Loading...
01/11 03:37
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed financial performance, with record revenue growth and adjusted EBITDA, yet a significant net loss and decreased gross profit margin. The Q&A section highlights potential risks such as the Wattpad security issue and vague management responses, causing uncertainty. Despite positive long-term growth indicators, the weak Q1 2025 guidance and increased expenses overshadow the positives, leading to a negative sentiment. The lack of a market cap suggests caution, but the overall sentiment points to a likely negative market reaction in the short term.
Revenue Reported revenue was roughly flat year over year, with a 5.3% growth on a currency basis. This growth was driven by all revenue streams, but faced tough comparisons from Q1 last year due to an extra day in February and increased traffic from a successful IP adaptation.
Net Loss Net loss was $22,000,000 compared to net income of $6,200,000 in the prior year, driven by higher general and administrative expenses due to public company costs and higher marketing expenses.
Adjusted EBITDA Adjusted EBITDA was $4,100,000 compared to $22,200,000 in the same quarter of 2024, driven by higher general and administrative expenses due to public company costs and higher marketing expenses.
Adjusted Earnings Per Share Adjusted earnings per share for the quarter was $0.03 compared to adjusted earnings per share of $0.20 in the prior year.
Gross Profit Gross profit for the quarter was $71,600,000 compared to $82,400,000 in the prior year, resulting in a gross margin of 22% compared to 25.2% in the prior year, affected by one-time impacts from larger SBC expenses and changes in marketing expenses.
Total G&A Expenses Total general and administrative expenses for the quarter were $66,700,000 compared to $48,700,000 in the prior year, primarily due to public company costs.
Interest Income Interest income in the first quarter was $5,100,000 compared to $1,200,000 in the prior year.
Other Income Other income was $2,700,000 compared to $1,400,000 in the prior year.
Income Tax Expense Income tax expense was $2,500,000 in the quarter compared to $6,700,000 in the prior year.
Depreciation and Amortization Depreciation and amortization was $8,400,000 compared to $9,000,000 in the prior year.
GAAP Loss Per Share GAAP loss per share was $0.17 compared to earnings per share of $0.06 in the prior year.
New Product Launches: Launched 'Overpowered' and 'Overheat' in the US and France, ranking in the top 10 of paid GMV for each respective country.
IP Adaptations: Adaptations of WAPE’s hit titled 'MARLA Influenza' launched on Netflix.
Global Franchises: Partnership with IDW Publishing to offer franchises like 'Sonic the Hedgehog' and 'Godzilla' on the platform.
Market Expansion: Grew presence in Japan, which represented over 50% of revenue in Q1, and expanded cross-border strategy by taking Japanese content to other markets.
User Growth in English Markets: 19% growth in English platform webcomic app MAU, driven by content flow and product innovation.
Operational Efficiencies: Investments in English language platform to improve user onboarding and content discovery experience.
ARPPU Growth: ARPPU around $12 per month, with microtransactions driving revenue.
Strategic Shifts: Focus on local creator ecosystems and cross-border content distribution strategies.
Market Resilience: Belief in a resilient global business model that can withstand potential downturns.
Market Volatility: The company acknowledges recent market volatility and is monitoring the health of its users closely, indicating potential risks associated with economic downturns.
User Growth Challenges: A decline in Monthly Active Users (MAU) of 10.5% was reported, primarily driven by issues in the Rest of World segment, particularly due to a security upgrade affecting search engine indexing.
Regulatory Issues: Wattpad is facing a government ban in one country, which is impacting user growth and engagement.
Increased Expenses: The company reported a net loss of $22 million, attributed to higher general and administrative expenses due to public company costs and increased marketing expenses.
Foreign Exchange Headwinds: The company anticipates facing foreign exchange headwinds in the first half of the year, which could impact revenue.
Advertising Revenue Decline: There was a decline in advertising revenue in the Rest of World segment, which poses a risk to overall revenue growth.
Competitive Pressures: The company is aware of competitive pressures in the market, particularly in the U.S. and English-speaking markets, which may affect user acquisition and retention.
Market Expansion: Webtoon has grown its presence in Japan, which represented over 50% of revenue in Q1, with strong growth across paid content, advertising, and IP adaptations.
Cross-Border Strategy: Webtoon is taking its cross-border strategy further by exporting Japanese content to other markets, including the US and France.
User Engagement Initiatives: Key investments are being made in the English language platform, including a new user onboarding experience and revamping content discovery features.
IP Adaptations: Webtoon continues to build on its past Spanish language success with adaptations like MARLA Influenza launched on Netflix.
Product Innovation: Extensive product changes are being rolled out in the English app, based on successful AB testing results.
Q2 Revenue Guidance: For Q2 2025, Webtoon expects revenue growth in the range of 2.2% to 5.2%, translating to approximately $335 million to $345 million.
Adjusted EBITDA Guidance: Expected adjusted EBITDA for Q2 2025 is in the range of $500,000 to $5,500,000, representing an adjusted EBITDA margin of 0.1% to 1.6%.
Long-term Growth Outlook: Webtoon remains focused on executing its strategy, believing that investments in infrastructure and marketing will yield profitable growth over the long term.
Share Repurchase Program: None
The earnings call summary shows mixed results: a strong increase in IP Adaptations revenue but declines in advertising revenue, gross profit, and MAUs. The Q&A revealed uncertainty and lack of details on key partnerships with Disney and Warner, and management's evasive responses likely raise concerns. Although the Disney partnership holds long-term potential, its immediate impact is unclear, and weak guidance for Q4 further dampens sentiment. Overall, these factors suggest a negative market reaction.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
