WEBTOON Entertainment Inc. (Nasdaq: WBTN) (“WEBTOON” or “the
Company”), a leading global entertainment company and home to some
of the world’s largest storytelling platforms, today announced
results for its second quarter ending June 30, 2024.
Second Quarter 2024 Highlights (vs. 2Q
2023)
- Total revenue of $321.0 million grew 0.1% as growth across the
business was offset by the Company’s significant exposure to weaker
foreign currencies including the Korean won and Japanese yen, the
latter of which reached historically low levels against the U.S.
dollar.
- Revenue on a constant currency basis was $350.3 million,
growing 11.1% year-over-year, driven by growth across all revenue
streams: Paid Content, Advertising and IP Adaptations.
- Paid Content revenue grew
1.0%, or 11.5% on a constant currency basis, driven by successful
execution of our user conversion strategies globally with robust,
double digit revenue growth on a constant currency basis in Rest of
World and Japan, which is the Company’s largest market.
- Advertising revenue declined 3.6%, but grew
2.3% on a constant currency basis, primarily driven by triple digit
revenue growth on a constant currency in Japan, double digit
revenue growth on a constant currency in Rest of World, and the
ongoing capture of a relatively nascent North American market,
which was partially offset by the impact of the continued strategic
diversification of advertising partners and inventory away from
parent company, NAVER Corporation, in Korea.
- IP Adaptations revenue declined 3.7%, which
translated to growth of 24.9% on a constant currency basis, driven
by growth in all geographies.
- Net Loss of $76.6 million was primarily driven by one-time
IPO-related costs and stock-based compensation expenses.
- Adjusted EBITDA of $22.4 million represented a significant
increase from a slight loss in the prior year, marking strong
profit improvement for the second consecutive quarter.
- Diluted EPS was a loss of $0.70 which increased from a loss of
$0.18 in the prior year.
- Adjusted EPS of $0.20 increased from a loss of $0.01 in the
prior year.
Junkoo Kim, Founder and CEO said, “In June, we
brought WEBTOON to the public markets, introducing our
revolutionary mobile storytelling formats and global IP &
creator ecosystem to the investment community. After nearly two
decades of innovation as the pioneers of the webcomic format, we’re
thrilled to begin the next chapter of our story as we continue to
build our business and help our creators earn money and build
global fandoms for their work.”
Kim continued, “In the second quarter, we
delivered robust performance across geographies and revenue streams
that clearly showcases the strength of our value proposition.
Looking ahead, I see significant opportunities to further
accelerate growth, leveraging our powerful global flywheel to
expand our reach in underpenetrated markets, seize our massive and
untapped advertising opportunity, and inspire even more popular IP
Adaptations worldwide. As a result, I am confident in our ability
to generate meaningful long-term value for our shareholders.”
|
|
|
|
Financial and Operational Highlights |
Quarter Ended |
|
Figures in millions, except user metrics and per share data |
June 30, 2024 |
June 30, 2023 |
Change |
|
Total Revenue |
$321.0 |
$320.7 |
0.1% |
|
Revenue on a Constant Currency Basis1 |
$350.3 |
$315.4 |
11.1% |
|
Paid Content Revenue |
$260.7 |
$258.1 |
1.0% |
|
Paid Content Revenue on a Constant Currency
Basis1 |
$285.2 |
$255.7 |
11.5% |
|
Advertising Revenue |
$40.4 |
$41.9 |
(3.6%) |
|
Advertising Revenue on a Constant Currency
Basis1 |
$42.9 |
$41.9 |
2.3% |
|
IP Adaptations Revenue |
$19.8 |
$20.6 |
(3.7%) |
|
IP Adaptations Revenue on a Constant Currency
Basis1 |
$22.2 |
$17.8 |
24.9% |
|
Monthly Active Users (“MAU”) |
166.3 |
167.7 |
(0.8%) |
|
Korea MAU |
23.2 |
24.8 |
(6.6%) |
|
Japan MAU |
22.0 |
21.8 |
1.0% |
|
Rest of World MAU |
121.1 |
121.1 |
0% |
|
Monthly Paying Users (“MPU”) |
7.8 |
7.8 |
(0.4%) |
|
Korea MPU |
3.7 |
4.0 |
(7.3%) |
|
Japan MPU |
2.2 |
1.9 |
15.5% |
|
Rest of World MPU |
1.8 |
1.8 |
(2.0%) |
|
Paying Ratio |
4.7% |
4.6% |
2 bps |
|
Korea Paying Ratio |
16.1% |
16.2% |
(12 bps) |
|
Japan Paying Ratio |
10.2% |
8.9% |
128 bps |
|
Rest of World Paying Ratio |
1.5% |
1.5% |
(3 bps) |
|
Paid Content Average Revenue Per Paying User
(“ARPPU”) |
$11.2 |
$11.0 |
1.4% |
|
Korea ARPPU |
7.5 |
8.3 |
(9.9%) |
|
Japan ARPPU |
21.2 |
22.5 |
(5.7%) |
|
Rest of World ARPPU |
6.5 |
5.0 |
30.2% |
|
ARPPU on a Constant Currency
Basis1 |
$12.2 |
$10.9 |
12.0% |
|
Korea ARPPU on a Constant Currency Basis1 |
$7.9 |
$8.1 |
(2.5%) |
|
Japan ARPPU on a Constant Currency Basis1 |
$24.1 |
$22.5 |
7.4% |
|
Rest of World ARPPU on a Constant Currency
Basis1 |
$6.5 |
$5.0 |
30.2% |
|
Net Income (Loss) |
($76.6) |
($19.7) |
N/A |
|
Adjusted EBITDA1 |
$22.4 |
($0.9) |
N/A |
|
Adjusted EBITDA Margin1 |
7.0% |
(0.3%) |
725 bps |
|
Diluted EPS |
($0.70) |
($0.18) |
N/A |
|
Adjusted EPS1 |
$0.20 |
($0.01) |
N/A |
1. Revenue on a constant currency basis, Paid
Content revenue on a constant currency basis, Advertising revenue
on a constant currency basis, IP Adaptations revenue on a constant
currency basis, ARPPU on a constant currency basis, Korea ARPPU on
a constant currency basis, Japan ARPPU on a constant currency
basis, Rest of World ARPPU on a constant currency basis, Adjusted
EBITDA, Adjusted EBITDA Margin and Adjusted EPS are non-GAAP
financial measures. For definitions of these non-GAAP financial
measures, see “Non-GAAP Financial Measures & Definitions” of
this release. A reconciliation of non-GAAP financial measures to
the most directly comparable U.S. GAAP measure can be found at the
end of this release.
Second Quarter 2024 Global Results (vs. Q2
2023) WEBTOON’s total revenue for the three months ended
June 30, 2024 increased 0.1% to $321.0 million compared to $320.7
million in the prior year as growth across the business was offset
by the Company’s significant exposure to weaker foreign currencies
including the Korean won and Japanese yen, the latter of which
reached historically low levels against the U.S. dollar. On a
constant currency basis, this translated to robust double digit
revenue growth of 11.1%, with growth drivers across all revenue
streams globally.
In Paid Content, revenue of $260.7 million grew
1.0%, or 11.5% on a constant currency basis. This was driven by
robust, double digit revenue growth on a constant currency basis in
Rest of World as well as Japan, which is the Company’s largest
market, following successful execution of user conversion
strategies. During the second quarter, total MAUs of 166.3 million
and MPUs of 7.8 million remained relatively stable compared to the
prior year. The Company also strengthened its leadership position
in Japan, with MPUs growing 15.5% compared to the second quarter of
2023, supporting a record high MPU and Paying Ratio. In Korea, user
engagement metrics showed improvement towards the end of the
quarter following the initial roll out of the platform’s AI-driven
personalized recommendation model.
Advertising revenue was down 3.6%, which
translated to growth of 2.3% on a constant currency basis. Triple
digit revenue growth on a constant currency basis in Japan and
double digit revenue growth on a constant currency basis in Rest of
World amidst the ongoing capture of a relatively nascent North
American market were partially offset by declining ad revenue in
Korea, primarily due to the continued strategic diversification of
advertising partners and inventory away from parent company, NAVER
Corporation. The Company continues to diversify its advertising
products and the introduction of pre-roll ads has bolstered
performance.
IP Adaptations revenue declined 3.7%, which
translated to growth of 24.9% on a constant currency basis, driven
by growth in all geographies. The Company remains focused on
efforts to strengthen its flywheel through IP adaptations, which
support expansion of our user base, enhance the creator ecosystem,
and contribute to the overall growth of the platform.
Total general & administrative expenses for
the quarter were $138.7 million, compared to $53.5 million in the
prior year quarter. This increase was primarily a result of
one-time IPO and stock-based compensation expenses. Gross profit
grew 2% in the quarter to $83.1 million from $81.1 million in the
prior year. This resulted in gross margin of 25.9%, which expanded
57 basis points compared to the prior year. Interest income was $2
million, compared to $1 million in the prior year and other income
was $2.3 million, compared to a loss of $6.1 million in the prior
year period. Income tax expense was $1.9 million in the quarter,
compared to $11.2 million in the prior year. Depreciation and
amortization was $8.9 million, compared to $9.3 million in the
prior year.
Net Loss for the quarter was $76.6 million. This
represents a larger loss than in the prior year, primarily due to
IPO related costs as well as a one-time increase in stock-based
compensation expenses. Excluding adjustments and other
non-recurring costs, the Company posted a healthy Adjusted EBITDA
of $22.4 million, a significant increase from a loss of $0.9
million in the prior year. As a result, on a reported basis,
including one-time expenses, EPS was a loss of $0.70 compared to a
loss of $0.18 in the prior year period. Adjusted EPS was $0.20 in
the quarter, compared to a loss of $0.01 in the prior year
period.
Balance Sheet As of June 30, 2024
the Company had total liquidity of $826.4 million, including $572.3
million of cash and cash equivalents. The Company had no material
debt.
Third Quarter 2024 Outlook
For the third quarter 2024, the Company
expects:
- Revenue growth on a constant currency basis in the range of
12.5%-14.5%. This represents revenue in the range of $332-$338
million, assuming FX rates remain relatively stable with the end of
Q2.
- Adjusted EBITDA in the range of ($10.0)-($7.7) million,
representing an Adjusted EBITDA Margin in the range of
(2.8%)-(2.1%).
Conference Call & Webcast
Details As previously disclosed, the Company will host a
webcast and conference call on August 8, 2024, at 5:00 p.m. Eastern
Time, to discuss the Company’s financial results for the quarter
ended June 30, 2024.
A live webcast of the conference call will be
available online at https://ir.webtoon.com/.
For those unable to listen to the live webcast, an
archived version will be available at the same location for up to
one year.
About WEBTOON Entertainment Inc.
WEBTOON Entertainment Inc. (“WEBTOON”) is a leading global
entertainment company and home to some of the world's largest
storytelling platforms. As the global leader and pioneer of the
mobile webcomic format, WEBTOON has transformed comics and visual
storytelling for fans and creators.
With its CANVAS UGC platform empowering anyone to
become a creator, and a growing roster of superstar WEBTOON
Originals creators and series, WEBTOON’s passionate fandoms are the
new face of pop culture. WEBTOON adaptations are available on
Netflix, Prime Video, Crunchyroll, and other screens around the
world, and the company’s content partners include Discord, HYBE and
DC Comics, among many others.
With approximately 170 million monthly active
users, WEBTOON’s IP & Creator Ecosystem of aligned companies
include WEBTOON, Wattpad--the world’s leading webnovel platform,
Wattpad WEBTOON Studios, Studio N, Studio LICO, WEBTOON Unscrolled,
LINE MANGA, and eBookJapan, among others.
Forward Looking Statements This
release contains forward-looking statements within the meaning of
the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995, and involves risks, assumptions and
uncertainties that could cause actual results to differ materially
from those expressed or implied by forward-looking statements.
Forward-looking statements cover all matters which are not
historical facts and include, without limitation, statements or
guidance regarding or relating to our future financial position,
results of operations and growth, plans and objectives for future
capabilities, ability to attract users in both our core and
underpenetrated geographies, ability to grow our Paid Content,
Advertising and IP Adaptations businesses, our financial condition
and liquidity, and other statements concerning the success of our
business and strategies. Forward-looking statements may be
identified by the use of words such as “anticipate,” “intend,”
“plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,”
“strategy,” “future,” “likely,” “may,” “should,” “will” and similar
references to future periods. Forward-looking statements speak only
as of the date on which they are made. They are not assurances of
future performance and are based only on our current beliefs,
expectations and assumptions regarding the future of our business,
future plans and strategies, projections, anticipated events and
trends, the economy and other future conditions. Therefore, you
should not place undue reliance on any of these forward-looking
statements. Although we believe that the forward-looking statements
contained in this release are based on reasonable assumptions, you
should be aware that many factors could cause actual results to
differ materially from those in such forward-looking statements,
including but not limited to: weakness in the economy, market
trends, uncertainty and other conditions in the markets in which we
operate, and other geopolitical or macroeconomic factors beyond our
control; inability to attract, empower, properly support or
incentivize our creators; inability to retain, attract and engage
with our users; inability to anticipate, understand and
appropriately respond to market trends and changing user
preferences; failure to retain or increase our paying users;
failure to effectively operate in highly competitive markets;
inability to innovate and expand our Advertising business;
inability to continue to diversify our monetization strategy or to
increase revenues from IP Adaptations; failure to control our
content-related costs; exposure to significant legal proceedings
and regulatory investigations which may result in significant
expenses, fines and reputational damage; failure to provide a safe
online environment for children; exposure to claims that we
violated third parties’ intellectual property rights; failure to
obtain, maintain, protect or enforce our proprietary and
intellectual property rights; rise of conflicts of interests with
NAVER Corporation, our majority stockholder; and other risks and
uncertainties set forth under the caption “Risk Factors” in our
final prospectus filed with the U.S. Securities and Exchange
Commission (the “SEC”) on June 27, 2024 pursuant to Rule 424(b)(4)
and in other filings we make with the SEC in the future.
Additionally, forward-looking statements regarding
past trends or activities should not be taken as a representation
that such trends or activities will continue in the future. Other
than in accordance with our legal or regulatory obligations, we
undertake no obligations to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Key Business Metrics
MAU: We define MAU as users based on each device
logged in and each offering accessed from a single device and may
include the same individual user multiple times if the user is
logged in from multiple devices or if the user accesses multiple
offerings from one device.
MPU: We define MPU as users who have paid to
access Paid Content in the applicable calendar month, averaged over
each month in the given period. We define Paying Ratio as the ratio
of MPU divided by MAU for the respective periods.
ARPPU: We define Paid Content ARPPU as average
Paid Content revenue in a given month divided by the number of MPU
for such month, averaged over each month in the given period.
Non-GAAP Financial Measures &
Definitions
This release contains certain financial
information that is not presented in conformity with U.S. GAAP.
These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA
Margin, Adjusted Earnings Per Share (EPS), revenue on a constant
currency basis, and revenue growth on a constant currency basis,
ARPPU on a constant currency basis and ARPPU growth on a constant
currency basis.
We believe that these non-GAAP measures provide
users of the Company’s financial information with additional
meaningful information to assist in understanding financial results
and assessing the Company’s performance from period to period.
Management believes these measures are important indicators of
operations because they exclude items that may not be indicative of
our core operating results and provide a better baseline for
analyzing trends in our underlying businesses, and they are
consistent with how business performance is planned, reported and
assessed internally by management and the board of directors of the
Company. Our non-GAAP financial measures should not be considered
in isolation, or as substitutes for, financial information prepared
in accordance with GAAP. Non-GAAP measures have limitations as they
do not reflect all the amounts associated with our results of
operations as determined in accordance with GAAP, and should only
be used to evaluate our results of operations in conjunction with
the corresponding or the most directly comparable GAAP measures. We
strongly encourage investors and shareholders to review our
financial statements and publicly filed report in their entirety
and not to rely on any single financial measure.
A reconciliation is provided at the end of this
release for each historical non-GAAP financial measure to the most
directly comparable financial measure stated in accordance with
U.S. GAAP. We encourage investors and shareholders to review the
related U.S. GAAP financial measures and the reconciliation of
these non-GAAP financial measures to their most directly comparable
U.S. GAAP financial measures, and not to rely on any single
financial measure to evaluate our business. We do not provide a
reconciliation of forward-looking non-GAAP financial measures to
the most directly comparable U.S. GAAP financial measures on a
forward-looking basis because we are unable to predict with
reasonable certainty or without unreasonable effort non-recurring
items that may arise in the future.
Adjusted EBITDA: We define Adjusted EBITDA as Net
Income(Loss), adjusted to remove the impact of interest expense,
income tax expense and depreciation and amortization) with further
adjustments to eliminate the effects of loss on equity method
investments, effect of applying the valuation method of fair value
through profit or loss (“FVPL”), impairment of goodwill, non-cash
stock-based compensation and certain other nonrecurring costs.
Adjusted EBITDA Margin: We define Adjusted EBITDA
Margin as Adjusted EBITDA divided by revenue.
Adjusted Earnings Per Share (EPS): We define
Adjusted Earnings Per Share as Earnings Per Share before interest
expense, income tax expense and depreciation and amortization with
further adjustments to eliminate the effects of loss on equity
method investments, effect of applying the valuation method of fair
value through profit or loss (“FVPL”), impairment of goodwill,
non-cash stock-based compensation and certain other nonrecurring
costs. We calculate Adjusted Earnings Per Share by making the
adjustments described herein from Net Income (Loss) and dividing by
basic and diluted weighted average shares of common stock
outstanding, respectively, for the applicable period.
Revenue on a Constant Currency Basis: We define
revenue on a constant currency basis as revenue adjusted to remove
the impact of foreign currency rate fluctuations and the impact of
deconsolidated and transferred operations. We calculate revenue on
a constant currency basis in a given period by applying the average
currency exchange rates in the comparable period of the prior year
to the local currency revenue in the current period. We calculate
revenue on a constant currency basis in each of our revenue streams
– Paid Content, Advertising and IP Adaptations – using the same
method as laid out herein.
Revenue Growth on a Constant Currency Basis: We
define revenue growth on a constant currency basis as
period-over-period growth rates of revenue, adjusted to remove the
impact of foreign currency rate fluctuations and the impact of
deconsolidated and transferred operations. We calculate revenue
growth (as a percentage) on a constant currency basis by
determining the increase in current period revenue over prior
period revenue, where current period foreign currency revenue is
translated using prior period average currency exchange rates.
ARPPU on a Constant Currency Basis: We define Paid
Content ARPPU on a constant currency basis as average Paid Content
revenue on a constant currency basis in a given month divided by
the number of MPU for such month, averaged over each month in the
given period. As discussed above, we calculate revenue on a
constant currency basis in a given period by applying the average
currency exchange rates in the comparable period of the prior
year to the local currency revenue in the current period and
excluding deconsolidated and transferred operations.
ARPPU Growth on a Constant Currency Basis: We
define ARPPU growth (as a percentage) on a constant currency basis
as the increase in current period ARPPU over prior period ARPPU,
with current period foreign currency ARPPU translated using prior
period average currency exchange rates and excluding deconsolidated
and transferred operations.
|
|
|
|
Financial StatementsWEBTOON Entertainment
Inc.Condensed Consolidated Balance
Sheets(unaudited)(in thousands of USD,
except share and per share data) |
|
|
|
|
|
|
|
As of |
|
|
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
572,305 |
|
|
$ |
231,745 |
|
|
Receivables, net of allowance for credit losses of $2,5181 and
$1,0491 at June 30, 2024 and December 31, 2023 respectively |
|
|
173,446 |
|
|
|
171,776 |
|
|
Asset held for sale |
|
|
— |
|
|
|
6,827 |
|
|
Other current assets, net2 |
|
|
80,639 |
|
|
|
82,479 |
|
|
Total current assets |
|
|
826,390 |
|
|
|
492,827 |
|
|
Property and equipment, net |
|
|
9,414 |
|
|
|
11,692 |
|
|
Operating lease right-of-use assets |
|
|
7,854 |
|
|
|
29,472 |
|
|
Debt and equity securities |
|
|
75,324 |
|
|
|
91,233 |
|
|
Intangible assets, net |
|
|
194,351 |
|
|
|
219,502 |
|
|
Goodwill, net |
|
|
741,307 |
|
|
|
779,176 |
|
|
Equity method investments |
|
|
78,618 |
|
|
|
64,222 |
|
|
Deferred tax assets |
|
|
24,108 |
|
|
|
24,045 |
|
|
Other non-current assets, net3 |
|
|
71,851 |
|
|
|
64,436 |
|
|
Total assets |
|
$ |
2,029,217 |
|
|
$ |
1,776,605 |
|
|
Liabilities and equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable4 |
|
$ |
121,374 |
|
|
$ |
127,427 |
|
|
Accrued expenses |
|
|
87,569 |
|
|
|
62,782 |
|
|
Short-term borrowings and current portion of long-term debt5 |
|
|
— |
|
|
|
4,252 |
|
|
Current portion of operating lease liabilities6 |
|
|
4,865 |
|
|
|
9,945 |
|
|
Contract liabilities7 |
|
|
97,524 |
|
|
|
76,722 |
|
|
Income tax payables - corporate tax |
|
|
9,742 |
|
|
|
9,459 |
|
|
Consumption taxes payables |
|
|
5,633 |
|
|
|
7,339 |
|
|
Provisions and defined pension benefits |
|
|
3,846 |
|
|
|
5,564 |
|
|
Other current liabilities |
|
|
11,646 |
|
|
|
12,584 |
|
|
Total current liabilities |
|
|
342,199 |
|
|
|
316,074 |
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
Long-term operating lease liabilities8 |
|
|
2,870 |
|
|
|
19,238 |
|
|
Defined severance benefits |
|
|
19,964 |
|
|
|
23,361 |
|
|
Deferred tax liabilities |
|
|
51,659 |
|
|
|
61,134 |
|
|
Other non-current liabilities |
|
|
1,650 |
|
|
|
9,322 |
|
|
Total liabilities |
|
$ |
418,342 |
|
|
$ |
429,129 |
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
Redeemable non-controlling interest in
subsidiary |
|
$ |
41,706 |
|
|
$ |
41,429 |
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Common stock, $0.0001 par value (2,000,000,000 authorized,
126,886,102 shares and 109,505,150 shares issued and outstanding as
of June 30, 2024 and December 31, 2023, respectively) |
|
$ |
13 |
|
|
$ |
11 |
|
|
Preferred stock, $0.0001 par value (100,000,000 authorized, no
shares and - shares issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively) |
|
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
2,053,326 |
|
|
|
1,667,246 |
|
|
Accumulated other comprehensive loss |
|
|
(104,008 |
) |
|
|
(54,824 |
) |
|
Accumulated deficit |
|
|
(433,985 |
) |
|
|
(363,292 |
) |
|
Total stockholders' equity attributable to WEBTOON
Entertainment Inc. |
|
|
1,515,346 |
|
|
|
1,249,141 |
|
|
Non-controlling interests in consolidated subsidiaries |
|
|
53,823 |
|
|
|
56,906 |
|
|
Total equity |
|
|
1,569,169 |
|
|
|
1,306,047 |
|
|
Total liabilities, redeemable non-controlling interest, and
equity |
|
$ |
2,029,217 |
|
|
$ |
1,776,605 |
|
- Includes amounts due from related parties of $54,585 and
$63,723 as of June 30, 2024 and December 31, 2023,
respectively.
- Includes amounts due from related parties of $8,672 and $- as
of June 30, 2024 and December 31, 2023, respectively.
- Includes amounts due from related parties of $30,520 and
$15,876 as of June 30, 2024 and December 31, 2023,
respectively.
- Includes amounts due to related parties of $20,481 and $6,713
as of June 30, 2024 and December 31, 2023, respectively.
- Includes amounts due to related parties of $- and as of $3,800
June 30, 2024 and December 31, 2023, respectively.
- Includes amounts due to related parties of $1,899 and $6,426 as
of June 30, 2024 and December 31, 2023, respectively.
- Includes amounts due to related parties of $1 and $16,160 as of
June 30, 2024 and December 31, 2023, respectively.
- Includes amounts due to related parties of $- and $14,852 as of
June 30, 2024 and December 31, 2023, respectively.
|
|
|
|
WEBTOON Entertainment Inc. Condensed
Consolidated Statements of Operations and Comprehensive
Loss (unaudited) (in thousands of USD,
except share and per share data) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
Revenue1 |
|
$ |
320,972 |
|
|
$ |
320,663 |
|
|
$ |
647,716 |
|
|
$ |
630,920 |
|
|
Cost of revenue2 |
|
|
(237,915 |
) |
|
|
(239,518 |
) |
|
|
(482,300 |
) |
|
|
(483,925 |
) |
|
Marketing3 |
|
|
(23,448 |
) |
|
|
(33,142 |
) |
|
|
(42,926 |
) |
|
|
(62,386 |
) |
|
General and administrative expenses4 |
|
|
(138,705 |
) |
|
|
(53,469 |
) |
|
|
(187,398 |
) |
|
|
(109,838 |
) |
|
Operating Loss |
|
|
(79,096 |
) |
|
|
(5,466 |
) |
|
|
(64,908 |
) |
|
|
(25,229 |
) |
|
Interest income |
|
|
2,043 |
|
|
|
1,018 |
|
|
|
3,278 |
|
|
|
1,375 |
|
|
Interest expense |
|
|
(11 |
) |
|
|
(18 |
) |
|
|
(44 |
) |
|
|
(41 |
) |
|
Income (loss) on equity method investments, net |
|
|
120 |
|
|
|
2,007 |
|
|
|
(932 |
) |
|
|
1,483 |
|
|
Other income (loss), net5 |
|
|
2,283 |
|
|
|
(6,090 |
) |
|
|
846 |
|
|
|
(2,052 |
) |
|
Loss before income tax |
|
|
(74,661 |
) |
|
|
(8,549 |
) |
|
|
(61,760 |
) |
|
|
(24,464 |
) |
|
Income tax expense |
|
|
(1,907 |
) |
|
|
(11,201 |
) |
|
|
(8,575 |
) |
|
|
(13,578 |
) |
|
Net Loss |
|
|
(76,568 |
) |
|
|
(19,750 |
) |
|
|
(70,335 |
) |
|
|
(38,042 |
) |
|
Net Loss attributable to WEBTOON Entertainment Inc. |
|
|
(76,885 |
) |
|
|
(20,118 |
) |
|
|
(70,693 |
) |
|
|
(37,679 |
) |
|
Net Income attributable to non-controlling interests and redeemable
non-controlling interests |
|
|
317 |
|
|
|
368 |
|
|
|
358 |
|
|
|
(363 |
) |
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net of tax |
|
|
(20,486 |
) |
|
|
(16,209 |
) |
|
|
(49,175 |
) |
|
|
(34,605 |
) |
|
Share of other comprehensive loss of equity method investments, net
of tax |
|
|
— |
|
|
|
(25 |
) |
|
|
(9 |
) |
|
|
(856 |
) |
|
Total other comprehensive loss, net of tax |
|
|
(20,486 |
) |
|
|
(16,234 |
) |
|
|
(49,184 |
) |
|
|
(35,461 |
) |
|
Total Comprehensive Loss |
|
$ |
(97,054 |
) |
|
$ |
(35,984 |
) |
|
$ |
(119,519 |
) |
|
$ |
(73,503 |
) |
|
Total comprehensive loss attributable to WEBTOON Entertainment
Inc. |
|
|
(97,371 |
) |
|
|
(36,352 |
) |
|
|
(119,877 |
) |
|
|
(73,140 |
) |
|
Total comprehensive income attributable to non-controlling
interests and redeemable non-controlling interests |
|
|
317 |
|
|
|
368 |
|
|
|
358 |
|
|
|
(363 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
110,102,868 |
|
|
|
109,505,150 |
|
|
|
109,804,009 |
|
|
|
109,505,150 |
|
|
Diluted |
|
|
110,102,868 |
|
|
|
109,505,150 |
|
|
|
109,804,009 |
|
|
|
109,505,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share Attributable to WEBTOON Entertainment
Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.70 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.34 |
) |
|
Diluted |
|
$ |
(0.70 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.34 |
) |
- Includes amounts earned from related parties of $20,880 and
$27,663 for the three months ended June 30, 2024 and June 30, 2023,
respectively and $34,167 and $46,774 for the six months ended June
30, 2024 and June 30, 2023, respectively.
- Includes amounts incurred from related parties of $34,131 and
$3,563 for the three months ended June 30, 2024 and June 30, 2023,
respectively and $46,967 and $7,143 for the six months ended June
30, 2024 and June 30, 2023, respectively.
- Includes amounts incurred from related parties of $(3,003) and
$35 for the three months ended June 30, 2024 and June 30, 2023,
respectively and $(2,941) and $97 for the six months ended June 30,
2024 and June 30, 2023, respectively.
- Includes amounts incurred from related parties of $968 and
$7,602 for three months ended June 30, 2024 and June 30, 2023,
respectively and $7,877 and $16,043 for the six months ended June
30, 2024 and June 30, 2023, respectively.
- Includes amounts earned from related parties of $(3,443) and
$(433) for three months ended June 30, 2024 and June 30, 2023,
respectively and $2,679 and $(247) for the six months ended June
30, 2024 and June 30, 2023, respectively.
|
|
|
|
WEBTOON Entertainment Inc. Condensed
Consolidated Statements of Cash Flows
(unaudited) (in thousands of USD) |
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
Operating activities: |
|
|
|
|
|
|
|
Net Loss |
|
$ |
(70,335 |
) |
|
$ |
(38,042 |
) |
|
Adjustments to reconcile net loss to cash used in operating
activities: |
|
|
|
|
|
|
|
Provision for bad debt expense |
|
|
1,712 |
|
|
|
554 |
|
|
Depreciation and amortization |
|
|
17,950 |
|
|
|
18,764 |
|
|
Operating lease expense |
|
|
5,294 |
|
|
|
6,429 |
|
|
Loss on foreign currency, net |
|
|
5,060 |
|
|
|
6,293 |
|
|
Deferred tax expense |
|
|
(7,460 |
) |
|
|
(841 |
) |
|
Gain on debt and equity securities, net |
|
|
(5,143 |
) |
|
|
(1,100 |
) |
|
Loss (gain) on equity method investments, net |
|
|
932 |
|
|
|
(1,483 |
) |
|
Contingent consideration liability |
|
|
(3,814 |
) |
|
|
1,987 |
|
|
Stock-based compensation |
|
|
57,656 |
|
|
|
3,097 |
|
|
Gain on disposal of right-of-use assets |
|
|
(1,883 |
) |
|
|
(62 |
) |
|
Other non-cash items |
|
|
(1,471 |
) |
|
|
715 |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Changes in receivables, net of allowance |
|
|
(28,269 |
) |
|
|
(30,643 |
) |
|
Changes in other assets |
|
|
(18,486 |
) |
|
|
(10,879 |
) |
|
Changes in accounts payable |
|
|
17,957 |
|
|
|
16,540 |
|
|
Changes in accrued expenses |
|
|
28,996 |
|
|
|
7,921 |
|
|
Changes in contract liabilities |
|
|
28,304 |
|
|
|
2,152 |
|
|
Changes in other liabilities |
|
|
207 |
|
|
|
(14,125 |
) |
|
Changes in operating lease liabilities |
|
|
(4,949 |
) |
|
|
(5,584 |
) |
|
Payment of severance benefits, net of cash transferred |
|
|
136 |
|
|
|
(2,356 |
) |
|
Net cash provided by (used in) operating
activities |
|
$ |
22,394 |
|
|
$ |
(40,663 |
) |
|
Investing activities: |
|
|
|
|
|
|
|
Proceeds from maturities of short-term investments |
|
$ |
63,299 |
|
|
$ |
7,725 |
|
|
Proceeds from sale of debt and equity securities |
|
|
2,977 |
|
|
|
— |
|
|
Purchases of property and equipment |
|
|
(679 |
) |
|
|
(9,326 |
) |
|
Proceeds from sale of equity method investments |
|
|
5,927 |
|
|
|
— |
|
|
Payment made for short-term investments |
|
|
(68,035 |
) |
|
|
(7,725 |
) |
|
Payment made for loan receivable |
|
|
(237 |
) |
|
|
(12,307 |
) |
|
Purchases of intangible assets |
|
|
(4,669 |
) |
|
|
(5,169 |
) |
|
Purchases of equity method investments |
|
|
(5,798 |
) |
|
|
(687 |
) |
|
Disposal of businesses, net of cash disposed |
|
|
(360 |
) |
|
|
2,031 |
|
|
Other investing activities |
|
|
269 |
|
|
|
(17 |
) |
|
Net cash used in investing activities |
|
$ |
(7,306 |
) |
|
$ |
(25,475 |
) |
|
Financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock upon initial public
offering, net of underwriting discounts and commissions |
|
$ |
292,950 |
|
|
$ |
— |
|
|
Proceeds from issuance of common stock related to private
placement |
|
|
50,000 |
|
|
|
— |
|
|
Payments of initial public offering costs |
|
|
(1,898 |
) |
|
|
— |
|
|
Repayments of short-term borrowings |
|
|
(3,647 |
) |
|
|
(6,761 |
) |
|
Payment of contingent consideration related to business
acquisition |
|
|
(1,352 |
) |
|
|
(1,983 |
) |
|
Net cash provided by (used in) financing
activities |
|
$ |
336,053 |
|
|
$ |
(8,744 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
$ |
(10,581 |
) |
|
$ |
(5,333 |
) |
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
340,560 |
|
|
$ |
(80,215 |
) |
|
Cash and cash equivalents at beginning of the year |
|
|
231,745 |
|
|
|
279,709 |
|
|
Cash and cash equivalents at end of the year |
|
$ |
572,305 |
|
|
$ |
199,494 |
|
|
Supplemental disclosure: |
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
15,477 |
|
|
$ |
18,440 |
|
|
Interest paid |
|
|
85 |
|
|
|
88 |
|
|
Reclassification of deferred offering costs to additional paid-in
capital upon IPO |
|
|
11,215 |
|
|
|
— |
|
|
Deferred offering costs not yet paid |
|
|
9,316 |
|
|
|
— |
|
|
Reclassification of debt and equity securities to equity method
investments |
|
|
18,256 |
|
|
|
— |
|
Reconciliation of Non-GAAP
Measures
In addition to adjustments for foreign exchange
fluctuations, we have also further adjusted revenue to exclude the
impacts of deconsolidated and transferred operations to show growth
or loss exclusive of these changes ("Revenue on a Constant Currency
Basis"). Revenue on a Constant Currency Basis is a Non-GAAP metric
that management believes adds value but has its limitations as an
analytical tool, and you should not consider it in isolation or as
substitutes for analysis of our results as reported under GAAP.
The following table presents a reconciliation of
revenue to revenue on a constant currency basis, and ARPPU to ARPPU
on a constant currency basis, respectively, for each of the periods
presented.
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
(in thousands of USD, except percentages) |
|
2024 |
|
|
2023 |
|
|
Change |
2024 |
|
|
2023 |
|
Change |
|
Total Revenue |
|
$ |
320,972 |
|
|
$ |
320,663 |
|
|
0.1 |
% |
|
$ |
647,716 |
|
|
$ |
630,920 |
|
2.7 |
% |
|
Effect of deconsolidated and transferred operations |
|
|
- |
|
|
|
(5,240 |
) |
|
-100.0 |
% |
|
|
(145 |
) |
|
|
(12,076 |
) |
-98.8 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
29,333 |
|
|
|
- |
|
|
N/A |
|
56,147 |
|
|
|
- |
|
N/A |
|
Revenue on a Constant Currency Basis |
|
|
350,305 |
|
|
|
315,423 |
|
|
11.1 |
% |
|
|
703,718 |
|
|
|
618,844 |
|
13.7 |
% |
|
Paid Content Revenue |
|
|
260,709 |
|
|
|
258,129 |
|
|
1.0 |
% |
|
|
527,564 |
|
|
|
513,821 |
|
2.7 |
% |
|
Effect of deconsolidated and transferred operations |
|
|
- |
|
|
|
(2,427 |
) |
|
-100.0 |
% |
|
|
(120 |
) |
|
|
(5,762 |
) |
-97.9 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
24,479 |
|
|
|
- |
|
|
N/A |
|
47,959 |
|
|
|
- |
|
N/A |
|
Paid Content Revenue on a Constant Currency Basis |
|
|
285,188 |
|
|
|
255,702 |
|
|
11.5 |
% |
|
|
575,403 |
|
|
|
508,059 |
|
13.3 |
% |
|
Advertising Revenue |
|
|
40,419 |
|
|
|
41,938 |
|
|
-3.6 |
% |
|
|
77,415 |
|
|
|
72,450 |
|
6.9 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
2,484 |
|
|
|
- |
|
|
N/A |
|
4,672 |
|
|
|
- |
|
N/A |
|
Advertising Revenue on a Constant Currency Basis |
|
|
42,903 |
|
|
|
41,938 |
|
|
2.3 |
% |
|
|
82,087 |
|
|
|
72,450 |
|
13.3 |
% |
|
IP Adaptations Revenue |
|
|
19,844 |
|
|
|
20,596 |
|
|
-3.7 |
% |
|
|
42,737 |
|
|
|
44,649 |
|
-4.3 |
% |
|
Effect of deconsolidated and transferred operations |
|
|
- |
|
|
|
(2,813 |
) |
|
-100.0 |
% |
|
|
(25 |
) |
|
|
(6,314 |
) |
-99.6 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
2,369 |
|
|
|
- |
|
|
N/A |
|
3,517 |
|
|
|
- |
|
N/A |
|
IP Adaptations Revenue on a Constant Currency Basis |
|
$ |
22,213 |
|
|
$ |
17,783 |
|
|
24.9 |
% |
|
$ |
46,229 |
|
|
$ |
38,335 |
|
20.6 |
% |
|
Paid Content Average Revenue Per Paying User
("ARPPU")1 |
|
|
|
|
|
|
|
|
|
|
Korea paid content revenue |
|
$ |
83,939 |
|
|
$ |
100,532 |
|
|
-16.5 |
% |
|
$ |
174,881 |
|
|
$ |
202,466 |
|
-13.6 |
% |
|
Korea ARPPU |
|
|
7.48 |
|
|
|
8.31 |
|
|
-10.0 |
% |
|
|
7.70 |
|
|
|
8.34 |
|
-7.7 |
% |
|
Effect of deconsolidated and transferred operations |
|
|
- |
|
|
|
(0.20 |
) |
|
-100.0 |
% |
|
|
- |
|
|
|
(0.24 |
) |
-100.0 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
0.43 |
|
|
|
- |
|
|
N/A |
|
0.47 |
|
|
|
- |
|
N/A |
|
Korea ARPPU on a Constant Currency Basis |
|
|
7.91 |
|
|
|
8.11 |
|
|
-2.5 |
% |
|
|
8.17 |
|
|
|
8.10 |
|
0.8 |
% |
|
Japan paid content revenue |
|
|
142,257 |
|
|
|
130,560 |
|
|
9.0 |
% |
|
|
284,465 |
|
|
|
261,742 |
|
8.7 |
% |
|
Japan ARPPU |
|
|
21.17 |
|
|
|
22.45 |
|
|
-5.7 |
% |
|
|
21.67 |
|
|
|
22.87 |
|
-5.2 |
% |
|
Effects of foreign currency rate fluctuations |
|
|
2.94 |
|
|
|
- |
|
|
N/A |
|
2.83 |
|
|
|
- |
|
N/A |
|
Japan ARPPU on a Constant Currency Basis |
|
|
24.11 |
|
|
|
22.45 |
|
|
7.4 |
% |
|
|
24.50 |
|
|
|
22.87 |
|
7.1 |
% |
|
Rest of World paid content revenue |
|
|
34,514 |
|
|
|
27,038 |
|
|
27.6 |
% |
|
|
68,218 |
|
|
|
49,614 |
|
37.5 |
% |
|
Rest of World ARPPU |
|
|
6.45 |
|
|
|
4.95 |
|
|
30.3 |
% |
|
|
6.37 |
|
|
|
4.51 |
|
41.2 |
% |
|
Effect of deconsolidated and transferred operations |
|
|
- |
|
|
|
- |
|
|
N/A |
|
- |
|
|
|
- |
|
N/A |
|
Effects of foreign currency rate fluctuations |
|
|
- |
|
|
|
- |
|
|
N/A |
|
- |
|
|
|
- |
|
N/A |
|
Rest of World ARPPU on a Constant Currency Basis |
|
$ |
6.45 |
|
|
$ |
4.95 |
|
|
30.2 |
% |
|
$ |
6.37 |
|
|
$ |
4.51 |
|
41.0 |
% |
1ARPPU is calculated by taking Paid Content
revenue and dividing it by the number of MPU for such month,
averaged over each month in the given period. ARPPU on a constant
currency basis is calculated by dividing Paid Content revenue on a
constant currency basis by the number of MPU for such month,
averaged over each month in the given period.. Where each metric is
country specific, the numerator is Paid Content revenue on a
constant currency basis by country and the denominator is users by
country.
The following table presents a reconciliation of
net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for
each of the periods presented.
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
(in thousands of USD, except percentages) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Net Income (Loss) |
|
$ |
(76,568 |
) |
|
$ |
(19,750 |
) |
|
$ |
(70,335 |
) |
|
$ |
(38,042 |
) |
|
Interest expense |
|
|
11 |
|
|
|
18 |
|
|
|
44 |
|
|
|
41 |
|
|
Income tax expense |
|
|
1,907 |
|
|
|
11,201 |
|
|
|
8,575 |
|
|
|
13,578 |
|
|
Depreciation and amortization |
|
|
8,915 |
|
|
|
9,291 |
|
|
|
17,950 |
|
|
|
18,764 |
|
|
EBITDA(6) |
|
$ |
(65,735 |
) |
|
$ |
760 |
|
|
$ |
(43,766 |
) |
|
$ |
(5,659 |
) |
|
Loss on equity method investments, net(1) |
|
|
(120 |
) |
|
|
(2,007 |
) |
|
|
932 |
|
|
|
(1,483 |
) |
|
Loss on fair value instruments, net(2) |
|
|
(1,772 |
) |
|
|
(854 |
) |
|
|
(5,143 |
) |
|
|
(1,100 |
) |
|
Stock-based compensation expense(3) |
|
|
53,817 |
|
|
|
769 |
|
|
|
56,043 |
|
|
|
3,100 |
|
|
Restructuring and IPO-related costs(4) |
|
|
36,204 |
|
|
|
450 |
|
|
|
37,720 |
|
|
|
1,628 |
|
|
Adjusted EBITDA(5) |
|
$ |
22,394 |
|
|
$ |
(882 |
) |
|
$ |
45,786 |
|
|
$ |
(3,514 |
) |
|
Net loss margin |
|
|
-23.9 |
% |
|
|
-6.2 |
% |
|
|
-10.9 |
% |
|
|
-6.0 |
% |
|
Adjusted EBITDA Margin |
|
|
7.0 |
% |
|
|
-0.3 |
% |
|
|
7.1 |
% |
|
|
-0.6 |
% |
|
Weighted average shares outstanding (Basic and Diluted) |
|
|
110,102,868 |
|
|
|
109,505,150 |
|
|
|
109,804,009 |
|
|
|
109,505,150 |
|
|
EPS (Basic and Diluted) |
|
|
(0.70 |
) |
|
|
(0.18 |
) |
|
|
(0.64 |
) |
|
|
(0.34 |
) |
|
Interest expense |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
Income tax expense |
|
|
0.02 |
|
|
|
0.10 |
|
|
|
0.08 |
|
|
|
0.12 |
|
|
Depreciation and amortization |
|
|
0.08 |
|
|
|
0.08 |
|
|
|
0.16 |
|
|
|
0.17 |
|
|
Loss on equity method investments, net(1) |
|
|
(0.00 |
) |
|
|
(0.02 |
) |
|
|
0.01 |
|
|
|
(0.01 |
) |
|
Loss on fair value instruments, net(2) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.05 |
) |
|
|
(0.01 |
) |
|
Stock-based compensation expense(3) |
|
|
0.49 |
|
|
|
0.01 |
|
|
|
0.51 |
|
|
|
0.03 |
|
|
Restructuring and IPO-related costs(4) |
|
|
0.33 |
|
|
|
0.00 |
|
|
|
0.34 |
|
|
|
0.01 |
|
|
Adjusted EPS (Basic and Diluted) |
|
|
0.20 |
|
|
|
(0.01 |
) |
|
|
0.42 |
|
|
|
(0.02 |
) |
- Represents our proportionate share of recognized losses
associated with our investments accounted for using the equity
method.
- Represents unrealized net loss of financial assets measured at
FVPL, which include the Company's equity investments in entities
including NAVER Z Co., Ltd., Contents First Inc. and Clova Games
Inc.
- Represents non-cash stock-based compensation expense related to
WEBTOON’s equity incentive plan and stock-based compensation plans
of NAVER, Munpia and LOCUS.
- Represents non-recurring expenses that we do not consider
representative of the operating performance of the business. For
the three and six months ended June 30, 2024, these amounts include
a $30.0 million one-time CEO bonus and legal and advisory fees
related to the IPO.
- Totals may not foot due to rounding.
Contact Information
Investor Relations Nikki Mostafavi & Lauren
Hopkinson investor@webtoon.com
Edelman Smithfield for WEBTOON
Hunter Stenback & Ashley Firlan webtoonIR@edelmansmithfield.com
WEBTOON Entertainment Kiel Hume & Lauren
Hopkinson webtoonpress@webtoon.com
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