over-year increase of 5.6%. This growth was primarily fueled by paid content and advertising.
Advertising Revenue Surge
Advertising revenue surged by 27.4% in Q4 on a constant currency basis, with notable performances in Korea and Japan, highlighting the strength of WEBTOON’s advertising strategies.
Increased Webcomic Engagement
The company saw a 6.7% increase in webcomic app MAU, driven by growth in English-speaking markets, France, and Thailand, indicating a rising engagement with its content.
IP Adaptations Success
WEBTOON’s IP adaptations saw successful launches, including “Jeongnyeon: The Star Is Born” on Disney+, “Sidelined: The QB and Me” on Tubi, and “The Trauma Code: Heroes on Call” on Netflix, showcasing the company’s expanding influence in media adaptations.
Net Loss and Adjusted EBITDA Decline
Despite these successes, WEBTOON reported a net loss of $102.6 million for Q4, attributed to higher general and administrative expenses, marketing expenses, and actuarial losses. Adjusted EBITDA also declined to negative $3.5 million, down from a positive $10.4 million in Q4 2023.
MAU Decline
The company faced a 3.7% decline in total company MAU in Q4, largely due to a government ban on Wattpad in one country, which accounted for two-thirds of the decline in the Rest of World segment.
IP Adaptation Revenue Decline
There was a 6.9% year-over-year decline in IP adaptation revenue in Q4 on a constant currency basis, primarily due to declines in Korea and the Rest of World.
Impact of Foreign Currency Exchange
WEBTOON’s revenue was adversely affected by weaker foreign currencies, impacting the overall financial performance and highlighting the challenges of operating in a global market.
Forward-Looking Guidance
Looking ahead, WEBTOON provided guidance for the first quarter of 2025, anticipating revenue growth between 1.7% and 4.8% on a constant currency basis, translating to an estimated revenue of $318 million to $328 million. The company expects adjusted EBITDA to range from $0.5 million to $5.5 million, reflecting an adjusted EBITDA margin of 0.2% to 1.7%. Despite challenges such as delays in IP adaptation in Korea and a government ban affecting Wattpad, WEBTOON remains optimistic about its long-term business health.
In summary, WEBTOON Entertainment’s earnings call painted a picture of a company experiencing both significant growth and notable challenges. While the company achieved record revenues and strong market positions, particularly in Japan, it also faced setbacks such as net loss and MAU decline. Looking forward, WEBTOON remains confident in its strategic direction and long-term prospects.