• Annual Revenue: $1.35 billion, up 5% on a reported basis and 13% on a constant currency basis.
• Net Loss: $153 million for the year, primarily due to non-cash expenses.
• Adjusted EBITDA: $67.9 million, an increase of over 600% compared to 2023.
• Q4 Revenue Growth: 10.4% on a constant currency basis; reported growth of 5.6% year over year.
• Gross Margin: Expanded by 45 basis points year over year; adjusted expansion of 147 basis points excluding certain expenses.
• Q4 Net Loss: $102.6 million, compared to a loss of $95.3 million in the prior year.
• Adjusted Loss Per Share: $0.03 in Q4, compared to adjusted earnings per share of $0.09 in the prior year.
• Pay Content Revenue Growth: 10.9% in Q4 and 12.6% for the full year on a constant currency basis.
• Advertising Revenue Growth: 27.4% in Q4 and 19.8% for the full year on a constant currency basis.
• IP Adaptation Revenue: Declined 6.9% in Q4 but up 6.7% for the full year on a constant currency basis.
• Japan Revenue Growth: 18.9% in Q4 and 25.8% for the full year on a constant currency basis.
• Korea Revenue Growth: 6.6% in Q4 on a constant currency basis; full year decline of 0.5%.
• Rest of World Revenue: Declined 3.3% in Q4 but grew 14.9% for the full year on a constant currency basis.
• Gross Profit: $82.3 million in Q4, up 7.7% year over year.
• First Quarter 2025 Revenue Guidance: Expected growth of 1.7% to 4.8% on a constant currency basis, translating to $318 million to $328 million.

• Warning! GuruFocus has detected 9 Warning Signs with JACK.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Webtoon Entertainment Inc (NASDAQ:WBTN) reported record annual revenue of $1.35 billion for 2024, marking a 5% growth on a reported basis and 13% on a constant currency basis.
• The company achieved a record adjusted EBITDA of $67.9 million, representing an increase of over 600% compared to 2023.
• WBTN successfully expanded its market presence in Japan, becoming the top non-game app by revenue in the country for the second half of 2024.
• The company invested in a Japanese studio, Number 9, to enhance its content pipeline in Japan, the fastest-growing market.
• WBTN's IP adaptations saw successful launches, with titles like 'Heroes Onco' debuting as a global streaming hit on Netflix, indicating strong cross-platform appeal.

Negative Points

• WBTN reported a net loss of $153 million for 2024, primarily due to non-cash expenses.
• The company experienced a net loss of $102.6 million in Q4, driven by higher general and administrative expenses and marketing costs.
• Total company Monthly Active Users (MAU) declined by approximately 3.7% in Q4, with significant impact from a government ban in one country.
• Gross margin declined sequentially due to a sales mix shift to higher revenue share ratio businesses.
• The IP adaptation business saw a revenue decline of 6.9% year over year in Q4, affected by delays in project timing.

Q & A Highlights

Q: Can you discuss the sustainability of your growth in Japan and how it factors into your guidance for the March quarter and the full year? A: David Lee, COO and CFO, emphasized confidence in their business model and the strong performance in Japan. He noted that while there are specific issues affecting Q1 guidance, such as IP slate timing and FX rates, the overall business remains robust. Japan's growth is supported by new original titles and strong market positioning, which they expect to continue.

Q: How are investments in user and creator engagement impacting user growth and engagement rates? A: David Lee highlighted ongoing investments in marketing and product innovation, including a revamped onboarding experience and AI-based personalization. These efforts are expected to enhance user engagement and drive long-term growth, with significant impacts anticipated in the latter half of the year.

Q: Can you elaborate on the impact of the AI recommendation engine in Korea and user growth trends? A: The AI personalization engine has led to a 2% increase in engagement per user in Korea, a key market. While specific growth metrics were not provided, the focus is on webcomic app user growth, which increased by 6.7%, indicating strong potential for paid content revenue growth.

Q: What are the main drivers of advertising growth, and how is it tracking against expectations? A: Advertising has shown strong growth, with a 27.4% increase on a constant currency basis. David Lee noted growth across all regions, with significant opportunities in English-speaking markets and Japan, where they are expanding their ad sales capabilities.

Q: How is the supply of new content performing, and what is its impact on monetization? A: David Lee expressed confidence in the content engine, particularly in Japan, where they launched 164 new original titles. Local content creation is crucial for global reach, and the company expects continued robust content supply to drive monetization and engagement.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.