8-K: WEBTOON Entertainment Announces Preliminary Q4 and Full Year 2024 Results, Revenue Up Despite Currency Headwinds

WEBTOON Entertainment reports preliminary estimated results for Q4 and full year 2024, showing revenue growth and adjusted EBITDA profitability despite foreign exchange challenges.

Summary

• WEBTOON Entertainment Inc. announced preliminary financial results for the fourth quarter and full year ended December 31, 2024.
• Full year 2024 total revenue is approximately $1.347 billion, or $1.433 billion on a constant currency basis.
• The company reported a net income range of approximately $(158) to $(152) million for the full year.
• Adjusted EBITDA for the full year is estimated to be between $67 and $68 million.
• Fourth quarter total revenue is approximately $351 million, or $367 million on a constant currency basis.
• Net income for the fourth quarter is projected to be in the range of $(107) to $(101) million.
• Adjusted EBITDA for the fourth quarter is estimated to be between $(4.5) and $(3.5) million.
• The company had approximately $572 million in cash and cash equivalents, plus $26 million in short-term deposits as of December 31, 2024.
• The US dollar's appreciation against the Korean Won and Japanese Yen impacted revenue growth in the fourth quarter.
• The company will hold a conference call on February 25, 2025, to discuss the financial results in more detail.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to revenue growth and adjusted EBITDA profitability, but tempered by net losses and currency headwinds. The company's management team is optimistic about the future.

Positives

• The company achieved a full year of growth and profitability in 2024.
• Revenue increased by over 12% on a constant currency basis from fiscal year 2023.
• Adjusted EBITDA grew over 600% from $8.7 million in 2023 to over $67 million in 2024.
• The company demonstrated approximately 10% revenue growth in the fourth quarter on a constant currency basis.

Negatives

• The company experienced a net loss for both the full year and the fourth quarter.
• Foreign exchange rates presented a headwind in the fourth quarter.
• The company experienced some short-term engagement impacts from political turbulence in Korea.
• Adjusted EBITDA for the fourth quarter was impacted by actuarial losses on retiree benefits, currency translation, and lower gross profit in Korea.

Risks

• The preliminary estimated results are unaudited and subject to change.
• The company's actual financial results may differ materially from the preliminary estimates.
• Weakness in the economy, market trends, and geopolitical factors could impact future performance.
• Inability to attract, empower, properly support or incentivize creators could impact future performance.
• Failure to retain or increase paying users could impact future performance.
• Exposure to significant legal proceedings and regulatory investigations may result in significant expenses, fines and reputational damage.
• Rise of conflicts of interests with NAVER Corporation, our majority stockholder could impact future performance.

Future Outlook

The company believes its fundamentals and strategy remain sound and looks forward to sharing more details on its upcoming earnings call.

Management Comments

• Junkoo Kim, Founder and CEO, stated, 'We are pleased to share that we have achieved a full year of growth and profitability in 2024.'
• Junkoo Kim, Founder and CEO, stated, 'We increased our revenue by over 12% on a constant currency basis from fiscal year 2023.'
• Junkoo Kim, Founder and CEO, stated, 'We delivered our second consecutive year of Adjusted EBITDA profitability, with over $67 million in 2024, which grew over 600% from $8.7 million in 2023.'
• Junkoo Kim, Founder and CEO, stated, 'While foreign exchange rates presented a headwind in the fourth quarter, we are pleased to have demonstrated another quarter of approximately 10% revenue growth on a constant currency basis.'

Industry Context

WEBTOON Entertainment operates in the global digital entertainment and webcomic industry, competing with other platforms and content providers. The company's performance is influenced by factors such as user engagement, content creation, and monetization strategies.

Comparison to Industry Standards

• It is difficult to compare WEBTOON directly to other companies as it is a unique business.
• Comparable companies include digital content platforms like Crunchyroll, Netflix (for adaptations), and manga platforms like Manga Plus.
• WEBTOON's growth in revenue and adjusted EBITDA suggests a strong position in the webcomic market.
• The company's focus on constant currency revenue provides a clearer picture of underlying growth, mitigating the impact of currency fluctuations.

Stakeholder Impact

• Shareholders may be encouraged by the revenue growth and adjusted EBITDA profitability.
• Employees may be positively impacted by the company's growth and financial stability.
• Creators may benefit from the company's continued investment in content creation.
• Customers may experience improved content offerings and platform features.

Next Steps

• WEBTOON Entertainment plans to report fourth quarter and full year 2024 financial results after market close on February 25, 2025.
• The company's management team will host a conference call at 4:30 p.m. ET on February 25, 2025, to review the results.

Key Dates