WEBTOON Entertainment reported third-quarter revenue of $362.8 million, down 4% from a year earlier, though revenue edged up 0.2% on a constant-currency basis. The digital comics and storytelling company posted a $7.5 million net loss and $2.2 million in adjusted EBITDA, both within its guidance ranges.
Management forecast a return to stronger revenue growth in the fourth quarter, projecting 9% to 12% growth on a constant-currency basis. CEO Junkoo Kim said the company is continuing to invest in reader engagement, adaptations of its intellectual property and partnerships to reach new audiences.
Third-quarter results
- Revenue was $362.8 million, down 4% year over year. Paid Content and IP Adaptations declined, partly offset by growth in Advertising.
- On a constant-currency basis, revenue was $378.6 million, up 0.2%. Paid Content and Advertising grew on this basis, while IP Adaptations declined. The difference between the reported and constant-currency figures reflects the effect of exchange rates.
- The net loss narrowed to $7.5 million from $11.1 million a year earlier. WEBTOON attributed the improvement mainly to higher gross profit and an income tax benefit, partly offset by increased marketing spending and greater foreign-currency losses.
- Adjusted EBITDA fell to $2.2 million from $5.1 million, with the decline primarily attributed to higher foreign-currency losses. The adjusted EBITDA margin was 0.6%, compared with 1.4%.
- Diluted loss per share was $0.06, versus $0.09 a year earlier. Adjusted earnings per share were $0.02, down from $0.04.
- Operating cash flow was $6.2 million, compared with $16.5 million in the year-earlier quarter.
- The company had approximately $548.4 million in cash and cash equivalents, plus $13.3 million in short-term deposits. It reported no debt.
Fourth-quarter outlook and strategy
- WEBTOON expects fourth-quarter revenue of $371 million to $381 million, equivalent to constant-currency growth of 9% to 12% based on current exchange rates.
- It forecasts adjusted EBITDA of $0 million to $5 million, or a margin of 0% to 1.3%.
- Kim said the company is working to improve how readers discover and engage with stories, develop its intellectual property into franchises across formats, and use collaborations to reach new audiences. He said WEBTOON is confident in returning to double-digit revenue growth in the fourth quarter.
The results show a business with substantial cash reserves and no debt, but with lower reported revenue, adjusted EBITDA and operating cash flow than a year earlier. Management’s fourth-quarter forecast points to a rebound in revenue growth, while its projected adjusted EBITDA range remains modest.