WBTN

Image source: The Motley Fool. Monday, Aug. 10, 2026 at 5:30 p.m. ET Vice President of Investor Relations - Soohwan Kim Founder and Chief Executive Officer - Junkoo Kim President - Yongsoo Kim Chief Financial Officer - David J. Lee Operator: 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 Second Quarter 26 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead. David J. Lee: 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 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 results to differ, including our SEC filings, including those given 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. 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 and not as a substitute for GAAP measures. Junkoo Kim: Joining me today on the call are Junkoo Kim, founder and CEO Yongsoo Kim, president, and David J. Lee, CFO. 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 begin by providing a brief overview of the quarter and I will also share more detail on a few strategic investments we announced today. David will then walk us through our financial results in more detail. As always, I encourage you to read our shareholder letter which is available on our Investor Relations website. We delivered another solid quarter with revenue of $339 million and adjusted EBITDA of $5.5 million reflecting continued execution across the business and I am proud of the progress we are making. This quarter, we are introducing a new strategic direction that we believe will power our flywheel into the future. This includes further investment in AI powered initiatives that strengthen and expand our core on platform business. Which I will share in more detail. We are also scaling our off platform IP adaptation business to create greater franchise value and bring more fans back to our global platform. We also will share more on this in a moment. Turning to AI. This call, we took meaningful steps to further integrate AI across our platform with features designed to strengthen our flywheel by expanding audience reach, deepening engagement, and creating new opportunities for creators. Fandoms are built on connection and shared passion and our AI initiatives are designed to further strengthen this sense of community. A great example is our AI powered auto translation program. By making it easier for stories to reach leaders across languages, we can help creators expand their global audience and give users access to more content in their native language. We launched the beta program in May for eligible English language Canvas creators and the early response from both users and creators has been encouraging. We look forward to expanding the program later this year to a broader group of CANVAS creators. And we believe it has the potential to become an important driver of growth. We are also going beyond simple predictive chats with BIAS-ON AI interactive story tech that we introduced to this call in Korea, where fans hold conversations with characters and build stories of their own. BIAS-ON brings to life characters fans already love, built on official world with the approval of the creators who made them. Initiatives like this move Webcomics from a 1-way reading experience to a deeply engaging and interactive 1, and the early results have been positive. We are planning to expand the service to Japan later this year. We also continue to pioneer video innovation in Korea. We recently launched CutCut, a new AI powered short form animation tool that lets fans create and participate in their favorite story using official IP. In its first week, new CANVAS rose 136%, and the number of creators making content grew 188% over the week prior. Video initiatives overall remain an important focus area for us and we are continuing to explore short animation as a way to extend how users experience our IP. Our ambition to be the world's storytelling technology platform is also being supported by exciting collaboration like the 1 we have with Disney. A quick update on our Disney collaboration. We are excited to introduce an original series later this year, and remain well positioned to launch the new digital comics platform before the end of this year. Before I turn it over to Yongsoo, I want to reiterate my belief in our strategy. We are launching new initiatives to accelerate our growth and receiving great feedback from the fans and creators who make WEBTOON the destination of stories. We continue to expect to return to double digit growth by the end of the year and look forward to the road ahead. With that, Yongsoo will provide an update on our off platform initiative. Please go ahead. Yongsoo Kim: Thank you, JK, and thank you to everyone joining us. I am excited to share more details on the next phase of growth. For our off-platform IP adaptation business. IP adaptations are a critical element of our flywheel. Creating greater franchise value. And bringing more fans back to our global platform. With our massive catalog of popular content, and database of user engagement, We have a unique opportunity to identify high potential franchises and participate in their growth. The strong performance of multiple WEBTOON adaptations this quarter including 3 series reaching Netflix global top 10, reinforces our confidence in this strategy. To support this evolution, we made 2 strategic investments during the third quarter. The first is an investment in Allied Games Holdings. Which will enable us to turn proven IP into immersive gaming experiences. Games are 1 of the most engaging form of fandom. Pulling fans deep into a story universe. Unlike many others in this space, we are starting with a strong pipeline from day 1. Together, WEBTOON and Allied Games holdings plan to develop and launch multiple games over the next 4 years. Based on proven IP. The formula underpinning our strategy does not stop at games. With Allied Games Holdings, we are building a monetization pipeline that can extend a single IP across multiple formats. Creating a repeatable success formula of adaptations that flow from web comics on our platform to animation and games. In particular, we hope to match game launches with animation release. To maximize their impact. Today, we also announced a dedicated IP adaptation fund. Together with NAVER, we entered into a limited partnership agreement in July. To establish $100 million fund to invest in IP adaptations. This fund will help us capture more value from our massive global hits. Evolved beyond licensing to secure strong IP rights. And gain more control over our growing adaptation slate. Our investment reflects our conviction in the long term value of these projects and aligns our capital with our strongest IP. I am excited about these investments we have made to accelerate our business and we would like to thank our team our creators, our users, and our partners. With that, I will now turn the call over to David. David, please go ahead. David J. Lee: Thank you, Yongsoo, and thank you everyone for joining us. I will be discussing the details of our second quarter 26 results compared to the comparable quarter in the prior year, unless otherwise noted. For the second quarter, we reported revenue of $339 million that declined 2.8% but grew 5.2% on a constant currency basis. This growth was driven by increases across all 3 revenue streams. Paid content, advertising, and IP adaptations. We expanded gross margin by almost 100-basis-points to 26% in the second quarter. We remain focused on expanding profitability further over time and believe our cross border content distribution as well as growth in higher margin businesses like advertising. Will continue to support this. We posted a net loss of $14.6 million in the quarter compared to a net loss of $3.9 million a year prior. Driven by higher income tax expense and marketing investment. We reported adjusted EBITDA of $5.5 million exceeding the high end of guidance. This compares to an adjusted EBITDA of $9.7 million in same quarter of 2025,, as we increased our marketing investments. As a result, our adjusted EPS for the quarter was $0.04 compared to an adjusted EPS of $0.07 in the prior year. Turning to operational health. Global MAU increased 0.5% in the quarter. We continue to focus on driving users to our app as well as converting them to paying users. While app MAU and our Webtoon App MAU declined 8.0%, 1.5%, respectively, year over year, we are pleased to have posted MPU growth of 1.8%. Driven by growth in Korea, partially offset by decreases in both Japan and rest of the world. We believe we can continue to drive MPU growth by further advancing our AI capabilities and initiatives. Importantly, our English platform Webtoon App MAU increased by 3.7% year over year. Titles that supported this growth included Situationship, an English language original, as well as Starting Over as a Cheat Player, and The Devil Never Cries. Now, I would like to provide an update on our revenue streams at a consolidated level. Starting with paid content. In the quarter, we posted 4.3% revenue growth on a constant currency basis. As I just mentioned, we are pleased to post another solid quarter of MPU growth. up 1.8% in Q2. We believe we can continue to drive MPU growth as we lean further into our AI capabilities. Including the initiatives that JK mentioned earlier. ARPU also increased 2.5% in the quarter on a constant currency basis. Advertising revenue grew 11.5% in the second quarter on a constant currency basis. This was driven primarily by growth in Korea and Rest of World, offset by a decline in Japan. Korea, in particular, has seen an increase in ad revenue from both NAVER and other partners. Finally, our IP adaptation business revenue grew 4.2% year over year on a constant currency basis in Q2. As we have noted previously, revenue recognition for IP Adaptation can vary quarterly, based on the achievement of certain milestones. Now I would like to look at our results in the context of core geographies. In Korea, during the second quarter, our revenue grew an impressive 20% year over year on a constant currency basis, driven by double digit growth in paid content and advertising, offset by a single digit decline in IP adaptations. During the second quarter, MAU of 24.3 million increased 5.9% year-over-year, with MPU of 3.8 million representing 10.4% growth year over year. Our paying ratio of 15.5% increased 64 basis points year over year and Korea ARPU was up 14.8% year over year on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 6.7% year over year on a constant currency basis. While we saw triple digit growth in IP adaptations in Japan, it was more than offset by single digit declines in both paid content and advertising. All on a constant currency basis. Japan's MAU of 21.8 million declined 3.3% year over year but increased on a sequential basis. MPU of 2.1 million remained steady from the first quarter, but declined 9.5% year over year, and paying ratio of 9.4% was down 65 basis points year over year. Second quarter Japan ARPU of $24.40 grew 2.9% year over year on a constant currency basis. In Rest of World, we saw revenue growth of 11.1% year over year on a constant currency basis in the quarter, driven by single digit growth in paid content, and double digit growth in advertising and IP adaptations. Second quarter rest of world MAU of 111 million increased 0.2% year over year. While paying ratio of 1.5% was relatively flat year over year, MPU declined 0.6% to 1.7 million. However, we are pleased that rest of world ARPU of $6.90 increased 4.4% year over year on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter grew 1% year over year to $88.1 million. This resulted in a gross margin of 26%, which expanded almost a full percentage point compared to the prior year. Adjusted EBITDA for the quarter was $5.5 million compared to $9.7 million in the prior year quarter primarily due to increased marketing investment. This resulted in an adjusted EBITDA margin of 1.6% which compares to 2.8% in the prior year. On the cost side, total G and A expenses for the quarter were $65.4 million roughly in line with the prior year quarter. Interest income in the second quarter was $4.5 million compared to $4.9 million in the prior year, and other income was $2.5 million compared to other loss of $1.4 million in the prior year period. We had an income tax expense of $900 thousand in the quarter, compared to a benefit of $800 thousand in the prior year. Depreciation and amortization was $7.3 million in the second quarter, compared to $8.4 million in the prior year. We posted a net loss of $14.6 million driven by higher income tax expense, and marketing investment. This compares to a net loss of $3.9 million in the prior year quarter. As a result, Q2 GAAP loss per share was $0.11 compared to a loss per share of $0.03 in the prior year period. Adjusted EPS was $0.04 in the quarter, compared to an adjusted EPS of $0.07 in the prior year period. Our balance sheet remains strong with a cash balance of $583 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 would like to spend a few moments discussing our third quarter outlook For the third quarter of 26, we expect to deliver revenue growth in the range of 0.7% to 3.3% on a constant currency basis. This represents revenue in the range of $358 to $368 million based on current FX rates. We anticipate third quarter adjusted EBITDA in the range of $0 to $5 million representing an adjusted EBITDA margin in the range of 0% to 1.4%. We are excited about the new strategic direction for our company. We believe leaning further into AI initiatives on platform and investing to scale our off platform IP adaptations business will continue to strengthen our offering and improve engagement for the long term. We continue to build on Webtoon's position as the destination for storytelling, and we continue to expect we will return to double digit revenue growth by the end of the year. With that, I would like to turn it back to our operator to begin the Q&A session. Operator: Thank you. Ladies and gentlemen, this formally begins the question and answer session. And at this time, I would like to give you a reminder, if you would like to ask a question, please press star. We would also like to ask everyone to stick to 1 question and 1 follow-up so we can take as many questions as possible. Our first question comes from the line of Kunal Madhukar with Deutsche Bank. Please go ahead. Kunal Madhukar: 1 on engagement and another 1 on the financials. So on the engagement side, can you talk about how many minutes per day do your users actually use the platform? And, can you talk about how many minutes, the paying users use on the platform? And then I have a follow-up. David J. Lee: Thank you, Kunal. Great questions. So first, with regard to engagement, what is remarkable about this business is even as you look at the Gen Z users, for example, in North America, or the users in our original market here in Korea. You are seeing a very consistent consumer behavior on webcomics and webnovels. We say typically that it averages approximately 30 minutes per day. But the reality is for those who have habituated we know that number can be larger for the heavier users. what is interesting, though, is even for users that are new to this idea of a web comic, when you think about North America users, they are not traditional paper based comic fans. They are fans of digital first entertainment. And for them to flick a finger on their mobile device allows them instant gratification and yet they still spend that 30 minute average we have seen. With regard to our paid users, we have not released a separate engagement number for our paid users. But we know that the amount of time they spend and the access because of our micropayment structure to multiple episodes is the driver of our paid content engine. So this is why we tend to report ARPU because, for example, when you see in Korea where we have been for nearly 20 years and we have 50% market penetration, it is remarkable that you are seeing constant currency revenue growth of 20%, growth in NPU and MAU being a growth driver, and ARPU, which is up 5%. that is why we tend to focus more on ARPU as the measure of deep engagement because we see habit formation in markets that we have been in for some time. Kunal Madhukar: that is a that is a great segue to the question that I had, and which was on the marketing side. So the marketing expense delevered during the quarter, and you had delivered 3 quarters of, like, leverage on this line. Small leverage, but leverage. Where are you spending this money on? Is that is that in Korea? Is that in Japan? And, what kind of LTV-to-CAC are you are you targeting on this marketing spend? Thank you. David J. Lee: Another great question, Kunal. Thank you. So just as we think about marketing, as you know, spent $38 million in the quarter, approximately up 11%. And so the question is, where do we spend and where do we leverage On the 1 we have a very diversified portfolio regionally. So when you think about the business I just mentioned in Korea, right, our country of origin where we have the largest market penetration, that is driving 20% growth. There is, I would call it, a relatively efficient steady state of marketing because we already have strong penetration and we have a flow of great content consistently arriving in the market. But when you look at hypergrowth markets, as we see Japan will become again, you know, we are sub 20% penetration in Japan. And we are sub 10% penetration in rest of the world. You see that we deliberately chose to invest with a longer LTV time particularly in rest of world. And we are seeing it pay off. And while we do not disclose these numbers, we have in the past noted that this north of 3% growth in English WebComic MAU is also paired with significant growth in English WebComic increase in actually paid users as well. So we manage a diversified portfolio where we have efficient spend to mature markets like Korea. But we intentionally are investing on the forward curve because we think adoption will grow in places like North America. Operator: Thank Our next question comes from the line of Mark Stephen Mahaney with Evercore. Mark Mahaney: Okay. I want to ask 2 questions, please. The could you spend a little bit more time on Japan and what specifically you need to do to return Japan to growth? And then I am sorry if you if you had mentioned this earlier or not, Should we still count on and lean on an exit of double digit revenue growth, percent revenue growth in the fourth quarter? Thank you. David J. Lee: Thanks, Mark. First, to cover your second question, we absolutely are strongly committed to the double digit growth and believe we will deliver it in the most important ways on platform by the end of Q4. And to cover that, there are 2, components of that you see evident in the quarter. Korea, our most mature market growing 20% on a constant currency basis, and then double digit growth in advertising globally. I think it is up 11% on a constant currency basis. And importantly, within advertising, we typically do not disclose this, but I have to tell you, rest of world advertising on a constant currency basis is up north of 20%. Now the question relates to your first piece, which is Japan. There are 3 key priorities that we have been working on since the completion of our infrastructure project by the end of Q1. 1 is returning Japan's growth through stronger local content. greater engagement and distribution partnerships. And I think the evidence in the post quarter in these areas would include things like our partnership with Studio White, which we think is significant on content. Getting agreement with Kadakawa and featuring spin off of Ryo Mizuno's fantasy series Record of Lodoss War is an example of the type of local content initiatives you are going to see much more of. Our partnerships, for example, with Lawson, which we talked about in our materials, is an example of what is more to come. And you will remember, we elevated Yuki Chae, our chief product to implement the proven track record of growth established in Korea and Japan. And that includes things like CRM, and deeper engagement with our customers there. So we feel very good about our Q4 commitment. And we think Japan is a proven growth market that we are now taking the time to deliver and stabilize through the course of this year. Thank you, Dae. Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead. Eric Sheridan: Thanks so much for taking the question. I want to go a little bit deeper in the pivot around IP commercialization. Can you talk a little bit about what you saw in the from your IP adaptation strategy going backwards that made you want to take maybe a more proactive approach and make the type of investments you are making today. And on the go forward over the next 2 to 3 years, how should we think about the capital or OpEx intensity of standing up IP commercialization? And how much of it either upfront will be born through investment and whether you will earn more of the return profile on larger hits, on the outside. Of the investment cycle as some of these properties mature. Thanks so much. David J. Lee: Thank you, Eric. it is a great question. First, I want to distinguish between the generation of new IP on our platform And I think as you heard from JK, there is significant innovation, for example, in Korea where I mentioned this 20% growth on allowing users through what we call CutCut make to generate new storylines to continually grow on platform. BIAS-ON is yet another AI powered initiative where I want to distinguish between what we have on which has a strong growth story still, But candidly, you are right. You are seeing a much more deliberate aggressive bet for the IP that’s not just on our platform with regards to the announcement of Allied Games as an example, and the IP adaptation fund, First, the most important point here is that we start with a proven pipeline from day 1. Yongsoo Kim: Unlike former days that you and I had spent at Zynga and other places, we do not need to worry about what will generate the next hit because we are the source of the hit. In the case of Allied Games, you are seeing us deliberately partner with an icon in this world Remember that this Allied Games investment allows us to have, after 2 closings, significant majority control, but we want that organization to run independently. Founded by Kevin Hahn, who had created through Redice Studio things like solo leveling and omniscient reader, our proven IP is now being applied to a proven game maker. Because we think our creators deserve to have a format that is outside our platform. But as a shareholder, we know there is a whole world of deep engagement on gaming that we can enter with this significant strategic investment. The IP Adaptation Fund is a clever way to address your second question because while we leveraged partnership with another, in this case, Naver for capital, we do not have to consolidate for the vagaries of quarter to quarter changes in revenue. As we aggressively bet on commercializing our proven IP. And then the last is, I am not gonna cover it, but if you look in our earnings material, I mean, across every region, you are seeing pretty significant increases in IP in both partnership, You know, we are very proud to have announced with Marvel Toni's Girl, an original. That time, Deadpool fell into Webtoon and found the longest title of all time. Which is hard to say. And X Men Korea. So across the board, we feel that we are gonna be a very efficient provider to IP, not just on platform. But in partnership in formats off our platform. Our IP adaptations have consistently demonstrated the strength of Webtoons proven IP and built-in fandom. Particularly in areas like film, television, and animation. However, historically, our adaptation business has been based on licensing model. Which means that the success of those adaptations is not always translated directly into meaningful economics for WEBTOON. That is something we are looking to strengthen through strategic investments and partnerships. We are gradually expanding our ability to participate more directly in the commercialization and economic upside of our IP. The game pipeline currently under development at Allied Games Holdings is a great example of that strategy. These games are based on some of the biggest hit titles on Webtoon, And importantly, those are being adopted into anime. So we see a very compelling opportunity to build a repeatable flywheel. From a successful web comic to animation to game. Leveraging proven IP and established fandoms. Eric, 1 last comment. David J. Lee: What Yongsoo mentioned at the end, I think, is quite significant. We are not just able to provide games on hit WEBTOON IP. We are also in a multimedia way able to launch animation concurrently and in support of the games as well as our own platform IP. I think we are clearly in a position to do this. Which you will see us begin to do with this partnership and investment. Eric Sheridan: Great. Really appreciate the color from both of you. Thank you. Operator: Our next question comes from the line of Matthew Cost with Morgan Stanley. Please go ahead. Matthew Cost: Great. Thanks for taking the question. Maybe I can just follow-up on what was just discussed. So if we look at the mobile game industry, you know, in addition to, you know, low hit rates, and, you know, licensed IP not necessarily being a guarantee of success, a lot of the companies that are IP holders really have exited the business of making games themselves over the years. So I am wondering if you could reflect on sort of the synergies, the opportunities available by becoming the majority shareholder of Allied and the advantages that you see in combining the actual process of making the games with this sort of obviously proven and very successful IP engine on the Webtoon side. Thanks. Operator: Thank you, Matthew, for your question. David J. Lee: You know, I have lived firsthand the question you have asked. In my former days as CFO of Zynga. I think this is significantly advantaged. Let me explain why. First, we are leveraging a very strong partner We are not seeking to build ground up capability in gaming. That would take us a long effort. And a lot of the companies that you mentioned have taken the approach of trying to build that capability. We recognize what we are good at. We have a 120 thousand stories arriving every day. 27 million creators, and we know from data what can be a hit not just on our platform but off it. I think the second piece is by creating Allied Games Holdings, we are leveraging a partner that has extremely deep expertise geographically first, in Korea. I want to be clear. This is a global opportunity. We are not limiting ourselves to Korea. But the proven track record in creating adaptation on hits here in Korea that we know have global appeal we believe derisks this investment. And then later, Matthew, in our follow-up, we can go through the detail of the queue, only certain terms were redacted. But there is a very clever way that we have managed to the mutual benefit of both this partnership with Kevin as well as for ourselves. A structure that derisks those hits. Even though we feel that they are proven IP, we recognize that there is an uncertainty as to the size of the hits, and we can cover that financial risk management for both parties. But I think it is quite clever. And it includes forced puts on both sides that incents both of us to grow together. But also manages downside risk. Which we can talk about in our follow-up. Matthew Cost: Great. Thank you very much. Operator: Our next comes from the line of Dae Lee with JPMorgan. Please go ahead. Day Li: Great. Thanks for taking the questions. I have 2 follow ups as well. First, on the IP adaptation strategy development. If I am understanding this correctly, it sounds like the direct ownership model is for more of the newer IP adaptations, like video games and AI driven products. Is that right, or are you guys looking to do more own content on the video adaptation as well? Then I have a follow-up. David J. Lee: Thank you, Dae. Let me just make sure I understand the question. The question is whether we seek to have only a primarily owned model. For IP that we provide that is proven in the form of off platform video games, etcetera? I think that was your question. And whether or not we are also pursuing alternative models. Is that right? Got that. And if the ownership model is going to apply to video adaptations like live action video or comics? Okay. We have the benefit of both models. So you are clearly seeing in the case of our strategic investment in Allied Games, related to games, that this is, as you see, a 60% ownership stake across 2 closes. Where we have ownership of the venture, but we also leverage their independent capability to run that business well. As we acknowledge their specialized capability we lack. On the other hand, when you look at what we have done with Disney, when you look at what we have done with Warner Brothers animation, which we have discussed in the past, that is a different approach, for example, for IP. Where we are providing our creators an opportunity to have success outside our platform but we do not primarily own the distribution or the production engine associated with that IP. I think it is very capital efficient. But limits our upside. And then if you look at our work in Studio Ed, we have this Emmy nominated internal studio with great IP like Chicken Nugget and Bloodhound Season 2 and Gyeongseong Creature Season 2. So we are also very carefully looking at opportunities where in a derisk way, we are taking more of the ownership on IP in the case of here, future feature length film opportunities, either at theaters or at streamers. But we are very selective there. As we do not want to risk our balance sheet without understanding what could be ahead. And we have a pretty good track record in that limited or rare area with StudioN. Thank you for your question. Day Li: Okay. A follow-up if I can, On your double digit growth expectation for 4Q, could you remind us if that was for the full quarter or a run rate within the quarter? And could you talk about the cadence of how you expect to get there given the 3Q guide? in the single-digit percent range? Thank you. David J. Lee: Good question, Dae. The double digit growth was really about exiting Q4 to set up, we hope, for persistent growth on a go forward basis going forward into 2027 and beyond. It was not a guidance for the full quarter. Regard to how we get there, I think you start with what you can see in the current posted quarter results, this strong growth from Korea, I do not know how many quarters have gone by where I have been able to say that Korea drove our total MAU growth. And by the way, total MAU of 156 million flat to year ago is also a nice thing to say, but it was driven by our most mature market. And that 20% constant currency growth was very healthily reflected across not just their MAU, but also the MPU and the ARPU. So for me, Korea is clear. Advertising, as I mentioned, is also clear. 11% growth on a constant currency basis driven by both Korea, and I mentioned for the first time over 20% rest of world constant currency advertising growth in the quarter, I think you can model and extend. Japan is the is the piece. That we have already discussed. That I believe is what is going to provide us that on platform growth. And the timing of crossover IP. Remember, IP can be great as it was in Q3 of last year, But when you see my Q3 guidance, it does not particularly help me on the optics. That said, while there are quarterly variances, I feel really good. About the fundamental growth platform we have exiting this calendar year. Thank you. Operator: And at this time, we have no further. That concludes our Q&A session in today's conference call. We would like to thank you for your participation. You may now disconnect. Before you buy stock in Webtoon Entertainment, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Webtoon Entertainment wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. WEBTOON (WBTN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

WEBTOON’s second quarter results fell short of Wall Street’s expectations, prompting a negative market reaction. Management attributed the underperformance to softness in Japan and increased marketing investments, while highlighting bright spots in Korea’s paid content and advertising growth. CEO Junkoo Kim pointed to the company’s “strong progress on AI-powered features and expanding IP adaptations,” emphasizing efforts to deepen user engagement and broaden the platform’s global appeal. Is now the time to buy WBTN? Find out in our full research report (it’s free). Revenue: $338.5 million vs analyst estimates of $344.1 million (2.8% year-on-year decline, 1.6% miss) Adjusted EPS: $0.04 vs analyst estimates of $0.01 (significant beat) Adjusted EBITDA: $5.48 million vs analyst estimates of $3.95 million (1.6% margin, 38.8% beat) Revenue Guidance for Q3 CY2026 is $363 million at the midpoint, below analyst estimates of $385.4 million EBITDA guidance for Q3 CY2026 is $2.5 million at the midpoint, below analyst estimates of $8.62 million Operating Margin: -4.6%, down from -2.5% in the same quarter last year Monthly Active Users: 155 million, in line with the same quarter last year Market Capitalization: $1.12 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Kunal Madhukar (Deutsche Bank) asked about trends in user engagement and how marketing spend is allocated between regions. CFO David J. Lee explained that user engagement remains steady at about 30 minutes daily, and that marketing investments target underpenetrated areas like North America for long-term growth. Mark Mahaney (Evercore) pressed for specifics on returning Japan to growth. Lee identified three priorities: stronger local content partnerships, improved engagement, and distribution deals, and reiterated plans to stabilize the region through targeted initiatives. Eric Sheridan (Goldman Sachs) inquired about the financial and strategic rationale for increased direct investment in IP adaptation. Lee and President Yongsoo Kim described the move as a way to participate more directly in the economic upside of successful adaptations, while noting the need to manage risks and maintain capital efficiency. Matthew Cost (Morgan Stanley) questioned whether owning a majority stake in Allied Games Holdings provides a sustainable advantage, given industry challenges. Lee responded that leveraging a specialized partner and proven IP pipeline reduces risk compared to building gaming capabilities from scratch. Day Li (JPMorgan) sought clarification on the mix of ownership models for IP adaptations and how this strategy affects capital allocation. Lee explained the company uses a blend of owned and licensed models, balancing upside potential with risk management. Looking ahead, our team will be watching (1) the pace at which AI-powered features drive user engagement and conversion, (2) stabilization and growth in Japan following new content and partnership initiatives, and (3) the monetization trajectory of IP adaptations across games and animation. Expansion of global partnerships and successful execution of collaboration projects like the Disney deal will also be important indicators of progress. WEBTOON currently trades at $8.21, down from $9.45 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. WEBTOON Entertainment (WBTN) recently reported its second quarter 2026 results, with sales of US$338.47 million and a net loss of US$15.25 million, and also issued third quarter revenue guidance. See our latest analysis for WEBTOON Entertainment. Since those results and the new third quarter guidance, WEBTOON Entertainment's share price has eased to US$8.29, with the 30 day share price return down 20.6% and the 1 year total shareholder return down 44.7%. This points to fading momentum as investors reassess growth and profitability risks. If the recent weakness in WEBTOON Entertainment has you rethinking where growth might come from next, this is a good moment to scan 30 AI small caps. So is WEBTOON Entertainment’s recent slide mostly a verdict on weaker near term results, or has sentiment simply swung too far as guidance stays relatively steady? The valuation picture should help separate those two stories. With WEBTOON Entertainment last closing at $8.29 against a narrative fair value of $11.29, the gap rests on some ambitious long term monetization goals. Read the complete narrative. Read the complete narrative. Curious what has to happen for WEBTOON Entertainment to reach that fair value? The narrative leans on rising revenue, stronger margins, and a premium future earnings multiple. The exact mix driving that $11.29 figure is where the real story sits. Result: Fair Value of $11.29 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the narrative around WEBTOON Entertainment also hinges on reversing recent MAU declines and managing higher content and marketing spend, which could pressure margins if execution disappoints. Find out about the key risks to this WEBTOON Entertainment narrative. While the narrative fair value suggests WEBTOON Entertainment is undervalued, the sales multiple sends a cooler signal. The stock trades on a P/S of 0.8x, which is in line with its fair ratio of 0.8x, slightly below the US Interactive Media and Services average of 0.9x, yet above peer averages of 0.6x. That combination points to limited room for error on execution at current levels, so which story do you trust more? See what the numbers say about this price — find out in our valuation breakdown. With sentiment on WEBTOON Entertainment split between caution and optimism, this is a good time to review the data and decide quickly where you stand. To see what investors are finding encouraging, start with the 3 key rewards. If WEBTOON Entertainment has sharpened your focus, do not stop here. The right mix of quality, value, and resilience across other stocks could be just as important. Target reliable income streams by scanning for higher yielding companies through the 10 dividend fortresses. Spot potential mispricing opportunities early by reviewing undervalued companies highlighted in the 52 high quality undervalued stocks. Prioritise capital preservation and sleep easier at night by checking out 80 resilient stocks with low risk scores. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WBTN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in WEBTOON Entertainment Inc.? Here are five stocks we like better. Q2 revenue fell 2.8% year over year to $338.5 million on a reported basis, though it increased 5.2% at constant currency. Adjusted EBITDA was $5.5 million, while the net loss widened to $14.6 million due partly to higher taxes and increased marketing investment. Performance varied by region: Korea revenue grew 20% at constant currency, while rest-of-world revenue rose 11.1%; Japan revenue declined 6.7%. Global monthly active users increased just 0.5%, but monthly paying users rose 1.8%. WEBTOON is prioritizing AI-powered platform tools and IP adaptations, including AI translation, interactive character chats, a short-form animation tool, gaming investments and a $100 million adaptation fund with Naver. Management expects to return to double-digit revenue growth on an exit-rate basis by the end of Q4, while Q3 revenue guidance implies only 0.7%–3.3% constant-currency growth. WEBTOON Entertainment (NASDAQ:WBTN) reported second-quarter revenue of $338.5 million, down 2.8% from a year earlier on a reported basis but up 5.2% at constant currency, as growth across paid content, advertising and intellectual-property adaptations was partly offset by foreign-exchange effects. The company posted adjusted EBITDA of $5.5 million, above the high end of its guidance, compared with $9.7 million in the prior-year period. Net loss widened to $14.6 million from $3.9 million, which Chief Financial Officer David Lee attributed to higher income tax expense and increased marketing investment. → MarketBeat Week in Review – 08/03 - 08/07 Founder and Chief Executive Officer Junkoo Kim said the company is adopting a strategic direction centered on AI-powered platform features and a larger off-platform IP adaptation business. WEBTOON said it still expects to return to double-digit revenue growth on an exit-rate basis by the end of the fourth quarter, rather than for the full fourth quarter as a whole. Gross profit rose 1% year over year to $88.1 million, while gross margin expanded by nearly 100 basis points to 26%. Lee said cross-border content distribution and growth in higher-margin businesses, including advertising, should support profitability over time. → Quantum Earnings Week: Winners and Losers Are Finally Emerging However, increased marketing spending weighed on earnings. Marketing expense was approximately $38 million in the quarter, up about 11%, according to Lee. He said WEBTOON is maintaining relatively efficient marketing in Korea, its more mature market, while investing over a longer time horizon in markets including North America and other international regions where platform penetration remains lower. Adjusted EBITDA margin was 1.6%, down from 2.8% a year earlier. GAAP loss per share was $0.11, compared with a loss of $0.03 in the prior-year quarter. Adjusted earnings per share were $0.04, down from $0.07. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War The company ended the quarter with $583 million in cash and another $11 million in short-term deposits included in other current assets. Global monthly active users increased 0.5% year over year. App MAU declined 8%, while webcomic app MAU fell 1.5%. Monthly paying users, or MPU, increased 1.8%, supported by growth in Korea and partly offset by declines in Japan and the rest of the world. During the question-and-answer session, Lee said users average roughly 30 minutes per day on the platform, although heavier users may spend more time. The company does not separately disclose engagement figures for paying users, he said, and instead focuses on average revenue per user as an indicator of deeper engagement. Korea: Revenue increased 20% at constant currency, driven by double-digit paid-content and advertising growth. MAU rose 5.9% to 24.3 million, while MPU increased 10.4% to 3.8 million. ARPU climbed 14.8% at constant currency. Japan: Revenue declined 6.7% at constant currency. Triple-digit growth in IP adaptations was more than offset by single-digit declines in paid content and advertising. MAU fell 3.3% to 21.8 million, though it increased sequentially. MPU declined 9.5% year over year to 2.1 million. Rest of world: Revenue grew 11.1% at constant currency, supported by paid-content growth and double-digit growth in advertising and IP adaptations. MAU increased 0.2% to 110.7 million, while MPU declined 0.6% to 1.7 million. ARPU rose 4.4% to $6.90. Advertising revenue rose 11.5% at constant currency, led by Korea and the rest of the world, while Japan advertising declined. Lee said rest-of-world advertising revenue increased more than 20% at constant currency. Paid-content revenue increased 4.3% at constant currency, with MPU growth of 1.8% and ARPU growth of 2.5%. Kim highlighted several AI-related product initiatives intended to expand audience reach and deepen engagement. The company launched a beta auto-translation program in May for eligible English-language Canvas creators and plans to expand it to a broader group later this year. WEBTOON also introduced Bios in Korea, an AI interactive story-chat service that enables users to hold conversations with characters based on official worlds approved by creators. The company plans to expand Bios to Japan later this year. In Korea, WEBTOON launched Cuts Make, an AI-powered short-form animation tool that lets users create content based on official IP. Kim said new content rose 136% during its first week, while the number of creators using the tool grew 188% from the prior week. The company also said it expects to introduce an original series through its Disney collaboration later this year and remains positioned to launch a new digital comics platform with Disney before year-end. President Yongsoo Kim said WEBTOON made two strategic investments during the third quarter to expand its IP adaptation business. The company invested in RI Games Holdings, which it said will help it develop games based on established WEBTOON IP. WEBTOON and RI Games Holdings plan to develop and launch multiple games over the next four years. Lee said the investment will result in a 60% ownership stake across two closings, while RI Games Holdings will continue to operate independently. He said the partnership combines WEBTOON’s content pipeline and user-engagement data with the game developer’s specialized expertise. WEBTOON and Naver also formed a limited partnership in July to establish a $100 million IP adaptation fund. Yongsoo Kim said the fund is intended to help the company move beyond a licensing-only model, secure stronger IP rights and participate more directly in the economic upside of adaptations. The company said multiple WEBTOON adaptations performed strongly during the quarter, including three series that reached Netflix’s global Top 10. For the third quarter of 2026, WEBTOON projected constant-currency revenue growth of 0.7% to 3.3%, representing reported revenue of $358 million to $368 million based on current exchange rates. It forecast adjusted EBITDA of $0 million to $5 million, implying an adjusted EBITDA margin of 0% to 1.4%. Lee said the company’s expected return to double-digit growth by the end of the year depends on continued strength in Korea and advertising, a recovery in Japan through local content, engagement efforts and distribution partnerships, and the timing of IP-related revenue. Webtoon Entertainment Inc operates WEBTOON, a leading digital comics platform offering a diverse library of user-generated and professionally produced webcomics. The company enables creators around the world to publish serialized content in a vertical-scrolling format optimized for mobile and web consumption. Through its platform, readers can access thousands of titles across genres such as romance, fantasy, drama, and action, with both free-to-read episodes and advanced access options supported by microtransactions and advertising. Founded as part of Naver Corporation and launched internationally in 2014, Webtoon Entertainment has grown rapidly by fostering a direct connection between comic creators and global audiences. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "WEBTOON Entertainment Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is shifting from a pure licensing model to a direct ownership and investment strategy for IP adaptations to capture more economic upside from global hits. Performance in Korea, the company's most mature market, serves as a blueprint for growth with 20% constant currency revenue increases driven by high market penetration and habituated users. The company is integrating AI to transform webcomics from a one-way reading experience into interactive fandoms, specifically through character-based chat and fan-generated animation tools. Advertising is emerging as a high-margin growth engine, particularly in the 'Rest of World' segment which saw constant currency growth exceeding 20%. Management attributes the $14.6 million net loss in the second quarter to higher income tax expenses and increased marketing investments. Operational focus has shifted toward converting existing app users into paying users (MPU), which grew 1.8% despite broader MAU fluctuations. Management reiterated a firm commitment to returning to double-digit revenue growth by the end of Q4 2026, driven by platform stabilization in Japan and advertising momentum. The newly established $100 million IP adaptation fund with NAVER is designed to secure stronger IP rights and gain control over the adaptation slate without consolidating quarterly revenue volatility. The Allied Games Holdings investment is expected to yield multiple game launches over the next four years, timed to coincide with animation releases to maximize franchise impact. AI-powered auto-translation tools for English creators are expected to become a significant growth driver by expanding the content library available to non-English speakers later this year. Q3 guidance reflects a conservative outlook due to the timing of IP milestones, though management expects fundamental platform growth to accelerate toward year-end. Acquired a majority stake in Allied Games Holdings to bridge the gap between webcomics and immersive gaming, leveraging a proven pipeline of existing hits. Formed a limited partnership for a $100 million IP Adaptation Fund to evolve beyond a licensing-only model and participate in production economics. Announced a digital comics platform collaboration with Disney to be launched before the end of the year, alongside a separate original series announcement with Marvel., aimed at expanding the English-language audience. Identified Japan as a key recovery area, focusing on local content partnerships and infrastructure improvements to reverse recent single-digit declines. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Users average approximately 30 minutes per day on the platform, with heavy users significantly exceeding this average. Management views ARPU as the primary measure of deep engagement and habit formation, particularly in mature markets like Korea where penetration is at 50%. Marketing investment is bifurcated: mature markets like Korea operate at a steady, efficient state, while Japan and North America receive aggressive investment for long-term LTV. English Webtoon App MAU growth of 3.7% was cited as evidence that intentional marketing spend in the 'Rest of World' segment is yielding results. The investment allows Webtoon to leverage specialized gaming expertise they lack internally while maintaining control over their proven IP pipeline. The deal structure includes 'forced puts' on both sides to align incentives for growth while managing the financial downside risk of individual game titles. Growth will be supported by the 'crossover' of IP milestones and the stabilization of the Japanese market following infrastructure updates. Management clarified that the double-digit target is an exit rate for the year rather than a full-quarter guidance figure for Q4.

Webtoon Entertainment (WBTN) came out with quarterly earnings of $0.04 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +100.00%. A quarter ago, it was expected that this online storytelling platform for comics and cartoons would post earnings of $0.01 per share when it actually produced earnings of $0.07, delivering a surprise of +600%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Webtoon, which belongs to the Zacks Internet - Content industry, posted revenues of $338.47 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.11%. This compares to year-ago revenues of $348.27 million. The company has not been able to beat consensus revenue estimates over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Webtoon shares have lost about 31.5% since the beginning of the year versus the S&P 500's gain of 13.3%. While Webtoon has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Webtoon was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.06 on $373.2 million in revenues for the coming quarter and $0.22 on $1.39 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Content is currently in the top 42% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the broader Zacks Computer and Technology sector, SAIC (SAIC), is yet to report results for the quarter ended July 2026. This information technology company is expected to post quarterly earnings of $2.25 per share in its upcoming report, which represents a year-over-year change of -38%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. SAIC's revenues are expected to be $1.75 billion, down 1.2% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WEBTOON Entertainment Inc. (WBTN) : Free Stock Analysis Report Science Applications International Corporation (SAIC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Webtoon Entertainment (WBTN) reported revenue of $338.47 million, down 2.8% over the same period last year. EPS came in at $0.04, compared to $0.07 in the year-ago quarter. The reported revenue represents a surprise of -0.11% over the Zacks Consensus Estimate of $338.82 million. With the consensus EPS estimate being $0.02, the EPS surprise was +100%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Webtoon performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Monthly Active Users (MAU): 156.9 million compared to the 149.05 million average estimate based on three analysts. Monthly Active Users (MAU) - Japan: 21.8 million versus 21.93 million estimated by two analysts on average. Monthly Active Users (MAU) - Rest of World: 110.7 million versus 102.22 million estimated by two analysts on average. Monthly Paying Users (MPU) - Korea: 3.8 million versus the two-analyst average estimate of 3.5 million. Monthly Paying Users (MPU) - Japan: 2.1 million versus the two-analyst average estimate of 2.27 million. Monthly Paying Users (MPU): 7.5 million compared to the 7.51 million average estimate based on two analysts. Paying Ratio - Korea: 15.5% versus the two-analyst average estimate of 15.7%. Paying Ratio - Japan: 9.4% versus the two-analyst average estimate of 10.4%. Paying Ratio - Rest of World: 1.5% compared to the 1.7% average estimate based on two analysts. Revenue- Paid Content Revenue: $263.94 million versus $265.34 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a -4% change. Revenue- IP Adaptations Revenue: $27.4 million compared to the $30.09 million average estimate based on two analysts. The reported number represents a change of -2.6% year over year. Revenue- Advertising Revenue: $47.12 million versus $43.03 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +4.2% change. View all Key Company Metrics for Webtoon here>>> Shares of Webtoon have returned -22.6% over the past month versus the Zacks S&P 500 composite's +3.4% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WEBTOON Entertainment Inc. (WBTN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Delivered Revenue Within Guidance Range and Adjusted EBITDA Above the High-End of Guidance Range Second Quarter Revenue Decline of 2.8%; Revenue Growth on a Constant Currency Basis of 5.2% Net Loss of $14.6 million; Adjusted EBITDA of $5.5 million Strong Balance Sheet With Cash and Cash Equivalents of Approximately $583.1 million and No Debt LOS ANGELES, Aug. 10, 2026 (GLOBE NEWSWIRE) -- WEBTOON Entertainment Inc. (Nasdaq: WBTN) (“WEBTOON Entertainment” or “the Company”), a leading global entertainment company and home to some of the world’s largest storytelling platforms, today announced results for its second quarter ended June 30, 2026. More information about these results can be found in the Company’s shareholder letter on the investor relations section of its website. Second Quarter 2026 Highlights (vs. Second Quarter 2025) Total revenue of $338.5 million declined 2.8%, driven by declines in Paid Content and IP Adaptations, partially offset by growth in Advertising. Revenue on a constant currency basis was $366.4 million, growing 5.2%, driven by growth in all three revenue streams, Paid Content and Advertising and IP Adaptations. Net Loss was $14.6 million, compared to $3.9 million in the prior year, driven primarily by increased marketing investment. Adjusted EBITDA was $5.5 million, compared to $9.7 million in the prior year​, ​due to increased marketing investment. Adjusted EBITDA Margin was 1.6%, compared to 2.8% in the prior year. Diluted loss per share was $0.11, compared to diluted loss per share of $0.03 in the prior year. Adjusted Earnings Per Share was $0.04, compared to $0.07 in the prior year. Cash and cash equivalents of approximately $583.1 million plus another $11.2 million of short-term deposits included in prepaid expenses and other current assets. Cash outflow from operations was $6.3 million, compared to a cash inflow of $5.7 million in the prior year. Junkoo Kim, Founder and CEO, said, “We delivered another quarter of solid financial performance, with revenue of $338.5 million, in line with our expectations, and an Adjusted EBITDA of $5.5 million, exceeding the high-end of our previous guidance range.” Kim continued, “This quarter, we advanced two strategic priorities that further strengthen our flywheel. We are leveraging AI to create more interactive experiences through innovations like byUs, our interactive story chat service, and our AI-Powered Auto Translation program, both of which are driving deeper engagement across our platform. We also continue to experiment with AI-powered initiatives such as Short Animation. At the same time, we are evolving our IP strategy by increasing direct investment and ownership, positioning us to capture more of the long-term value our ecosystem creates.” Strategic Investment in RI Games Holdings Inc. Today, WEBTOON Entertainment also issued a press release announcing entry into a definitive agreement to make a strategic investment in RI Games Holdings Inc., giving the Company a dedicated pipeline to develop games from hit webcomics with established, built-in global fandoms. The transaction is expected to support WEBTOON Entertainment's long-term IP strategy by extending successful stories across additional entertainment formats. Third Quarter 2026 Outlook For the third quarter 2026, the Company expects: Revenue growth on a constant currency basis in the range of 0.7%-3.3%. This represents revenue in the range of $358-$368 million, based on current FX rates. Adjusted EBITDA in the range of $0.0-$5.0 million, representing an Adjusted EBITDA Margin in the range of 0.0%-1.4%. Conference Call & Webcast Details As previously disclosed, the Company will host a webcast and conference call on August 10, 2026, at 5:30 p.m. Eastern Time, to discuss the Company’s financial results for its second quarter ended June 30, 2026. A live webcast of the conference call will be available online at https://ir.webtoon.com/. For those unable to listen to the live webcast, an archived version will be available at the same location for up to one year. About WEBTOON Entertainment Inc. WEBTOON Entertainment is a leading global entertainment company and home to some of the world's largest storytelling platforms. As the global leader and pioneer of the mobile webcomic format, WEBTOON Entertainment has transformed comics and visual storytelling for fans and creators. With its CANVAS UGC platform empowering anyone to become a creator, and a growing roster of superstar WEBTOON Originals creators and series, WEBTOON Entertainment’s passionate fandoms are the new face of pop culture. WEBTOON Entertainment adaptations are available on Netflix, Prime Video, Crunchyroll, and other screens around the world, and the company’s content partners have included Warner Bros. Animation, Discord, HYBE, and Duolingo, among many others. With approximately 155 million monthly active users, WEBTOON Entertainment’s IP & Creator Ecosystem of aligned brands and platforms include WEBTOON, Wattpad--the world’s leading webnovel platform--WEBTOON Productions, Studio N, Studio LICO, WEBTOON Unscrolled, LINE MANGA, and eBookJapan, among others. Forward-Looking Statements This release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and include, without limitation, statements or guidance regarding or relating to our future financial position, results of operations and growth, plans and objectives for future capabilities, ability to attract users in both our core and underpenetrated geographies, ability to grow Paid Content, Advertising and IP Adaptations businesses, the impact of our product development initiatives, including our use of AI, our financial condition and liquidity, and other statements concerning the success of our business and strategies. Forward-looking statements may be identified by the use of words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements speak only as of the date on which they are made. They are not assurances of future performance and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Although we believe that the forward-looking statements contained in this release are based on reasonable assumptions, you should be aware that many factors could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to: weakness in the economy, market trends, uncertainty and other conditions in the markets in which we operate, and other geopolitical or macroeconomic factors beyond our control; inability to attract, empower, properly support or incentivize our creators; inability to retain, attract and engage with our users; inability to anticipate, understand and appropriately respond to market trends and changing user preferences; failure to retain or increase our paying users; failure to effectively operate in highly competitive markets; inability to innovate and expand our Advertising business; inability to continue to diversify our monetization strategy or to increase revenues from IP Adaptations; failure to realize returns on investments made toward entering new markets and lines of business; failure to control our content-related costs; exposure to significant legal proceedings and regulatory investigations which may result in significant expenses, fines and reputational damage; failure to provide a safe online environment for children; exposure to claims that we violated third parties’ intellectual property rights; failure to obtain, maintain, protect or enforce our proprietary and intellectual property rights; exposure to liability and adverse effects from the use of AI; rise of conflicts of interests with NAVER Corporation, our majority stockholder; and other risks and uncertainties set forth under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, and in other filings we make with the SEC in the future. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with our legal or regulatory obligations, we undertake no obligations to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Non-GAAP Financial Measures & Definitions This release contains certain financial information that is not presented in conformity with U.S. GAAP. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings Per Share (Adjusted EPS), revenue on a constant currency basis and revenue growth on a constant currency basis. We believe that these non-GAAP measures provide users of the Company’s financial information with additional meaningful information to assist in understanding financial results and assessing the Company’s performance from period to period. Management believes these measures are important indicators of operations because they exclude items that may not be indicative of our core operating results and provide a better baseline for analyzing trends in our underlying businesses, and they are consistent with how business performance is planned, reported and assessed internally by management and the board of directors of the Company. Our non-GAAP financial measures should not be considered in isolation, or as substitutes for, financial information prepared in accordance with GAAP. Non-GAAP measures have limitations as they do not reflect all the amounts associated with our results of operations as determined in accordance with GAAP, and should only be used to evaluate our results of operations in conjunction with the corresponding or the most directly comparable GAAP measures. We strongly encourage investors and shareholders to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation is provided at the end of this release for each historical non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. We encourage investors and shareholders to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures, and not to rely on any single financial measure to evaluate our business. We do not provide a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures on a forward-looking basis because we are unable to predict with reasonable certainty or without unreasonable effort non-recurring items that may arise in the future. Adjusted EBITDA: We define Adjusted EBITDA as net income (loss), adjusted to remove the impact of interest income, interest expense, income tax expense (benefit) and depreciation and amortization, with further adjustments to eliminate the effects of loss on equity method investments, effect of applying the valuation method of fair value through profit or loss, impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. Adjusted Earnings Per Share (Adjusted EPS): We define Adjusted Earnings Per Share as Earnings Per Share before interest expense, interest income, income tax expense (benefit) and depreciation and amortization with further adjustments to eliminate the effects of loss on equity method investments, effect of applying the valuation method of fair value through profit or loss, impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. We calculate Adjusted Earnings Per Share by making the adjustments described herein from Net Income (Loss) and dividing by basic and diluted weighted average shares of common stock outstanding, respectively, for the applicable period. Revenue on a Constant Currency Basis: We define revenue on a constant currency basis as revenue adjusted to remove the impact of foreign currency rate fluctuations and the impact of deconsolidated and transferred operations. We calculate revenue on a constant currency basis in a given period by applying the average currency exchange rates in the comparable period of the prior year to the local currency revenue in the current period. We calculate revenue on a constant currency basis in each of our revenue streams – Paid Content, Advertising and IP Adaptations – using the same method as laid out herein. Revenue Growth on a Constant Currency Basis: We define revenue growth on a constant currency basis as period-over-period growth rates of revenue, adjusted to remove the impact of foreign currency rate fluctuations and the impact of deconsolidated and transferred operations. We calculate revenue growth (as a percentage) on a constant currency basis by determining the increase in current period revenue over prior period revenue, where current period foreign currency revenue is translated using prior period average currency exchange rates. Includes amounts due from related parties of $59,283 and $55,156 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due from related parties of $4,881 and $4,730 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due from related parties of $33,529 and $33,913 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due to related parties of $20,010 and $18,765 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due to related parties of $5,898 and $6,849 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due to related parties of $4,866 and $5,221 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts due to related parties of $2,714 and $5,371 as of June 30, 2026, and December 31, 2025, respectively. Includes amounts earned from related parties of $24,551 and $18,278 for the three months ended June 30, 2026, and June 30, 2025, respectively, and $42,794 and $35,991 for the six months ended June 30, 2026, and June 30, 2025, respectively. Includes amounts incurred from related parties of $28,259 and $28,399 for the three months ended June 30, 2026, and June 30, 2025, respectively, and $55,330 and $56,530 for the six months ended June 30, 2026, and June 30, 2025, respectively. Includes amounts incurred from related parties of $613 and $(2,870) for the three months ended June 30, 2026, and June 30, 2025, respectively, and $(1,116) and $(5,451) for the six months ended June 30, 2026, and June 30, 2025, respectively. Includes amounts incurred from related parties of $8,031 and $7,023 for the three months ended June 30, 2026, and June 30, 2025, respectively, and $15,848 and $13,936 for the six months ended June 30, 2026, and June 30, 2025, respectively. Includes amounts earned from related parties of $384 and $424 for the three months ended June 30, 2026, and June 30, 2025, respectively, and $792 and $835 for the six months ended June 30, 2026, and June 30, 2025, respectively. The following table presents a reconciliation of revenue to revenue on a constant currency basis, and ARPPU to ARPPU on a constant currency basis, respectively, for each of the periods presented. 1 ARPPU is calculated by taking Paid Content revenue and dividing it by the number of monthly paid users ("MPU") for such month, averaged over each month in the given period. ARPPU on a constant currency basis is calculated by dividing Paid Content revenue on a constant currency basis by the number of MPU for such month, averaged over each month in the given period. Where each metric is country specific, the numerator is Paid Content revenue on a constant currency basis by country and the denominator is users by country. The following table presents a reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods presented. (1) Represents non-cash stock-based compensation expense related to WEBTOON’s equity incentive plan and stock-based compensation plans of NAVER Corp. and Munpia Inc., including amounts which are cash settled.(2) Represents specific costs that are discrete to the periods presented and are not indicative of our core ongoing operations. For the three months ended June 30, 2026, these amounts were comprised of (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business; (ii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business; and (iii) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the six months ended June 30, 2026, these amounts were comprised of (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business, (ii) one-time advisory fees related to the purchase agreement that do not qualify as equity issuance costs; (iii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business; and (iv) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the three and six months ended June 30, 2025, these amounts included (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business; and (ii) professional fees associated with the initial implementation of Sarbanes-Oxley compliance and IPO readiness.(3) Represents unrealized net (gain) loss of financial assets measured at FVPL, which include the Company's equity investments.(4) Represents our proportionate share of recognized losses associated with our investments accounted for using the equity method.(5) Totals may not foot due to rounding. (6) The numerator for Adjusted EPS is calculated by adjusting Net Income (Loss) by the same items in the Net Income (Loss) to Adjusted EBITDA reconciliation. The denominator for computing Adjusted EPS is the same as that used for Basic and Diluted EPS. Contact Information Investor RelationsSoohwan Kim, [email protected] Corporate CommunicationsKiel [email protected]

Digital storytelling platform WEBTOON (NASDAQ:WBTN) fell short of the market’s revenue expectations in Q2 CY2026, with sales falling 2.8% year on year to $338.5 million. Next quarter’s revenue guidance of $363 million underwhelmed, coming in 5.8% below analysts’ estimates. Its non-GAAP profit of $0.04 per share was significantly above analysts’ consensus estimates. Is now the time to buy WEBTOON? Find out in our full research report. Revenue: $338.5 million vs analyst estimates of $344.1 million (2.8% year-on-year decline, 1.6% miss) Adjusted EPS: $0.04 vs analyst estimates of $0.01 (significant beat) Adjusted EBITDA: $5.48 million vs analyst estimates of $3.95 million (1.6% margin, 38.8% beat) Revenue Guidance for Q3 CY2026 is $363 million at the midpoint, below analyst estimates of $385.4 million EBITDA guidance for Q3 CY2026 is $2.5 million at the midpoint, below analyst estimates of $8.62 million Operating Margin: -4.6%, down from -2.5% in the same quarter last year Free Cash Flow was -$5.00 million, down from $1.92 million in the same quarter last year Monthly Active Users: 155 million, in line with the same quarter last year Market Capitalization: $1.21 billion Junkoo Kim, Founder and CEO, said, “We delivered another quarter of solid financial performance, with revenue of $338.5 million, in line with our expectations, and an Adjusted EBITDA of $5.5 million, exceeding the high-end of our previous guidance range.” Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ:WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes. A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. With $1.37 billion in revenue over the past 12 months, WEBTOON is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base. As you can see below, WEBTOON grew its sales at a decent 6% compounded annual growth rate over the last four years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within business services, a stretched historical view may miss recent innovations or disruptive industry trends. WEBTOON’s recent performance shows its demand has slowed as its annualized revenue growth of 2.6% over the last two years was below its four-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. This quarter, WEBTOON missed Wall Street’s estimates and reported a rather uninspiring 2.8% year-on-year revenue decline, generating $338.5 million of revenue. Company management is currently guiding for a 4% year-on-year decline in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 7% over the next 12 months, an improvement versus the last two years. This projection is admirable and suggests its newer products and services will fuel better top-line performance. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. WEBTOON’s high expenses have contributed to an average adjusted operating margin of negative 3.1% over the last five years. Unprofitable business services companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle. On the plus side, WEBTOON’s adjusted operating margin rose by 3.4 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability. In Q2, WEBTOON generated a negative 1% adjusted operating margin. If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills. WEBTOON broke even from a free cash flow perspective over the last four years, giving the company limited opportunities to return capital to shareholders. Taking a step back, an encouraging sign is that WEBTOON’s margin expanded by 5.3 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. WEBTOON burned through $5.00 million of cash in Q2, equivalent to a negative 1.5% margin. The company’s cash burn increased meaningfully year on year while its cash conversion fell 2 percentage points. This relationship shows WEBTOON’s management team spent more cash this quarter but was less efficient at generating sales with that cash. It was good to see WEBTOON beat analysts’ EPS expectations this quarter. On the other hand, its revenue guidance for next quarter missed and its revenue fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 3.3% to $9.13 immediately following the results. WEBTOON may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.