Webtoon executives discuss plans after Nasdaq debut – including developers, AI and more

WEBTOON Entertainment, the corporate changing the best way the world reads comics while constructing a pipeline for transforming popular mental properties into streaming media, movies, animation, games and graphic novels, had its long-awaited IPO today.

The company, listed on the NASDAQ under the ticker symbol WBTN, opened at an initial price of $21 per share. WBTN ended its first day of trading up 2 points at 23 (9.5%), near its intraday high, on volume of 6.23 million shares.

In an exclusive one-on-one interview after the stock market close WEBTOON Founder and CEO Junkoo Kim and Chief Strategy Officer Yongsoo Kim discussed the impact of the IPO on the corporate’s global growth strategy.

Webtoon executives Junkoo Kim and Yongsoo Kim on the IPO, market growth, developers and content, and AI

Rob Salkowitz: Did the market response to the IPO meet your expectations?

Junkoo Kim: Rather than setting a price goal on day one, I take a long-term perspective. Yes, the share price is up 10%, but that’s paramount on the long road ahead.

RS: How will the proceeds from the IPO help expand WEBTOON’s business?

Yongsoo Kim: In fact, we were already operating money flow positive last yr. We will use the proceeds from the IPO to speed up areas of the business, comparable to developing more advanced AI tools for our developers, expanding our content library, onboarding more local developers, and increasing our promoting.

RS: During the pandemic, we saw a surge in consumption of all kinds of content, including webtoons, but now we’re seeing a decline. How has this affected your revenue?

JK: There are two necessary metrics in our business: variety of users and engagement. We have been capable of easily secure a high variety of users, but even when the user base is stagnant, when engagement increases, we also see revenue growth. On our platform, a lot of the content is free, but there may be a Fast Pass that provides people early access to latest episodes. When readers grow to be more attached to a title, we see the next conversion rate of paying users. All of our content is published weekly as a serialized story, which is why users develop the habit of coming back to the platform every week. This allows us to achieve users steadily, and even after COVID, we didn’t lose many readers. The serialized story feature has really helped us.

YK: Some of our key metrics are the common time users spend on our platform and the common revenue per paying user. Both are steadily increasing. We see a time spent on our platform of around half-hour per day.

RS: Has the slowdown in investment in streaming media affected your plans for licensing and developing external media?

JK: We have very diverse content. Last yr, 50% of Korean Netflix originals were based on webtoon IPs. Even if the production ratio changes, there will probably be a flow that continues. Will it’s with TV networks? Streamers? OTT? Who we work with may change, however the proportion of our adapted IPs won’t change because the demand for content and IPs continues to grow.

YK: One of the massive benefits for our partners is that the IP on our platform is already tested. We have 55 million episodes of content on the platform; there are 100,000 latest episodes day by day. We have all the information when it comes to demographics, geographies and users tell us what works. So we go to partners who’ve IP packaged with data – that is the phrase we use. Streamers love working with us due to that.

RS: WEBTOON’s success relies on independent content creators. How do you be certain that creators are completely satisfied with the collaboration, especially with regard to subsequent media and licensing developments?

JK: We work with our developers to achieve success. We don’t own the content; they’ve all of the rights. We just help them be financially successful while listening to our user base. We try to supply our developers with an unmatched value proposition.

RS: How does this model compare to, for instance, Disney or other corporations that fully own their mental property?

JK: Our goal might be the identical as Disney’s – to create good IP that folks want – but Disney invests an enormous amount in a single IP. With 24 million creators, we now have an enormous diversity of content and we now have the information to prove and confirm the content that we will implement through adaptation. We have the identical goal but different approaches.

RS: What type of investments are you making in AI?

YK: We consider that AI tools will help our developers in some ways. Our focus is to assist them be more productive in less time. We are also taking a look at a suggestion engine and AI protection for our developers. We do not believe that AI can replace our developers. It may also help them do higher financially.

RS: Japan is a large and necessary marketplace for comics, manga and webtoons. How is your corporation going there and what opportunities do you have got for expansion?

YK: The Japanese market is very important in two ways: for developers and for consumers. For developers, our platform could be very attractive. It is the leading digital app in Japan when it comes to gross revenue, and we’re also the leading platform globally. They need to be popular of their local market, but additionally for his or her content to be consumed globally, and we’re the one player that could make that occur. We recently had a title that did thoroughly, not only in Japan, but additionally in Korea and other markets. Such examples will be model.

Consumers in Japan who already read a number of manga will, once they switch to the webtoon format, already find very similar webtoon content. So once they like what we provide, they are going to grow to be really committed to the platform. We consider that manga readers will grow to be regular webtoon readers. That’s why we’re primary in Japan for all apps, even game apps. It’s a vital market and we consider that the IPO will help us strengthen our position in Japan.

RS: Would you prefer to add something else?

JK: Just that we’re really enthusiastic about this moment and we see an enormous growth opportunity, particularly within the US market. And we’re just beginning to penetrate that market. That’s really going to speed up our growth.

About WEBTOON’s IPO

According to the corporate, the sale of 15 million common shares is anticipated to lift roughly $315 million, not including a 30-day option for the underwriters to buy an extra 2.25 million shares, representing a valuation of roughly $2.7 billion.

WEBTOON’s parent company, South Korean technology and entertainment conglomerate Naver Corporation, can also be acquiring a separate issue of two,380,952 shares at $21 each (total proceeds of roughly $50 million). Naver will retain greater than 60% of the corporate’s shares after the IPO.

According to the Form S-1 WEBTOON Entertainment reported a net lack of $144.8 million for 2023 with the U.S. Securities and Exchange Commission, a rise from the online lack of $132.5 million in 2023. Despite the online loss, the corporate’s total revenue in 2023 increased 18.8% to $1.28 billion. Adjusted EBITDA for the yr to 2023 was $11.7 million, representing an adjusted EBITDA margin of 0.9%. The company reported a profit of $6.2 million for the primary three months of 2024, in comparison with a lack of $18.2 million in the identical period last yr.

Goldman Sachs & Co. LLC and Morgan Stanley are acting as lead book-running managers for the offering. JP Morgan and Evercore ISI are acting as energetic book-running managers for the proposed offering. Deutsche Bank Securities, UBS Investment Bank and HSBC are acting as joint book-running managers. Raymond James and LionTree are acting as co-managers.

From comics to media

WEBTOON was founded in 2005 by comic enthusiast and tech entrepreneur Junkoo Kim as easy platform for reading and distributing comics on mobile devices, with a vertically scrolling format optimized for small screens. As mobile phones became more powerful and more widely used world wide, WEBTOON built a big fan base that uses the format and rhythm of mobile comics to inform different sorts of stories in genres aside from print comics and manga.

Nine hundred IPs that began as webtoons have been developed into movies, streaming series, games, books, and consumer products, including the Netflix series Sweet Home, the Disney series Vigilante, and the New York Times bestseller graphic novel. Lore Olympus.

The company says it has around 170 million energetic users in over 150 countries worldwide, with South Korea, Japan and North America being the leading regions. WEBTOON relies on its ecosystem of over 24 million creators who monetize their content through subscriptions, promoting, merchandise and licensing, and suggestions. The company says it paid out $2.8 billion to creators between 2017 and 2022. The top 100 creatives worldwide earn a median of $1 million per yr, with the common skilled salary being $48,000.

Lots of room to grow

One of WEBTOON’s strongest arguments to potential investors is that despite some recent market downturns following Covid-19, there continues to be loads of room for growth. In its roadshow, WEBTOON says it sees a market potential of about $130 billion for paid content, $680 billion for promoting and $900 billion for IP media adaptations. Currently, penetration in North America is lower than 1 percent, and there may be “still a lot of room for improvement.”

There is widespread agreement available in the market on this point. Jayden Kang, COO and head of content at Tapas Entertainment, a webtoon platform owned by Naver’s biggest South Korean rival Kakao Entertainment, said he and his company hope WEBTOON has a successful IPO. “The concept of webtoons is still at a very nascent stage in the market, so I think the whole industry will get bigger and better if we attract more local creators and readers,” he said. “This is a huge opportunity to increase people’s awareness in the U.S. market.”