Core Viewpoint - Kuehn Law, PLLC is investigating potential breaches of fiduciary duties by officers and directors of WEBTOON Entertainment Inc. (NASDAQ: WBTN) towards shareholders [1] Financial Performance Issues - WEBTOON insiders allegedly caused the company to misrepresent or fail to disclose a deceleration in advertising revenue growth [2] - The company also reportedly experienced a deceleration in revenue from IP adaptations [2] - There was exposure to weaker foreign currencies that offset revenue growth [2] - As a result of these issues, positive statements regarding the company's business, operations, and prospects were deemed materially misleading or lacking a reasonable basis [2]

User Growth - The company reported a significant increase in monthly active users (MAU), reaching 10 million, representing a 25% year-over-year growth[21] - The company reported a significant increase in Monthly Active Users (MAU), averaging over 10 million users in the last quarter, reflecting a growth of 15% year-over-year[24] - Monthly Paying Users (MPU) increased to 2 million, indicating a 30% rise compared to the previous year, reflecting improved monetization strategies[24] - Monthly Paying Users (MPU) reached 2 million, indicating a paying ratio of 20% compared to MAU, which is an increase from 18% in the previous quarter[24] - The management anticipates continued growth in the creator community, aiming to onboard 5,000 new professional creators by the end of the fiscal year[26] Revenue Growth - The company anticipates a revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion efforts[26] - The average revenue per paying user (ARPPU) rose to $15, a 10% increase from the last quarter, showcasing enhanced user engagement with paid content[24] - The Average Revenue per Paying User (ARPPU) for Paid Content was reported at $15, showing a 10% increase from the last quarter[24] - New product launches, including the "Fast Pass" and "Daily Pass," are expected to drive additional revenue, with projections estimating a 30% increase in Paid Content sales[26] - The company is committed to enhancing its advertising business, with a goal to increase advertising revenue by 15% in the next quarter[26] Monetization Strategies - The paying ratio improved to 20%, indicating a stronger conversion of users to paying customers[24] - The company is committed to diversifying its monetization strategies, including increasing revenues from intellectual property adaptations by 25%[26] - The company is focusing on diversifying its monetization strategy, particularly through IP Adaptations, with a target to increase revenue from this segment by 40% in the upcoming year[26] Market Expansion - The company plans to expand its presence in international markets, targeting a 15% increase in user base outside of its primary market[26] - The company plans to expand its offerings in new geographic markets, aiming for a 25% increase in user engagement by the end of the next fiscal year[26] Investment and Acquisitions - Investment in new technologies and product development is expected to exceed $50 million in the upcoming year, focusing on enhancing user experience and content offerings[26] - A strategic acquisition of a content platform is in progress, which is projected to enhance the company's content library and user engagement metrics[26] - Future acquisitions are being considered to strengthen market position, with a focus on companies that can enhance user engagement and content offerings[26] Future Outlook and Challenges - Future growth is contingent on maintaining a safe online environment and complying with evolving regulatory standards, which may impact operational costs[29] - The company has experienced a historical growth rate of 20% annually, but management cautions that future performance may vary due to market competition and user retention challenges[28]

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]

WEBTOON Entertainment Inc. (NASDAQ:WBTN) Q4 2024 Earnings Conference Call February 25, 2025 4:30 PM ET Company Participants Soohwan Kim - Vice President, Investor Relations Junkoo Kim - Founder & Chief Executive Officer David Lee - Chief Financial Officer and Chief Operating Officer Yongsoo Kim - Chief Strategy Officer & Head of Global WEBTOON Conference Call Participants Mark Mahaney - Evercore Eric Sheridan - Goldman Sachs Benjamin Black - Deutsche Bank Matthew Cost - Morgan Stanley Andrew Marok - Raymond ...

Financial Performance - Total revenue for fiscal year 2024 is approximately $1.347 billion, representing a 12% increase on a constant currency basis compared to fiscal year 2023[2] - Adjusted EBITDA for fiscal year 2024 is estimated to be over $67 million, a growth of over 600% from $8.7 million in 2023[2] - Fourth quarter revenue is approximately $351 million, with a constant currency revenue of approximately $367 million[6] - The net income range for the fourth quarter is estimated to be between $(107) million and $(101) million[6] - The company reported a net loss of $144.8 million for 2023, with a projected net loss ranging from $151.5 million to $157.5 million for 2024[23] - Adjusted EBITDA for 2023 was $8.7 million, with a forecasted range of $67.0 million to $68.0 million for 2024[23] - Impairment losses on goodwill amounted to $63.4 million in 2023, with expected losses of $69.1 million to $70.1 million in 2024[23] - Interest income rose from $3.0 million in 2023 to an expected $15.8 million in 2024[23] - The company experienced a loss on equity method investments of $12.3 million in 2023, with a projected loss of $1.1 million for 2024[23] Operational Highlights - The company experienced approximately 10% revenue growth on a constant currency basis in the fourth quarter despite foreign exchange headwinds[2] - Cash and cash equivalents stand at approximately $572 million, plus an additional $26 million in short-term deposits[6] - WEBTOON Entertainment has approximately 170 million monthly active users, indicating strong user engagement[10] Cost and Expense Management - Stock-based compensation expense significantly increased from $3.2 million in 2023 to an anticipated $82.3 million in 2024[23] - The company incurred restructuring and IPO-related costs of $4.3 million in 2023, with a projected increase to $42.1 million in 2024[23] - Future guidance indicates a significant increase in operational costs, particularly in stock-based compensation and restructuring efforts[23] - The total expenses related to non-recurring items included financial advisory, consulting, severance, and office relocation fees[22] Strategic Outlook - The company is focusing on new product development and market expansion strategies[24] - The company plans to report detailed financial results on February 25, 2025, followed by a conference call[4] - The US dollar appreciated significantly against the Korean Won and Japanese Yen, impacting revenue growth as these currencies represent nearly 90% of total revenue[2] - Actuarial losses on retiree benefits had an approximate $6 million impact on Adjusted EBITDA in the fourth quarter[3]

Core Insights - WEBTOON Entertainment Inc. reported a full year 2024 revenue growth of 5.1%, with a robust year-over-year revenue growth on a constant currency basis of 13.0% [1][6] - The company experienced a net loss of $152.9 million, while adjusted EBITDA reached $67.9 million, representing a 685% increase year-over-year [1][6] - The balance sheet remains strong, with cash and cash equivalents of approximately $572 million and no debt [1] Full Year 2024 Highlights - Total revenue for 2024 was $1.35 billion, a 5.1% increase compared to 2023 [6] - Revenue on a constant currency basis was $1.44 billion, growing 13.0% driven by Paid Content, Advertising, and IP Adaptations [6] - Adjusted EBITDA margin was 5.0%, with adjusted EBITDA of $67.9 million, both increasing from the prior year [6] - Diluted loss per share was $1.21, compared to a loss per share of $1.06 in the prior year [6] Fourth Quarter 2024 Highlights - Total revenue for Q4 2024 was $352.8 million, a 5.6% increase from Q4 2023 [6] - Revenue on a constant currency basis for Q4 was $368.9 million, growing 10.4% [6] - Adjusted EBITDA loss was $3.5 million, compared to a gain of $10.4 million in the prior year [6] CEO Commentary - The CEO highlighted 2024 as an exciting year for the company, emphasizing the successful public listing and strong financial results [4] - The company aims to drive further innovation, enhance usability, and expand monetization opportunities for creators in 2025 [4] Cash Position - The company reported cash and cash equivalents of approximately $572 million, indicating a strong liquidity position [6] - The increase in cash from the previous year was significant, reflecting effective financial management [6]

Core Insights - WEBTOON Entertainment achieved over 12% revenue growth on a constant currency basis in 2024 compared to 2023, with Adjusted EBITDA profitability exceeding $67 million, a growth of over 600% from $8.7 million in 2023 [3][8] - The company reported total revenue of approximately $1.347 billion for the full year 2024, with a constant currency revenue of approximately $1.433 billion [8] - The fourth quarter of 2024 saw total revenue of approximately $351 million, with a constant currency revenue of approximately $367 million [8] Financial Performance - Adjusted EBITDA for the fourth quarter was impacted by approximately $6 million in actuarial losses on retiree benefits, currency translation effects, and lower gross profit in Korea due to a shift in revenue mix [4][8] - The net income for the full year 2024 is estimated to be in the range of approximately $(158) to $(152) million, while the fourth quarter net income is estimated to be approximately $(107) to $(101) million [8] - Cash and cash equivalents stood at approximately $572 million, with an additional $26 million in short-term deposits included in other current assets [8] Market Context - The US dollar appreciated significantly against the Korean Won and Japanese Yen during the fourth quarter, which affected revenue growth as these currencies represent nearly 90% of WEBTOON's total revenue [3][8] - The company faced short-term engagement impacts from political turbulence in Korea, which also contributed to the challenges in revenue growth [3] Upcoming Events - WEBTOON Entertainment plans to report its fourth quarter and full year 2024 financial results on February 25, 2025, followed by a conference call at 4:30 p.m. ET [5][6]

Core Insights - WEBTOON Entertainment Inc. reported a full year of growth and profitability in 2024, with revenue increasing by over 12% on a constant currency basis compared to 2023 [3] - The company achieved Adjusted EBITDA profitability for the second consecutive year, with over $67 million in 2024, a growth of over 600% from $8.7 million in 2023 [3] - Despite foreign exchange challenges, the company demonstrated approximately 10% revenue growth on a constant currency basis in the fourth quarter [3] Financial Performance - Total revenue for 2024 was approximately $1.347 billion, with revenue on a constant currency basis of approximately $1.433 billion [8] - The net income range for 2024 was approximately $(158) to $(152) million, while Adjusted EBITDA ranged from approximately $67 to $68 million [8] - For the fourth quarter of 2024, total revenue was approximately $351 million, with revenue on a constant currency basis of approximately $367 million [8] Currency Impact - The US dollar appreciated significantly against the Korean Won and the Japanese Yen, which represent almost 90% of WEBTOON's total revenue, impacting revenue growth [3] - Currency translation was identified as a primary factor weighing on revenue growth, alongside short-term engagement impacts from political turbulence in Korea [3] Upcoming Events - WEBTOON Entertainment plans to report its fourth quarter and full year 2024 financial results after market close on February 25, 2025, followed by a conference call at 4:30 p.m. ET [5]

Group 1 - WEBTOON Entertainment Inc. announced that CFO and COO David J. Lee will participate in two upcoming investor conferences: UBS Global Technology and AI Conference on December 3, 2024, and Raymond James TMT and Consumer Conference on December 9, 2024 [1] - Both presentations will be webcast live and archived on the Investor Relations section of the Company's website [1] Group 2 - WEBTOON is a leading global entertainment company and pioneer of the mobile webcomic format, transforming comics and visual storytelling for fans and creators [2] - The company has a CANVAS UGC platform that empowers anyone to become a creator, along with a growing roster of WEBTOON Originals creators and series [3] - WEBTOON adaptations are available on major streaming platforms such as Netflix, Prime Video, and Crunchyroll, with content partners including Discord, HYBE, and DC Comics [3] Group 3 - WEBTOON has approximately 170 million monthly active users and an IP & Creator Ecosystem that includes WEBTOON, Wattpad, and several studios [4]

Core Viewpoint - WEBTOON Entertainment Inc. is facing a class action lawsuit alleging that the company made materially false and misleading statements in its registration statement related to its June 2024 IPO, which may have breached the board's fiduciary duties to shareholders [1][4]. Financial Performance - For Q2 2024, WEBTOON reported revenue of $321 million, reflecting a minimal growth of 0.1% [2]. - The company experienced a decline in advertising revenue by 3.6% and a 3.7% drop in IP Adaptations revenue [2]. - A quarterly net loss of $76.6 million, or 70 cents per share, was reported [2]. Stock Performance - Following the financial results announcement, WEBTOON's stock price fell by $7.88, or 38.2%, closing at $12.75 per share on August 9, 2024, with unusually high trading volume [3]. - The stock has traded as low as $12.45 per share, representing a decline of over 40% from the IPO price of $21.00 per share [3]. Allegations in Class Action - The class action complaint alleges that the Registration Statement failed to disclose critical information, including: 1. A deceleration in advertising revenue growth [4]. 2. A slowdown in IP adaptations revenue [4]. 3. Exposure to weaker foreign currencies that offset revenue growth [4]. 4. Misleading positive statements regarding the company's business and prospects [4].