Tracking the financial fortunes of Webtoon will likely take investors some getting used to. Based in Korea, the webcomics giant does a significant amount of its business overseas, and as such is subject to the vagaries of currency fluctuations.
In its first quarterly filing since going public in June at $21.00 per share, the company announced that reported sales in the period ended June 30, 2024, were basically flat, at $321 million. The sluggish results were attributed entirely to weak exchange rates for the Korean won and the Japanese yen compared to the U.S. dollar. On a constant currency basis, which ignores the fluctuations in exchange rates, sales were up 11%.
The cost of going public ate into Webtoon’s bottom line, with the company posting a net loss of $76.6 million in the quarter, up from $19.7 million a year ago. Adjusted EBITDA, which is not affected by currency exchange rates, rose in the quarter, to $22.4 million, from a loss of $900,000.
Results for Webtoon’s three operating groups can also be broken down into reported sales and constant currency. On a constant currency basis, sales of paid content rose 11.5%, advertising revenue increased 2.3%, and IP adaptation revenue jumped 24.9%. One metric that isn’t subject to currency fluctuations, monthly active users, dipped 0.8% in the quarter, to 166.3 million, while monthly paying users were flat, at 7.8 million.
At least for the moment, investors are paying more attention to reported results. The day after Webtoon’s results were released on August 8, its stock price plunged to $12.75 per share, from $20.63 per share, and its stock was priced at $12.03 per share as of August 12.
