Webtoon Entertainment Inc.(WBTN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - WEBTOON reported record annual revenue of $1.35 billion, growing 5% on a reported basis and 13% on a constant currency basis [10] - The company reported a net loss of$ 153 million, primarily due to noncash expenses, but achieved record adjusted EBITDA of $67.9 million, an increase of over 600% compared to 2023 [10] - In Q4, revenue grew 10.4% on a constant currency basis, with reported revenue up 5.6% year-over-year [19] - Adjusted EBITDA was negative$ 3.5 million in Q4 compared to a positive $10.4 million in the same quarter of 2023 [22] Business Line Data and Key Metrics Changes - Paid Content revenue grew 10.9% year-over-year on a constant currency basis in Q4, with full-year growth of 12.6% [27] - Advertising revenue increased by 27.4% in Q4 on a constant currency basis, driven by growth in Korea and Japan [29] - IP Adaptation revenue declined by 6.9% year-over-year in Q4 but was up 6.7% for the full year on a constant currency basis [30] Market Data and Key Metrics Changes - In Korea, revenue grew 6.6% year-over-year on a constant currency basis in Q4, while MAU decreased by 0.5% [32] - Japan's revenue grew 18.9% year-over-year on a constant currency basis in Q4, with MAU increasing by 6.6% [35] - The Rest of the World saw a revenue decline of 3.3% year-over-year on a constant currency basis in Q4, with MAU and MPU declining by 6.1% and 3.3% respectively [37] Company Strategy and Development Direction - WEBTOON is focused on building a local creator ecosystem in Japan and investing in content studios globally to enhance its content pipeline [12][14] - The company aims to democratize storytelling and expand its global IP and creator ecosystem [17] - Management emphasized the importance of product innovation and marketing investments to drive long-term growth [61][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamental health of the business and the growth potential in key markets like Japan and English-speaking countries [46][56] - The company anticipates facing FX headwinds in Q1 and is investing in infrastructure ahead of product improvements expected in the latter half of 2025 [44] - Management highlighted the impact of political turbulence in Korea on MAU and payer trends but believes these issues will not persist beyond the guided period [74][83] Other Important Information - The company is not providing full-year guidance but remains optimistic about long-term revenue growth and profitability [46] - Adjusted loss per share for Q4 was$ 0.03 compared to adjusted earnings per share of $0.09 in the prior year [42] Q&A Session Summary Question: Sustainability of growth in Japan and full-year outlook - Management is confident in the sustainability of growth in Japan and believes the IP slate will drive future performance despite some short-term challenges [51][56] Question: User engagement and onboarding experiences - Management discussed ongoing investments in user experience and product innovation, which are expected to enhance user engagement over time [61][66] Question: AI recommendation engine impact - The AI personalization engine has driven a 2% increase in engagement per user, and management sees significant long-term growth potential from this initiative [72] Question: Impact of political disruption in Korea - Management indicated that the political turmoil in Korea affected MAU and payer trends but expects these issues to resolve in the near term [74][83] Question: Advertising business scaling - Advertising continues to show strong growth, with opportunities for further expansion in English-speaking markets and Rest of World [94] Question: Content supply and monetization - Management expressed confidence in the robustness of the content engine and highlighted the importance of local content creation in Japan for global consumption [106][110]