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WEBTOON Entertainment Inc. Common stock (WBTN) 7 Nov 24 2024 Q3 Earnings call transcript

AInvestFriday, Nov 8, 2024 7:43 pm ET
1min read

Wattpad and WEBTOON Parent Company WEBTOON Entertainment reported a robust third quarter performance, showcasing a 9.5% revenue growth on a reported basis and double-digit growth on a constant currency basis. The company also achieved solid profitability, with adjusted EBITDA reaching $28.9 million in the quarter. These results reflect the company's successful execution of its strategy and its growing presence in the digital content market.

Key Strategic Highlights

WEBTOON Entertainment's strategic focus on optimizing user experience through AI technology has been a significant contributor to its growth. The company's AI recommendation engine has led to a 3-point increase in weekly episodes viewed per user in Korea, and a 4.3% increase in Japan's user engagement, with PU reaching record highs. This technology, coupled with the company's successful expansion into Japan, has been instrumental in driving the company's strong performance.

The company also highlighted its strategic shift towards the app, with global MAU on the app increasing 1% year-over-year. This move reflects the company's focus on driving greater user engagement and monetization through the app. WEBTOON's diversified revenue streams, including paid content and advertising, have also contributed to its robust financial performance. The company's IP adaptation business, which includes adaptations on Netflix and Amazon Prime, has further bolstered its brand awareness and revenue growth.

Financial Highlights

The company reported a 13.5% revenue growth on a constant currency basis for the quarter, with a 13.2% revenue growth year-to-date. This growth was driven by strong performance in paid content and advertising, with adjusted EBITDA growing significantly compared to the same quarter in 2023. The company's net income also showed a significant increase, driven by improved gross profit and income tax benefits.

Looking Ahead

WEBTOON Entertainment expects to deliver revenue growth in the range of 10.3% to 13.3% on a constant currency basis for the fourth quarter of 2024. The company's focus on high-return marketing investments, including partnerships with platforms like Duolingo, is expected to continue driving growth. The company's strategic shift towards the app and its successful expansion into Japan position it well for continued growth in the digital content market.

Conclusion

WEBTOON Entertainment's third quarter performance highlights its strong strategic direction and successful execution. The company's focus on optimizing user experience, expanding into new markets, and leveraging technology to drive growth are key factors in its robust financial performance. With a solid financial foundation and a strategic focus on growth, WEBTOON Entertainment is well-positioned for continued success in the digital content market.

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