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Thank you for standing by. My name is Jericho, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment first quarter 2026 earnings call. All lines has been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead.

Good afternoon. 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, and 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 to differ is included in our SEC filings, including those stated in 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 will discuss today will include both GAAP and non-GAAP financial measures. Reconciliations 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. Joining me on the call are Junkoo Kim, Founder and CEO, David Lee, CFO, and Yongsoo Kim, President. With that, I'll now turn the call over to our founder and CEO, Junkoo Kim.

Thank you everyone for joining us today. I will begin by providing a brief overview of our performance, and I encourage you to read the shareholder letter available on our investor relations website for a more detailed discussion on the quarter. David Lee will go over the financials. I would like to begin by talking about a few areas we are investing in to support creators who are an important part of our global flywheel. Amateur creators make up a large proportion of our creators and contribute the vast majority of content on our platform. We have listened carefully to our amateur creators over the last years, and we are excited to introduce major changes to our Canvas platform.

We are introducing a unified international platform to support global distribution across several languages, including English, Spanish, and French, which we believe will make it easier than ever for creators to share their story all over the world. We are also introducing an opt-in AI-powered translation program where creators have a choice to translate and distribute their series in other languages. As part of this update, we'll also expand our ad revenue share to all supported Canvas languages. Helping creators monetize their content on our platform remains an important part of our strategy. We have a strong track record of driving this from 2021 to 2025. We paid out an impressive $2.7 billion to our creators. Looking ahead, we want to grow that sum even more. We will continue to invest to make our creator ecosystem more robust.

Moving on to a quick update on our Disney collaboration. Since the end of the fourth quarter, we have launched another five titles, including Star Wars: Darth Maul, Star Wars: Darth Vader - Black, White, & Red, Star Wars: The High Republic, Daredevil, Wings of Starlight, and Mickey x F1: Racing to the Top!. We look forward to introducing another original series later this year and remain well-positioned to launch the new digital comic platform before the end of this year. Moving on to IP adaptations, I just want to highlight a couple of recent successes. We celebrated Valentine's Day this year with the release of two of our Wattpad web novels as film adaptations. Love Me, Love Me was released on Prime Video, where it reached global number one during its launch week, while Kissing is the Easy Part was released on Tubi.

We are also excited to release a webcomic adaptation of Kissing is the Easy Part on WEBTOON in the next few months, moving the titles through our global ecosystem to unlock value for this fan-favorite web novel. Our Korean content continues to demonstrate its universal appeal beyond just our country of origin. In March, we co-hosted the world premiere of The Legend of Kitchen Soldier at Series Mania, Europe's biggest TV festival. The series is scheduled to premiere in Korea in May 2026, with concurrent global streaming on Disney+ and HBO Max in select regions. Before I conclude, I want to share a leadership update.

As we announced in March, we have elevated Yongsoo Kim to President to lead our global operations. He has been a key member of our management team over the last few years with a demonstrated track record of driving innovation through disciplined leadership. I believe Yongsoo Kim will play a key role in accelerating the execution of our global business. We believe we are off to a solid start this year. We look forward to driving further innovation throughout the rest of this year. With that, I will now turn the call over to David Lee. David Lee, please go ahead.

Thank you, J.K., and thank you everyone for joining us. I'll be discussing the details of first quarter 2026 results compared to the comparable quarter in the prior year, unless otherwise noted. For the first quarter, we reported revenue of $320.9 million that declined 1.5%, but grew 0.2% on a constant currency basis within our prior guidance range. This growth was driven by growth in paid content and advertising, offset by a decline in IP adaptations. We expanded gross margin by 390 basis points to 25.9% in the first quarter. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher margin businesses such as advertising.

We narrowed our net loss to $8.8 million in the quarter, compared to a loss of $22.0 million in the year prior, driven primarily by improved gross profit. We reported Adjusted EBITDA of $9.5 million, well above the high end of guidance, as we exercise cost discipline, leveraging our G&A and marketing expenses to deliver Adjusted EBITDA growth of 132% in the quarter. This compares to an Adjusted EBITDA of $4.1 million in the same quarter of 2025. As a result, our Adjusted EPS for the quarter was $0.07, compared to an Adjusted EPS of $0.03 in the prior year. Turning to operational health. Global MAU declined 5.9% in the quarter. In March 2026, we saw a spike in automated web traffic in certain non-core markets.

We strive to detect and minimize unauthorized access to our platform, fake user accounts, and fraudulent accounts created by bots that inflate user activity. Starting from the quarter ending March 31st, 2026, we decided to exclude such users from our MAU calculation to ensure accuracy and consistency of our MAU reporting. We continue to focus on driving users to our app, as well as converting them to paying users. While app MAU and web comic app MAU declined 6.7% and 3.0% respectively YoY, we're pleased to have driven MPU growth of 2.2%, as our initiatives focused on recommending more relevant content to our users have been performing well. Importantly, our English platform web comic app MAU increased by 3.1% YoY.

I'd like to highlight a couple of successful new title launches in the first quarter that contributed to this growth. Ties That Bind Us, a hit Wattpad web novel, was adapted into a web comic in March 2026 and has already garnered over 5 million views. Another strong performer, Shifting Tails, launched in February and has consistently ranked in the top 20 amongst English platform titles. I'd like to provide an update on our revenue streams at a consolidated level, starting with paid content. In the quarter, we posted 2.3% revenue growth on a constant currency basis. We are pleased to report another quarter of solid MPU growth of 2.2% in Q1. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model.

ARPU also increased 0.1% in the quarter on a constant currency basis. Advertising grew 0.8% in the first quarter on a constant currency basis YoY. In Korea, we experienced a decline in ad revenue from Naver, offset by an increase from other partners. Finally, our IP adaptations business saw revenue decline 22.2% YoY on a constant currency basis in Q1. As we've noted previously, revenue recognition for IP adaptations can vary quarterly based on the achievement of certain milestones. Now I'd like to look at our results in the context of core geographies. In Korea, during the first quarter, our revenue grew 3.2% YoY on a constant currency basis, driven by double-digit growth in paid content, offset by double-digit decline in IP adaptations and single digit decline in advertising.

During the first quarter, while MAU of 23.1 million decreased 4.3%, we were pleased to see MPU of 3.7 million grow 8.5% and a paying ratio of 16.1%, increasing 189 basis points compared to the first quarter of 2025. Korea ARPU on a constant currency basis was up 5.1% compared to the first quarter of 2025. Moving to Japan. For the quarter, Japan revenue declined 3.4% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by a single-digit growth in advertising and triple-digit growth in IP adaptations, all on a constant currency basis. Japan's MAU of 21.1 million declined 3.6%.

MPU of 2.1 million declined 8.3%, paying ratio of 9.8% was down 50 basis points YoY. First quarter Japan ARPU of $23.20 grew 3.7% YoY on a constant currency basis. We completed our infrastructure projects by the end of Q1, we've redeployed resources to improve user experience on our platform. Yuki Chae, who was recently elevated to Chief Product Officer, successfully drove growth in MPU in Korea in his former role as Head of Korean Content Services. We expect Yuki Chae to spend a substantial amount of time focusing on our Japan business.

In rest of world, we saw revenue growth of 5.6% YoY on a constant currency basis in the quarter, driven by single-digit growth in paid content and advertising, offset by a single-digit decline in IP adaptations. First quarter, rest of world MAU declined 6.7% YoY. While paying ratio of 1.7% increased 17 basis points compared to the first quarter of last year, we are pleased to see MPU growth of 3.3%. Rest of world ARPU of $6.80 also increased 4.4% YoY on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter grew 16% YoY to $83 million.

This resulted in a gross margin of 25.9%, which expanded 390 basis points compared to the prior year. Adjusted EBITDA for the quarter increased 132% to $9.5 million. This resulted in an Adjusted EBITDA margin of 3.0%, which expanded 170 basis points compared to the prior year. On the cost side, total G&A expenses for the quarter were $60.6 million, compared to $66.7 million in the prior year quarter as we exercised cost discipline. Interest income in the first quarter was $4.4 million, compared to $5.1 million in the prior year, and other loss was $2.0 million, compared to other income of $2.7 million in the prior year period.

We had an income tax expense of $2.7 million in the quarter, compared to $2.5 million in the prior year. Depreciation and amortization was $8.0 million in the first quarter, compared to $8.4 million in the prior year. Net loss was $8.8 million, driven primarily by higher gross profit. This compares to a net loss of $22 million in the prior year quarter. As a result, Q1 GAAP loss per share was $0.07, compared to a loss per share of $0.17 in the prior year period. Adjusted EPS was $0.07 in the quarter, compared to an Adjusted EPS of $0.03 in the prior year period. Our balance sheet remains strong with a cash balance of $595 million and another $11 million of short-term deposits included in other current assets.

We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I'd like to spend a few moments discussing our second quarter outlook. For the second quarter of 2026, we expect to deliver revenue growth in the range of 1.7%-4.6% on a constant currency basis. This represents revenue in the range of $332 million-$342 million based on current FX rates. We anticipate second quarter Adjusted EBITDA in the range of $0-$5 million, representing an Adjusted EBITDA margin in the range of 0.0%-1.5%.

The fundamentals of our business are strong, and we expect to see an improvement in Japan and advertising trends as we move through the course of the year. We are continuing to make investments throughout the year in our creators, content, and users in order to drive our near and long-term success. We continue to expect these drivers will support a return to double-digit revenue growth by the end of the year. With that, I'd like to turn it back to the operator to begin the Q&A session.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. As a reminder, we'll ask everyone to stick to one question and one follow-up so we can take as many questions as possible. Our first question comes from the line of Mark Mahaney with Evercore ISI. Your line is open. Please go ahead.

Thank you. I'd like to ask two questions, please. Gross margins, you've got some nice trends working. Talk about where gross margins can go, you know, in kind of the medium term. Not next quarter, but, you know, in the next year or two, and what are the key drivers is it primarily this mix shift towards advertising? What else would be in there? Secondly, could you talk a little bit about your financial philosophy? As you know, hopefully re-accelerate revenue growth per your guidance through by the end of the year, are there enough investment opportunities out there that you want to keep that, you know, kind of very low single-digit positive EBITDA?

Is that how you're thinking about running the business at $0 million-$5 million, you know, single-digit millions in positive EBITDA generating each year and any revenue upside, just let it flow down to investments as opposed to just dropping to the bottom line? That's sort of a philosophical question. Thank you very much.

Thanks, Mark. It's David Lee, and then others will join after I go through your two questions. They're interrelated. Let me answer the sources before we talk about, so to speak, the uses on your philosophy question. Regarding gross profit margin, as we noted in the quarter, the 390 basis points increase to 25.9% really had two major drivers. The one that I think persists is the benefit of mix shift as we grow more of our paid content outside of our original market of Korea, which as we've discussed in the past, has a improved gross profit margin, along with our future growth in our advertising business. That certainly wasn't a major factor in this quarter, but it is broadly still a factor.

Crossover IP, I believe, still represents the lowest form of customer acquisition investment, but it does have a lower gross profit margin. When we see these crossover IPs hit a quarter or two, it will swing things. Broadly speaking, within Q1, you'll note in 2024, we and in 2025, we did have some cleanup in attribution between marketing to COR, particularly in Japan and Korea. Going forward, I think we're relatively clean, and I think the mix benefit I just described is likely to persist. Within the quarter, in addition to mix, there was an isolated improvement in our Japan business' gross profit margin associated with the Japan Smartphone Act. We do not intend to drop this benefit, approximately $3 million to the bottom line. We continue to want to invest it in our guidance frame for additional growth.

That is a noteworthy improvement in the cost profile, not just for us, but many businesses in consumer tech in Japan. Let me start with the answer to your philosophy question and then turn to Yongsoo or JK if they would like to comment. We're very bullish on the persistent long-term growth of this business. That's why we talk about double-digit growth by Q4. We are intentional about investing, which you see in our Q2 guidance, behind the growth that we're excited about. Investments in Canvas that you saw as major improvement on. Investments in our core marketing in high-growth areas. The transition you're seeing in rest of world. We're seeing real MPU growth, 3% growth in what we call rest of world, and even higher if I were to break out the English-speaking portion of that.

There are really strong reasons to invest for shareholder value. Long term, I don't think we're limited to, as you mentioned, single digit Adjusted EBITDA dollars or margin range. I think this flywheel will continue to improve its growth prospects along with its profit margin. I wanna recognize we're still getting through our Q1 noise. Are we finished our infrastructure project in Japan and we're reinvesting back into growth in Japan? That will take a few quarters, which is why we recognize that it's the right thing to do in the short term. Long term, however, we're very bullish on both the top-line growth and the long-term potential for profit.

Yeah. We management team is focused on initiative aimed at accelerating growth, including both organic and inorganic opportunities. This includes expanding video format on the platform, strengthening digital character interaction and community features, and building mega IP franchises that can both expand the IP business and further drive platform growth. We look forward to sharing progress update on these initiative in future course.

Great. Why don't we go to our next question?

Will do. Our next question comes from Kunal Madhukar with Deutsche Bank. Your line is now open. Please go ahead.

Hi. Thank you for taking the questions. Two, if I could. One is, can you give us an update on the status of the Disney digital comics platform? Then I have a follow-up.

Sure. Welcome to the coverage, Kunal. I look forward to meeting you in person and talking with you in greater depth. With regard to Disney.

Thank you.

As J.K. mentioned, we are very excited about this collaboration, and we are on track. Specifically, we reiterated targeting a 2026 launch for the new consumer app platform. We're not sitting on our heels. Since our last Q call, this may be new news for you as you begin coverage, but having five titles launched on our platform since our last call, 2 Star Wars titles, Wings of Starlight, Daredevil, and actually an original around the Mickey and Formula One racing storyline, continues to exhibit the progress that we intend to continue to make. We also mentioned an additional original series coming out later this year. I would characterize our collaboration with Disney to be on track, very exciting, but much more to come down the road.

Got it. Thanks. Quick follow-up on the revenue side. You mentioned getting back to double-digit growth by full quarter of 26. Can you talk about, one, what are the different elements that go into that growth acceleration? How much does Japan play into it? Thank you.

Yes. We're excited to drive to double-digit growth by the end of this year. Let me go through the components. As you get to know our business, paid content is our quote, "Bread and butter," and our country of origin was Korea. Noting within the quarter, a 13.9% constant currency growth in paid content in Korea reflects the fact that we're very confident in the health of our flywheel, our oldest flywheel. One that benefited from continued investment in products, AI personalization engine, a very exciting new development in character chat that was launched in June of 2024, which by the way, is following on in Japan, shortly, later. Actually it launched in Japan in February of 2026.

Just to continue the thought, we're very excited about the work that we're partnering with Genies on, that Yongsoo Kim can talk about with regard to having AI-powered character avatars in the U.S. launching later this year. Continued investment in the product and the features that our readers, our consumers want, also continued investment in the supply chain of great stories. We talked about Canvas, our amateur platform in English, for example, having launched a new homepage, in just in May recently, a new app. This is showing up in things like Korea paid content increasing 13.9%. In Japan, in paid content, we're just completed in Q1 a pretty important infrastructure investment. This was us shoring up the infrastructure to drive growth in the latter part of this year by Q4.

We'll also note that our advertising business will lag a challenging quarter a year-ago period by Q4. We talked about one large e-commerce player hurting the growth year ago in Korea, and how we are relatively early in rest of world, which we hope to begin to drive to growth by the end of this year. Finally, there's crossover IP. More and more of these great examples of consumers discovering our stories, not just on our platform, but on the big screen and the small screens. There is an ebb and flow, and a quarter or two can make a difference. We're very excited about the slate. That's why Junkoo Kim mentioned and wrote in his shareholder letter about the strength of the examples.

I think all three of these components are the areas we're investing in to drive to that double-digit growth number by the end of the year.

Across the WEBTOON platform, we are continuing to see decent growth in Korea, as well as in the U.S. and the broader ROW market. Once Japan returns to growth, we believe the platform can return to a more meaningful overall growth trajectory. Key drivers behind these efforts. Turning around the active users and paying user growth in Japan remains our top priority. As David mentioned, we see significant opportunities through product innovation. We are accelerating the development of local original content in Japan. We plan to further strengthen our investment in local content and creators. More concrete plans are currently being developed.

Our next question comes from Eric Sheridan with Goldman Sachs. Your line is now open. Please go ahead.

Thanks so much for taking the question. Maybe 2-parter building on some of the themes we've talked about so far. In terms of changing the way in which you compensate or monetize creators on the platform, can you talk a little bit how that might change your competitive positioning for creators across some of your key markets, not just maybe the growth markets for creators as well? That'd be number one. Understood on the easier comp as you get into the back part of the year with respect to advertising, can you update us on some of the building blocks you're putting in place with respect to the advertising business that would sustain growth beyond 2026? How should we be thinking about those investments sort of turning into yield or output? Thank you.

Thanks, Eric. Good questions. Let's cover the first and then the second. With regard to our competitive position, as the dominant leader in this format, we feel we are extremely competitive with regard to the aligned revenue share model that we continue to support. I don't think you can find another platform where any creator, even an amateur creator, can sit side by side with the platform and see mutual benefit, and that is not going to change. We have not talked about or forecasted any need to invest more to be competitive. In fact, I think that we're increasingly providing great tools like what you find in Canvas. There is an example where we're creating value, having a beta where an AI-powered translation tool can take an original English amateur story into the other seven languages.

Sharing our advertising revenue with amateurs is a low cost, a very aligned way to demonstrate to even those who have not had success as a creator, that if they have a hit, we will power their growth beyond. Very consistent with even what you see as a success in things like Lore Olympus on Prime Video or one of the many Wattpad examples. This is a core strength of the business. We will increasingly provide more and more value to creators, we will maintain that alignment with no change, in my view, from a CFO standpoint in needing to increase the rev share.

It's rather we're increasing the value that we give to creators in our existing model. I'll also note that this model allows for us all to benefit because as a creator exports more stories beyond their country of origination, we see more opportunity in our company's gross profit margin, as described in the previous answer to the question posed. With regard to Q4 ads, in the quarter, we talked about Korea, our most mature market for advertising, having been impacted in this quarter by a lower level of advertising from our former parent Naver, but an increased level of support in diversifying our customers in advertising in Korea. That will continue, and we will see the benefit of that in future periods. Japan, we did not break out the growth in Japan, but we're pleased with our advertising growth in Japan.

In rest of world, we're much more clear-eyed. Part of the leadership change with Yongsoo leading the business as our Global President and having him ask me to lead Wattpad directly as its President is to put in place the fundamentals for the bigger game. That means that we're not driving to a short-term bump in rest of world or North America-based advertising. We're much more focused on the bigger prize in 2027 and beyond. Those pieces we will update you on as we can in terms of the building blocks.

Clear creators are at the very core of WEBTOON. One of our most important priority is making WEBTOON the go-to platform for more creators around the world. The key to that is helping them share their stories and reach more users globally. The evolution of Canvas, our amateur creator platform, will further support this vision. With the launch of Global Canvas, creators from any region around the world will be able to upload their work, and with their consent, have it automatically translated through our AI-powered translation engine. In other words, creator will be able to reach a much broader global audience, while users will gain access to wider variety of content. We believe this creates meaningful benefits for both creators and users, further strengthening the flywheel of the platform.

Our next question comes from Dae Lee with J.P. Morgan. Your line is now open. Please go ahead.

Great. Thanks for taking my questions. I have two. The first one, when you guys talk about leadership changes that you guys have made recently, the piece about shifting from regional structures to integrated global leadership kind of stood out, and your unification of the Canvas program also stood out as, like, a way to bring down geographical walls. When you guys talk about, like, globalization of your platform, is this more of you guys doing better work in rest-of-world regions, or does that involve Korea and Japan as well, and thinking about the three distinct regions as a global platform overall? I have a follow-up.

Thanks, Dae. It's a great question. Let me start by offering this point of view. Globalization is about a few things. Principally for us, it's about applying best-in-class business practices to the benefit of more than one region. It is not about just rest of world. Let me give you an example. We're very proud of the work we've done in Korea, our original market in the last year, showing that 13.9% constant currency growth, showing the increase in experimentation in AI personalization. You see the ARPU growth. You see the ability to own titles, not just, quote-unquote, rent and lease them. The phenomenal work in product and on business model in Korea has great relevance across the world.

As an example, we talk about a leadership change such as Yuki Chae, who led that work in Korea, now leading globally as Chief Product Officer and spending a lot of time in the investment in Japan with Yongsoo Kim's help as just one example. Canvas is another great example, where having a unified tech platform, being able to provide seven languages, not just one, that doesn't eventually just benefit rest of world, that benefits the entire global platform. From a finance standpoint, it's about allocation of capital and talent to the maximum impact. And I think it's a big lever for us, not just in rest of world, but as a global public company across all regions.

One of the biggest changes under our globally integrated organization structure is on the product side. Today, WEBTOON operates different platform across Korea, Japan, and rest of the world market, and we see a significant opportunity to raise the overall platform standard by more quickly and efficiently scaling successful feature across regions. This includes areas such as content discovery engine, character interactive features, and video-related features. By accelerating the sharing and adoption of successful product innovations across markets, we believe we can improve the user experience globally and drive stronger platform growth over time. At the same time, leadership changes across both the tech side and AI organization will help accelerate AI transformation across the product and the company as a whole. We expect to move faster in integrating AI-driven innovation into both the user experience and internal operations going forward.

Got it. As a follow-up, on the creator side, when you guys unify Canvas, is there a reason why, I guess, like Korea and Japan might be missing there. Then when you talk about investing $50 million in creator support, like, could you give us examples of, like, what kind of support, I guess, was lacking on your platform that necessitated this type of investment in 2026? Thank you.

Let me start with your second question first. Candidly, I don't think we were lacking any investment in our creators. It has been a 20-year passion for our founder, JK, and we've continuously invested in our creators. In fact, I think we just updated a number. I wanna make sure, IR will correct me if it's wrong. I think it's a $2.8 billion creator rev share number from $2.7 billion, sorry, creator investment that we've made from the periods of a five-year period of, I think, 2011, sorry, 2021 to 2026. We'll update you if I'm off by a decimal or two. This is not gonna change. On your first question, let's have Yongsoo Kim, our President, answer it directly.

Korean and Japanese are at different stages within the WEBTOON ecosystem, and each market also has somewhat different creator system and operating structures. As a result, Korea and Japan were not included in the initial rollout. However, we are actively considering a phased approach for applying this initiative to Korea/Japan over time.

Our next question comes from Matthew Cost with Morgan Stanley. Your line is now open. Please go ahead.

Great. Thanks. Taking the question. I just wanna follow up on the Canvas platform. Obviously, it's been talked a lot about a good bit on the call so far. In the shareholder letter, you made a comment about increasing the number of crossovers from Canvas to ORIGINALS. I guess, is that hopefully going to be a function of just by exposing Canvas content to, you know, seven languages instead of one, that you'll have a better level of visibility into what content would succeed in the ORIGINALS program? I guess, help us understand what the new Canvas program will do kind of at a more granular level to help increase the conversion to the ORIGINALS side. Thank you.

Thanks, Matt. I'll start, and then I think Yongsoo Kim will jump in. First, we have always seen great ORIGINALS emerge from our amateur platform, even on the Canvas of yesterday. You know, we've given you these examples, but having folks emerge who never had a voice before, like Rachel Smythe and many, many others, even on the Wattpad side, is a core part of our business model. It is the lowest cost way for us to empower creators to write a story that we may not have suspected would be the global hit that they eventually become. That is unchanged. Canvas is critically important for us in that way. While the purpose is unchanged, I think you'll find the specificity of the shareholder letter reflecting the fact that there's a massive upgrade in its capability.

It starts with this new board, which we launched on April 21st. The whole app was refreshed on May 6th. We've highlighted these seven languages where you have AI-powered translation, but there have always been, and there continue to be, even more compelling tools for the amateur creator on Canvas to have a chance to graduate to being a hit maker and eventually a professional creator. I would think of this as a wholesale improvement, soup to nuts, rather than a bet on any small part of it. Yongsoo Kim can jump in as well.

What we expect from a globally integrated Canvas platform is the ability to attract more creators, help them reach larger audiences, and ultimately generate bigger breakout titles. Naturally, this will strengthen our WEBTOON original contents, PGC platforms by creating more big hit series, while also expanding the pool of contents that can evolve into IP adaptations. In other words, as Canvas becomes stronger, as the starting point for discovering new contents and creators, our overall original content development pipeline also becomes significantly stronger.

There are no further questions at this time, and this concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soohwan 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 and expected performance and 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 in the Risk Factors section of our filings with the SEC. These forward-looking statements represent our outlook only as of date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we discuss today 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 and not a substitute for GAAP measures. Joining me today on the call are Junkoo Kim, Founder and CEO; David Lee, CFO and COO; and Yongsoo Kim, Chief Strategy Officer. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim.

Thank you, everyone, for joining us today. I will make a few brief comments on our performance, and then David will provide more details on our results and outlook. For my first thought on the year, please refer to the shareholder letter posted on our Investor Relations website. We reported solid year 2025 results with revenue growth of 3.9% on a constant currency basis and adjusted EBITDA of over $19 million. We are pleased to see MPU growth turn positive in the first quarter, driven by growth in Korea and in Rest of World. We made significant progress advancing our personalization tools throughout the year. As we have become more proficient with AI, we are now making increasingly personalized content recommendations that are unique to our users. In Korea, where we have seen the most progress, we also increased the content diversity at the same time. We are seeing MPU growth as users need more titles and episodes as they get more relevant recommendations. We believe that we can take the learning from Korea and apply them to other regions. We are excited that following the end of Q4 on January 8, 2026, the Walt Disney Company and WEBTOON Entertainment announced that we have completed the previous announced strategic agreement, including both the development of an all new digital comics platform as well as Disney's approximately 2% equity investment in WEBTOON Entertainment. We are targeting a 2026 launch for this new platform. We have already launched a total of 12 format titles on WEBTOON's Mobile vertical-scroll format following the initial collaboration announcement with Disney in August 2025. These have included stories from Amazing Spider-Man, Star Wars and Avengers, and we look forward to introducing an original series later this year. This is a powerful next step for our growing global business and a strong foundation for even greater collaboration with Disney in the year ahead. Finally, we continue to advance our flywheel with IP adaptations, which further keep users engaged with our platform. And I would like to highlight just a few examples here. Animation continues to be a major initiative for us, and we are excited to announce that Amazon MGM Studio greenlit Lore Olympus to be developed into a new animated series from WEBTOON Productions and The Jim Henson company. In Japan, anime is a particular focus, and I'm happy to announce that we reached our target of 20 new anime projects in 2025. We are excited to have launched another anime series on Crunchyroll with DARK MOON: The BLOOD ALTAR this January. We are also seeing success with live action as Netflix announced that viral hit will be adapted into a Japanese live action series following the success of our anime adaptation in 2024. Overall, we believe these financial and operational results demonstrate that our flywheel and strategy are working. Our ecosystem of content, creators and users continues to drive the success of our business. That said, we acknowledge that we have an opportunity to accelerate our flywheel and realize our growth potential faster. We remain laser-focused on deepening engagement across our platform to foster a stronger, more vibrant fandom and look forward to sharing more about our plans in the quarters ahead. With that, I will now turn the call over to David. David, please go ahead.

Thank you, JK, and thank you, everyone, for joining us. For the fourth quarter, we reported revenue of $330.7 million, in line with our expectations. Our reported revenue was down 4.1% on a constant currency basis and 6.3% on a reported basis as paid content growth was more than offset by declines in advertising and IP adaptations. For the full year 2025, we reported revenue of $1.4 billion. Our reported revenue grew 3.9% on a constant currency basis, driven by constant currency growth in all revenue streams and grew 2.5% on a reported basis. We expanded gross margin by 100 basis points to 24.3% in the fourth quarter as we lapped a number of discrete items that were recategorized from marketing to cost of revenue during the year. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher-margin businesses like advertising. Net loss was $336.5 million in the quarter compared to a loss of $102.6 million in the year prior, driven primarily by goodwill impairments. Net loss for the full year was $373.4 million compared to a loss of $152.9 million in the year prior. We exercised cost discipline through the quarter, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth. Adjusted EBITDA was $0.6 million in the quarter, exceeding the high end of guidance. This compares to a negative adjusted EBITDA of $3.5 million in the same quarter of 2024. For the full year, adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the year prior. As a result, our adjusted EPS for the quarter was $0.00 compared to a negative adjusted EPS of $0.03 in the prior year and $0.15 for the full year compared to $0.57 in the prior year. Turning to operational health. We continue to focus on driving users to our app as well as converting them to paying users. While fourth quarter app MAU and webcomic app MAU declined 6.5% and 2.6%, respectively, year-over-year, we were pleased to have driven MPU growth of 0.7%, evidence that our personalized content recommendations are working. Importantly, our English platform webcomic app MAU was up 2.2% year-over-year. For the full year, MAU of 7.5 million declined 2.9% year-over-year. While app MAU declined 4.3%, webcomic app MAU grew 1.9% and English platform webcomic app MAU was up 12.8% for the full year. Global MAU declined 1.7% in the quarter. We estimate that global MAU benefited from roughly a 10 percentage point increase in Wattpad activity resulting from automated web traffic in certain noncore markets. While we saw a small increase starting in late Q3 2025, the web traffic peaked in Q4 2025, and we are seeing reduced impact in Q1 2026. Notably, this had no impact on app MAU and is not expected to have a material impact on our business. For the full year, total MAU of $157 million declined 7.1%. Now I'd like to provide an update on our revenue streams at a consolidated level. Starting with paid content. In the quarter, we posted 0.4% revenue growth on a constant currency basis. For the full year, we posted 1.5% revenue growth on a constant currency basis. While ARPU declined 0.3% in the quarter on a constant currency basis, we were pleased to see 4.6% growth for the full year. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. Advertising posted a decline of 10.3% in the fourth quarter on a constant currency basis year-over-year. In Korea, we saw similar declines from the same e-commerce advertising partners last quarter, but we experienced growth from other partners. Ad revenue from NAVER was relatively consistent with the fourth quarter of the prior year. For the full year, we posted 0.4% advertising growth on a constant currency basis. Finally, our IP adaptation business saw revenue decline 29.7% year-over-year on a constant currency basis in Q4. As we've shared previously, revenue recognition for IP adaptations can be volatile from quarter-to-quarter, depending on the timing of key milestones for various projects. For the full year, IP adaptation revenue was up 35.5% on a constant currency basis. We had a strong year of IP adaptations in Korea, particularly driven by the theatrical success of My Daughter Is a Zombie and The Trauma Code on Netflix. Now I'd like to look at our results in the context of core geographies. In Korea, during the fourth quarter, our revenue declined 9.1% year-over-year on a constant currency basis as growth in paid content was more than offset by a decline in advertising and IP out of patients. For the full year, we posted revenue growth of 5.9% on a constant currency basis. During the fourth quarter, while MAU of $24.3 million decreased 10.8%, we were pleased to see MPU of 3.7 million grow 3.3% and a paying ratio of 15.1%, reflecting an increase of 207 basis points compared to the fourth quarter of 2024. Korea ARPU on a constant currency basis was up 0.9% compared to the fourth quarter of 2024. For the full year, Korea MAU was $24 million, decreasing 11.1% year-over-year, while Korea MPU was $3.6 million, declining 5.3% year-over-year. Full year paying ratio was 14.8%, up 91 basis points year-over-year. Full year Korea ARPU grew 4.7% to $8.2 million on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 1.0% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by a single-digit growth in advertising and IP adaptations, all on a constant currency basis. For the full year, we posted 3.9% revenue growth on a constant currency basis. LINE Manga continued to be the #1 overall app for revenue, including mobile games for the quarter as well as the full year according to data.ai. Compared to Q4 2024, Japan's MAU of 22.2 million increased 0.5%. MPU of $2.1 million declined 6.9% and paying ratio of 9.5% was down 76 basis points year-over-year. Fourth quarter Japan ARPU of $23.30 grew 5.7% year-over-year on a constant currency basis. For the full year, Japan MAU increased 4.9% year-over-year to $23 million, while Japan MPU of 2.2 million declined 0.1% year-over-year. Full year paying ratio of 9.7% was down 49 basis points year-over-year and ARPU grew 3.4% on a constant currency basis. We expect to complete our infrastructure investments by the end of Q1 and redeploy engineering resources to support improvement across our personalized recommendation tools. We believe more personalized AI recommendations may drive MPU growth in Japan as we've done in Korea. In Rest of World, we saw revenue growth of 0.8% year-over-year on a constant currency basis in the quarter, driven by single-digit growth in paid content and triple-digit growth in IP adaptations, partially offset by a double-digit decline in advertising. For the full year, we posted a 2.1% revenue decline on a constant currency basis. Fourth quarter MAU was flat year-over-year after including the 10% growth impact in Wattpad activity resulting from automated web traffic. MPU grew 5.7% and paying ratio of 1.5% increased 8 basis points compared to the fourth quarter of last year. Fourth quarter Rest of World ARPU of $6.50 declined 5.1% year-over-year on a reported and a constant currency basis. For the full year, Rest of World MAU of $110 million decreased 8.4% year-over-year, while MPU of $1.7 million declined 1.5% year-over-year. Full year paying ratio of 1.6% was up 11 basis points year-over-year. Full year Rest of World ARPU increased 0.5% to $6.60 on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter was $80.5 million compared to $82.3 million in the prior year. This resulted in a gross margin of 24.3%, which expanded 100 basis points compared to the prior year. Full year gross profit was $322.2 million compared to $339.1 million in the prior year, translating to a gross margin of 23.3%, which decreased 180 basis points compared to the prior year. Adjusted EBITDA for the quarter was $0.6 million compared to a loss of $3.5 million in the prior year, and full year adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the prior year. On the cost side, Total G&A expenses for the quarter were $65.4 million compared to $77.8 million in the prior year quarter as we exercised cost discipline. Total general and administrative expenses for the full year were $259.5 million compared to $332 million in the year prior. Interest income in the quarter was $4.5 million compared to $6.0 million in the prior year, and other loss was $9.2 million compared to $6.2 million in the prior year period. For the full year, interest income was $19.2 million compared to $15.8 million in the prior year, and other loss was $9.8 million compared to other income of $6.5 million in the prior year. We had an income tax benefit of $18.4 million in the quarter compared to an income tax expense of $4.9 million in the prior year. Income tax benefit for the full year was $16 million compared to tax expense of $3.6 million in the prior year. Depreciation and amortization was $10.6 million in the fourth quarter compared to $12.1 million in the prior year. Depreciation and amortization for the full year was $35.4 million compared to $40.1 million in the prior year. Net loss of $336.5 million was driven by impairment losses on goodwill, the majority of which was attributable to Wattpad. This compares to a net loss of $102.6 million in the prior year quarter. Net loss for the full year was $373.4 million compared to net loss of $152.9 million last year. As a result, fourth quarter GAAP loss per share was $2.36 compared to a loss per share of $0.72 in the prior year period, and full year loss per share was $2.66 compared to a loss per share of $1.21 in the prior year. Adjusted EPS was $0.00 in the quarter compared to a negative adjusted EPS of $0.03 in the prior year period, and full year adjusted EPS was $0.15 compared to $0.57 in the year prior. Our balance sheet remains strong with a cash balance of $582 million and another $11 million of short-term deposits included in other current assets at year-end. We generated $11.2 million in cash flow from operations during the year. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I'd like to spend a few moments discussing our first quarter outlook. For the first quarter of 2026, we expect to deliver revenue growth in the range of negative 1.5% to positive 1.5% on a constant currency basis. This represents revenue in the range of $317 million to $327 million based on current FX rates. We anticipate first quarter adjusted EBITDA in the range of $0 million to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. We continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content and users. As we've shared today, we're making numerous investments across all 3 of these areas that we believe will support a return to double-digit year-over-year growth by the end of the year. In closing, I'm pleased with the progress we made in 2025. We're encouraged by the positive signs we see in key metrics like MPU, and we look forward to executing our strategy in 2026. With that, I'd like to turn it back to our operator to begin the Q&A session.

[Operator Instructions] Our first question comes from the line of Mark Mahaney with Evercore.

Okay. Could I ask 2 questions, please? First, any more details on this launch coming up, the 2026 launch with Disney, the all-new digital comics platform? Just talk about what needs to be done in order to put that together, marketing plans, product plans? How far along is this platform to being launched? And then secondly, David, on this return to double-digit year-over-year growth by the end of the year. If that happens, could you just maybe give a little bit more color on that, either by region or by revenue segment? Like what are the factors most likely? Is it recovery in the rest of world market? Is it Japan or Korea? Or is it paid content? What are the factors most likely to get to that return to double-digit year-over-year growth by the end of the year?

Thanks, Mark. This is David Lee, and those are 2 good questions. Let me take them in turn. First, with regard to Disney, it has been some time since we last spoke to you. So I wanted to be complete. Since we last spoke, first, remember that Disney closed their investment in us on January 8 of this year, purchasing 2.7 million shares for approximately a purchase price of $32.8 million. It's also important that we've been hard at work with them. You'll note that we have launched already with their collaboration 12 reformatted titles, including 7 since the end of Q3. And while I don't think I need to list them all as you'll find them in the materials that we provided, I'm particularly impressed by the strength of those stories, stories that include Predator and Star Wars and even The Unbeatable Squirrel Girl, et cetera. But to your broader question, we've always talked about 2 elements: one, the ability to tell original stories that we have demonstrated success with in the past, new to the world stories. And in our disclosure, we noted we are committed to doing so at least one this 2026 period. I think that's important because I think new-to-the-world originals has powered a lot of the creator success as well as the consumer delight on our platform. The second is we've committed to launching the new consumer platform. Remember, we intend to build and operate completely this new platform in collaboration with Disney. We committed to launching that by the end of the year. You'll note that while I mentioned double-digit growth in revenue by the end of the year, I did not note any disclosed additional investment or burden on the company to achieve these outcomes with Disney. Let me turn to your second question because I think it's important. We recognize that in the guidance we provided, which is flat growth for Q1, that there may be a misconception. We're very confident in our platform. Our flywheel is healthy. We really will deliver double-digit growth by the end of the year, and it comes in 3 parts. First, you will see a return to the strong growth we have demonstrated in paid content, the core of our business. You'll note that we mentioned that in Japan, which has become a very large business for us, where we're still #1 in revenue when you include all consumer apps, including mobile games for 3 quarters running, that we had to take time to invest in infrastructure. While we complete that, we noted by the end of this quarter, Q1. And as a result, you could expect that will drive paid content growth towards the end of the year as one example. The other is advertising. Korea is our most mature business in advertising, and we've been clear now in the last 2 quarterly releases on the impact of a single discrete advertiser and e-commerce provider. We also talk about the health broadly in our ability to grow our legacy businesses and advertising in Korea and the upside future opportunity in Rest of World. This will also contribute to double-digit growth. And then finally, crossover IP, JK was very clear about some very compelling examples. There will be more to come. While this is only 8% of our total revenue in the reported quarter of Q4, the ability strategically for next-generation consumers, for example, in the U.S., where Yongsoo Kim has led growth in English web comic MAU and now you're seeing in MPU for them to see on the big screen or on the small screen, stories that they can discover not just on our platform. And I'll let the results come through the course of the year, but I think this is an important component of our growth by Q4 of 2026 as well.

Mark, this is Yong Kim, the CSO of WEBTOON. Regarding the Disney app launch within this year, the most critical and time-intensive component is the development of the new product. Disney's best content library is already in place. The key is building a new app that delivers the best possible user experience around discovery and recommendation so that this library can be presented to the user in the most compelling way.

Our next question comes from the line of Eric Sheridan with Goldman Sachs.

This is [ Julie ] on for Eric. Two, if I could. You talked a little bit about the progress made to your recommendation algorithm in Korea as being a driver toward improved user engagement. Could you talk and expand a little bit around the key learnings within that market and how we should be thinking about the application of various recommendation algorithms to other users or within other markets more broadly? And then on the creator side, you talked a little bit about content diversification coming from the rest of the world. Any updates on how we should be thinking about competitive dynamics for attracting and retaining creators, specifically within the English language markets?

Thanks, Julie. Good questions. Let me address the first. We are a tech company at heart. And with regard to our business in Korea, we're very pleased to see that in our original business, you're still seeing strong performance. There, metrics like MPU are very important, where we have approximately 50% household penetration in a market where we're an everyday household name, being able to see, as you saw, the total company delivered 0.7% increase in paying users, but Korea specifically in the breakout you saw delivered plus 3%. Because we have very strong awareness in Korea, product innovation and content presentation is an ongoing constant endeavor for us as a tech company. And this AI-driven and machine learning-driven personalization engine is particularly relevant for our most mature market because there's habit formation already in place. So we're pleased with that. And frankly, I think you're going to see more of it outside of just our original foundation market. In fact, we even disclosed that as we've completed our infrastructure project in Japan, we specifically tried to be clear in our script that you will see machine learning-based recommendation engines and CRM that we think will help drive and return the Japan business to the historic growth that you've seen in the past. You'll hear more about our intent to drive global innovation from one market across all markets, but AI is a proven tactic for us, and you'll see more of it as we roll out more results this year. Your second question was with regard to creator content diversification. And I think your question was particularly focused on the market here in the U.S. or what we call the English-speaking markets. So first, I just want to draw attention to the fact that we've intentionally kept our investments in marketing and in product innovation in what we call Rest of World, our English webcomic app MAU growth, which grew 2.2% and prior grew double digits, is now being accompanied with NPU growth. We didn't break it out for you at that level of disclosure, but I wanted to call it out qualitatively as I think it's a meaningful milestone for the company. In order to create a healthy opportunity for creators, it starts with creating a growing and healthy base of paying users, which I think you're seeing today. And then I'd point you to the ongoing comments by JK in his script, but also the shareholder letter, a number of the exciting crossover IP projects that we've talked about. We talked about Chasing Red, starring Riverdale star Madalaine Petsch. We talked about Lore Olympus being greenlit by Amazon. These represent not just great opportunities for us and shareholders, but this represent proof points for that creator who is an amateur, of the 24 million, who wants to be published globally and have a voice. I think there'll be more to come on this, but I think both the platform as well as the off-platform opportunities we'll pursue are reasons why our creator ecosystem remains strong. We are not seeing any pressure with regard to the strength of that part of our flywheel. We think it continues to be foundational and a point of leverage for us.

Regarding the second question, in the U.S., we continue to focus on strengthening our English original content development, not only by bringing proven hits from Korea and Japan, but also developing strong original title locally. Following the success of Lore Olympus, we have seen promising momentum from titles such as Starfish late last year, Chip King earlier this year. Across all markets, including English market, we will continue to carefully manage the balance between globally successful IP and locally developed content.

Our next question comes from the line of Benjamin Black with Deutsche Bank.

First, a follow-up on the Disney platform. Can you maybe just dig in a little bit to the economics a little bit? How should we be thinking about the margin profile of the new joint platform compared to the core WEBTOON app? And then secondly, maybe a bigger picture question. If we sort of zoom out and look at the broader advertising opportunity for your platform, maybe speak to us a little bit about the investments that are still required to really sort of address that potential opportunity going forward.

Great. This is David, and I'll start, but Yongsoo will jump in shortly. With regard to what we've disclosed in the past, and here, I'm not going to speak on behalf of Disney. I'm going to focus more on our experience at WEBTOON. Remember, Benjamin, we have partnered with great companies in the past. And we've talked about the economics, the unit economics of when we have our own original, as Yongsoo just mentioned, or when we have a wonderful what we call reformatted title from somebody else's universal platform. When you take out the cost to produce great hits, the ongoing cost structure and margin from a great piece of content, whether they are created by us as an original or by our creators or from outside our platform, we've never disclosed a meaningful margin drainage or impact. And I think from that, you can infer that we're very excited about collaborating not just with Disney, but with anyone who can see us as the destination for this growth we're seeing amongst Gen Z and Gen Alpha here in the U.S. I don't want to go more into detail on Disney. Yongsoo can provide some color on the strength of that relationship. Let me briefly cover ads. When you look at our ads business, we are very careful to maintain the long-term proposition for Rest of World as we're quite early. And that includes actions we've taken to recently focus, for example, the Wattpad effort separate from our broader WEBTOON opportunity in the U.S. This is invest in the fundamental stage for Wattpad. And so I would love to be able to give you more milestones of progress, but we're just not yet there. We're much more focused on growing the paid content business in the U.S. with Global WEBTOON and putting in place the framework for advertising growth second. Let me turn to Yongsoo for any comments you may have.

Yes. Regarding the new platform, as the operator of the new platform, WEBTOON will recognize all revenue and cost. With respect to the content and brand licensing fee, the structure has been determined in a manner that is totally consistent with our existing business.

Our next question comes from the line of Doug Anmuth with JPMorgan.

This is Dae on for Doug. I have 2 as well. First one on your expectations to exit the year growing double digit. I appreciate the comment you gave on paid content versus advertising and by regions. But could you break that down a little bit more? And tell us if the excitement is more around what you're seeing on the MPU side? Or is it more on the monetization side? Because in 2025, the content growth appears to have been driven by ARPU growth. So just curious like how you guys are thinking about the drivers of the double-digit percent growth across those 2? And then secondly, I appreciate the IP adaptation revenue is milestone driven and lumpy quarter-over-quarter. But curious if you can share like how your 2026 pipeline look compared to 2025? And like how much of that or how much contribution from IP addition is baked into your double-digit percent growth exiting the year?

Good question, Dave. Thanks for them. First, with regard to the double-digit growth we expect by the end of 2026, I think I was careful to make sure that you understood that, that would be driven by both paid content and an improvement in our advertising business trends as well. When one looks at paid content, as you know, the different flywheels we have in Korea, Japan and rest of world are in different states. So let me have you recall what we've described in the past as I think they're important. In Korea, where we have a strong penetration and awareness, MPU and ARPU is critically important as product innovation that we just discussed, including innovations in AI as well as the rollout of content keep that market strong, and we're pleased with the strength of that market. In Japan, when one excludes the recent effort to create the infrastructure to persist in the growth we saw in the first half of 2025, that is a market where LINE Manga is the #1 app. And as you know, we've historically seen not just increase in ARPU, but also a fundamental increase in actual top-of-funnel metrics. So there, we're very early with arguably less than 20% household penetration in a market that is very accustomed to purchasing our digital format. So I would expect that in the mid- to long term, you should see Japan return to healthy growth, not just in ARPU, but also in more mid- and top-of-funnel metrics. And then in Rest of World, we are very early. It's our largest addressable market. We're pleased to have noted the MCU year-on-year growth disclosed in the quarter and the previously disclosed for the last 2 quarters growth in top-of-funnel web comic app MAU in English, but we have not yet committed to significant at-scale revenue growth as we are preparing that market given its potential size for mid- to long-term opportunity in revenue. With regard to advertising, as I mentioned, Korea represents one of our larger opportunities in advertising and a discrete reliance on one e-commerce provider accounted for some of the noise in the numbers in Q4 as disclosed. We believe we have a healthy business and a strong team in more mature markets, and we believe it's very early days for the growth in Rest of World. Japan, as we've described in advertising, has consistently been an area of strength for us, particularly in rewarded video, and I would expect us to return to that strength by the end of this year as well. With regard to the IP pipeline. First, despite the quarterly shifts that you hear us discussing, I want to review the fact that IP adaptation revenue for all of fiscal 2025 grew a whopping 35.5%. So this is a very healthy business, not measured in the swing between one quarter or the next, but zooming out more broadly as a lever point for us to create faster adoption. Qualitatively, I would say we are very pleased with our pipeline in 2026, but we are cautious about promising a specific quarterly impact from that pipeline as we all know that 1 quarter can shift when you are producing great IP hits. And turning it over to Yongsoo now for a comment.

Regarding the end of year growth, the growth of our weapon platform business typically follows a pattern where MAU increased first, followed by MPU growth, which then drives revenue expansion. Last year, we shared updates on MAU growth for our English WEBTOON platform, and we are now seeing that momentum translate into MPU growth in the region with the MPU growth having resumed. In Japan, revenue growth was strong over the past 2 years, but MAU growth was somewhat stagnant. We believe we are now seeing the impact of that dynamic. In response, we are preparing initiatives aimed not only at driving revenue growth in Japan, but also at expanding the overall user base. We expect these efforts to begin delivering meaningful results in the second half of this year in Japan.

Our next question comes from the line of Matthew Cost with Morgan Stanley.

I guess on the 12 reformat titles of Disney content that are on the WEBTOON app, how is engagement with those titles going? Is it attracting new people? Is it driving new forms of engagement? I guess when you think about the goal of bringing the Disney content on to WEBTOON, what are your early learnings in terms of moving towards that goal from those titles that you put on the app?

Thank you, Matt. I appreciate the question. First, it is quite early going, candidly, in our collaboration with Disney. I think the pace that we're demonstrating is a reflection of just how large scale the opportunity set is for us in this area, this area, call it reformatted stories on our platform. So we're pleased to present the 12, including the 7 that we have recently announced since the end of Q3, but it's far too early for you to really have a meaningful sense on specific metrics. For us, I think this opportunity won't be measured in a quarter's performance. The collaboration with Disney was always intended for the long-term success of both enterprises, and we're very excited about that. So as Yongsoo mentioned, having an original this year and not just that, but being able to really build this consumer platform he mentioned right and launch it before the end of the year, these are the areas we're focused on versus on probably too early to give results on these important reformatted titles.

Our next question comes from the line of Andrew Marok with Raymond James.

Maybe one on advertising, if I could. As we're seeing kind of the broader advertising ecosystem take a shift toward more performance-oriented outcomes over brand-focused outcomes, I guess, how is that informing your investment road map, your product focus as you're building out your ad ecosystem?

Well, it's interesting. When you look at the business with regard to Korea, we have a long history of great products built by our team that are absolutely anticipating future trends around performance. And I'm not going to go through all of them, Andrew. We can do it in a follow-up meeting. But if you look at that business, we've set the pace in many ways for products that are very much tied to the publisher or the advertiser success on platform. I think rewarded video, but not just that. We talked to you about our off-platform deals with large e-commerce creators, one of which we just mentioned. When you look at our business in Japan and Rest of World, we're really just at the beginning stages of rolling out the infrastructure. You should anticipate in the Rest of World business here in the U.S. for us to have long-term success, but it will take us time to establish the direct ad sales force and to build for the North American market specifically, product offerings and advertising that are not just exported from our success in Japan and Korea. That's why we are very cautious about providing any short-term expectations for the business as we recognize we have to build for the market, and that will take us time.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session and today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.