Q2 2024 Financial Results Overview Performance Highlights WEBTOON reported flat revenue at $321.0 million but achieved 11.1% constant currency growth, with a net loss of $76.6 million due to IPO costs, yet a healthy Adjusted EBITDA of $22.4 million Q2 2024 Key Financial and Operational Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | Constant Currency Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $321.0M | $320.7M | 0.1% | 11.1% | | Net Loss | ($76.6M) | ($19.7M) | N/A | N/A | | Adjusted EBITDA | $22.4M | ($0.9M) | N/A | N/A | | Diluted EPS | ($0.70) | ($0.18) | N/A | N/A | | Adjusted EPS | $0.20 | ($0.01) | N/A | N/A | | MAU | 166.3M | 167.7M | (0.8%) | N/A | | MPU | 7.8M | 7.8M | (0.4%) | N/A | - The significant net loss was primarily driven by one-time IPO-related costs and stock-based compensation expenses129 - Revenue growth was negatively impacted by weaker foreign currencies, particularly the Korean won and Japanese yen, while on a constant currency basis, all revenue streams showed strong growth: Paid Content (+11.5%), Advertising (+2.3%), and IP Adaptations (+24.9%)24 - LINE MANGA's performance in Japan was a major highlight, achieving 1 consumer app status in June and driving a record number of Monthly Paying Users (MPU) and a record paying ratio for the company in that region15 Management Commentary CEO Junkoo Kim highlighted the successful IPO and robust Q2 performance, expressing confidence in future growth through market expansion, advertising, and IP adaptations - The company successfully went public in June, marking a new chapter after nearly two decades of innovation in the webcomic format2 - Management is confident in its ability to generate long-term shareholder value by leveraging its global flywheel for growth3 - Key future growth strategies include: expanding reach in underpenetrated markets, seizing the large advertising opportunity, and inspiring more IP Adaptations worldwide3 Detailed Financial & Operational Performance Q2 2024 revenue was flat at $321.0 million (11.1% constant currency growth), with a net loss of $76.6 million due to increased G&A expenses, but achieved a positive Adjusted EBITDA of $22.4 million - Paid Content revenue growth was driven by successful user conversion strategies, with double-digit constant currency growth in Japan and Rest of World, and MPU in Japan grew 15.5% YoY5 - Advertising revenue in Korea declined due to a strategic diversification away from parent company NAVER Corporation, which partially offset strong growth in Japan and Rest of World6 - IP Adaptations revenue showed strong underlying growth of 24.9% on a constant currency basis, reflecting the company's focus on strengthening its content flywheel7 - General & administrative expenses increased significantly to $138.7 million from $53.5 million in Q2 2023, primarily due to one-time IPO and stock-based compensation expenses8 - Despite a reported net loss of $76.6 million, the company achieved a positive Adjusted EBITDA of $22.4 million, a significant improvement from a loss of $0.9 million in the prior year9 Balance Sheet As of June 30, 2024, WEBTOON maintained a strong financial position with $826.4 million in total liquidity, including $572.3 million in cash, and no material debt Balance Sheet Highlights (as of June 30, 2024) | Item | Amount | | :--- | :--- | | Total Liquidity | $826.4 million | | Cash and Cash Equivalents | $572.3 million | | Material Debt | None | Third Quarter 2024 Outlook For Q3 2024, WEBTOON projects 12.5%-14.5% constant currency revenue growth, targeting $332-$338 million in revenue and an Adjusted EBITDA of ($10.0)-($7.7) million Q3 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue Growth (Constant Currency) | 12.5% - 14.5% | | Revenue | $332M - $338M | | Adjusted EBITDA | ($10.0M) - ($7.7M) | | Adjusted EBITDA Margin | (2.8%) - (2.1%) | Financial Statements Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets as of June 30, 2024, show a significant increase in cash and cash equivalents to $572.3 million, primarily due to the IPO Selected Balance Sheet Items (in thousands USD) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $2,029,217 | $1,776,605 | | Cash and cash equivalents | $572,305 | $231,745 | | Goodwill, net | $741,307 | $779,176 | | Total Liabilities | $418,342 | $429,129 | | Total Equity | $1,569,169 | $1,306,047 | Condensed Consolidated Statements of Operations and Comprehensive Loss The unaudited condensed consolidated statements of operations show Q2 2024 revenue at $321.0 million, with a significant operating loss of $79.1 million and a net loss of $76.6 million Statement of Operations Highlights - Three Months Ended June 30 (in thousands USD) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $320,972 | $320,663 | | Cost of revenue | ($237,915) | ($239,518) | | General and administrative expenses | ($138,705) | ($53,469) | | Operating Loss | ($79,096) | ($5,466) | | Net Loss | ($76,568) | ($19,750) | | Diluted Loss Per Share | ($0.70) | ($0.18) | Condensed Consolidated Statements of Cash Flows For H1 2024, net cash from operating activities was $22.4 million, a significant improvement, with financing activities providing $336.1 million from IPO proceeds, resulting in $572.3 million cash Cash Flow Summary - Six Months Ended June 30 (in thousands USD) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $22,394 | ($40,663) | | Net cash used in investing activities | ($7,306) | ($25,475) | | Net cash provided by (used in) financing activities | $336,053 | ($8,744) | | Net increase (decrease) in cash | $340,560 | ($80,215) | | Cash and cash equivalents at end of period | $572,305 | $199,494 | Non-GAAP Financial Measures Definitions of Key Metrics & Non-GAAP Measures This section defines key business metrics like MAU and MPU, and non-GAAP measures such as Adjusted EBITDA and constant currency revenue, for enhanced operational insight - MAU (Monthly Active Users) is defined based on each device logged in and each offering accessed, meaning a single individual can be counted multiple times19 - Adjusted EBITDA is defined as Net Income (Loss) adjusted for interest, taxes, depreciation, amortization, and further adjusted for items like stock-based compensation and other non-recurring costs24 - Revenue on a Constant Currency Basis is calculated by applying the average currency exchange rates from the prior year's comparable period to the current period's local currency revenue to remove the impact of foreign exchange fluctuations27 Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of GAAP to non-GAAP measures, including constant currency revenue by segment and Net Loss to Adjusted EBITDA, with specific adjustments for Q2 2024 Reconciliation of Reported Revenue to Constant Currency Revenue (Q2 2024, in thousands USD) | Metric | As Reported | FX Impact | Constant Currency | YoY Growth (CC) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $320,972 | $29,333 | $350,305 | 11.1% | | Paid Content | $260,709 | $24,479 | $285,188 | 11.5% | | Advertising | $40,419 | $2,484 | $42,903 | 2.3% | | IP Adaptations | $19,844 | $2,369 | $22,213 | 24.9% | Reconciliation of Net Loss to Adjusted EBITDA (Q2 2024, in thousands USD) | Item | Amount | | :--- | :--- | | Net Loss | ($76,568) | | Interest, Tax, D&A | $10,833 | | Stock-based compensation expense | $53,817 | | Restructuring and IPO-related costs | $36,204 | | Other adjustments | ($1,892) | | Adjusted EBITDA | $22,394 |
Webtoon Entertainment Inc.(WBTN) - 2024 Q2 - Quarterly Results