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• Revenue Growth: 11.1% constant currency growth in Q2; 13.7% in the first half of 2024.

• Reported Revenue: Roughly flat year over year due to weaker foreign currencies.

• Adjusted EBITDA: $22.4 million in Q2, marking profit improvement.

• Net Loss: $76.6 million in Q2, primarily due to IPO-related costs and stock-based compensation.

• Adjusted EPS: Positive $0.20 in Q2 compared to a loss of $0.01 in the prior year.

• Paid Content Revenue Growth: 11.5% constant currency growth in Q2; 13.3% in the first half.

• Advertising Revenue Growth: Triple-digit growth in Japan; double-digit growth in rest of world.

• IP Adaptation Revenue Growth: 24.9% constant currency growth in Q2; 20.6% in the first half.

• Gross Profit: $83.1 million in Q2, representing 2% growth.

• Gross Margin: 25.9%, expanded by 57 basis points year over year.

• General & Administrative Expenses: $138.7 million in Q2, up from $53.5 million due to IPO and stock-based compensation expenses.

• Interest Income: $2 million in Q2, compared to $1 million in the prior year.

• Depreciation and Amortization: $8.9 million in Q2, compared to $9.3 million in the prior year.

• Third-Quarter Revenue Outlook: Expected growth of 12.5% to 14.5% on a constant currency basis.

• Third-Quarter Adjusted EBITDA Outlook: Expected to be negative $7.7 million to negative $10.0 million.

• Warning! GuruFocus has detected 4 Warning Signs with NOTE.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Webtoon Entertainment Inc (NASDAQ:WBTN) achieved double-digit revenue growth of 11.1% on a constant currency basis in the second quarter, demonstrating strong performance across all revenue streams.

• The company successfully completed its IPO, marking a significant milestone and providing access to additional capital for future growth initiatives.

• Webtoon Entertainment Inc (NASDAQ:WBTN) boasts a vast content library with 124,000 new episodes published daily, supported by a global user base of approximately 170 million monthly active users.

• The company's IP adaptation business saw impressive growth, with revenue increasing by 24.9% on a constant currency basis, highlighting its potential as a future growth avenue.

• Webtoon Entertainment Inc (NASDAQ:WBTN) is expanding its global footprint, with strong revenue growth in Japan and the rest of the world, driven by successful user conversion strategies and local content development.

Negative Points

• Webtoon Entertainment Inc (NASDAQ:WBTN) reported a net loss of $76.6 million in the quarter, primarily due to IPO-related costs and stock-based compensation expenses.

• The company's revenue was negatively impacted by weaker foreign currencies, including the Korean won and Japanese yen, which reached historically low levels against the US dollar.

• In Korea, revenue declined by 10.8% on a constant currency basis, driven by decreases in advertising and paid content revenue.

• The delay in launching an AI-driven personalized recommendation model resulted in softer user dynamics in Korea, with a 6.6% year-over-year decrease in monthly active users.

• Webtoon Entertainment Inc (NASDAQ:WBTN) anticipates a negative adjusted EBITDA in the third quarter, driven by increased marketing spend to support user acquisition.