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WE

WEBTOON Entertainment Inc. (WBTN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $352.8M, up 5.6% year over year; on a constant currency basis (FX-neutral), revenue was $368.9M (+10.4% YoY). Adjusted EBITDA was a loss of $3.5M (−1.0% margin) versus a gain of $10.4M in Q4 2023 due to FX headwinds, actuarial losses (~$6M) and lower gross profit in Korea from mix shift .
  • Reported diluted EPS was −$0.72 vs −$0.62 in Q4 2023; adjusted loss per share was −$0.03 vs +$0.09 last year. Gross profit grew to $82.3M (+7.7% YoY) with gross margin 23.3% (+45 bps YoY), though sequential margin declined on higher-revenue-share ad mix .
  • Japan outperformed, now the largest region by revenue, with Q4 revenue +15.4% reported (+18.9% cc), MPU +15.0%, and Paying Ratio +75 bps; Korea grew +6.6% cc but saw MAU/MPU headwinds from political turbulence; Rest of World saw MAU pressure from a government ban on Wattpad in one country .
  • Q1 2025 outlook: revenue $318–$328M (1.7%–4.8% cc growth) and adjusted EBITDA $0.5–$5.5M (0.2%–1.7% margin), reflecting continued FX headwinds and timing delays in Korea IP adaptations; narrative catalysts include advertising acceleration, Japan content momentum, and product innovations (onboarding, Highlights trailers, unlock-whole-series) slated for back-half impact .

What Went Well and What Went Wrong

What Went Well

  • Japan strength and leadership: “LINE Manga is now firmly on top of the market in Japan… topped the nongame app market by revenue in Japan for both the fourth quarter and the second half of 2024” with Q4 revenue +18.9% cc and MPU +15% .
  • Product and monetization gains: ARPPU on a constant currency basis rose 12.4% in Q4, with improvements from the AI-driven recommendation model (weekly episodes viewed per user +2% in Korea) and ad format innovation (Offerwall/Rewarded Video); Advertising revenue +27.4% cc in Q4 .
  • Strategic IP adaptations: Multiple Q4/early-2025 hits (Jeongnyeon on Disney+, Sidelined on Tubi, Trauma Code on Netflix) enhancing awareness and funneling users back to platforms; studio investment (No.9) strengthens Japan content pipeline .

What Went Wrong

  • FX headwinds and Korea turbulence: USD strength vs KRW/JPY weighed significantly on reported growth; Korea faced short-term engagement impacts from political turbulence, pressuring MAU/MPU and mix-driven gross profit .
  • IP timing delays in Korea: Prolonged delays in project deliveries hurt Q4 IP Adaptations revenue (−6.9% cc), with management noting quarter-specific timing impacts into Q1 .
  • Higher public-company and non-cash costs: Q4 net loss widened to −$102.6M on higher G&A (public-company costs), higher marketing, and higher goodwill impairments; actuarial losses reduced adjusted EBITDA by ~$6M .

Financial Results

Consolidated Summary vs Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$321.0 $347.9 $352.8
Revenue (Constant Currency) ($USD Millions)$350.3 $360.4 $368.9
Net Income (Loss) ($USD Millions)$(76.6) $20.0 $(102.6)
Diluted EPS ($USD)$(0.70) $0.15 $(0.72)
Adjusted EPS ($USD)$0.20 $0.22 $(0.03)
Adjusted EBITDA ($USD Millions)$22.4 $28.9 $(3.5)
Adjusted EBITDA Margin (%)7.0% 8.3% −1.0%
Gross Profit ($USD Millions)$83.1 —$82.3
Gross Margin (%)25.9% —23.3%

Revenue by Stream (Reported)

StreamQ2 2024 ($M)Q3 2024 ($M)Q4 2024 ($M)
Paid Content$260.7 $285.2 $270.2
Advertising$40.4 $43.4 $45.3
IP Adaptations$19.8 $19.3 $37.3

Q4 2024 KPIs (Global and by Region)

KPIQ4 2023Q4 2024
Global MAU (M)169.6 163.3
Global MPU (M)7.6 7.5
Paying Ratio (%)4.5% 4.6%
Global ARPPU ($)$11.1 $12.0
Global ARPPU (cc) ($)$11.1 $12.5
Korea MAU (M)24.6 24.5
Korea MPU (M)3.9 3.6
Korea Paying Ratio (%)15.8% 14.5%
Korea ARPPU ($)$7.4 $8.1
Japan MAU (M)20.7 22.1
Japan MPU (M)2.0 2.3
Japan Paying Ratio (%)9.5% 10.3%
Japan ARPPU ($)$22.2 $22.0
Rest of World MAU (M)124.3 116.7
Rest of World MPU (M)1.7 1.7
Rest of World Paying Ratio (%)1.4% 1.4%
Rest of World ARPPU ($)$6.7 $6.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (reported)Q4 2024$375–$385M (assumes FX stable at end of Q3) Actual: $352.8M Below guidance (FX headwinds, Korea mix/timing)
Revenue (cc growth)Q4 202410.3%–13.3% Actual: 10.4% Delivered midpoint
Adjusted EBITDAQ4 2024$9–$14M (2.4%–3.6% margin) Actual: −$3.5M (−1.0% margin) Below guidance (actuarial loss ~$6M; FX; Korea mix)
Revenue (reported)Q1 2025—$318–$328M (1.7%–4.8% cc growth) New
Adjusted EBITDAQ1 2025—$0.5–$5.5M (0.2%–1.7% margin) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI personalizationInitial rollout in Korea; engagement improving late Q2 Continued benefits; ARPPU growth cc; Japan leadership Weekly episodes/user +2% in Korea; AI-driven home recommendations Improving engagement; broader rollout
Advertising momentumMixed (declined reported; +2.3% cc) Strong (+24.3% cc) Q4 +27.4% cc; growth across Korea/Japan; formats like Rewarded Video Accelerating across regions
FX headwindsKRW/JPY weakness weighed on reported growth FX assumed stable in Q4 guide USD strength vs KRW/JPY weighed; cc growth stronger Persistent headwind
IP adaptations+24.9% cc in Q2 +5.3% cc in Q3 −6.9% cc in Q4 on Korea delays; pipeline strong Timing volatility near term
Regional dynamicsJapan MPU +15.5%; #1 app status (June) Solid growth across regions Japan surpasses Korea in revenue; MAU/MPU gains; Korea short-term engagement impact; ROW MAU ban effect Japan structurally stronger
Platform/product roadmapPreparing product improvements Cross-border content leverage New onboarding, Highlights trailers, unlock whole series; tests positive; rollout starting March 2025 Back-half monetization upside

Management Commentary

  • Strategic message: “We’re proud to have delivered strong financial results in 2024… revenue growth on a constant currency basis of 13%… record Adjusted EBITDA of $67.9 million” and confidence in 2025 innovation focus (usability, creator monetization, discovery) .
  • FX and Korea context: “US dollar appreciated significantly against the Korean Won and the Japanese Yen… currency translation was the primary factor that weighed on revenue growth… short-term engagement impacts from political turbulence in Korea” .
  • Operational discipline: “Gross margin… expanded 45 bps YoY… excluding reclassification, gross profit would have been $85.9M or ~24.3% of revenue” .
  • Important quotes:
    • “Actuarial loss had an approximately $6 million impact to Adjusted EBITDA in the fourth quarter.” — David Lee, CFO .
    • “LINE Manga… topped the nongame app market by revenue in Japan for both the fourth quarter and the second half of 2024.” — David Lee, CFO .
    • “We plan to… test short, trailer-style promotional videos called ‘Highlights’… and… introduce the ability for readers to unlock entire series… rollout… across all regions in March 2025.” — Shareholder letter .

Q&A Highlights

  • Japan sustainability and guidance framing: Management emphasized discrete Q1 factors (IP timing, marketing investment, FX set to current rates) and strong, durable Japan trajectory with 164 local title launches and #1 revenue ranking outside mobile games .
  • Product investments and engagement: New onboarding and Highlights trailers expected to lift engagement and conversion; investments balanced with positive adjusted EBITDA guidance; payoff expected in back half of 2025 .
  • AI recommendation lift: Korea’s mature market benefits from personalization; disclosed 6.7% growth in webcomic app MAU excluding webnovels; intent to provide more transparency on app MAU metrics .
  • IP adaptation timing: Delays are quarter-specific; slate lifts paid content organically without whale dependence; pipeline remains robust .
  • Advertising trajectory: Ongoing growth opportunity across regions; early days in North America direct sales; Q4 cc growth +27.4% .

Estimates Context

  • S&P Global consensus estimates were unavailable due to provider request limits at time of analysis; as a result, explicit revenue and EPS consensus comparisons cannot be shown. We recommend updating the tables with consensus and spread-to-actual once SPGI access is restored.
  • Directionally, Q4 reported revenue and adjusted EBITDA both finished below prior company guidance ranges given in November (FX headwinds, actuarial losses, Korea mix and IP delays), implying likely negative variance vs typical street expectations tied to those guideposts .

Key Takeaways for Investors

  • Japan is the structural growth engine: largest revenue region with strong MPU/Paying Ratio and content pipeline; continue to model above-company-average growth and margin contribution from Japan .
  • Near-term headwinds are transitory: FX and Korea IP timing diluted Q4 reported results and Q1 guide; constant-currency growth and product roadmap support back-half reacceleration .
  • Advertising is inflecting: +27.4% cc in Q4 with new formats and partner contributions; a medium-term lever as direct sales capability scales (especially in English-speaking markets) .
  • Monetization and engagement features should lift ARPPU: AI recommendations, new onboarding, Highlights trailers, and unlock-whole-series pricing are credible catalysts for paid content and conversion in 2H’25 .
  • Profitability optics: Adjusted EBITDA setback in Q4 driven by non-operating actuarial losses and FX; underlying gross profit and cc growth remain healthy; watch adjusted EBITDA cadence vs product investment in 1H .
  • Risk monitor: FX sensitivity (KRW/JPY), regulatory actions (Wattpad ban), and IP delivery timing can swing quarterly reported metrics; model with cc scenarios and timing buffers .
  • Trading implications: Near-term prints may be constrained by FX and Q1 guide, but narrative strength in Japan and ad momentum, plus product monetization features, are catalysts for estimate revisions in 2H and multiple support on improving growth quality .