Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Webtoon Entertainment Inc (WBTN, Financial) achieved a 13.5% revenue growth on a constant currency basis, with growth across all regions and revenue streams.
- The company reported a significant increase in adjusted EBITDA to $28.9 million, driven by strong gross profit and effective cost controls.
- Webtoon Entertainment Inc (WBTN) saw a notable increase in user engagement, particularly in Japan, where MAU and MPU reached record highs.
- The company successfully launched several new original titles and improved AI-based personalized content recommendation capabilities.
- Webtoon Entertainment Inc (WBTN) expanded its IP adaptation business, with successful projects like Sweet Home on Netflix and collaborations with Amazon Prime in Europe.
Negative Points
- Webtoon Entertainment Inc (WBTN) experienced a decline in overall MAU, particularly due to a reduction in web users as they shifted focus to app users.
- The company faced challenges with weaker foreign currencies, which partially offset revenue growth.
- There were project delays in the IP adaptation segment, impacting Q3 growth and potentially extending into Q4.
- Revenue growth in Korea was modest at 1.7% on a constant currency basis, with declines in MAU and MPU.
- Webtoon Entertainment Inc (WBTN) encountered a government ban in one country, affecting user access and contributing to a decline in MAU in the rest of the world.
Q & A Highlights
Q: Could you explain the decision to prioritize app users in Korea and the US, especially since web platforms have lower costs in Korea? Also, how is the progress on building a direct sales team in Japan and the US?
A: David Lee, CFO & COO: The app allows us to apply more levers to improve engagement and monetization. In Korea, despite lower platform costs on the web, the app provides better opportunities for product innovation, like our AI personalization engine. Regarding direct sales, while we have begun investments, especially in the US, the sales cycle is long, and we expect significant results in 2026 and beyond.
Q: What initiatives are you using to drive users from the web to the app, and is there room to improve conversion tools to reduce churn?
A: David Lee, CFO & COO: The app offers a better product experience, encouraging users to transition from the web. This is not a forced migration but an organic movement driven by content availability. Our focus is on providing content that users love, which naturally increases their engagement and spending over time.
Q: Could you remind us of the underlying drivers behind Q3 seasonality in Japan, and are there similar seasonalities in other markets?
A: David Lee, CFO & COO: In Japan, manga consumption peaks in September, which we capitalize on. Additionally, during holiday periods like summer, we see increased content consumption. However, there are no other major seasonal increases disclosed in other markets.
Q: How would you characterize the current marketing environment in terms of ROI, and are there specific channels you're leaning into?
A: David Lee, CFO & COO: We've increased marketing spend by 40% sequentially but kept it flat year-over-year, focusing on higher ROI opportunities. In Japan, we've found high-return investments, and partnerships like the one with Duolingo in the US are examples of effective marketing strategies.
Q: Can you discuss the customer acquisition strategy in Japan and North America?
A: David Lee, CFO & COO: We're leveraging high-return marketing strategies and partnerships with platforms like Duolingo to acquire users. This approach allows us to grow our user base without relying heavily on traditional top-of-funnel spending.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
