Q4 2024 Webtoon Entertainment Inc Earnings Call

February 25, 2025

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This time I would now like to turn the call over to <unk>, Kim Vice President of Investor Relations. Mr. Kim. Please go ahead.

Good afternoon, and thank you for joining us as a reminder, our remarks today will include forward looking statements, including those regarding our future plans objectives expected performance in particular, our guidance for the next quarter actual results may vary materially from today's statements information concerning risks uncertainties and other factors that could cause. These results to differ is included in our SEC filings, including those stated.

Operator: Good afternoon. Thank you for joining us. As a reminder, our remarks today will include forelooking statements, including those regarding our future plans, objectives, expected performance, and in particular, our guidance for the next quarter. Actual results may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that could cause these results differs, including our SEC filings, including those stated in the risk factors section of our filings with the SEC. These forelooking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forelooking statements.

And the risk factors section of our filings with the SEC.

These forward looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward looking statements. Additionally, the matters. We discuss today will include both GAAP and non-GAAP financial measures.

Operator: Additionally, the matters we discuss today will include both GAAP and non-GAAP financial measures. Reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures.

If any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release non-GAAP financial measures should be considered in addition to not as a substitute for GAAP measures joining us on the call our Chengdu <unk> founder and CEO, David <unk> and young Soo, Kim Chief strategy Officer with that I'll now turn the call over to.

Operator: Joining us today on the call are Joon-Goo Kim, founder and CEO, David Lee, CFO at ZOO, and Yong-Soo Kim, Chief Strategy Officer.

Joon-Goo Kim: With that, I will now turn the call over to our founder and CEO, Joon-Goo Kim. Thank you, everyone, for joining us today. I'll make a few brief comments on our performance, and then David will provide more detail on our result and outlook.

Our founder and CEO to induce Kim.

Thank you everyone for joining us today.

David: Make a few brief comments on our powerful month, and then David will provide more detail on our <unk> and <unk>.

Joon-Goo Kim: For my full thoughts on the year and our path forward, please refer to the shareholder letter posted on our investor relations website.

David: My first thought on the year and our path forward. Please refer to the shareholder letter.

David: Posted on our Investor Relations website.

Joon-Goo Kim: 2024 was an important year for Webtoon. We became a public company, making the beginning of an exciting new chapter in our history. And our creators and IPs continued to grow their influence all over the world. I'm pleased to share that we reported strong results for the year 2024 with record annual revenue and profitability. Revenue of $1.35 billion grew 5% on a reported basis and 13% on a constant-currency basis. While we reported a net loss of $153 million, mostly due to non-test expenses, we reported record-adjusted EBITDA of $67.9 million, an increase of more than 600% compared to 2023.

David: 2024 was an important year for Westin, we became a public company, making the beginning of an exciting new chapter in our history and our creators and IP continued to grow data input.

David: All over the world.

David: I am pleased to share that we reported strong featured four and <unk> 24, we had record annual revenue and profitability level.

David: Revenue of $1 35 billion grew 5%.

David: 40 of the bases and 13%.

David: On a constant currency basis.

David: While we reported a net loss of 153 million, mostly due to noncash expenses, we reported a record adjusted EBITDA of $67 million to $9 million, an increase of more than 600% compared to 2023.

David: We believe these in leisure to demonstrate that our strategy and Friday are working.

Joon-Goo Kim: We believe these results demonstrate that our strategy and flywheel are working.

David: I'd like to share a few highlights from 2024, starting with the progress of our business in Japan.

Joon-Goo Kim: I'd like to share a few highlights from 2024, starting with the progress of our business in Japan. By leveraging our leading position in Korea and our successful and differentiated cross-border strategy, we've been able to take the top position in Japan for the second half of 2020. as measured by a review in the Nantes Game and Market. after successfully exporting a number of our hit Korean content to Japan, including stories like Teenage Merchandise. We are now focused on building a powerful local creator ecosystem in the market. In January, we invested in No. 9, a Japanese studio that has produced titles such as our global hit, Savior of Divine Blood, which was Lime Manga's first local webcomic to become a breakout hit both in and out of Japan.

David: By leveraging our leading position in Korea, and our successful and differentiated growth support our strategy, we have been able to pick the top puts <unk> in Japan for the second half of 2024.

David: As measured by revenue in that non game at market.

David: <unk> successfully exporting a number of our Heath Korea content to Japan, including <unk> Marcia and already we are now focused on building a powerful local creek ecosystem in the market.

David: In January we invested in number nine our Japanese studio that has produced titles such as our global heat failure over divided broadly which was in line manga first enrolled currently a comic to become a break out hit both in and out of Japan.

David: Our investment in number nine liter boosts to our content pipeline in Japan, the company's largest geography and the fastest growing market.

David: Further our industry a mature platform in Japan is helping us discover rocker creators and maintain a pipeline of fresh new content.

Joon-Goo Kim: Senpai is an Otokonoko. It was discovered through indies and was developed into a successful cultural anime series in 2024. With its continued popularity, this title has since been adapted into a new animated feature film by N-Plex. Our incredible success in Japan is evidence of the power of our strategy.

David: Empire is Atacama coal was discovered through in these and was developed into a success for Concho anime series in 2024.

David: We have his continued popularity these tied to has since been adaptive into a new animated feature featuring by and clicks.

David: Our incredible success in Japan is evidence of the power of our strategy.

Joon-Goo Kim: We are taking similar actions at various stages in the U.S. and the other key markets, investing in content studios and creators to build our global content pipeline.

David: We are taking similar actions at various stages in the U S and the other key markets investing in content studios and creators to build our global <unk> pipeline.

David: Finishing up with the IP of the patients we had a number of our successful launches in Q4, and we are off to the great start in 2025.

Joon-Goo Kim: Finishing up with IP adaptations, we had a number of successful launches in Q4, and we are off to a great start in 2025. Three examples of this include, first, Jung Yeon-hee, the star is born in Korea, was ranked sixth in Disney Plus Global TV Show category in November. Second, over the U.S. Thanksgiving weekend, we launched Sidelined the QB & Me. The project was instant hit, reaching number one on Tubi in the U.S. and Canada, drawing the biggest number of views of any title on Tubi in its first seven days. This success has already led to a green light for a sequel.

David: Three examples of this include <unk>.

John Kiani: <unk> John Kiani. Those star is born in Korea was <unk> six in Disney plus Global TV Shaw category in November.

John Kiani: Second over the U S. Thanksgiving weekend, we launched it sidelined at QB and me.

John Kiani: The project was instant heat, reaching number one on <unk> in the U S and Canada.

John Kiani: The biggest number of years of any tighter on QB in its first seven days.

John Kiani: Is the success has already led to a green light for us CCAR.

Joon-Goo Kim: And finally, in January, the drama called Heroes Encore debuted on Netflix as a global stream hit, spending four weeks in the streamer's top ten non-English categories. We've intentionally built our global IP and creator ecosystem to develop titles that can find a variety of audiences across formats. We believe these successes will continue to drive new users to our platform as viewers seek out the original source material for these adaptations.

John Kiani: And final rate in January.

John Kiani: The trauma quota heroes Encore debuted on Netflix as a <unk> screen kit spending four weeks in the three months top 10, non English category.

John Kiani: We intentionally built our global IP and creator ecosystem to develop tightest that can find of variety of audience across formats.

John Kiani: We believe that these successes will continue to drive new users to our platform as viewers seek out the original source metro here for these patients.

Joon-Goo Kim: In conclusion, our success in 2024 was driven by our passionate and dedicated community of creators and users who continue to create, share, and enjoy stories on our platform. I also want to thank our employees for their continued commitment to our company and our mission. Looking to 2025, I remain confident in our ability to continue driving innovation with bold new initiatives to grow our business and ecosystem as we continue to democratize storytelling by bringing comics and new forms of visual storytelling to the creative economy.

John Kiani: In conclusion.

John Kiani: Our success in 2024 was driven by our passionate and dedicated community of creators and users who continue to create share and injury stories on our platform.

John Kiani: I also want to thanks, our employees for their continued commitment to our company and our mission.

John Kiani: Looking to 2025 I remain confident in our ability to continue driving innovation with bold new initiative to grow our business and ecosystem as we continue to demo Kraft heinz's storytelling by bringing comics and new form of <unk>.

John Kiani: Returning to the creator economy.

David Lee: With that, I will now turn the call over to David. David, please go ahead. Thank you, J.K., and thank you, everyone, for joining us.

David: With that I will now turn the call over to David David.

Speaker Change: Please go ahead.

Speaker Change: Thank you Jacob and thank you everyone for joining us.

David Lee: I'm going to focus my commentary on fourth quarter 2024 results compared to the prior year, unless otherwise noted. During the fourth quarter, we grew revenue 10.4% on a constant currency basis with growth across all revenues. Our reported revenue is at 5.6% year-over-year as a result of strength in paid content and advertising, partially offset by our exposure to weaker foreign currencies. As we executed on our cross-border content distribution strategies, we also gained greater leverage on our gross profit, which expanded 45 basis points year over year. If you adjust for the e-book Japan marketing expenses, which moved from marketing to cost of revenue during the quarter.

Speaker Change: I am going to focus my commentary on our fourth quarter 2024 results compared to the prior year unless otherwise noted during.

Speaker Change: During the fourth quarter, we grew revenue 10, 4% on a constant currency basis with growth across all revenue streams are.

Speaker Change: Our reported revenue was up five 6% year over year as a result of strength in paid content and advertising, partially offset by our exposure to weaker foreign currencies.

Speaker Change: As we executed on our cross border content distribution strategies. We also gained greater leverage on our gross profit, which expanded 45 basis points year over year.

Speaker Change: If you adjust for the E book, Japan, marketing expenses, which moved from marketing to cost of revenue during the quarter.

David Lee: Gross margin expanded by 147 basis points. On a sequential basis, gross margin declined due to a sales mixed shift to certain studio and performance-based ad businesses, both of which have higher revenue share ratios.

Speaker Change: Gross margin expanded by 147 basis points.

Speaker Change: On a sequential basis gross margin declined due to a sales mix shift to certain studio and performance based AD businesses, both of which have higher revenue share ratios.

David Lee: Net loss was $102.6 million in the quarter, compared to a loss of $95.3 million in the year prior, driven by higher general and administrative expenses due to public company costs and higher marketing costs. Adjusted EBITDA was negative $3.5 million in the quarter compared to a positive $10.4 million in the same quarter of 2023. We were primarily impacted by increases in actuarial losses on retiree benefits, a non-cash, non-operating expense as a result of a third-party evaluation. as well as the effects of currency translation and lower gross profit in Korea due to a shift in revenue. Actuarial losses had an impact of approximately $6 million to adjusted EBITDA in the fourth quarter.

Speaker Change: Net loss was $102 6 million in the quarter compared to a loss of $95 3 million in the year prior driven by higher general and administrative expenses due to public company costs and higher marketing expense.

Adjusted EBITDA was negative $3 5 million in the quarter compared to a positive $10 4 million in the same quarter of 2023.

Speaker Change: We were primarily impacted by increases in actuarial losses on retiree benefits.

Speaker Change: Noncash nonoperating expense as a result of a third party evaluation.

Speaker Change: As well as the effects of currency translation and lower gross profit in Korea due to a shift in revenue mix.

Speaker Change: Actuarial losses had an impact of approximately 6 million to adjusted EBITDA in the fourth quarter.

David Lee: As a result, our adjusted loss per share for the quarter was $0.03 compared to adjusted earnings per share of $0.09 in the prior year.

Speaker Change: As a result, our adjusted loss per share for the quarter was <unk> <unk> compared to adjusted earnings per share of <unk> in the prior year.

David Lee: turning to operational health. Total company MAU was down roughly 3.7% in the On our last call, we shared our efforts to focus on driving app. who are more engaged and present better monetization opportunities. While App MAU decreased slightly by 1.5% overall, we saw a 6.7% increase in webcomic App MAU when we removed the impact of web novel users. This growth was led by increases across important English-speaking markets as well as other key countries like France and Thailand. As mentioned last quarter, we continue to see pressure on rest of the world MAU due to a government ban on Wattpad in one country.

Speaker Change: Turning to operational health <unk>.

Speaker Change: Total company <unk> was down roughly three 7% in the quarter.

Speaker Change: On our last call we shared our efforts to focus on driving App users, who are more engaged in percent better monetization opportunities.

Speaker Change: While <unk> decreased slightly by one 5% overall, we saw a six 7% increase in web comic tap Mou when we remove the impact of web novel users.

Speaker Change: This growth was led by increases across importance English speaking markets as well as other key countries like France and Thailand.

Speaker Change: As mentioned last quarter, we continued to see pressure on rest of world Mou due to a government ban on what had in one country.

Speaker Change: While we are working closely with our government to get the ban lifted the fourth quarter included the impact of a full three months of the band accounting for two thirds of the Mou decline in rest of world.

David Lee: While we're working closely with that government to get the ban lifted, the fourth quarter included the impact of a full three months of the ban, accounting for two-thirds of the MAU decline in the rest of the world. Although webcomics tend to generate higher revenue and profitability than webnovels, which we believe is an indication of our acceptance in rest of the world, webnovels are still an important piece of our IP strategy, as the format's lower barrier to entry allows even more creators to showcase their stories on our platform.

Speaker Change: Although web comics tend to generate higher revenue and profitability than web novels, which we believe is an indication of our acceptance in rest of world Web novels are still an important piece of our IP strategy as the formats lower barrier to entry allows even more creators to showcase their stories on our platform.

David Lee: Wattpad remains the global leading platform for web novels, and we are focused on returning the platform to growth and profitability.

Speaker Change: <unk> remains the global leading platform for web novels, and we are focused on returning the platform to growth and profitability.

Speaker Change: Now I'd like to provide an update on our revenue streams at a consolidated level.

David Lee: Now, I'd like to provide an update on our revenue streams that have consolidated. starting with paid content. In the quarter, we posted 10.9% revenue growth on a constant currency basis year over year. For the full year, we posted 12.6% revenue growth on a constant currency basis. This was driven by our ongoing strength in Japan, which continued to show double-digit growth, as well as successful modernization efforts in Korea and the rest of the world. Additionally, ARPU growth on a constant currency basis of 12.4% in the quarter and 13.7% for the full year represents success in driving paying user engagement as we continue to improve our recommendation models and users increase their propensity to spend on the content they love.

Speaker Change: Starting with pay content.

Speaker Change: In the quarter, we posted 10, 9% revenue growth on a constant currency basis year over year.

Speaker Change: For the full year, we posted 12, 6% revenue growth on a constant currency basis.

Speaker Change: This was driven by our ongoing strength in Japan, which continued to show double digit growth as well as successful monetization efforts in Korea, and the rest of the world.

Speaker Change: Additionally, <unk> growth on a constant currency basis of 12, 4% in the quarter and 13, 7% for the full year represents success in driving paying user engagement as we continue to improve our recommendation models and users increase their propensity to spend.

Speaker Change: On the content they love.

Speaker Change: While we have seen declines in Korea, and rest of world due to decreases in web users coupled with the continuing Wap had bad I just mentioned, we've been able to post solid revenue growth with strong <unk> growth.

David Lee: While we have seen MAU declines in Korea and the rest of the world due to decreases in web users coupled with the continuing Wattpad ban I just mentioned, We've been able to post solid revenue growth with strong ARPU growth. Advertising posted 27.4% revenue growth in the fourth quarter on a constant currency basis year over year. This strong performance was driven by double-digit growth in Korea and Japan. In Korea, we saw increased ad sales from both Naver and other partners as the strength of our offering continues to draw interest from partners. Japan's growth was driven by higher year-over-year MAU for line manga and e-book Japan.

Speaker Change: Advertising posted 27, 4% revenue growth in the fourth quarter on a constant currency basis year over year.

Speaker Change: This strong performance was driven by double digit growth in Korea and Japan.

Speaker Change: In Korea, we saw increased AD sales from both Nabors and other partners as the strength of our offering continues to draw interest from partners.

Speaker Change: Japan's growth was driven by higher year over year Mou for line manga, an ebook Japan.

Speaker Change: During Q4, we introduced rewarded video ads to ebooks, Japan as we continue to make improvements on that platform.

Speaker Change: For the full year, we posted 19, 8% advertising revenue growth on a constant currency basis.

David Lee: Finally, our IP adaptation business saw revenue decline 6.9% year-over-year on a constant currency basis in Q4. driven by declines in Korea and the rest of the world, partially offset by growth in Japan. For the full year, IP adaptation revenue was up 6.7% on a constant currency basis. While the pipeline of entertainment projects in Korea remains strong, we experienced a prolonged delay in project timing in Q4.

Speaker Change: Finally, our IP adaptation business saw revenue declined six 9% year over year on a constant currency basis in Q4, driven by declines in Korea, and rest of world, partially offset by growth in Japan.

Speaker Change: For the full year IP adaptation revenue was up six 7% on a constant currency basis.

Speaker Change: While the pipeline of entertainment projects in Korea remains strong we experienced a prolonged delay in project timing in Q4.

Speaker Change: In 2025 and beyond we are excited to bring our latest studio and projects to market and believe our IP adaptation strategy continues to support brand awareness globally driving traffic to our platforms.

David Lee: In 2025 and beyond, we are excited to bring our latest StudioN projects to market and believe our IP adaptation strategy continues to support brand awareness globally, driving traffic to our platform.

Speaker Change: Now I'd like to look at our results in the context of core geographies.

David Lee: Now I'd like to look at our results in the context of core geography. In Korea, during the fourth quarter, our revenue grew 6.6% year-over-year on a constant currency basis, primarily driven by growth in paid content and advertising revenue. We continue to see benefits from the rollout of our AI recommendation engine from Q2, and we also saw balanced growth in ad sales from Naver and other partners. For the full year, we posted 0.5% revenue decline on a constant currency basis. During the fourth quarter, MAU of $24.5 million decreased 0.5%. MPU of 3.6 million declined 8.6% and our paying ratio of 14.5% was down 129 basis points compared to the fourth quarter of 2023.

Speaker Change: In Korea during the fourth quarter, our revenue grew six 6% year over year on a constant currency basis, primarily driven by growth in paid content and advertising revenue.

Speaker Change: We continue to see benefits from the rollout of our AI recommendation engine from Q2, and we also saw balanced growth in AD sales from Naver and other partners.

Speaker Change: For the full year, we posted 0.5% revenue decline on a constant currency basis.

Speaker Change: During the fourth quarter.

Speaker Change: <unk> of $24 5 million decreased <unk>, 5%.

Speaker Change: And <unk> of $3 6 million declined eight 6% and our paying ratio of 14, 5% was down 129 basis points compared to the fourth quarter of 2023.

David Lee: As we reported when we pre-announced results a few weeks ago, we experienced some short-term engagement impacts from the political turbulence in Korea that occurred during the fourth quarter. That said, ARPU on a constant currency basis was up a solid 16.3% compared to the fourth quarter of 2023, representing the strong relationship we have with our existing users. As we mentioned previously, our AI driven personalized recommendation model, which was fully rolled out in June of 2024, continues to improve home tab recommendations. During the fourth quarter, we saw the number of weekly episodes viewed per user increase 2%.

Speaker Change: As we reported when we pre announced results a few weeks ago, we experienced some short term engagement impacts from the political turbulence in Korea that occurred during the fourth quarter.

Speaker Change: That said, our <unk> on a constant currency basis was up a solid 16, 3% compared to the fourth quarter of 2023, representing the strong relationship we have with our existing users.

Speaker Change: As we mentioned previously our AI driven personalized recommendation model, which was fully rolled out in June of 2024 continues to improve home tap recommendations.

Speaker Change: During the fourth quarter, we saw the number of weekly episodes viewed per user increased 2%.

David Lee: Moving to Japan. For the quarter, Japan posted revenue growth on a constant currency basis of 18.9%. This was driven by significant growth in each of our revenue streams. Line Manga is now firmly on top of the market in Japan as SensorTower data shows that we topped the non-game app market by revenue in Japan for both the fourth quarter and the second half of 2024. For the full year, we posted 25.8% revenue growth on a constant currency basis, and Japan now represents nearly half of our total revenue. Compared to Q4 2023, Japan's MAU of 22.1 million increased 6.6%.

Speaker Change: Moving to Japan.

Speaker Change: For the quarter, Japan posted revenue growth on a constant currency basis of 18, 9%.

Speaker Change: This was driven by significant growth in each of our revenue streams.

Speaker Change: Line manga is now firmly on top of the market in Japan is sensor tower data shows that we topped the non game app market by revenue in Japan for both the fourth quarter in the second half of 2024.

Speaker Change: For the full year, we posted 25, 8% revenue growth on a constant currency basis.

Speaker Change: In Japan now represents nearly half of our total revenue.

Speaker Change: Compared to Q4, 2023, Japan's <unk> of $22 1 million increased six 6%.

Speaker Change: <unk> of $2 $3 million grew 15% and paying ratio of 10, 3% was up 75 basis points.

Speaker Change: Engagement with paid users steepened with fourth quarter <unk> of $22 growing 2% year over year on a constant currency basis, as we launched 164, new original titles during the quarter.

Speaker Change: As J J talked about our localization efforts in Japan earlier, we're particularly pleased to note that local Japanese title launches made up the majority of our launches in the quarter.

Speaker Change: In the rest of the World. We saw revenue declined three 3% year over year on a constant currency basis, driven by declines in pay content and IP adaptations in the quarter, partially offset by growth in advertising.

David Lee: In the rest of the world, we saw revenue decline 3.3% year over year on a constant currency basis driven by declines in paid content and IP adaptations in the quarter, partially offset by growth in advertising. For the full year, we posted 14.9% revenue growth on a constant currency basis. While fourth quarter MAU and MPU declined 6.1% and 3.3% year-over-year respectively, paying ratio of 1.4% stayed consistent year-over-year. ARPU of $6.90 grew 2% year over year on a constant currency basis.

Speaker Change: For the full year, we posted 14, 9% revenue growth on a constant currency basis.

Speaker Change: While fourth quarter, MDU, and MCU declined six 1% three 3% year over year, respectively.

Speaker Change: <unk> ratio of one 4% stay consistent year over year.

Speaker Change: <unk> of $6 90.

Speaker Change: 2% year over year on a constant currency basis.

David Lee: Turning to profitability. Gross profit for the quarter was $82.3 million compared to $76.4 million in the prior year, representing growth of 7.7%. This resulted in a gross margin of 23.3%, which expanded 45 basis points compared to the prior year. Starting in Q4, part of eBook Japan's marketing expense was moved from marketing to cost of revenue, amounting to an impact of $3.6 million. Excluding this reclassification, gross profit would have been $85.9 million. or an increase of 12% from the prior year, approximately 24.3% of revenue. Gross margin declined sequentially due to a sales mix shift to certain studio and performance based ads business.

Speaker Change: Turning to profitability.

Speaker Change: Gross profit for the quarter was $82 3 million compared to $76 4 million in the prior year representing growth of seven 7%.

Speaker Change: This resulted in a gross margin of 23, 3%, which expanded 45 basis points compared to the prior year.

Speaker Change: Starting in Q4 part of EBIT, Japan's marketing expense was moved from marketing to cost of revenue.

Speaker Change: Amounting to an impact of $3 6 million.

Speaker Change: Excluding this reclassification gross profit would have been $85 9 million or an increase of 12% from the prior year up approximately 24, 3% of revenue.

Speaker Change: Gross margin declined sequentially due to a sales mix shift to certain studio and performance based ads businesses, both of which have higher revenue share ratio.

David Lee: both of which have higher revenue share ratios. While there were some temporary mixed shifts that impacted gross profit in the short term, we expect to increase our gross margin over time as we increase our paid content in markets outside of Korea. Adjusted EBITDA loss for the quarter was $3.5 million compared to a profit of $10.4 million in the prior year. Actuarial losses on retiree benefits, a non-cash, non-operating expense based on a third-party evaluation, had an impact of approximately $6 million to adjusted EBITDA in the fourth quarter. On the cost side, total G&A expenses for the quarter were $77.8 million as compared to $55.1 million in the prior year quarter, primarily as a result of public company costs.

Speaker Change: While there were some temporary mix shifts that impacted gross profit in the short term, we expect to increase our gross margin over time as we increase our paid content in markets outside of Korea.

Speaker Change: Adjusted EBITDA loss for the quarter was $3 5 million compared to a profit of $10 4 million in the prior year.

Speaker Change: Actuarial losses on retiree benefits, our noncash nonoperating expense based on a third party evaluation had an impact of approximately 6 million to adjusted EBITDA in the fourth quarter.

Speaker Change: On the cost side total G&A expenses for the quarter were $77 8 million as compared to $55 1 million in the prior year quarter, primarily as a result of public company costs.

Speaker Change: Interest income in the fourth quarter was $6 million compared to <unk> 7 million in the prior year and other loss was $6 2 million compared to $20 8 million in the prior year period.

David Lee: Interest income in the fourth quarter was $6 million compared to $0.7 million in the prior year and other loss was $6.2 million compared to $20.8 million in the prior year period. income tax expense of $4.1 million in the quarter compared to a benefit of $7.5 million in the prior year. Depreciation and amortization was $12.1 million compared to $10.4 million in the prior year. Net loss of $102.6 million was primarily driven by higher general and administrative expenses due to public company costs, higher marketing, and higher impairment losses on goodwill, which were primarily related to our web novel business.

Speaker Change: Income tax expense of $4 1 million in the quarter compared to a benefit of $7 5 billion in the prior year.

Speaker Change: Depreciation and amortization was $12 1 million compared to $10 4 million in the prior year.

Speaker Change: Net loss of $102 6 million was primarily driven by higher general and administrative expenses due to public company costs higher marketing and higher impairment losses on goodwill, which were primarily related to our web novel businesses.

David Lee: As a result, gap loss per share was $0.72 compared to a loss per share of $0.62 in the prior year period. Adjusted loss per share was 3 cents in the quarter compared to adjusted earnings per share of 9 cents in the prior year period.

Speaker Change: As a result, GAAP loss per share was <unk> 72, compared to a loss per share of <unk> 62.

Speaker Change: In the prior year period.

Speaker Change: Adjusted loss per share was <unk> <unk> in the quarter compared to adjusted earnings per share of <unk> <unk> in the prior year period.

Speaker Change: For the first quarter of 2025, we expect to deliver revenue growth in the range of one 7% to four 8% on a constant currency basis.

David Lee: For the first quarter of 2025, we expect to deliver revenue growth in the range of 1.7% to 4.8% on a constant currency basis. This represents revenue in the range of $318 to $328 million. This guidance is based on current FX rates rather than FX rates from the end of Q4 2024. As we have discussed previously, we will face FX headwinds in the first quarter and the first half of this year as rates were more favorable in the first half of 2024. We continue to experience delays with IP adaptation in Korea despite a strong slate. We are also investing in our infrastructure ahead of product improvements, which will occur in the back half of 2025.

Speaker Change: This represents revenue in the range of $318 million to $328 million.

Speaker Change: This guidance is based on current FX rates, rather than FX rates from the end of Q4 2024.

Speaker Change: As we have discussed previously we will face FX headwinds in the first quarter and the first half of this year as rates were more favorable in the first half of 2024.

Speaker Change: We continue to experience delays with IP adaptation in Korea, Despite a strong slate.

Speaker Change: We are also investing in our infrastructure ahead of product improvements, which will occur in the back half of 2025.

David Lee: We anticipate first quarter adjusted EBITDA in the range of $0.5 to $5.5 million, representing an adjusted EBITDA margin in the range of 0.2% to 1.7%. In addition to revenue factors I just referenced, we expect to maintain our strategic investment in marketing to drive future growth. We also have additional public company expenses this quarter that we did not have in the year ago quarter as a private company.

Speaker Change: We anticipate first quarter adjusted EBITDA in the range of 0.5 to $5 $5 million Rep.

Speaker Change: Representing an adjusted EBITDA margin in the range of 0.2% to one 7%.

Speaker Change: In addition to revenue factors I just referenced we expect to maintain our strategic investment in marketing to drive future growth.

Speaker Change: We also have additional public company expenses this quarter that we did not have in the year ago quarter as a private company.

Speaker Change: While we are not providing full year guidance. We continue to believe in the fundamental health of our long term strategy underpinned by our powerful flywheel of creators content and users.

Speaker Change: Over the long term our goal is to generate profitable.

Speaker Change: Constant currency revenue growth.

David Lee: In closing, I'm pleased with the progress we made in our first year as a public company. While there's still much work to be done, we're encouraged by positive signs we see in key regions like the English-speaking markets and France, and we look forward to executing our strategy in 2025.

Speaker Change: In closing I am pleased with the progress we made in our first year as a public company.

Speaker Change: While there is still much work to be done we're encouraged by positive signs we see in key regions like the English speaking markets and France, and we look forward to executing our strategy in 2025.

Operator: With that, I'd like to turn it back to our operator to begin the Q&A session. Okay. Okay, thanks.

Speaker Change: With that I'd like to turn it back to our operator to begin the Q&A session.

Speaker Change: Thank you.

Speaker Change: As a reminder.

Speaker Change: Mike.

Speaker Change: Ask a question please press star and the number one on your telephone keypad.

Speaker Change: Also as a reminder, we will ask everyone to stick to one question and one follow up so we can take as many questions as possible.

Speaker Change: Our first question comes from.

Mark Mahaney: Mark Mahaney Evercore.

Mark Mahaney: Your line is open okay. Okay. Thanks, I'll ask two questions. Please first the strength that youre seeing in Japan, just talk about the sustainability of Bob ads embedded in your March quarter guidance.

Operator: I'll ask two questions, please. First, the strength that you're seeing in Japan, just talk about the sustainability of that as embedded in your March quarter guidance and maybe for the full year. And the second question really has to do with the full year. You've got a lot of puts and takes, you know, the anniversary of the outage, however politely you got the MAU issues that should stabilize. There are a lot of puts and takes.

Mark Mahaney: And then maybe for the full year and the second question really has to do with the full year, you've got a lot of puts and takes.

Mark Mahaney: The anniversarying of that.

Mark Mahaney: Pad.

Mark Mahaney: The.

Mark Mahaney: Outage, our partner you want to say that.

Mark Mahaney: The strength in Japan, you've got.

Mark Mahaney: You issues that should stabilize as a lot of puts and takes how should we think about the growth and the profitability levels just directionally post the March quarter. Thank you very much.

Operator: How should we think about the growth and the profitability levels just directionally post the March quarter? Thank you very much. Thanks, Mark. It's a great question and one that I really do want to answer.

Mark Mahaney: Thanks, Mark it's a great question and one that I really do want to answer.

Operator: I want to first be clear, we are extremely confident in the fundamental business we have, the flywheel that JK has created and the rocket ship that is Japan, we continue to be very bullish on. That said, I wanted to be clear on some of the discrete issues that are reflected in the Q1 guidance and try to be helpful for you as you think about your model thereafter. Remember, this guidance we provided for Q1 did have a few very specific discrete items that I think are specific only to Q1. The one of the key ones is that we talked about a great IP slate in Korea.

Mark Mahaney: I want to first be clear.

Mark Mahaney: We are extremely confident and the fundamental business. We have the flywheel that JK has created and the rocket ship that is Japan. We continue to be very bullish on that said I wanted to be clear on some of the discrete issues that are reflected in the Q1 guidance and trying to be helpful. For you as you think about your model.

Mark Mahaney: Thereafter remember this guidance we provided for Q1 did have a few very specific discrete items that I think are specific only to Q1.

Mark Mahaney: One of the key ones is that we talked about a great IP slate in Korea, we gave examples of <unk>.

Operator: We gave examples of Trauma Code, Jung Yong-Hee, A Star is Born. And in the U.S. even, we talked about a great film on Tubi called Sideline, The Quarterback and Me. So while the fundamental health of the IP slate is strong, the sequence of timing in Q1 is a factor on your compare to previous quarter. Similarly, within the Q1 guide, while we maintain our investment in marketing, because we're really bullish on the user opportunity we see, particularly as we mentioned in English-speaking countries and abroad, we still post or suggest that we are going to guide towards a positive hepatitis.

Mark Mahaney: Trauma code <unk> Star is born and in the U S. Even we talked about a great film on to be called sideline. The quarterback at me. So while the fundamental health of the IP slate is strong the sequence of timing in Q1 is a factor on your compare to previous quarter Sim.

Mark Mahaney: Similarly within the Q1 guide, while we maintain our investment in marketing because we're really bullish on the user opportunity, we see particularly as we mentioned in English speaking countries and abroad.

Mark Mahaney: We still post or suggest that we're going to guide towards a positive EBITDA range.

Operator: Importantly, the sequence of product development, you know, JK founded this company on technology and product innovation, and he's been very specific, both in the shareholder letter as well as his commentary today, that a large portion of it is sequenced towards the back half of the year. And what we discussed, whether it's highlights, the ability to unlock entire series, this improvement in the way in which we engage with users on the home landing page, these are significant, but they affect the remainder of the year. And so when I think about our fundamental business, while we are only guiding a quarter out, we've talked about not just our target, but our confidence in how we've demonstrated previous strong profitable growth.

Mark Mahaney: Importantly, the sequence of product development JV.

Mark Mahaney: <unk> founded this company on technology and product innovation and he has been very specific bolt in the shareholder letter as well as for his commentary today that a large portion of it is sequence towards the back half of the year and what we discussed whether it's highlights the ability to unlock entire series. This.

Mark Mahaney: <unk> in the way in which we engage with users on the home landing page. These are significant but they affect the remainder of the year.

Mark Mahaney: And so when I think about our fundamental business, while we are only guiding a quarter out.

Mark Mahaney: We've talked about not just our target, but our confidence and how we demonstrated previous strong profitable growth.

Operator: And I encourage you to think about the business mid to long-term with that confidence.

Mark Mahaney: I encourage you to think about the business mid to long term with that confidence that said, we want to make sure. We're very clear on Q1, one other point Mark which is important we previously guided on an FX basis based on the last day of the previous quarter, but we have seen unprecedented change in the rate of the Korean won versus the USD.

Operator: That said, we wanna make sure we're very clear on Q1. One other point, Mark, which is important. We previously guided on an FX basis based on the last day of the previous quarter, but we have seen unprecedented change in the rate of the Korean won versus the USD. And some investors had trouble tracking what we based our guidance on, though we'd like to be transparent, to what the current FX for a given period might be. So just be clear that in the guide for Q1, addition to a current rate, a current rate that one could argue is that a historic weakness for local currency relative to the USD.

Mark Mahaney: And some investors had trouble tracking what we based our guidance on go we'd like to be transparent to what the current FX for a given period might be so just be clear that in the guide for Q1 position to a current rate our current rate that one could argue is at a historic weakness for local currency relative to the.

Mark Mahaney: <unk>, but I wanted to make sure that was also clear in your model.

Operator: But I wanted to make sure that was also clear in your model.

Mark Mahaney: Your second question.

Operator: Your second question was specific to Japan. I would just say, in short, whether you want to look at the 165 new original titles that launched, most of which were locally created, or the fact that we're rated as number one revenue line manga is outside of mobile games, we feel very strongly that we've built a rocket ship in Japan and we're excited about it. All right. Thanks again. Thank you so much for taking the questions.

Mark Mahaney: Your second question was specific to Japan, I would just say in short <unk>.

Mark Mahaney: Whether you want to look at the 165, new original titles that launched most of which were locally created or the fact that were rated as number one revenue line manga is outside of mobile games, we feel very strongly that we've built a rocket ship in Japan, and we're excited about it.

Mark Mahaney: Okay. Okay.

Mark Mahaney: Thanks again.

Mark Mahaney: Thank you.

Speaker Change: Your next question comes from the line of Eric Sheridan from Goldman Sachs.

Speaker Change: Line is open.

Speaker Change: Thank you so much for taking the questions I want to come back to some of the things you highlighted in the shareholder letter with respect to investments.

Operator: I want to come back to some of the things you highlighted in the shareholder letter with respect to investments in users and creators.

Speaker Change: Users and creators can you go a little bit deeper in terms of.

Operator: Can you go a little bit deeper in terms of how usability and elements of giving users new onboarding experiences can continue to drive increases in user engagement and maybe a little bit of a quantification of what you might be seeing in rate of change from an engagement? And the second part of it would be just you talked about exploring new formats to increase engagements. I'm actually thinking about what that might mean either in investments you need to make or again, what it might mean in terms of lift on engagement or conversion of traffic. Thank you.

Speaker Change: How usability and elements of giving users new onboarding experiences can continue to drive increases in user engagement and maybe a little bit of a quantification of what you might be seeing in rate of change from an engagement and second part of it would be just you talked about exploring new formats to inclusion.

How should we be thinking about what that might mean, either and the investments you need to make or again, what it might mean in terms of lift on engagement or conversion of traffic. Thank you.

Operator: Thanks, Eric. Another great question.

Speaker Change: Thanks, Eric and another great question first on overall levels of investment relative to EBITDA performance I want to reiterate that in the guide for Q1 as well as in our strategic commentary on Jk's letter, we are already in making investments in the periods reported and then the guidance both in marketing and in product innovation and unclear.

Operator: First, on overall levels of investment relative to EBITDA performance, I want to reiterate that in the guide for Q1, as well as in our strategic commentary in J.K.'s letter, we are already making investments in the periods reported and in the guidance, both in marketing and in product innovation. And clear, we're going to post, or we promised to post, positive adjusted EBITDA. So I would not want you to read our comments on investment to be at the expense of our fundamental profitability. That said, I wanted to highlight specifically what J.K. mentioned in product, and then we can talk about marketing, because the innovation of our content flywheel with our creators, product is key.

Speaker Change: We're going to a poster we promise to post positive adjusted EBITDA. So I would not want you to read our comments on investment to be at the expense of our fundamental profitability that said I wanted to highlight specifically with JK mentioned in product and then we can talk about marketing because.

Speaker Change: The innovation of our content flywheel with our creators product is key and he was very specific we talked about in January on how we revamped the onboarding experience for new users.

Operator: And he was very specific. You know, we talked about in January how we revamped the onboarding experience for new users, showing them preference. We talked in Korea about this AI-based personalization engine that, while launched in June, continues to show a 2% sequential increase in new titles read. We actually provided some additional color commentary you may not have seen before regarding how we're testing this trailer-style promotional video called Highlights. And then we're even talking about different business model options, which include unlocking an entire series for a completed title. These are not insignificant, and ones that we have been testing in some cases for some time.

Speaker Change: Selling them preference, we talked in Korea about this AI based personalization engine that will launched in June continues to show a 2% sequential increase in new titles Red we actually provided some additional color commentary you may not have seen before regarding how we're testing this trailer style promotional video called highlights.

Speaker Change: <unk>.

Speaker Change: And then we're even talking about different business model options, which include unlocking the entire series for a completed title. These are not insignificant and ones that we have been testing in some cases for some time all of these will pay off we believe post the Q1 guidance period, which is part of the reason why our resources are focused on long term.

Operator: All of these will pay off, we believe, post the Q1 guidance period, which is part of the reason why our resources are focused on long-term value creation throughout the Q1 period. So we remain very confident in that.

Speaker Change: Value creation throughout the Q1 period. So we remain very confident in that with regard to marketing I have always said with JK has always said as well that we will invest for the long term business health our investments in marketing, we do not expect nor desire for them to show up one quarter out the investments in marketing show up in greater engagement and rest of the world where we.

Operator: With regard to marketing, I have always said, J.K. has always said as well, that we will invest for the long-term business health. Our investments in marketing, we do not expect nor desire for them to show up one quarter out. The investments in marketing show up in greater engagement in the rest of the world, where we see already ARPU increasing significantly as more and more English-speaking or English-reading customers engage more with our content. So I would think of the marketing as being a longer-term payoff, but product is real. It shows up in the everyday experience of consumers, which will likely be in the back half, second half of the year.

Speaker Change: We see already <unk>, increasing significantly as more and more English speaking or English reading customers engage more with our content. So I would think of the marketing is being a longer term payoff, but product is Israel. It shows up in the everyday experience of consumers, which will likely be in the back half second half.

Operator: That's how I think about the sequence of those investments. Great. Thank you. Great.

Speaker Change: Of the year, that's how I think about the sequence of those investments.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Benjamin Black from Deutsche Bank.

Speaker Change: Your line is open.

Benjamin Black: Great. Thank you for taking my questions as a follow up on the AI recommendation engine in Korea.

Speaker Change: I know you mentioned that it.

Speaker Change: It drove a 2%.

<unk> increase in engagement per user through really great to hear more about your.

Operator: You know, how big of a list could AI-driven recommendations become? And so, generally speaking, how should we think about user growth in the near to midterm?

Speaker Change: Your learnings here, how big of a lift could AI driven recommendations become and so generally speaking how should we think about user growth.

Speaker Change: In the near to midterm and then the second question is you.

Operator: And the second question is, you know, you mentioned the political disruption in Korea. Can you just talk about how MAU and payer trends have progressed so far this year? Thanks, Benjamin. First, with regard to the AI personalization engine, the reason why we talk about it in relation to our experience in Korea is, as you know, Korea is an extremely robust market. When you have 50% household engagement and there is habituation well in place with strong ARPU, as we release more content, and that's why crossover IP is so powerful in Korea, as we release more content, any impact we can have on presenting users what they want to potentially read, just given the depth of the content and the amount of habituation we think is critical for long-term growth.

Speaker Change: You mentioned the political disruption in Korea, he could talk about how <unk> trends have progressed. So far this year. Thank you.

Speaker Change: Okay.

Speaker Change: Thanks, Benjamin first with regard to the AI personalization engine there.

Speaker Change: The reason why we talk about it in relation to our experience in Korea is as you know Korea is an extremely robust market. When you have 50% household engagement and there is a habituation well in place with strong <unk> as we release more content and Thats why crossover IP is so powerful in Korea as we release more content.

Speaker Change: Any impact we can have on presenting users what they want to potentially read just given the depth of the content and the amount of <unk>. We think is critical for long term growth, we're not providing guidance specific to any one of our new product releases, but we have talked about how we are focused on.

Operator: We're not providing guidance specific to any one of our new product releases, but we have talked about how we are focused on webcomic app MAU growth. We specifically highlighted a new metric for you in the spirit of transparency around a 6.7% increase. And while we highlighted it and we talked about strength abroad, this will become something I promise we will talk to you all about more and more, because it's that app MAU growth, particularly for webtoons or webcomics, where you will see the benefit of product innovation show up in paid content revenue. You know, our web novel business, critical for our crossover IP, is more for the scale of our advertising business, where we really see paid content strength, and the heart of which is in Korea and Japan today, is really around those product innovations.

Speaker Change: Web comic.

Speaker Change: MAA yogurt, we specifically highlighted the new metric for you in the spirit of transparency around a six 7% increase on while we highlighted it.

Speaker Change: And we talked about strength abroad. This is this will become something I promise, we will talk to you all about more and more because it's that app Mou growth, particularly for web teams or web comics, where you will see the benefit of product innovation show up and paid content revenue.

Speaker Change: Our web novel business critical for our crossover IP is more for the scale of our advertising business, where we really see pay content strength in the heart of which is in Korea, and Japan today is really around those product innovations. So I can't provide you more specific metrics today, but I wanted to inform strategically why we're bigger.

Operator: So I can't provide you more specific metrics today, but I wanted to inform strategically why we're beginning to disclose more and more of this metric called webcomic app MAU. As for commentary with regard to January, you know, I would trust the guide that we've given you for Q1, which do include, we mentioned these issues that we faced starting in Q4, this political turbulence. We also said that our guide reflected the fact that while we believe those issues have resolved, our Q1 guide reflects our best estimate today on the performance in the first three months. Great.

Speaker Change: To disclose more and more of this metric called web comic App Mou.

Speaker Change: As for commentary with regard to January.

Speaker Change: Would trust the guide that we've given you for Q1, which do include as we mentioned these issues that we faced starting in Q4. This political turbulence. We also said that our guide reflected the fact that while we believe those issues have resolved. Our Q1 guide reflects our best estimate today on the performance.

Speaker Change: In the first three months.

Speaker Change: Okay.

Speaker Change: Great. Thank you Brian.

Operator: Thank you. Great.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Doug Anmuth.

Speaker Change: From JP Morgan.

Speaker Change: Your line is open.

Speaker Change: Great.

Operator: Thanks for taking my questions.

Speaker Change: Thanks for taking my questions.

Operator: Just to follow up on your OneCue guide, you talked about some of the discrete issues like the IP slave and your commitment to the breakeven and also some of the issues that like the political unrest in Korea that happened in 4Q but it's falling into OneCue. When you were to look at the magnitude of the driver and is the IP slave being pushed out also affecting some of the organic traffic acquisition that you might have been assuming for in Korea and other regions? Well, one way I can answer that is to point you to a longer period than a quarter.

Speaker Change: Just a follow up on your way to guide you talked about some of the issue.

Speaker Change: Ladies.

Speaker Change: Just to go back to EBITDA.

Speaker Change: Okay.

Speaker Change: And also some of the issue.

Speaker Change: The political and Ralph can create.

Speaker Change: Okay.

Speaker Change: What is flowing into <unk>. When you also look at.

Speaker Change: It's a little bit in your pocket across both items.

Speaker Change: Okay.

Speaker Change: Is that a driver.

Speaker Change: Yes, the IP slate pushed out also affected.

Speaker Change: The organic traffic acquisition.

Speaker Change: Specific floor.

Speaker Change: And for yet another region.

Speaker Change: Well one way I can answer that is to point you to a longer period than a quarter. So when you look at our overall penetration of revenue from an IP standpoint versus paid content. You'll note that it's actually a relatively small percent of total revenue.

Operator: So when you look at our overall penetration of revenue from an IP standpoint versus paid content, you'll note that it's actually a relatively small percent of total revenue. And I can send you the specific numbers. I think we disclose it primarily at a total company level. So I wouldn't read the IP slate delay as being an annual or persistent mid to long term issue. It can affect a quarter. And that is because of how much of a great organic lift it can provide.

Speaker Change: And I can send you the specific numbers that I think we disclosed that primarily at a total company level. So I wouldn't read the IP slate delay as being a annual or persistent mid to long term issue. It can affect the quarter and that is because of how much of a great organic lift. It can provide if you think about what we have talked about.

Operator: If you think about what we have talked about in previous periods, like Marry My Husband, which was a phenomenon globally that started actually as a web novel, then a web comic, and then crossed over to Amazon Prime as a global hit in Q1 of 2024, that hit had lifted engagement and usership globally across our business and had some revenue impact in that quarter, just as an example of something I can discuss outside of the guide period. I think the strength of our IP slate is significantly important as a source of overall. It's just in a given quarter, it may have an impact.

Speaker Change: In previous periods like Mary My husband, which was a phenomenon globally that started actually as a web novel Dental web comic and then crossed over to Amazon Prime as a global hit in Q1 of 2020.

Speaker Change: For that hit had lifted engagement and user ship globally across our business and had some revenue impact in that quarter. Just as an example of something I can discuss outside of the guide period I.

Speaker Change: I do not I would I think the strength of our IP slate is significantly important as a source of strength overall is just in a given quarter. It may have an impact. The other thing I would emphasize is we are not a whale dependent business, we do not see a single hit move the paid content <unk>.

Operator: The other thing I would emphasize is we are not a whale dependent business. We do not see a single hit move the paid content engine. But if a slate that includes more than one or two projects shifts by a month or two, it would affect our short term quarterly guide. Long term, though, I want to be clear, we feel like our IP slate is a source of increasing strength.

Speaker Change: <unk>.

Speaker Change: If a slate that includes more than one or two projects shifted by a month or two it would affect our short term quarterly guide long term, though I want to be clear, we feel like our IP slate is a source of increasing strength.

Operator: Hope that answers that question.

Speaker Change: Hope that answers that question and then with regards to the short term impact on some of the other issues again, we can only point you to the guide we have said that we don't think these issues for example, the political turmoil in Korea persist beyond the guidance period, but it is something that we do want to include as a reason for our Q4 performance as well as our Q1 <unk>.

Operator: And then with regard to the short-term impact on some of the other issues, again, we can only point you to the guide. We have said that we don't think these issues, for example, the political turmoil in Korea persist beyond the guided period, but it is something that we do want to include as a reason for our Q4 performance, as well as our Q1 guide.

Speaker Change: <unk>.

Speaker Change: Okay.

Operator: And as a quick follow-up on the IT adaptation delay, could you explain what's causing that delay? What's your strategy when projects get pushed out? Do they just all kind of... Like I fall into future quarters, meaning like today I have to compete against each other, or does the pipeline kind of move back together with the current state? Yeah, so first, we never like to depend on the short-term timing of a given IP crossover. We rejoice when they reach market and drive engagement with our users, but we're not managing to a short-term schedule. That's why we would much rather have them come to market in the best organic way because we know that they organically lift our core paid content engine very well.

Speaker Change: And as a quick follow up.

Speaker Change: Kevin.

Speaker Change: Could you explain what's causing it.

What's your strategy with Nic projects got pushed out.

Speaker Change: Debate or cargo.

Speaker Change: Okay fall into future quarters.

Speaker Change: Meaning like how quick we can get it going to be struggling a robust pipeline of a new governor.

Speaker Change: The current state of looking back.

Speaker Change: Yes. So first we are not we never like to depend on the short term timing of a given IP crossover.

Speaker Change: Rejoice, when they reach market and drive engagement with our users, but we're not managing to a short term schedule Thats why we would much rather have them come to market and the best organic way, because we know that they organically lift our core paid content engine very well. So as a result, we don't seek to manage the short term schedule, we seek to ensure.

Operator: So as a result, we don't seek to manage the short-term schedule. We seek to ensure the maximum success of the slate at the lowest cost. Because remember, we have the advantage of not having to deploy massive amounts of studio dollars. We have these hits that cross over to feature-length film and other forms of crossover IP that then benefits our paid platform. So rather, for me, this is an IR disclosure issue, where I want to be clear on the timing and impact on future results, rather than seek to short-term manage when they come out. We're also not at a scale yet with this business where we need to worry about cannibalization or one affecting another.

Speaker Change: The maximum success of the slate at the lowest cost because remember we have the advantage of not having to deploy massive amounts of studio dollars. We have these hits that crossed over to feature length film and other forms of crossover IP that then benefits are paid platform.

Speaker Change: So rather for me. This is an IR disclosure issue, where I want to be clear on the timing and impact on future results rather than seek to short term manage when they.

Speaker Change: Come out we're also not at scale, yet with this business, where we need to worry about cannibalization or one affecting another these crossover hits.

Operator: These crossover hits, we think they're pretty significant, but they don't compete for share of mind when they come out. They have a fairly diverse source of content, and the timing of them, remember, this is not a primary business, that the timing of them benefit the core paid content platform for us. Got it.

Speaker Change: We think they are pretty significant but they don't compete for share of mind when they come out.

Speaker Change: A fairly diverse source of content and the timing of them remember this is not our primary business that the timing of them benefit the cord pay concept platform for us.

Speaker Change: Okay.

Speaker Change: Got it thank you.

Operator: Thank you. Great.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Matthew costs.

Speaker Change: Morgan Stanley.

Speaker Change: Your line is open.

Speaker Change: Hey, Thanks for taking the question I wanted to ask about advertising it's Joe.

Operator: Thanks for taking the question. I want to ask about advertising. It's shown a really nice acceleration the past couple of quarters.

Speaker Change: On a really nice acceleration in the past couple of quarters I believe 25 of the year, where maybe you saw an opportunity to show that advertising business really inflect, maybe even as early as kind of a first half year. So I guess now that we're almost two months into the year.

Operator: I believe 25 is a year where maybe you saw an opportunity to show that advertising business really inflect maybe even as early as kind of the first half year. So I guess now that we're almost two months into the year, how is advertising scaling? Where are you tracking versus where you hoped to be and what initiatives would you call needle moving on the ad side? And then I have one follow-up. Thanks, Matt. Advertising continues to be a strength. On a constant currency basis, underlining the 27.4% increase. And while we didn't disclose it by region, when I peel back internally and look at Japan versus Korea versus rest of the world, I'm seeing growth in the Q4 period, constant currency in all markets.

Speaker Change: How is advertising scaling where are you tracking versus where you hoped to be.

Speaker Change: And what initiatives would you call out.

Speaker Change: A needle moving on the add side and then I'll have one follow up thank you.

Speaker Change: Thanks, Matt advertising continues to be a strength on a constant currency basis, just underlining the 27, 4% increase and while we didn't disclose it by region when I Peel back internally and look at Japan versus Korea versus rest of world I'm seeing growth in the Q4 period constant currency in all markets.

Operator: Remember, we've talked about how advertising is a nascent opportunity in markets like English-speaking markets and rest of the fair amount of room to run, not having a robust direct ad sales force yet, for example, in North America.

Speaker Change: Remember, we've talked about how advertising is a nascent opportunity in markets like English speaking markets and rest of world and and Japan, where we feel like we have a fair amount of room to run not having a robust direct AD sales force yet for example in North America. So I think it's early days and we're really pleased with the <unk>.

Operator: So I think it's early days and we're really pleased with the continued quarter to quarter growth we see on a constant currency basis. Great.

Speaker Change: <unk> quarter to quarter growth, we see on a constant currency basis.

Speaker Change: Great and then just following up on the on the App and Au number if I understand it correctly, the total app and EU number declined a bit year on year, but if you back out web novel users web comic app.

Operator: And then just following up on the app MAU number, so if I understand it correctly, the total app MAU number declined a bit year on year, but if you back out web novel users, web comic app MAUs were up almost 7%. So I guess part one is like, is that accurate? And then part two, is the impact on web novel users, is that a result of some specific changes that you've made to the experience of web novel users? Is that something that will continue as a headwind? How should we think about that? Well, first on the accuracy of your interpretation, yes, 6.7% growth in the Q4 period when we look at webcomic MAU that excludes web novels.

Speaker Change: End user up almost 7%. So I guess part one is that accurate and then part two is the impact on web novel users.

Speaker Change: We got a result of some specific changes that you've made to the experience of web novel users is that something that will continue as a headwind how should we think about that from here. Thank you.

Well first on the accuracy of your interpretation, yes, six 7% growth in the Q4 period. When we look at web comic Mou that excludes web novels, and example of that would be or what Pat business first let me explain why we're disclosing this.

Operator: An example of that would be our Wattpad business. First, let me explain why we're disclosing this. Wattpad is an important business for us, but it is not a business that is as driven by paid content as it is by other business models. And it's a source of crossover IP given its scale. In fact, when we talk about Sideline, The Quarterback and Me and other feature-length films, many of the examples that we've mentioned in the past actually come from great content generated by users on the web novel Wattpad platform. So we value it. But when we talk about this metric that grew 6.7%, we're trying to more precisely show you where the paid content engine will go.

Speaker Change: <unk> is an important business for us, but it is not a business that is as driven by paid content as it is by other business models and it's a source of crossover IP given its scale in fact, when we talk about sidelines quarterback and me and other feature length films. Many of the examples that we've mentioned in the past actually come from great content generated by users.

Speaker Change: On the web novel, what Pat platform, So we value it.

Speaker Change: But when we talk about this metric that grew six 7% we're trying to more precisely show you where the paid content engine woke up because the paid content engine is driven by product improvement and where we monetize on a paid content basis and that is more so from our global web comic business than for example, our webinar.

Operator: Because the paid content engine is driven by product improvement and where we monetize on a paid content basis, and that is more so from our global webcomic business than, for example, our web novel business. So that's the reason why we are pointing you towards that number. The other reason we're pointing towards that number is I want to be transparent about what we've disclosed in total MAU from WPAT. You know, our total MAU declined in Q4, and we pointed specifically to one country that banned WPAT, which actually drove two-thirds of the total rest-of-world MAU decline. Just one country's embargo that we saw the full quarter impact in Q4.

Speaker Change: <unk> business. So that's the reason why we are pointing you towards that number. The other reason we're pointing towards that number is I want to be transparent about what we've disclosed in total Mou from Wap app.

Speaker Change: Our total <unk> declined in Q4, and we pointed specifically to one country that band, what Pat which actually drove two thirds of the total rest of world declined just one countries embargo that we saw a full quarter impact in Q4. So part of the reason why we're trying to be transparent.

Operator: So part of the reason why we're trying to be transparent is sometimes we worry that when we show these total MAU numbers, we're not helpful to the investors on where this big product innovation is going and what metric on a non-GAAP basis it's more tied to.

Speaker Change: Some times, we worry that when we show. These total Mou numbers were not helpful to the investors on where this big product innovation is going and what metric on a non-GAAP basis, it's more tied to.

Operator: We're just at the beginning of providing more disclosure on this, but that's the primary reason why we shared it in this release. Great.

Speaker Change: We're just at the beginning of providing more disclosure on this but that's the primary reason why we shared it in this release.

Speaker Change: Okay.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Andrew Merrick.

Speaker Change: Raymond James.

Speaker Change: Your line is open.

Operator: Hi, thanks for taking my question. Maybe one on kind of the supply side of the equation here, maybe more as it relates to paid content rather than IP adaptations. But if you could just talk about kind of your level of comfort and your level of or your evaluation of the new content that's kind of come online, both in terms of the, the quantity, as well as kind of the cohort behavior of how that's monetizing versus your expectations.

Speaker Change: Hi, Thanks for taking my question, maybe one on kind of the supply side of the equation here, maybe more as it relates to paid content rather than IP adaptations, but if you could just talk about kind of your level of comfort and your level of or your evaluation of the new content that has kind of come online both in terms of the.

Speaker Change: The quantity as well as kind of the cohort behavior of how thats monetizing <unk>.

Speaker Change: Is your expectations and any commentary about the breadth of our Geo.

Operator: And any commentary about, you know, the breadth or geo mix of those things that we can that we can use for our models as we're looking into 20. Thanks for the question, Andrew. I think while there could be quarterly slips in a market like Korea, where we are so dominant, we feel strongly that our content engine in every market is robust.

Speaker Change: The mix of those things that we can that we can use for our models as we're looking into 'twenty five thank you.

Speaker Change: Thanks for the question Andrew.

Speaker Change: I think while there could be quarterly slips in a market like Korea, where we are so dominant.

Speaker Change: We feel strongly that our content engine and every market is robust.

Operator: The market that we provided the most disclosure where I think you want to spend time in your model is Japan. We talk about not just the sheer growth, being the number one app outside of mobile gaming for Line Manga, but we specifically called out 164 new original launches, the most of which are local. This is very important. When JK creates Flywheels, they export globally. But when they are created locally, those creators have now the ability not just to publish in the language of origin, in Japanese, for example, but they have the power, like Savior of Divine Blood, to reach audiences outside of their original market.

Speaker Change: The market that we provided the most disclosure where I think you want to spend time in your model as Japan.

Speaker Change: We talk about not just the sheer growth that being the number one app outside of mobile gaming for line longer, but we specifically called out 164, new original launches the most of which are local this is very important when.

Speaker Change: When JK creates flywheels they export globally, but when they are created locally those creators have now the ability not just to publish in the language of origin and Japanese for example, but they have the power like Savior of divined blood to reach audiences outside of their original market and the reason why that's important is some.

Operator: And the reason why that's important is sometimes folks look at our business and they think the source of content can only come from one country for the consumption of one country, when in reality, we've seen there's a global consumption for content despite where the origin market is. And so Japan is going to, I believe, be a robust, long-term source of content, not just for Japan. But giving those local Japanese creators access to the rest of the world in Korea helps them and it helps our business. So I think you should think of these local sources of content as having a global outlet.

Speaker Change: Folks look at our business and they think the source of content can only come from one country for the consumption of one country. When in reality, we proven theres a global consumption for content, despite where the origin market is.

Speaker Change: And so Japan is going to I believe be a robust long term source of content not just for Japan, but giving those local Japanese creators access to the rest of world in Korea, who helps them and it helps our business. So I think you should think of these local sources of content is having a global outlet with regards to the rest of.

Operator: With regard to the rest of the world and Korea, we didn't provide too much commentary in this release because it was a year-end release. But JK intentionally spent time on the crossover IP slate because I think it's a very powerful, low-cost way that we do marketing. When a creator has an unexpected hit that hits feature-length film, like the ones we've mentioned in this release, it naturally lifts the platform. And I think that's a testament to the power of the flywheel we have. It's at scale and it's growing. So for the mid- to long-term, we feel very good.

Speaker Change: The World and Korea, we didn't provide too much commentary in this release because it was a year end release, but jk's intentionally spent time on the crossover IP slate because I think it's a very powerful low cost way that we do marketing when a creator has an unexpected hit the hits feature length film like the ones. We've mentioned in this release.

Speaker Change: <unk> it naturally lifts the platform and I think Thats, a testament to the power of the flywheel, we have it at scale and it's growing so for the mid to long term, we feel very good I think we're just trying to be very transparent on the Q1 guide to establish a practice of ensuring that we are providing as much information for what we know about which is this quarter, but the Mitchell.

Operator: I think we're just trying to be very transparent on the Q1 guide to establish a practice of ensuring that we are providing as much information for what we know about, which is this quarter. But the mid- to long-term is bright, particularly as a source of content from creators.

Speaker Change: Long term as bright, particularly as a source of content from creators.

Speaker Change: Okay.

Operator: Thank you. Thank you very much and we look forward to meeting you over the current period and then providing new results at the end of Q1.

Speaker Change: Thank you.

Speaker Change: Seeing as there are no more questions index that concludes our question and answer session I will now like to turn the call back over to the web two and entertainment team for closing remarks.

Speaker Change: Thank you very much and we look forward to.

Speaker Change: Meeting you over the current period, and then providing new results at the end of Q1 Bye bye.

Operator: Bye-bye. [music] Good afternoon and thank you for joining us. As a reminder, our remarks today will include forelooking statements, including those regarding our future plans, objectives, expected performance, and in particular, our guidance for the next quarter. Actual results may vary materially from stated statements. Information concerning risks, uncertainties, and other factors that could cause these results differs including our SEC filings, including those stated in the risk factors section of our filings with the SEC. These forelooking statements represent our outlook only as of the date of this call.

Speaker Change: The meeting is now concluded.

Speaker Change: You all for joining you may now disconnect.

Speaker Change: [music].

Speaker Change: Thank you for standing by.

Dustin: My name is Dustin and that will be your conference operator today.

Dustin: At this time I would like to welcome everyone to the web to entertainment fourth quarter and full year 2024 earnings call.

Dustin: All lines have been placed on mute to prevent any background noise.

Dustin: The speakers remarks, there will be in that question and answer session.

Dustin: If you'd like to ask a question. Please press star and then one on your keypad.

Kim: At this time I would now like to turn the call over to <unk>, Kim Vice President of Investor Relations.

Speaker Change: Mr. Kim Please go ahead.

Dustin: Good afternoon.

Speaker Change: And thank you for joining us as a reminder, our remarks today will include forward looking statements, including those regarding our future plans objectives expected performance in particular, our guidance for the next quarter.

Speaker Change: Actual results may vary materially from today's statements information concerning risks uncertainties and other factors that could cause. These results to differ is included in our SEC filings, including those stated and the risk factors section of our filings with the SEC.

Speaker Change: These forward looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward looking statements. Additionally, the matters. We discussed today will include both GAAP and non-GAAP financial measures reconciliations of any non-GAAP financial measures similar to directly comparable GAAP measures are set forth in our earnings press release non-GAAP financial measures should be considered in addition to not.

Operator: We undertake no obligation to revise or update any forelooking statements. Additionally, the matters we discuss today will include both GAAP and non-GAAP financial measures. Reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to not as a substitute for GAAP measures.

David: As a substitute for GAAP measures joining me today on the call our agenda at Sam founder and CEO David <unk>.

Operator: Joining us today on the call are Joon-Goo Kim, Founder and CEO, David Lee, CFO and COO, and Yong-Soo Kim, Chief Strategy Officer.

Chonburi Kim: And young Soo, Kim Chief strategy officer, with that I'll now turn the call over to our founder and CEO Chonburi Kim.

Joon-Goo Kim: With that, I will now turn the call over to our Founder and CEO, Joon-Goo Kim. Thank you, everyone, for joining us today. I'll make a few brief comments on our performance, and then David will provide more detail on our result and outlook.

Chonburi Kim: Thank you everyone for joining us today I'll make a few brief comments on our powerful months and then David will provide more detail on our leach Eric.

Joon-Goo Kim: For my full thoughts on the year and our path forward, please refer to the shareholder letter posted on our investor relations website. 2024 was an important year for Webtoon. We became a public company, making the beginning of an exciting new chapter in our history. And our creators and IPs continued to grow their influence all over the world. I am pleased to share that we reported strong results for the year 2024 with record annual revenue and profitability. Revenue of $1.35 billion grew 5% on a reported basis and 13% on a constant-crisis basis. While we reported a net loss of $153 million, mostly due to non-test expenses, we reported record adjusted EBITDA of $67.9 million, an increase of more than 600% compared to 2023.

Speaker Change: For my first thought on the year and our path forward. Please refer to the shareholder.

Speaker Change: Posted on our Investor Relations website, 2024 was an important year for weapon.

Speaker Change: We became a public company, making the beginning of an exciting new chapter in our history, and our creators and IP continued to grow their <unk> or.

Speaker Change: Over to ward.

Speaker Change: I am pleased to share that we reported strong <unk> for the year obtained 24 with record revenue and profitability.

Revenue of one point to 35 billion grew 5%.

Speaker Change: The basis and 13%.

Speaker Change: On a constant currency basis.

While we reported a net loss of $153 million, mostly due to noncash expenses.

Speaker Change: We reported a record adjusted EBITDA.

Speaker Change: 57, 9 million, an increase of more than 600% compared to 2023.

Joon-Goo Kim: We believe these results demonstrate that our strategy and flywheel are working.

Speaker Change: We believe these results demonstrate that our strategy and Friday are working.

Joon-Goo Kim: I'd like to share a few highlights from 2024, starting with the progress of our business in Japan. By leveraging our leading position in Korea and our successful and differentiated cross-border strategy, we've been able to take the top position in Japan for the second half of 2025. as measured by a revenue in the non-game market. After successfully exporting a number of our hit Korean content to Japan, including stories like Teenage Mercenary, we are now focused on building a powerful local creator ecosystem in the market. In January, we invested in No. 9, a Japanese studio that has produced titles such as our global hit, Savior of Divine Blood, which was Lime Manga's first local webcomic to become a breakout hit both in and out of Japan.

Speaker Change: I'd like to share a few highlights from 2024, starting with the progress of our business in Japan.

Speaker Change: By leveraging our leading position in Korea, and our success for and differentiated growth support our strategy, we have been able to pick the top puts shenton, Japan for the second half of 2020 for.

Speaker Change: As measured by revenue in that non gaming market.

Speaker Change: After successfully exporting a number of our hip Korea content to Japan, including stories like Chianese Marcia on already we are now focused on building a powerful local creek ecosystem in the market.

Speaker Change: In January we invested in number nine our Japanese studio that has it produced titles such as our global heat failure of the Divine Broadway, which was in line manga Firstly rocker web comic to become a break out hit both in and out of Japan.

Joon-Goo Kim: Our investment in No. 9 will boost our content pipeline in Japan, the company's largest geography and fastest-growing market. Further, our individual amateur platform in Japan is helping us discover local creators and maintain a pipeline of fresh new content. Senpai is Otokonoko. It was discovered through indies and was developed into a successful cultural anime series in 2024. With its continued popularity, this title has since been adapted into a new animated feature film by NCLEX.

Speaker Change: Our investment in number nine liter pushed our content pipeline in Japan, the company's largest geography and fastest growing market.

Speaker Change: Further our mature platform, Japan is helping us discover rocker creators and maintain a pipeline of a fresh new content.

Speaker Change: <unk> Atacama co Los of discovered through in these and was developed into a successful contour anime series in 2024.

Speaker Change: It is continued popularity. These types of has since been adapted into a new animated feature featuring by MPLX.

Joon-Goo Kim: Our incredible success in Japan is evidence of the power of our strategy. We are taking similar actions at various stages in the U.S. and the other key markets, investing in content studios and creators to build our global content pipeline.

Speaker Change: Our incredible success in Japan is evidence of the power of our strategy.

Speaker Change: We're taking similar actions at various stages in the U S and the other key markets investing in content studios and creators to build our global <unk> pipeline.

Joon-Goo Kim: Finishing up with IP adaptations, we had a number of successful launches in Q4, and we are off to a great start in 2025. Three examples of this include First, Jung Yeon-hee, the star is born in Korea, was ranked 6th in Disney Plus Global TV Show category in November. Second, over the U.S. Thanksgiving weekend, we launched Sidelined the QB & Me. The project was instant hit, reaching number one on Tubi in the U.S. and Canada, drawing the biggest number of viewers of any title on Tubi in its first seven days. His success has already led to a green light for a sequel.

Speaker Change: Finishing up with the IP other patients we had a number of successful launches in Q4, and we are off to a great start in 2025.

Speaker Change: Three examples of this include first John Kiani, They're a star is born in Korea was negative six in Disney plus global TV Shaw category in November.

Speaker Change: Second over the U S. Thanksgiving weekend, we launched it sidelined at QB and me.

Speaker Change: The project to us instant seat, reaching number one on <unk> in the U S and Canada. During the biggest number of years of entitlement QB in its first seven days.

Speaker Change: <unk> success has already led to a green light for us CCAR.

Joon-Goo Kim: And finally, in January, the drama called Heroes Encore debuted on Netflix as a global stream hit, spending four weeks in the streamer's top 10 non-English categories. We've intentionally built our global IPM creator ecosystem to develop titles that can find a variety of audiences across formats. We believe these successes will continue to drive new users to our platform as viewers seek out the original source material for these adaptations.

And final rate in January.

Speaker Change: Trauma quota heroes Encore debuted on Netflix as a robust screen Keith spending for relief in the three months top 10, non English category.

Speaker Change: We intentionally built.

Speaker Change: Our Grover IPM creator ecosystem to develop tightest that can find of variety of audience across format.

We believe these successes will continue to drive new users to our platform as viewers seek out that region is worth metro area for these patients.

Speaker Change: In conclusion.

Speaker Change: Our success in 2024 was driven by our passionate and dedicated community of creators and users who continue to create share and <unk> <unk> on our platform.

Speaker Change: I also want to thank our employees for their continued commitment to our company and our mission.

Speaker Change: Looking to 2025 I remain confident in our ability to continue driving innovation redeployed new.

Speaker Change: New in Japan to grow our business and ecosystem as we continue to demo Kraft Heinz storytelling by bringing comics and new form of Bgs, so retain to the creator economy.

David Lee: With that, I will now turn the call over to David. David, please go ahead. Thank you, J.K., and thank you, everyone, for joining us. I'm going to focus my commentary on fourth quarter 2024 results compared to the prior year, unless otherwise noted. During the fourth quarter, we grew revenue 10.4% on a constant currency basis with growth across all revenue streams. Our reported revenue is at 5.6% year-over-year as a result of strength in paid content and advertising, partially offset by our exposure to weaker foreign currencies. As we executed on our cross border content distribution strategies, we also gained greater leverage on our gross profit, which expanded 45 basis points year over year.

Speaker Change: With that I will now hand, the call over to David David.

Speaker Change: Please go ahead.

Speaker Change: Thank you J J and thank you everyone for joining us.

Speaker Change: Im going to focus my commentary on our fourth quarter 2024 results compared to the prior year unless otherwise noted.

Speaker Change: During the fourth quarter, we grew revenue 10, 4% on a constant currency basis with growth across all revenue streams are.

Speaker Change: Our reported revenue was up five 6% year over year as a result of strength in paid content and advertising, partially offset by our exposure to weaker foreign currencies.

Speaker Change: As we executed on our cross border content distribution strategies. We also gained greater leverage on our gross profit, which expanded 45 basis points year over year.

David Lee: If you adjust for the e-book Japan marketing expenses, which moved from marketing to cost of revenue during the quarter. Gross margin expanded by 147 basis points. On a sequential basis, gross margin declined due to a sales mixed shift to certain studio and performance-based ad businesses, both of which have higher revenue share ratios. Net loss was $102.6 million in the quarter compared to a loss of $95.3 million in the year prior, driven by higher general and administrative expenses due to public company costs and higher marketing Adjusted EBITDA was negative $3.5 million in the quarter compared to a positive $10.4 million in the same quarter of 2023.

Speaker Change: If you adjust for the E book, Japan, marketing expenses, which moved from marketing to cost of revenue during the quarter.

Speaker Change: Gross margin expanded by 147 basis points.

Speaker Change: On a sequential basis gross margin declined due to a sales mix shift to certain studio and performance based AD businesses, both of which have a higher revenue share ratios.

Speaker Change: Adjusted EBITDA was negative $3 5 million in the quarter compared to a positive $10 4 billion in the same quarter of 2023.

David Lee: We were primarily impacted by increases in actuarial losses on retiree benefits, a non-cash, non-operating expense as a result of a third-party evaluation. as well as the effects of currency translation and lower gross profit in Korea due to a shift in revenue. Actuarial losses had an impact of approximately $6 million to adjusted EBITDA in the fourth quarter. As a result, our adjusted loss per share for the quarter was $0.03 compared to adjusted earnings per share of $0.09 in the prior year.

Speaker Change: We were primarily impacted by increases in actuarial losses on retiree benefits.

Speaker Change: Non cash non operating expense as a result of a third party evaluation.

Speaker Change: As well as the effects of currency translation and lower gross profit in Korea due to a shift in revenue mix.

Speaker Change: Actuarial losses had an impact of approximately 6 million to adjusted EBITDA in the fourth quarter.

Speaker Change: As a result, our adjusted loss per share for the quarter was <unk> <unk> compared to adjusted earnings per share of <unk> in the prior year.

David Lee: turning to operational health. Total company MAU was down roughly 3.7% of the... On our last call, we shared our efforts to focus on driving app. who are more engaged and present better monetization opportunities. While AppMAU decreased slightly by 1.5% overall, we saw a 6.7% increase in webcomic AppMAU when we removed the impact of web novel users. This growth was led by increases across important English-speaking markets as well as other key countries like France and Thailand. As mentioned last quarter, we continue to see pressure on rest of world MAU due to a government ban on Wattpad in one country.

Speaker Change: Turning to operational health <unk>.

Speaker Change: Total company <unk> was down roughly three 7% in the quarter.

Speaker Change: On our last call we shared our efforts to focus on driving App users, who are more engaged and better monetization opportunities.

Speaker Change: While <unk> decreased slightly by one 5% overall, we saw a six 7% increase in web comic Pap Mou when we remove the impact of web novel users.

Speaker Change: This growth was led by increases across importance English speaking markets as well as other key countries like France and Thailand.

Speaker Change: As mentioned last quarter, we continued to see pressure on rest of world Miu due to what government ban on what's had in one country.

David Lee: While we're working closely with that government to get the ban lifted, the fourth quarter included the impact of a full three months of the ban, accounting for two-thirds of the MAU decline in the rest of the world. Although webcomics tend to generate higher revenue and profitability than web novels, which we believe is an indication of our acceptance in rest of the world, web novels are still an important piece of our IP strategy as the format's lower barrier to entry allows even more creators to showcase their stories on our platform. Wattpad remains the global leading platform for web novels, and we are focused on returning the platform to growth and profitability.

Speaker Change: While we are working closely with our government to get the ban lifted the fourth quarter included the impact of a full three months of demand accounting for two thirds of the Mou decline in rest of world.

Speaker Change: Although web comics tend to generate higher revenue and profitability than web novels, which we believe is an indication of our acceptance in rest of the world Web novels are still an important piece of our IP strategy as the formats lower barrier to entry allows even more creators to showcase their stories on our platform.

Speaker Change: <unk> remains the global leading platform for web novels, and we are focused on returning the platform to growth and profitability.

David Lee: Now I'd like to provide an update on our revenue streams that have consolidated. starting with pay cuts. In the quarter, we posted 10.9% revenue growth on a constant currency basis year over year. For the full year, we posted 12.6% revenue growth on a constant currency basis. This was driven by our ongoing strength in Japan, which continued to show double-digit growth, as well as successful modernization efforts in Korea and the rest of the world. Additionally, ARPU growth on a constant currency basis of 12.4% in the quarter and 13.7% for the full year represents success in driving paying user engagement as we continue to improve our recommendation models and users increase their propensity to spend on the content they love.

Speaker Change: Now I'd like to provide an update on our revenue streams at a consolidated level.

Speaker Change: Starting with pay content.

Speaker Change: In the quarter, we posted 10, 9% revenue growth on a constant currency basis year over year.

Speaker Change: For the full year, we posted 12, 6% revenue growth on a constant currency basis.

Speaker Change: This was driven by our ongoing strength in Japan, which continued to show double digit growth as well as successful monetization efforts in Korea, and the rest of the world.

Speaker Change: On the content they love.

David Lee: While we have seen MAU declines in Korea and the rest of the world due to decreases in web users coupled with the continuing Wattpad ban I just mentioned. We've been able to post solid revenue growth with strong ARPU growth. Advertising posted 27.4% revenue growth in the fourth quarter on a constant currency basis year over year. This strong performance was driven by double-digit growth in Korea and Japan. In Korea, we saw increased ad sales from both Naver and other partners as the strength of our offering continues to draw interest from partners. Japan's growth was driven by higher year-over-year MAU for line manga and e-book Japan.

Speaker Change: While we have seen declines in Korea, and rest of world due to decreases in web users coupled with the continuing Wap had been I just mentioned, we've been able to post solid revenue growth with strong <unk> growth.

Speaker Change: Advertising posted 27, 4% revenue growth in the fourth quarter on a constant currency basis year over year.

Speaker Change: This strong performance was driven by double digit growth in Korea and Japan.

Speaker Change: In Korea, we saw increased AD sales from both Nabors and other partners as the strength of our offering continues to draw interest from partners.

Speaker Change: Japan's growth was driven by higher year over year Mou for line manga, an ebook Japan.

David Lee: During Q4, we introduced rewarded video ads to eBooks Japan as we continue to make improvements on that platform. For the full year, we posted 19.8% advertising revenue growth on a constant currency basis. Finally, our IP adaptation business saw revenue decline 6.9% year-over-year on a constant currency basis in Q4. driven by declines in Korea and the rest of the world, partially offset by growth in Japan. For the full year, IP adaptation revenue was up 6.7% on a constant currency basis. While the pipeline of entertainment projects in Korea remains strong, we experienced a prolonged delay in project timing in Q4.

Speaker Change: During Q4, we introduced rewarded video ads to ebooks, Japan as we continue to make improvements on that platform.

Speaker Change: For the full year, we posted 19, 8% advertising revenue growth on a constant currency basis.

Speaker Change: For the full year IP adaptation revenue was up six 7% on a constant currency basis.

Speaker Change: While the pipeline of entertainment projects in Korea remains strong we experienced a prolonged delay in project timing in Q4.

David Lee: In 2025 and beyond, we are excited to bring our latest studio-end projects to market and believe our IP adaptation strategy continues to support brand awareness globally, driving traffic to our platform.

David Lee: Now I'd like to look at our results in the context of core geography. In Korea, during the fourth quarter, our revenue grew 6.6% year over year on a constant currency basis, primarily driven by growth in paid content and advertising revenue. We continue to see benefits from the rollout of our AI recommendation engine from Q2. And we also saw balanced growth in ad sales from Naver and other partners. For the full year, we posted 0.5% revenue decline on a constant currency basis. During the fourth quarter, MAU of $24.5 million decreased 0.5%. NPU of 3.6 million declined 8.6% and our paying ratio of 14.5% was down 129 basis points compared to the fourth quarter of 2023.

Speaker Change: Now I'd like to look at our results in the context of core geographies.

Speaker Change: In Korea during the fourth quarter, our revenue grew six 6% year over year on a constant currency basis, primarily driven by growth in paid content and advertising revenue.

Speaker Change: We continue to see benefits from the rollout of our AI recommendation engine from Q2.

Speaker Change: We also saw balanced growth in AD sales from Naver and other partners.

Speaker Change: For the full year, we posted 0.5% revenue decline on a constant currency basis.

Speaker Change: During the fourth quarter <unk> of $24 5 million decreased <unk>, 5%.

Speaker Change: And <unk> of $3 6 million declined eight 6% and our paying ratio of 14, 5% was down 129 basis points compared to the fourth quarter of 2023.

Speaker Change: As we mentioned previously our AI driven personalized recommendation model, which was fully rolled out in June of 2024 continues to improve home tap recommendations.

Speaker Change: During the fourth quarter, we saw the number of weekly episodes viewed per user increased 2%.

David Lee: Moving to Japan. For the quarter, Japan posted revenue growth on a constant currency basis of 18.9%. This was driven by significant growth in each of our revenue streams. Line Manga is now firmly on top of the market in Japan as Sensor Tower data shows that we topped the non-game app market by revenue in Japan for both the fourth quarter and the second half of 2024. For the full year, we posted 25.8% revenue growth on a constant currency basis, and Japan now represents nearly half of our total revenue. Compared to Q4 2023, Japan's MAU of 22.1 million increased 6.6%.

Speaker Change: Moving to Japan.

Speaker Change: For the quarter, Japan posted revenue growth on a constant currency basis of 18, 9%.

Speaker Change: This was driven by significant growth in each of our revenue streams.

Speaker Change: Line longer is now firmly on top of the market in Japan is sensor tower data shows that we top the non gaming app market by revenue in Japan for both the fourth quarter in the second half of 2024.

Speaker Change: For the full year, we posted 25, 8% revenue growth on a constant currency basis, and Japan now represents nearly half of our total revenue.

Speaker Change: Compared to Q4, 2023, Japan's MQ $22 1 million increased six 6%.

David Lee: NPU of 2.3 million grew 15% and paying ratio of 10.3% was up 75 basis points. Engagement with paid users steepened with fourth quarter ARPU of $22 growing 2% year-over-year on a constant currency basis as we launched 164 new original titles during the quarter. As J.K. talked about our localization efforts in Japan earlier, we're particularly pleased to note that local Japanese title launches made up the majority of our launches in the quarter. In the rest of the world, we saw revenue decline 3.3% year over year on a constant currency basis, driven by declines in paid content and IP adaptations in the quarter, partially offset by growth in advertising.

Speaker Change: <unk> of $2 $3 million grew 15% and paying ratio of 10, 3% was up 75 basis points.

Speaker Change: As J P talked about our localization efforts in Japan earlier, we're particularly pleased to note that local Japanese title launches made up the majority of our launches in the quarter.

Speaker Change: In the rest of the World. We saw revenue declined three 3% year over year on a constant currency basis, driven by declines in paid content and IP adaptations in the quarter.

Speaker Change: Partially offset by growth in advertising.

David Lee: For the full year, we posted 14.9% revenue growth on a constant currency basis. While fourth quarter MAU and MPU declined 6.1% and 3.3% year-over-year respectively, paying ratio of 1.4% stayed consistent year-over-year. ARPU of $6.90 grew 2% year-over-year on a constant currency basis.

Speaker Change: For the full year, we posted 14, 9% revenue growth on a constant currency basis.

While fourth quarter MDU and MCU.

Speaker Change: <unk> six 1% three 3% year over year, respectively paying ratio of one 4% stay consistent year over year.

Speaker Change: Our pool of $6 90.

Speaker Change: 2% year over year on a constant currency basis.

Speaker Change: Turning to profitability.

Speaker Change: Gross profit for the quarter was $82 3 million compared to $76 4 million in the prior year representing growth of seven 7%.

Speaker Change: This resulted in a gross margin of 23, 3%, which expanded 45 basis points compared to the prior year.

Speaker Change: Starting in Q4 part of EBIT, Japan's marketing expense was moved from marketing to cost of revenue.

Speaker Change: I'll now move to an impact of $3 6 million excluding.

Speaker Change: Excluding this reclassification gross profit would have been $85 9 million or an increase of 12% from the prior year up approximately 24, 3% of revenue.

Speaker Change: Gross margin declined sequentially due to a sales mix shift to certain studio and performance space add businesses, both of which have higher revenue share ratio.

David Lee: both of which have higher revenue share ratio. While there were some temporary mixed shifts that impacted gross profit in the short term, we expect to increase our gross margin over time as we increase our paid content in markets outside of Korea. Adjusted EBITDA loss for the quarter was $3.5 million compared to a profit of $10.4 million in the prior year. Actuarial losses on retiree benefits, a non-cash, non-operating expense based on a third-party evaluation, had an impact of approximately $6 million to adjusted EBITDA in the fourth quarter. On the cost side, total G&A expenses for the quarter were $77.8 million as compared to $55.1 million in the prior year quarter, primarily as a result of public company costs.

Speaker Change: Adjusted EBITDA loss for the quarter was $3 5 million compared to a profit of $10 4 million in the prior year.

Speaker Change: Actuarial losses on retiree benefits.

Speaker Change: Noncash nonoperating expense based on a third party evaluation had an impact of approximately 6 million to adjusted EBITDA in the fourth quarter.

Speaker Change: On the cost side total G&A expenses for the quarter were $77 8 million as compared to $55 1 million in the prior year quarter, primarily as a result of public company costs.

Income tax expense of $4 1 million in the quarter compared to a benefit of $7 5 billion in the prior year.

Speaker Change: Depreciation and amortization was $12 1 million compared to $10 4 billion in the prior year.

David Lee: As a result, gap loss per share was $0.72 compared to a loss per share of $0.62 in the prior year period. Adjusted loss per share was $0.03 in the quarter compared to adjusted earnings per share of $0.09 in the prior year period.

Speaker Change: As a result, GAAP loss per share was <unk> 72, compared to a loss per share of <unk> 62.

Speaker Change: In the prior year period.

Speaker Change: Adjusted loss per share was <unk> <unk> in the quarter compared to adjusted earnings per share of <unk> <unk> in the prior year period.

Speaker Change: For the first quarter of 2025, we expect to deliver revenue growth in the range of one 7% to four 8% on a constant currency basis.

This represents revenue in the range of $318 million to $328 million.

Speaker Change: This guidance is based on current FX rates, rather than FX rates from the end of Q4 2024.

Speaker Change: As we have discussed previously we will face FX headwinds in the first quarter and the first half of this year as rates were more favorable in the first half of 2024.

Speaker Change: We continue to experience delays with IP adaptation in Korea, Despite a strong slate.

Speaker Change: We are also investing in our infrastructure ahead of product improvements, which will occur in the back half of 2025.

Speaker Change: We anticipate first quarter adjusted EBITDA in the range of 0.5 to $5 $5 million, representing an adjusted EBITDA margin in the range of 0.2% to one 7%.

Speaker Change: In addition to revenue factors I just referenced we expect to maintain our strategic investment in marketing to drive future growth.

Speaker Change: We also have additional public company expenses this quarter that we did not have in the year ago quarter as a private company.

David Lee: While we are not providing full year guidance, we continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content, and users. Over the long term, our goal is to generate profitable constant currency revenue growth. In closing, I'm pleased with the progress we've made in our first year as a public company. While there's still much work to be done, we're encouraged by positive signs we see in key regions like the English-speaking markets and France, and we look forward to executing our strategy in 2025.

Speaker Change: Over the long term our goal is to generate profitable constant currency revenue growth.

Speaker Change: In closing I am pleased with the progress we made in our first year as a public company.

Speaker Change: While theres still much work to be done we're encouraged by positive signs we see in key regions like the English speaking markets in France, and we look forward to executing our strategy in 2025.

Operator: With that, I'd like to turn it back to our operator to begin the Q&A session. Okay. Okay, thanks.

Speaker Change: With that I'd like to turn it back to our operator to begin the Q&A session.

Speaker Change: Thank you.

Speaker Change: As a reminder.

Blake.

Speaker Change: Ask a question please press.

Speaker Change: Press Star and the number one on your telephone keypad.

Speaker Change: As a reminder, we will ask everyone to stick to one question and one follow up so we can take as many questions as possible.

Speaker Change: Our first question comes from the line of.

Mark Mahaney: Mark Mahaney from Evercore.

Speaker Change: Your line is open.

Operator: I'll ask two questions, please. First, the strength that you're seeing in Japan, just talk about the sustainability of that as embedded in your March quarter guidance and maybe for the full year. And the second question really has to do with the full year. You've got a lot of puts and takes, you know, the anniversary of the outage, however politely you say it. You've got MAU issues that should stabilize. There are a lot of puts and takes. How should we think about the growth and the profitability levels just directionally post the March quarter? Thank you very much.

Speaker Change: Hey, Thanks, I'll ask two questions. Please first the strength that youre seeing in Japan, just talk about the sustainability of Bob that's embedded in your March quarter guidance.

Speaker Change: And then maybe for the full year and the second question really has to do with our full year, you've got a lot of puts and takes.

Speaker Change: The anniversarying of that.

Speaker Change: Pad.

Speaker Change: The outage.

Speaker Change: Lastly, you wanted to say that.

Speaker Change: The strength in Japan, you've got.

Issues that should stabilize but a lot of puts and takes how should we think about the growth and the profitability levels just directionally post the March quarter. Thank you very much.

Operator: Thanks Mark, it's a great question and one that I really do want to answer. I want to first be clear, we are extremely confident in the fundamental business we have, the flywheel that JK has created and the rocket ship that is Japan, we continue to be very bullish on. That said, I wanted to be clear on some of the discrete issues that are reflected in the Q1 guidance and try to be helpful for you as you think about your model thereafter. Remember, this guidance we provided for Q1 did have a few very specific discrete items that I think are specific only to Q1.

Speaker Change: Thanks, Mark it's a great question and one that I really do want to answer.

Speaker Change: I want to first be clear.

Speaker Change: We are extremely confident and the fundamental business, we have the sly wheel that JK has created and the rocket ship that is Japan. We continued to be very bullish on that said I wanted to be clear on some of the discrete issues that are reflected in the Q1 guidance and tried to be helpful. For you as you think about your model.

Speaker Change: Thereafter remember this guidance we provided for Q1 did have a few very specific discrete items that I think are specific only to Q1.

Operator: The one of the key ones is that we talked about a great IP slate in Korea. We gave examples of Trauma Code, Jung Yong-Hee, A Star is Born. And in the U.S. even, we talked about a great film on Tubi called Sideline, The Quarterback and Me. So while the fundamental health of the IP slate is strong, the sequence of timing in Q1 is a factor on your compare to previous quarter. Similarly, within the Q1 guide, while we maintain our investment in marketing because we're really bullish on the user opportunity we see, particularly as we mentioned in English-speaking countries and abroad.

Speaker Change: One of the key ones that we talked about a great IP slate in Korea, we gave examples of <unk>.

Speaker Change: Trauma code John Young a star is born and in the U S. Even we talked about a great film on to be called sideline. The quarterback at me. So while the fundamental health of the IP slate is strong the sequence of timing in Q1 is a factor on your compare to previous quarter Sim.

Speaker Change: Similarly within the Q1 guide, while we maintain our investment in marketing because we're really bullish on the user opportunity, we see particularly as we mentioned in English speaking countries and abroad.

Operator: we still post or suggest that we are going to guide towards a positive epithelium. Importantly, the sequence of product development, you know, JK founded this company on technology and product innovation, and he's been very specific both in the shareholder letter as well as his commentary today, that a large portion of it is sequenced towards the back half of the year. And what we discussed, whether it's highlights, the ability to unlock entire series, this improvement in the way in which we engage with users on the home landing page, these are significant, but they affect the remainder of the year.

Speaker Change: We still post or suggest that we're going to guide towards a positive EBITDA range.

Speaker Change: Importantly, the sequence of product development JK.

Speaker Change: <unk> founded this company on technology and product innovation and he has been very specific bolt in the shareholder letter as well as for his commentary today that a large portion of it is sequence towards the back half of the year and what we discussed whether it's highlights the ability to unlock entire series.

Speaker Change: Improvement in the way in which we engage with users on the home landing page. These are significant but they affect the remainder of the year.

Operator: And so when I think about our fundamental business, while we are only guiding a quarter out, we've talked about not just our target, but our confidence in how we demonstrated previous strong profitable growth. And I encourage you to think about the business mid to long term with that confidence. That said, we want to make sure we're very clear on Q1. One other point, Mark, which is important. We previously guided on an FX basis based on the last day of the previous quarter. But we have seen unprecedented change in the rate of the Korean won versus the USD.

Speaker Change: And so when I think about our fundamental business, while we are only guiding a quarter out.

Speaker Change: We've talked about not just our target, but our confidence and how we demonstrated previous strong profitable growth.

Speaker Change: I encourage you to think about the business mid to long term with that confidence that said, we want to make sure. We're very clear on Q1, one other point Mark which is important we previously guided on an FX basis based on the last day of the previous quarter, but we have seen unprecedented change in the rate of the Korean won versus the USD.

Operator: And some investors had trouble tracking what we based our guidance on, though we'd like to be transparent, to what the current FX for a given period might be. So just be clear that in the guide for Q1, addition to a current rate, a current rate that one could argue is that a historic weakness for local currency relative to the USD. But I wanted to make sure that was also clear in your model.

Speaker Change: And some investors had trouble tracking what we based our guidance on though we'd like to be transparent to what the current FX for a given period might be so just be clear that in the guide for Q1 position to a current rate our current rate that one could argue is at a historic weakness for local currency relative to the.

Speaker Change: U S D, but I wanted to make sure that was also clear in your model.

Speaker Change: Your second question.

Speaker Change: Your second question was specific to Japan, I would just say in short <unk>.

Speaker Change: Whether you want to look at the 165, new original titles that launched most of which were locally created or the fact that were rated as number one revenue line manga is outside of mobile games, we feel very strongly that we've built a rocket ship in Japan, and we're excited about it.

Speaker Change: Okay Alright.

Speaker Change: Alright, Thanks again.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Eric Sheridan from Goldman Sachs.

Speaker Change: Your line is open.

Operator: Thank you so much for taking the questions. I want to come back to some of the things you highlighted in the shareholder letter with respect to investments in users and creators. Can you go a little bit deeper in terms of how usability and elements of giving users new onboarding experiences can continue to drive increases in user engagement and maybe a little bit of a quantification of what you might be seeing in rate of change from an engagement? And the second part of it would be just you talked about exploring new formats to increase engagements. I'm actually thinking about what that might mean either in investments you need to make or again what it might mean in terms of lift on engagement or conversion of traffic.

Speaker Change: Thank you so much for taking the questions I want to come back to some of the things you highlighted in the shareholder letter with respect to investments it users and creators can you go a little bit deeper in terms of.

Speaker Change: <unk>, how should we be thinking about what that might mean, either in investments you need to make or again, what it might mean in terms of lift on engagement or conversion of traffic. Thank you.

Operator: Thank you. Thanks, Eric. Another great question. First, on overall levels of investment relative to EBITDA performance, I want to reiterate that in the guide for Q1, as well as in our strategic commentary in J.K.'s letter, we are already making investments in the periods reported and in the guidance, both in marketing and in product innovation. And I'm clear, we're going to post, or we promised to post, positive adjusted EBITDA. So I would not want you to read our comments on investment to be at the expense of our fundamental profitability. That said, I wanted to highlight specifically what J.K.

Speaker Change: Thanks, Eric that's a great question first on overall levels of investment relative to EBITDA performance I want to reiterate that in the guide for Q1 as well as in our strategic commentary on Jk's letter, we are already in making investments in the periods reported and then the guidance both in marketing and in product innovation and unclear.

Operator: mentioned in product, and then we can talk about marketing, because the innovation of our content flywheel with our creators, product is key. And he was very specific. You know, we talked about in January how we revamped the onboarding experience for new users, showing them preference. We talked in Korea about this AI-based personalization engine that, while launched in June, continues to show a 2% sequential increase in new titles read. We actually provided some additional color commentary you may not have seen before regarding how we're testing this trailer-style promotional video called Highlights. And then we're even talking about different business model options, which includes unlocking an entire series for a completed title.

Speaker Change: Selling them preference, we're talking Korea about this AI based personalization engine that will launched in June continues to show a 2% sequential increase in new titles Red we actually provided some additional color commentary you may not have seen before regarding how we're testing this trailer style promotional video called highlights.

Operator: These are not insignificant, and ones that we have been testing in some cases for some time. All of these will pay off, we believe, post the Q1 guidance period, which is part of the reason why our resources are focused on long-term value creation throughout the Q1 period. So we remain very confident in that. With regard to marketing, I have always said, J.K. has always said as well, that we will invest for the long-term business health. Our investments in marketing, we do not expect nor desire for them to show up one quarter out. The investments in marketing show up in greater engagement in the rest of the world, where we see already ARPU increasing significantly as more and more English-speaking or English-reading customers engage more with our content.

Speaker Change: <unk> on long term value creation throughout the Q1 period. So we remain very confident in that with regard to marketing I have always said JK has always said as well that we will invest for the long term business health our investments in marketing, we do not expect nor desire for them to show up one quarter out the investments in marketing show up in greater engagement and <unk>.

Speaker Change: The world, where we see already <unk>, increasing significantly as more and more English speaking or English reading customers engage more with our content. So I would think of the marketing is being a longer term payoff, but product is Israel. It shows up in the everyday experience of consumers, which will likely be in the back.

Operator: So I would think of the marketing as being a longer-term payoff, but product is real. It shows up in the everyday experience of consumers, which will likely be in the back half, second half of the year. That's how I think about the sequence of Great, thank you. Great.

Speaker Change: Half second half of the year, that's how we think about the sequence of those investments.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Our next question comes from the line.

Speaker Change: Benjamin Black from Deutsche Bank.

Speaker Change: Your line is open.

Operator: Thank you for taking my question. This is a follow-up on the AI recommendation engine in Korea. I know you mentioned that it drove sort of a 2 percent increase in engagement per user, so it's really great to hear sort of more about your learnings here. You know, how big of a list could AI-driven recommendations become? And so, generally speaking, how should we think about user growth in the near to midterm? And the second question is, you know, you mentioned the political disruption in Korea. Could you talk about how MAU and payer trends have progressed so far this year?

Speaker Change: Great. Thank you for taking my questions just a follow up on the AI recommendation engine in Korea.

Speaker Change: I know you mentioned that.

Speaker Change: What drove sort of a two.

<unk> increase in engagement per user through really great to hear more about your.

Speaker Change: Your learnings here, how big of a lift could AI driven recommendations become and so generally speaking how should we think about user growth.

Speaker Change: In the near to midterm and then the second question is you.

Speaker Change: You mentioned the political disruption in Korea.

Speaker Change: Talk about how <unk> trends have progressed so far this year. Thank you.

Operator: Thanks, Benjamin. First, with regard to the AI personalization engine, the reason why we talk about it in relation to our experience in Korea is, as you know, Korea is an extremely robust market. When you have 50 percent household engagement and there's habituation well in place with strong ARPU, as we release more content, and that's why crossover IP is so powerful in Korea, as we release more content, any impact we can have on presenting users what they want to potentially read, just given the depth of the content and the amount of habituation we think is critical for long-term growth.

Speaker Change: Thanks, Benjamin first with regard to the AI personalization engine. The reason why we talk about it in relation to our experience in Korea is as you know Korea is an extremely robust market. When you have 50% household engagement and there is a habituation well in place with strong <unk>.

Speaker Change: As we release more content and Thats why crossover IP is so powerful in Korea as we release more content any impact we can have on presenting users what they want to potentially read just given the depth of the content and the amount of <unk>. We think is critical for long term growth, we're not providing guidance specific.

Operator: We're not providing guidance specific to any one of our new product releases, but we have talked about how we are focused on webcomic app MAU growth. We specifically highlighted a new metric for you in the spirit of transparency around a 6.7 percent increase, and while we highlighted it and we talked about strength abroad, this will become something I promise we will talk to you all about more and more, because it's that app MAU growth, particularly for webtoons or webcomics, where you will see the benefit of product innovation show up in paid content revenue. You know, our web novel business, critical for our crossover IP, is more for the scale of our advertising business, where we really see paid content strength, and the heart of which is in Korea and Japan today, is really around those product innovations.

Speaker Change: To any one of our new product releases, but we have talked about how we are focused on web comic app MAA yogurt, we specifically highlighted the new metric for you in the spirit of transparency around a six 7% increase in while we highlighted it.

Speaker Change: And we talked about strength abroad.

Speaker Change: This will become something I promise, we will talk to you all about more and more because it's that app.

Speaker Change: <unk> growth, particularly for web teams or web comics, where you will see the benefit of product innovation show up and paid content revenue.

Speaker Change: Our web novel business critical for our crossover IP is more for the scale of our advertising business, where we really see pay content strength and the heart of which is in Korea and Japan today is really around those product innovations. So I can't provide you a more specific metrics today, but I wanted to inform strategically why we're beginning.

Operator: So I can't provide you more specific metrics today, but I wanted to inform strategically why we're beginning to disclose more and more of this metric called webcomic app MAU. As for commentary with regard to January, you know, I would trust the guide that we've given you for Q1, which do include, as we mentioned, these issues that we faced starting in Q4, this political turbulence. We also said that our guide reflected the fact that while we believe those issues have resolved, our Q1 guide reflects our best estimate today on the performance in the first three months.

Speaker Change: To disclose more and more of this metric called web comic App Mou.

Speaker Change: As for commentary with regard to January I would trust. The guide that we've given you for Q1, which do include as we mentioned these issues that we faced starting in Q4. This political turbulence. We also said that our guide reflected the fact that while we believe those issues have resolved our Q1 guide.

Speaker Change: It reflects our best estimate today on the performance in the first three months.

Speaker Change: Okay.

Operator: Great. Thank you for that. Great.

Speaker Change: Great. Thank you for that.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line.

Speaker Change: Doug Anmuth from JP Morgan.

Speaker Change: Your line is open.

Operator: This is Dae Young for Doug. Thanks for taking my questions. Just to follow up on your OneCue guide, you talked about some of the discrete issues like the IP slave and your commitment to the task of breakeven and also some of the issues that like the political unrest in Korea that it happened in 4Q but it's only to OneCue. Like when you're to look at the magnitude of the impact across those items, like what do you think is the bigger driver and is the IP slave being pushed out also affecting some of the organic traffic acquisition that you might have been assuming for in Korea and other regions?

Speaker Change: Great.

Speaker Change: Thanks for taking my questions.

Speaker Change: Just a follow up on your way to your guide you talked about some of the issues like <unk>.

Speaker Change: Just to go back to EBITDA.

Speaker Change: Breakeven already.

Speaker Change: Some of the issue.

Speaker Change: Political unrest and create that.

Speaker Change: Hey, guys, hoping a.

Speaker Change: But as for way too long with north to look good.

Speaker Change: The magnitude of the impact across those identities.

Speaker Change: What do you think is the digital driver.

Speaker Change: It is being pushed out also affected some of the organic traffic acquisition that in your model.

Speaker Change: Specific floor.

Speaker Change: In Korea and other regions.

Operator: Well, one way I can answer that is to point you to a longer period than a quarter. So when you look at our overall penetration of revenue from an IP standpoint versus paid content, you'll note that it's actually a relatively small percent of total revenue. And I can send you the specific numbers. I think we disclose it primarily at a total company level. So I wouldn't read the IP slate delay as being an annual or persistent mid to long-term issue. It can affect a quarter. And that is because of how much of a great organic lift it can provide.

Speaker Change: And I can send you the specific numbers that I think we disclosed it primarily a total company level. So I wouldn't read the IP slate delay as being a annual or persistent mid to long term issue. It can affect the quarter and that is because of how much of a great organic lift. It can provide if you think about what we have talked about in <unk>.

Speaker Change: These periods like Mary My husband, which was a phenomenon globally that started actually as a web novel than a web comic and then crossed over to Amazon Prime as a global hit in Q1 of 2020.

I do not I would I think the strength of our IP slate is significantly important as a source of strength overall is just in a given quarter. It may have an impact. The other thing I would emphasize is we are not a whale dependent business, we do not see a single hit move the paid content engine.

Operator: The other thing I would emphasize is we are not a whale-dependent business. We do not see a single hit move the paid content engine. But if a slate that includes more than one or two projects shifts by a month or two, it would affect our short-term quarterly guide. Long-term, though, I want to be clear, we feel like our IP slate is a source of increasing strength. Hope that answers that question and then with regard to the short-term impact on some of the other issues, again, we can only point you to the guide. We have said that we don't think these issues, for example, the political turmoil in Korea persist beyond the guided period, but it is something that we do want to include as a reason for our Q4 performance as well as our Q1 guide.

Speaker Change: But if a slate that includes more than one or two projects shifted by a month or two it would affect our short term quarterly guide long term, though I want to be clear, we feel like our IP slate is a source of increasing strength.

Speaker Change: That answers that question and then with regards to the short term impact on some of the other issues again, we can only point you to the guide we have said that we don't think these issues for example to political turmoil in Korea persist beyond the guided period, but it is something that we do want to include as a reason for our Q4 performance as well as our Q1 <unk>.

Good.

Speaker Change: Okay.

Operator: And as a quick follow-up, on the IT adaptation delay, could you explain what's causing that delay? What's your strategy when projects get pushed out? Do they just all kind of... Like, I fall into future quarters, meaning like today I have to compete against each other or does the pipeline kind of move back together with the current state? Yeah, so first, we never like to depend on the short-term timing of a given IP crossover. We rejoice when they reach market and drive engagement with our users, but we're not managing to a short-term schedule. That's why we would much rather have them come to market in the best organic way because we know that they organically lift our core paid content engine very well.

Speaker Change: And as a quick follow up.

Speaker Change: Got a patient with a <unk>.

Speaker Change: Playing what's causing it.

Speaker Change: Yeah.

Speaker Change: What's your strategy with the projects got pushed out the debate or kind of a.

Speaker Change: Okay fall into future quarters.

Speaker Change: Meaning they have to compete against each other over both the pipeline of a move back to go there.

Speaker Change: Looking back.

Speaker Change: Yes. So first we are not we never like to depend on the short term timing of a given IP crossover we rejoiced when they reach market and drive engagement with our users, but we're not managing to a short term schedule Thats why we would much rather have them come to market and the best organic way because we know that.

Speaker Change: They organically lift our core paid content engine very well.

Speaker Change: So as a result, we don't seek to manage the short term schedule, we seek to ensure the maximum success of the slate at the lowest cost because remember we have the advantage of not having to deploy massive amounts of studio dollars. We have these hits that crossover to feature length film and other forms of crossover IP that then benefits are paid platform.

Speaker Change: So rather for me. This is an IR disclosure issue, where I want to be clear on the timing and impact on future results rather than seek to short term manage when they.

Speaker Change: Come out we're also not at scale, yet with this business, where we need to worry about cannibalization or one affecting another these crossover hits.

Operator: These crossover hits, we think they're pretty significant, but they don't compete for share of mind when they come out. They have a fairly diverse source of content, and the timing of them, remember, this is not a primary business. The timing of them benefit the core paid content platform for us. Got it. Thank you.

Speaker Change: We think they're pretty significant but they don't compete for share of mind when they come out they have a fairly diverse source of content and the timing of that and remember this is not our primary business the timing of them benefit the cord pay concept platform for us.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Matthew costs.

Speaker Change: Morgan Stanley.

Speaker Change: Your line is open.

Operator: Great, thanks for taking the question. I want to ask about advertising. It's shown a really nice acceleration the past couple of quarters. I believe 25 is a year where maybe you saw an opportunity to show that advertising business really inflect maybe even as early as kind of the first half year. So I guess now that we're almost two months into the year, how is advertising scaling? Where are you tracking versus where you hoped to be and what initiatives would you call needle moving on the ad side? And then I have one follow-up. Thanks, Matt. Advertising continues to be a strength on a constant currency basis, just underlining the 27.4% increase.

Speaker Change: Great. Thanks for taking the question I wanted to ask about advertising, it's shown a really nice acceleration in the past couple of quarters. I believe 25 is a year, where maybe you saw an opportunity to show that advertising business really inflect, maybe even as early as kind of a first half year. So I guess now that we're almost two months into the year.

Speaker Change: How is advertising scaling where are you tracking versus where you hoped to be and what initiatives would you call out.

Speaker Change: Needle moving on the add side and then I'll have one follow up thank you.

Operator: And while we didn't disclose it by region, when I peel back internally and look at Japan versus Korea versus rest of world, I'm seeing growth in the Q4 period, constant currency in all markets. Remember, we've talked about how advertising is a nascent opportunity in markets like English speaking markets and rest of world and and Japan, where we feel like we have a fair amount of room to run not having a robust direct ad sales force yet, for example, in North America. So I think it's early days, and we're really pleased with the continued quarter to quarter growth we see on a constant currency basis.

Speaker Change: Remember, we've talked about how advertising is a nascent opportunity in markets like English speaking markets and rest of world and Japan, where we feel like we are a fair amount of room to run not yet having a robust direct AD sales force yet for example in North America. So I think it's early days and we're really pleased with the <unk>.

Speaker Change: <unk> quarter to quarter growth, we see on a constant currency basis.

Operator: Great. And then just following up on the app MAU number, so if I understand it correctly, the total app MAU number declined a bit year on year, but if you back out web novel users, webcomic app MAUs were up almost 7%. So I guess part one is like, is that accurate? And then part two, is the impact on web novel users, is that a result of some specific changes that you've made to the experience of web novel users? Is that something that will continue with the headwind? How should we think about that? Well, first on the accuracy of your interpretation, yes, 6.7% growth in the Q4 period when we look at webcomic MAU that excludes web novels.

Speaker Change: And the user up almost 7%. So I guess part one is that accurate and then part two is the impact on web novel users.

Speaker Change: We've got a result of some specific changes that you've made to the experience of web novel users is that something that will continue as a headwind how should we think about that from here. Thank you.

Speaker Change: Well first on the accuracy of your interpretation, yes, six 7% growth in the Q4 period. When we look at web comic Mou that excludes web novels, and example of that would be or what Pat business first let me explain why we're disclosing this lockout.

Operator: An example of that would be our Wattpad business. First, let me explain why we're disclosing that. Wattpad is an important business for us, but it is not a business that is as driven by paid content as it is by other business models. And it's a source of crossover IP given its scale. In fact, when we talk about Sideline, The Quarterback and Me and other feature-length films, many of the examples that we've mentioned in the past actually come from great content generated by users on the web novel Wattpad platform. So we value it. But when we talk about this metric that grew 6.7%, we're trying to more precisely show you where the paid content engine will go.

Speaker Change: The web novel, what Pat platform, So we value it.

Speaker Change: But when we talk about this metric that grew six 7%. We are trying to more precisely show you where the paid content engine woke up because the paid content engine is driven by product improvement and where we monetize on a paid content basis and that is more so from our global web comic business than for example, our webinar.

Operator: Because the paid content engine is driven by product improvement and where we monetize on a paid content basis. And that is more so from our global web comic business than, for example, our web novel business. So that's the reason why we are pointing you towards that number. The other reason we're pointing towards that number is I want to be transparent about what we've disclosed in total MAU from WPAT. You know, our total MAU declined in Q4, and we pointed specifically to one country that banned WPAT, which actually drove two-thirds of the total rest-of-world MAU decline.

Speaker Change: <unk> business. So that's the reason why we are pointing you towards that number and the other reason we're pointing towards that number is I wanted to be transparent about what we've disclosed in total Mou from Wap app.

Operator: Just one country's embargo that we saw the full quarter impact in Q4. So part of the reason why we're trying to be transparent is sometimes we worry that when we show these total MAU numbers, we're not helpful to the investors on where this big product innovation is going, and what metric on a non-GAAP basis it's more tied to. We're just at the beginning of providing more disclosure on this, but that's the primary reason why we shared it in this release.

Speaker Change: Times, we worry that when we show. These total Mou numbers were not helpful to the investors on where this big product innovation is going and what metric on a non-GAAP basis, it's more tied to.

Speaker Change: We're just at the beginning of providing more disclosure on this but that's the primary reason why we shared it in this release.

Operator: Great.

Speaker Change: Okay.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Andrew <unk>.

Speaker Change: Raymond James.

Speaker Change: Your line is open.

Speaker Change: Hi, Thanks for taking my question, maybe one on kind of the supply side of the equation here, maybe more as it relates to paid content rather than IP adaptations, but if you could just talk about kind of your level of comfort and your level of your evaluation of the new content that has kind of come online both in terms of the.

Speaker Change: The quantity as well as kind of the cohort behavior of how thats monetizing versus your expectations and any commentary about the breadth of our Geo mix of those things that we can that we can use for our models as we're looking into 'twenty five thank you.

Operator: Thanks for the question, Andrew. I think while there could be quarterly slips in a market like Korea, where we are so dominant, we feel strongly that our content engine in every market is robust. The market that we provided the most disclosure, where I think you want to spend time in your model, is Japan. We talk about not just the sheer growth, being the number one app outside of mobile gaming for Line Manga, but we specifically called out 164 new original launches, the most of which are local. This is very important. When JK creates Flywheels, they export globally, but when they are created locally, those creators have now the ability not just to publish in the language of origin, in Japanese, for example, but they have the power, like Savior of Divine Blood, to reach audiences outside of their original market.

Speaker Change: Thanks for the question Andrew.

Speaker Change: I think while there could be quarterly slips in a market like Korea, where we are so dominant.

Speaker Change: We feel strongly that our content engine and every market is robust.

Mark Mahaney: Mark is that we provided the most disclosure where I think you want to spend time in your model as Japan, we talk about not just the share growth that being the number one app outside of mobile gaming for line longer, but we specifically called out 164, new original launches the most of which are local this is very important.

Mark Mahaney: J P creates flywheels they export globally, but when they are created locally those creators have now the ability not just to publish in the language of origin and Japanese for example, but they have the power like Savior of divined blood to reach audiences outside of their original market and the reason why that's important is sometime.

Operator: And the reason why that's important is sometimes folks look at our business and they think the source of content can only come from one country for the consumption of one country, when in reality, we've seen there's a global consumption for content despite where the origin market is. And so Japan is going to, I believe, be a robust, long-term source of content, not just for Japan, but giving those local Japanese creators access to the rest of the world and Korea helps them and it helps our business. So I think you should think of these local sources of content as having a global outlet.

Mark Mahaney: Folks look at our business and they think the source of content can only come from one country for the consumption of one country. When in reality, we proven theres a global consumption for content, despite where the origin market is and so Japan is going to I believe be a robust long term source of content not just for Japan.

Mark Mahaney: But giving those local Japanese creators access to the rest of world in Korea will helps them and it helps our business. So I think you should think of these local sources of content is having a global outlet with regards to the rest of.

Operator: With regard to the rest of the world and Korea, we didn't provide too much commentary in this release because it was a year-end release, but JK intentionally spent time on the crossover IP slate because I think it's a very powerful, low-cost way that we do marketing. When a creator has an unexpected hit that hits feature-length film, like the ones we've mentioned in this release, it naturally lifts the platform. And I think that's a testament to the power of the flywheel we have. It's at scale and it's growing. So for the mid- to long-term, we feel very good.

Mark Mahaney: The World and Korea, we didn't provide too much commentary in this release because it was a year end release, but jk's intentionally spent time on the crossover IP slate because I think it's a very powerful low cost way that we do marketing when a creator has an unexpected hit the hits feature length film like the ones we've mentioned in the release.

Mark Mahaney: And naturally lifts the platform and I think Thats, a testament to the power of the flywheel, we have it's at scale and it's growing so for the mid to long term, we feel very good I think we're just trying to be very transparent on the Q1 guide to establish a practice of ensuring that we are providing as much information for what we know about which is this quarter, but the mid to long term is.

Mark Mahaney: Bright, particularly as a source of content from creators.

Mark Mahaney: Okay.

Mark Mahaney: Thank you.

Mark Mahaney: Seeing as there are no more questions index.

Mark Mahaney: That concludes our question and answer session I will now like to turn the call back over to the web two and entertainment team for closing remarks.

Operator: Thank you very much and we look forward to meeting you over the current period and then providing new results at the end of Q1. Bye-bye.

Speaker Change: Thank you very much and we look forward to.

Mark Mahaney: Meeting you over the current period and then providing the results at the end of Q1 Bye bye.

Mark Mahaney: The meeting is now concluded. Thank you all for joining you may now disconnect.

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