Webtoon Entertainment Inc. ((WBTN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Webtoon Entertainment Inc.’s recent earnings call revealed a mixed sentiment, showcasing both robust growth and areas of concern. The company reported strong revenue growth and strategic partnerships, alongside reductions in net loss. However, challenges such as declines in global monthly active users (MAU) and issues with Wattpad were also highlighted.
Strong Revenue Growth
Webtoon Entertainment Inc. reported a 5.5% growth in revenue on a constant currency basis, with an 8.5% increase year-over-year. This growth underscores the company’s ability to expand its financial footprint despite challenging market conditions.
Significant Reduction in Net Loss
The company achieved a notable reduction in net loss, decreasing it to $3.9 million from $76.6 million in the previous year. This improvement is primarily attributed to lower general and administrative expenses following the company’s IPO.
Successful Strategic Partnerships
Webtoon has forged successful strategic partnerships with industry giants like Disney and Dark Horse Comics. These collaborations aim to bring popular franchises such as Spider-Man, Avengers, and Star Wars to Webtoon’s platform, potentially attracting a larger audience.
Growth in English Platform
The English platform WebComic app has shown significant momentum, with its monthly active users increasing by 19% for the second consecutive quarter. This growth highlights the platform’s expanding reach in key English-speaking markets.
Advertising Revenue Increase
Advertising revenue experienced a 10.2% growth year-over-year, driven by strong performance in Korea and Japan. This increase reflects the company’s successful monetization strategies in these regions.
IP Adaptations Business Growth
Revenue from IP adaptations surged by 42.6% year-on-year on a constant currency basis. This growth indicates a successful expansion of Webtoon’s intellectual property adaptations business.
Decline in Global MAU
Despite positive revenue trends, global MAU saw a decline of 7.6%, with significant drops in Korea and other regions. This decline is partly due to government bans affecting Wattpad, a subsidiary of Webtoon.
Decrease in Adjusted EBITDA
The company’s adjusted EBITDA decreased to $9.7 million from $20.4 million in the previous year, indicating a need for improved operational efficiency.
Challenges with Wattpad
Wattpad continues to face challenges, including government bans and search engine indexing issues, which have negatively impacted its MAU.
Decrease in Korea MAU
Korea’s MAU decreased by 11.1% year-over-year, reflecting challenges in maintaining user engagement in this key market.
Forward-Looking Guidance
Looking ahead, Webtoon Entertainment Inc. anticipates revenue growth between 9.4% and 12.2% for the third quarter, translating to expected revenue between $380 million and $390 million. The adjusted EBITDA is projected to range from $2 million to $7 million, with a margin of 0.5% to 1.8%. These projections indicate the company’s confidence in continued growth and strategic initiatives.
In summary, Webtoon Entertainment Inc.’s earnings call presented a mixed outlook, with strong revenue growth and strategic partnerships counterbalanced by challenges such as declining global MAU and issues with Wattpad. The company’s forward-looking guidance suggests optimism for future growth, although operational efficiency remains a focus area.