WEBTOON Entertainment (WBTN) Q3 2024 earnings summary

Executive summary

• Achieved 9.5% year-over-year revenue growth to $347.9M, or 13.5% on a constant currency basis, driven by Paid Content and advertising, with double-digit growth across all regions and revenue streams.

• Net income reached $20M, a significant turnaround from a $11.5M loss in the prior year, aided by improved gross profit, interest income, and income tax benefit.

• Adjusted EBITDA rose to $28.9M (8.3% margin), up from $3.2M (1.0% margin), reflecting strong cost controls and higher marketing ROI.

• Diluted EPS improved to $0.15 from a loss of $0.10; Adjusted EPS increased to $0.22 from $0.03 year-over-year.

• IPO completed in June 2024, raising $281.7M, with additional $50M from a private placement and $26.8M from over-allotment, strengthening liquidity.

Financial highlights

• Q3 2024 revenue: $347.9M (+9.5% YoY); nine-month revenue: $995.6M (+4.9% YoY).

• Gross profit increased 26.7% to $91.4M, with gross margin expanding 358 basis points to 26.3%.

• Paid Content revenue grew 8.9% to $285.2M; Advertising revenue up 20.8% to $43.4M; IP Adaptations revenue declined 3.5% to $19.3M.

• Cash and cash equivalents at September 30, 2024: $585.5M, up from $231.7M at year-end 2023.

• General and administrative expenses rose 45.8% YoY in Q3, mainly due to stock-based compensation and higher headcount.

Outlook and guidance

• Q4 2024 revenue expected at $375M–$385M, constant currency growth of 10.3%–13.3%.

• Q4 Adjusted EBITDA projected at $9M–$14M, margin of 2.4%–3.6%.

• Management expects higher seasonal activity in Q4 due to holidays and increased advertiser budgets.

• Recent FX volatility could negatively impact revenue by $20M and EBITDA by $2M.

• Management confident in achieving Q4 targets and long-term value creation.