WEBTOON Entertainment reported a loss of $11.6 million in Q3, a big change from the $20.0 million profit it reported in the same quarter a year ago. When adjusted for constant currency, the loss is $31.9 million, compared to a $59.4 million profit in the year ago profit. The Q3 report was coupled with a forecasted revenue decline of 2.3% to 5.1% in Q4.
The company attributed the flip to a loss to “lower other income as well as a higher income tax expense.” According to the company’s financial filings, the $13.8 million decline in other income was related to “losses on certain transactions due to changes in foreign currency exchange rates.” The difference in income t0061 was $10.5 million. WEBTOON showed a $14.9 million operating loss (which doesn’t include those elements) for the quarter, compared to a $8.1 million loss in Q3 2024.
Sales were up 8.7% in Q3 to $378.0 million from $347.9 million in Q3 2024, behind growth in revenues from paid content and IP adaptations, partially offset by a decline in ad revenue.
Despite WEBTOON’s overall performance, there were a number of positive trends in the company’s English-language webtoon app, COO David Lee pointed out in the conference call. Those positive trends included 12% growth in MAU (Monthly Average Users) for the English app, and a 0.8% increase in MPU (Monthly Paying Users) for users in the company’s Rest of the World territory (everything except Korea and Japan, of which the U.S. is the largest portion).
The sales decline WEBTOON expects in Q4 is due to “pressure from IP adaptations related to the timing of milestones.”
Investors were not happy, knocking 25.1% off the company’s stock price on Thursday. This took the stock price close to the price it was at before the announcement of the deal with Disney in August (see “Disney and WEBTOON Deal”), despite the announcement of a deal with Warner Brothers Animation for future media adaptations in conjunction with the earnings report.
WEBTOON had a better quarter in Q2 (see “Webtoon Cuts Losses in Q2”).
Source: ICv2
