Summary of WBTN Q3 2025 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $378 million, up 8.7% year-over-year (9.1% on a constant currency basis).

Adjusted EBITDA: $5.1 million, down from $28.9 million in Q3 2024.

Net Loss: $11.1 million compared to a net income of $20 million in the prior year.

Adjusted Earnings Per Share: $0.04, down from $0.22 in the previous year.

Advertising Revenue: Decreased by 8.9% year-over-year on a constant currency basis.

Monthly Active Users (MAU): Overall MAU declined by 8.5%, with webcomic app MAU increasing by 1.5% and English platform MAU up 12% year-over-year.

2Strategic Updates and Business Highlights

Partnership with Disney: Announced a nonbinding partnership to develop a digital comic platform featuring over 35,000 comics from Disney's portfolio. Disney is also in talks to acquire a 2% equity stake in WBTN.

Video Episodes Launch: Introduced video episodes on the English platform, aiming to enhance user engagement.

New Content Initiatives: Launched "The Cut" in Korea for short-form animated videos, and announced plans to co-produce ten animated series with Warner Bros. Animation.

IP Adaptations Growth: Revenue from IP adaptations increased by 171.8% year-over-year, driven by successful adaptations in Korea.

3Forward Guidance and Outlook

Q4 2025 Revenue Guidance: Expected to decline between 5.1% to 2.3% on a constant currency basis, with projected revenue of $330 million to $340 million.

Adjusted EBITDA Loss: Anticipated in the range of $6.5 million to $1.5 million for Q4, including $16.5 million in non-cash expenses.

Long-term Confidence: Management expressed confidence in future growth driven by partnerships and product innovations, despite short-term revenue challenges.

4Bad News, Challenges, or Points of Concern

Net Loss and Declining Profitability: Significant net loss and reduced adjusted EBITDA indicate profitability challenges.

Advertising Revenue Decline: A notable decrease in advertising revenue, particularly affected by a decline from a major e-commerce partner in Korea.

Overall MAU Decline: A significant drop in total MAU, primarily driven by issues with Wattpad, including a government ban in certain countries impacting user engagement.

Market Penetration Issues: High market penetration in Korea may lead to revenue fluctuations based on the timing of IP adaptations.

5Notable Q&A Insights

Disney Partnership: Management emphasized the long-term potential of the Disney collaboration but noted it is too early to quantify its financial impact.

User Engagement with New Formats: Early metrics for video episodes show promise, but specific engagement data was not disclosed.

Advertising Market Dynamics: Interest from advertisers is strong, particularly in Japan, but the company is still building its infrastructure in North America to capitalize on this demand.

Future of Web Novel Users: Management acknowledged the decline in web novel users but focused on the growth of webcomic users as a more critical metric for future revenue. Overall, while WBTN reported growth in revenue and user engagement in specific segments, it faces challenges with profitability and advertising revenue, alongside a significant decline in total MAU. The company remains optimistic about its strategic partnerships and product innovations as drivers for future growth.