User Metrics - As of September 30, 2024, global Monthly Active Users (MAU) reached approximately 170 million, with contributions of 15.0% from Korea, 13.5% from Japan, and 71.5% from the Rest of World[135]. - Monthly Paying Users (MPU) reached 7.9 million with a paying ratio of 4.7%, showing slight declines compared to the previous year, but an upward trend in sequential quarters[139]. - The decline in Rest of World MAU to 119.3 million was primarily due to a decrease in web users, with a significant impact from a government ban on global content sites in one country[137]. - The company focuses on converting web users to app users, as app users are more engaged and monetization is more effective[135]. - The company tracks performance by geographic regions, categorizing users into Korea, Japan, and Rest of World, to better understand engagement trends[129]. Revenue Performance - Revenue for the three months ended September 30, 2024, was $347,915 thousand, representing a 9.5% increase from $317,764 thousand in 2023[161]. - Paid Content revenue increased by 8.9% to $285,228 thousand, while Advertising revenue grew by 20.8% to $43,384 thousand[161]. - Revenue for the nine months ended September 30, 2024, increased by $46.9 million, or 4.9%, to $995.6 million compared to $948.7 million in 2023, driven by strong growth in Paid Content and Advertising revenue[169]. - Paid Content revenue rose by $37.1 million, or 4.8%, primarily due to strong growth in Japan, while Advertising revenue increased by $12.4 million, or 11.5%[169]. - Revenue on a constant currency basis for the three months ended September 30, 2024, was $360,357,000, a 13.5% increase from $317,415,000 in 2023[194]. User Revenue Metrics - Average Revenue per Paying User (ARPPU) increased to $12.1, reflecting an 11.0% growth compared to the same quarter of 2023, driven by strategic shifts from web to app usage[143]. - In Korea, ARPPU increased to $7.9, a 3.9% rise year-over-year, attributed to the rollout of AI-driven personalized recommendations[144]. - In Japan, ARPPU reached $23.1, a 4.5% increase year-over-year, benefiting from seasonal comic consumption trends[144]. - In the Rest of World, ARPPU increased to $6.7, an 11.7% growth year-over-year, driven by increased reader habituation to paying for content[145]. Expenses and Costs - Cost of revenue rose by 4.4% to $256,534 thousand, with a total cost of revenue of $738,834 thousand for the nine months ended September 30, 2024[162]. - General and administrative expenses surged by 45.8% to $66,747 thousand, driven by increases in stock compensation and consulting fees[163]. - Marketing expenses decreased by $19.8 million, or 20.8%, to $75.6 million, reflecting increased efficiencies in marketing spend[172]. - General and administrative expenses surged by $98.5 million, or 63.3%, to $254.1 million, driven by stock compensation and a one-time bonus related to the IPO[173]. - Cost of revenue increased by $9.2 million, or 1.3%, to $738.8 million, attributed to higher commissions and fees paid to creators[171]. Income and Loss - Operating loss for the three months ended September 30, 2024, was $8,085 thousand, compared to a loss of $6,747 thousand in 2023, marking a 19.8% increase[160]. - Net income for the three months ended September 30, 2024, was $19,986 thousand, a significant recovery from a loss of $11,451 thousand in 2023[160]. - The company experienced a 128.3% increase in operating loss for the nine months ended September 30, 2024, totaling $72,993 thousand compared to $31,976 thousand in 2023[160]. - For the nine months ended September 30, 2024, the company reported a net loss of $50.3 million, adjusted for non-cash items of $76.9 million[201]. - The company reported a net income margin of 5.7% for the three months ended September 30, 2024, compared to a negative margin of -3.6% in 2023[187]. Other Financial Metrics - Interest income skyrocketed by 613.3% to $6,512 thousand, primarily due to earnings from IPO proceeds[164]. - Other income increased significantly by 1736.3% to $11,798 thousand, attributed to gains from foreign currency transactions[168]. - Income tax benefit rose by 266.8% to $9,899 thousand, mainly due to changes in valuation allowance following the LDF-eBIJ Merger[168]. - Adjusted EBITDA for the three months ended September 30, 2024, was $28,903,000, up from $3,164,000 in the same period of 2023[187]. - The company experienced a foreign currency exchange impact of $12,442,000 for the three months ended September 30, 2024[194]. Cash Flow and Capital - As of September 30, 2024, the company had $585.5 million in cash and cash equivalents, primarily invested in short-term, highly liquid investments[198]. - For the nine months ended September 30, 2024, net cash provided by operating activities was $26.5 million, compared to $7.5 million for the same period in 2023[200][202]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $11.2 million, significantly lower than $45.1 million in the same period of 2023[203][204]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $353.7 million, primarily from the IPO proceeds of $293.0 million[205]. Legal and Compliance - A class action lawsuit has been filed against the company related to its IPO, alleging that the registration statement was materially false and misleading[224]. - The company is focused on remediating material weaknesses in internal control over financial reporting, including enhancing financial reporting functions and IT controls[219][221]. - The company anticipates future capital requirements will depend on growth rate, sales and marketing activities, and other business factors[198]. - The company has not entered into derivative or hedging transactions but may consider them in the future if foreign currency exposure increases[212].
Webtoon Entertainment Inc.(WBTN) - 2024 Q3 - Quarterly Report