Webtoon Entertainment Inc.

08/13/2025 | Press release | Distributed by Public on 08/13/2025 14:36

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
This Management's Discussion and Analysis of Financial Condition and Results of Operation should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes to those statements included in this Report and our audited Consolidated Financial Statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the year ended December 31, 2024, included in the Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in this Report.
Overview
WEBTOON is a global storytelling platform where a vibrant community of creators and users discover, create and share new content. We have pioneered a cultural movement by revolutionizing the storytelling format and democratizing content creation and publication. WEBTOON empowers creators, by enabling them to participate economically in their own creation, and users, by offering an endless library of content.
Contenton our platform tells stories, across formats. On our platform, creators tell long-form stories through serialized narratives in the form of short-form, bite-sized episodes, creating a habitual behavior with an engaged user base. These stories are primarily told in two ways-web-comics, a graphical comic-like medium, and web-novels, which are text-based stories. The web-comic medium tells stories using a continuous vertical-scroll format that is easily read on mobile devices. We are able to extend the reach, impact and monetization of our content by adapting it into other media formats such as film, streaming series, games, merchandise and print books.
Creatorspower our content engine by authoring immersive visual stories, developing imaginative new characters and inspiring fandoms. Our creator base ranges from the individual enthusiast with a love of storytelling to the professional author building a brand and an enterprise on our platform. WEBTOON provides creators with an opportunity to monetize their creativity through various means, including Paid Content, advertising and IP Adaptations.
Userscome to our platform to discover and consume engaging and immersive content. Our creators tell stories that are relatable to global audiences, attracting users across age groups, geographies and genders. Our primary user base is Gen Z and millennials. WEBTOON helps fans discover engaging content across genres, with fresh, weekly releases.
Communityreinforces the benefits to creators and users on our platform. We help users and creators build relationships and engage with one another over content. As users, or "fans," often develop a personal connection to the titles on our platform, they relish the direct engagement with creators through both our comments section at the end of each episode and the "Creator Profile" section, where creators can post messages and users can respond directly. Fans also appreciate the ability to potentially influence how stories unfold and how their favorite characters evolve, as creators may choose to incorporate fans' feedback. This enables a positive feedback loop for content creation and user engagement. This community engagement powers a flywheel of user engagement and creator readership, which in turn drives WEBTOON's success.
Our platform continuously empowers and incentivizes creators to drive creation of unique long-form stories. These stories are enjoyed on our platform by a growing base of loyal fans and importantly, enable us to expand the audience base off-platform over time. This continuous cycle results in successful and durable franchises within our ever-growing content library, empowering us with a multitude of monetization opportunities through IP Adaptations.
Key Business Metrics
We believe our performance is dependent upon many factors, including the key metrics described below that we track and review to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
Our offerings include WEBTOON, LINE MANGA, NAVER SERIES, eBookJapan, Munpia and Wattpad. We manage our business by tracking several operating metrics, including: monthly active users, or MAU; monthly paying users, or MPU; and Paid Content Average Revenue per Paying User, or ARPPU. For a definition of these operating metrics, please see the "Glossary." As a management team, we believe each of these operating metrics provides useful information to investors and others.
Our year-over-year activity and quarter-over-quarter growth trends may fluctuate subject to various internal and external factors including (i) seasonality of our business where we see increased activity during holiday season, (ii) magnitude of our marketing campaigns, (iii) hiatus/return of creators and key titles on our platforms, (iv) TV shows, films, and/or gaming release based on our content as part of our IP Adaptation business, (v) our strategic decision to direct traffic
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to our mobile application may lead to fluctuations in trends as web users who view in both mediums may choose to continue to consume on our mobile application only and (vi) external factors impacting the global economy, our industry and our company.
Geographic Tracking
We review each metric by geography where our products are available and accessible. We categorize geographies into Korea, Japan, and Rest of World ("ROW") based on the location of our users:
•Koreaincludes WEBTOON Korea, NAVER SERIES, and Munpia where our content is in Korean and targeted at Korean speaking users.
•Japanincludes LINE MANGA and eBookJapan where our content is in Japanese and targeted at Japanese speaking users.
•Rest of Worldincludes WEBTOON in all other languages including English, Spanish, and more, as well as Wattpad, where our content is targeted at global users outside of Korea and Japan.
In particular, as a proxy for tracking our performance in North America, which we consider to be a key market, amongst Rest of World, we track users who consume WEBTOON offered in English in the U.S. and Canada based on such user's Internet Protocol (IP) addresses (collectively "WEBTOON North America"). For clarity, the following cases are not counted as part of WEBTOON North America but counted as part of Rest of World: (i) where users consume non-English (e.g., Spanish) WEBTOON content while they are physically based in North America and (ii) where users consume non-WEBTOON products (e.g., Wattpad) while they are physically based in North America.
Our methodology of geographic tracking may include an immaterial number of users not geographically located within the above segmentation. For instance, where users consume WEBTOON Korea content while they are physically based outside of Korea, the users will be counted as part of Korea. While we believe that these metrics are reasonable estimates of our user base for the applicable period of measurement, and that the methodologies we employ and update from time-to-time to create these metrics are reasonable bases to identify trends in user behavior, the preparation of each of such metrics involves the use of estimates, judgments and assumptions, and our metrics may be materially affected if such estimates, judgments or good faith assumptions prove to be inaccurate. See "Risk Factors-Risks Related to Our Business, Industry and Operations-Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could adversely affect our business and reputation."
Trends in Monthly Active Users (MAU)
We define MAU as users based on each device logged in and each offering accessed from a single device and may include the same individual user multiple times if the user is logged in from multiple devices or if the user accesses multiple offerings from one device.
We track MAU as an indicator of the scale of our active user base, user engagement and adoption. We also break out MAU by geographic region to help us understand the global engagement.
Starting January 1, 2025, NAVER adjusted their methodology for measuring MAU in Korea. Korea is the only region where NAVER serves as a source of our MAU data. NAVER adjusted their methodology for identifying and counting web users for all of their services. This change only affected MAU in Korea. All the other regions are continuing to report their metrics in the same way as previous quarters. A table reconciling previously reported MAU in Korea for fiscal quarters in 2024 to MAU in Korea using the new methodology was provided in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 14, 2025. This Report compares MAU in Korea to the prior period applying the new methodology for all reported periods.
As of the quarter ended June 30, 2025, our global MAU was approximately 156.1 million. The global MAU decreased by approximately 7.6% compared to June 30, 2024, primarily due to declines of MAU in Korea and ROW.
•In Korea, our MAU was approximately 23.0 million as of the quarter ended June 30, 2025, compared to MAU of 25.8 million as of the same quarter of 2024.
•In Japan, our MAU have reached 22.6 million as of the quarter ended June 30, 2025, compared to MAU of 22.0 million as of the same quarter of 2024, largely attributable to growth in eBookJapan.
•In Rest of World, our MAU was 110.5 million as of the quarter ended June 30, 2025, which declined from 121.1 million as of the comparable prior year period. The decrease was primarily attributable to government bans on Wattpad in certain countries, as well as the impact of a Wattpad security upgrade which unintentionally affected search engine indexing, causing a dip in search traffic.
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Trends in Monthly Paying Users (MPU)
We define MPU as users who have paid to access Paid Content in the applicable calendar month, averaged over each month in the given period. We define paying ratio as the ratio of MPU divided by MAU for the respective periods.
We view MPU and paying ratio to be indicators of the strength of our monetization.
As of the quarter ended June 30, 2025, our global MPU was 7.4 million with a paying ratio of 4.7%, which is an increase of 0.1% compared to the paying ratio for the quarter ended June 30, 2024, of 4.6%. By geographic regions, Korea, Japan, and Rest of World contributed 46.4%, 30.8% and 22.8% of global MPU, respectively.
•In Korea, our MPU have decreased to around 3.4 million with a paying ratio of 14.9%, compared to MPU of 3.7 million and a paying ratio of 14.5% as of the quarter ended June 30, 2024. While our MPU decreased from the comparable quarter of 2024, our paying ratio increased approximately 0.4% from the comparable quarter of 2024.
•In Japan, our MPU have reached 2.3 million with a paying ratio of 10.0%, compared to MPU of 2.2 million and a paying ratio of 10.2% as of the quarter ended June 30, 2024.
•In Rest of World, our MPU is 1.7 million with a paying ratio of 1.5% compared to MPU of 1.8 million and a paying ratio of 1.5% in the prior year's comparable quarter.
Trends in Paid Content Average Revenue per Paying User (ARPPU)
We define ARPPU as average Paid Content revenue in a given month divided by the number of MPU for such month, averaged over each month in the given period.
We view ARPPU to be an indicator of both the strength of engagement and Paid Content monetization on our platform. Units are in U.S. dollars.
Engagement is a key aspect to drive our monetization. Our ARPPU has increased over time as our users explored more titles and purchased more episodes behind our paywall. For the quarter ended June 30, 2025, our ARPPU has increased to $12.4, or 11.1% growth compared to the same quarter of 2024. The growth in ARPPU was driven primarily by our strategic effort to shift users from web to the app, as app users are more engaged and present better monetization opportunities.
•In Korea, our ARPPU for the quarter ended June 30, 2025 has increased to $7.9, or 5.0% increase compared to the same quarter of 2024. On a constant currency basis, our ARPPU increased by 8.3%.
•In Japan, our ARPPU for the quarter ended June 30, 2025 has increased to $23.7, or 11.8% increase compared to the same quarter of 2024.
•In Rest of World, our ARPPU for the quarter ended June 30, 2025 has increased to $6.6, or 2.2% growth compared to the same quarter of 2024.
Seasonality
Historically, while the magnitude and timing varies across regions, we experience higher levels of user engagement and monetization in the third quarter of the calendar year primarily as a result of increased use of our platform during the global vacation and holiday schedules of our users. In addition, many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing. As we continue to diversify our sources of revenue, and in particular increase revenue from advertising, the seasonal impacts may be more pronounced in the fourth quarter in the future or different altogether.
Components of Results of Operations
Revenue
Our revenue is derived from three distinct revenue streams: Paid Content, Advertising and IP Adaptations.
Our Paid Content revenue represents revenue generated from the sale of content on our platform to users. Advertising revenue represents revenue earned for the display of advertisements on our platform, including in-stream placement within content. Our IP Adaptations revenue comprises of revenue generated from adaptations of certain content on our offerings into other media formats such as films, streaming series, games and merchandise, which may take the form of fixed licensing fees or other arrangements where we participate in the upside of such productions, or sales of
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merchandise. See Note 2. Revenue in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Cost of Revenue
Cost of revenue consists of Paid Content creator revenue shared with creators, app store fees and other variable costs. Creator revenue share includes commissions payable to creators or publishers based on revenue generated from Paid Content. App store fees include platform fees payable to companies that provide users with the ability to download the mobile application through application stores and make purchases directly through such applications (such as Google and Apple) and certain other payment-related costs. These expenses are lower in Korea where more people buy Coins through our website as opposed to purchases made through mobile applications. Other variable costs include, among other things, costs directly associated with our IP Adaptations business, including payroll and related personal expenses, amortization and production costs.
Marketing
Marketing expenses consist of expenses incurred for the promotion of our brand, costs associated with user acquisition and costs associated with loyalty marketing campaigns where we give away free Coins. Marketing expenses also include compensation costs related to sales and marketing personnel.
General and Administrative Expenses
General and administrative expenses consist of all our operating costs, excluding cost of revenue and marketing, and include costs related to operating and maintaining our platform, general corporate function costs, stock-based compensation expense (benefit) and depreciation and amortization of non-operating assets. See Note 7.Stock-Based Compensationin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Interest Income
Interest income primarily consists of interest earned on our short-term, highly liquid investments with original maturities of three months or less, which are mainly comprised of bank deposits, and interest income from loan receivables.
Interest Expense
Interest expense primarily consists of interest related to our outstanding debt obligations, including both short-term borrowings and long-term debt.
Income (Loss) on Equity Method Investment, Net
Income (loss) on equity method investment, net, includes recognized income (loss) associated with our investments accounted for using the equity method. See Note 14. Equity Method Investmentsin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Other Income (Loss), Net
Other income, net, primarily consists of gains or losses on valuation of debt and equity securities, net, income or loss on foreign currency, net, retirement benefit, net, and other non-operating income or loss, net.
Income Tax Expense
Income tax expense primarily includes income taxes in certain federal, state, local, and foreign jurisdictions in which we conduct our business, primarily in the U.S., Korea, Japan and Canada. Foreign jurisdictions have different statutory tax rates from those in the U.S. Additionally, certain of our foreign earnings may also be taxable in the U.S. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of tax credits, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. See Note 8. Income Taxes in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Results of Operations
Condensed Consolidated Statements of Operations and Comprehensive Loss
The following table sets forth our condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, respectively. We have derived this data from our unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The information for each of the periods presented has been prepared on the same basis as our audited Consolidated Financial Statements and, in the opinion of management, reflects all adjustments of a normal, recurring nature that are necessary for the fair statement of the results of operations for the period.
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This data should be read in conjunction with our audited Consolidated Financial Statements in the Annual Report, and unaudited Condensed Consolidated Financial Statements included in this Report. Historical results are not necessarily indicative of the results that may be expected in the future.
Three Months Ended
June 30, 		Six Months Ended
June 30,
(in thousands of USD) 2025 2024
%
Change
2025 2024
%
Change
Revenue $ 348,271 $ 320,972 8.5 % $ 673,978 $ 647,716 4.1 %
Cost of revenue (260,992) (237,915) 9.7 % (515,088) (482,300) 6.8 %
Marketing (31,070) (23,448) 32.5 % (62,613) (42,926) 45.9 %
General and administrative expenses (64,972) (138,705) (53.2 %) (131,674) (187,398) (29.7 %)
Operating income (loss) (8,763) (79,096) (88.9 %) (35,397) (64,908) (45.5 %)
Interest income 4,910 2,043 140.3 % 10,023 3,278 205.8 %
Interest expense (2) (11) (81.8 %) (4) (44) (90.9 %)
Loss on equity method investments, net 507 120 322.5 % (62) (932) (93.3 %)
Other income (loss), net (1,367) 2,283 (159.9 %) 1,303 846 54.0 %
Income (loss) before income tax (4,715) (74,661) (93.7 %) (24,137) (61,760) (60.9 %)
Income tax expense 832 (1,907) (143.6 %) (1,715) (8,575) (80.0 %)
Net income (loss) (3,883) (76,568) (94.9 %) (25,852) (70,335) (63.2 %)
Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests 443 317 39.7 % 863 358 141.1 %
Total comprehensive income (loss) attributable to WEBTOON Entertainment Inc. $ (4,326) $ (76,885) (94.4) % $ (26,715) $ (70,693) (62.2 %)
Comparison of the Three Months Ended June 30, 2025 and June 30, 2024
Revenue
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Revenue $ 348,271 $ 320,972 8.5 %
Paid Content 274,913 260,709 5.4 %
Advertising 45,220 40,419 11.9 %
IP Adaptations 28,138 19,844 41.8 %
Revenue increased 8.5% for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Significant drivers were the impacts from foreign exchange rates, as well as revenue recognized from the new IP Adaptation of "The Remarried Empress."
Cost of Revenue
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Cost of revenue (260,992) (237,915) 9.7 %
Our cost of revenue increased by $23.1 million, or 9.7%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. As a percentage of revenue, costs remained comparable to the same quarter in the prior year period.
Marketing
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Marketing $ (31,070) $ (23,448) 32.5 %
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Marketing expense increased by $7.6 million, or 32.5%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, as we continue to invest in marketing to drive growth.
General and Administrative Expenses
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
General and administrative expenses $ (64,972) $ (138,705) (53.2 %)
General and administrative expenses decreased by $73.7 million, or 53.2%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease in general and administrative expenses was largely driven by a decrease of approximately $43.2 million in stock compensation expense during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Additional drivers were the impact of a one-time bonus of $30.0 million granted to the CEO for a successful IPO, and increased consulting fees during the quarter ended June 30, 2024, which did not occur during the three months ended June 30, 2025.
Interest Income
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Interest income $ 4,910 $ 2,043 140.3 %
Interest income increased by $2.9 million, or 140.3%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to interest income earned on the proceeds from our IPO.
Interest Expense
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Interest expense $ (2) $ (11) (81.8 %)
Interest expense was not material for either the three months ended June 30, 2025, or the three months ended June 30, 2024. We did not have any debt as of the three months ended June 30, 2025.
Income (Loss) on Equity Method Investment, Net
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Income on equity method investments, net
$ 507 120 322.5 %
Income on equity method investment, net, increased by $0.4 million, or 322.5%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. See Note 14. Equity Method Investmentsin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on the Company's equity method investments.
Other Income (Loss), Net
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Other income (loss), net $ (1,367) $ 2,283 (159.9) %
Other income (loss), net, decreased by $3.7 million, or (159.9%), for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This decrease was driven by losses on certain transactions due to changes in foreign currency exchange rates.
Income Tax Benefit (Expense)
Three Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Income tax benefit (expense)
$ 832 $ (1,907) (143.6 %)
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Income tax expense decreased by $2.7 million, or 143.6%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The decrease was primarily attributable to the change in position from income before income tax during the three months ended June 30, 2024, to loss before income tax in the three months ended June 30, 2025, for the entities included in our effective tax rate. See Note 8. Income Taxesin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on our taxes.
Comparison of the Six Months Ended June 30, 2025 and June 30, 2024
Revenue
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Revenue $ 673,978 $ 647,716 4.1 %
Paid Content 535,139 527,564 1.4 %
Advertising 85,118 77,415 10.0 %
IP Adaptations 53,721 $ 42,737 25.7 %
Revenue increased by $26.3 million, or 4.1%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The primary driver was an increase in IP Adaptations revenue of $11.0 million, or 25.7%, followed by increases of $7.7 million and $7.6 million in Advertising and Paid Content, respectively.
Cost of Revenue
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Cost of revenue $ (515,088) $ (482,300) 6.8 %
Our cost of revenue increased by $32.8 million, or 6.8%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due to overall increases in commissions and fees paid to creators.
Marketing
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Marketing $ (62,613) $ (42,926) 45.9 %
Marketing expenses increased by $19.7 million, or 45.9%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. These increases were a result of our continued investment in marketing to drive growth.
General and Administrative Expenses
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
General and administrative expenses $ (131,674) $ (187,398) (29.7 %)
General and administrative expenses decreased by $55.7 million, or 29.7%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease in general and administrative expenses was largely driven by a decrease in stock compensation expense of approximately $32.8 million during the six months ended June 30, 2025, and a one-time bonus of $30.0 million granted to the CEO for a successful IPO during the six months ended June 30, 2024, which did not occur during the six months ended June 30, 2025.
Interest Income
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Interest income $ 10,023 $ 3,278 205.8 %
Interest income increased by $6.7 million, or 205.8%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was primarily driven by higher balances due to proceeds from the IPO and higher interest rates compared to the prior year.
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Interest Expense
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Interest expense $ (4) $ (44) (90.9 %)
Interest expense decreased for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was due to lower balances on our short-term borrowings during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.
Income (Loss) on Equity Method Investment, Net
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Loss on equity method investments, net
$ (62) $ (932) (93.3 %)
Loss on equity method investment, net, decreased by $0.9 million, or 93.3%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. See Note 14. Equity Method Investmentsin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on the Company's equity method investments.
Other Income (Loss), Net
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Other income (loss), net $ 1,303 $ 846 54.0 %
Other income (loss), net, increased by $0.5 million, or 54.0%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was attributable to gains related to certain transactions due to changes in foreign currency exchange rates.
Income Tax Benefit (Expense)
Six Months Ended June 30,
(in thousands of USD) 2025 2024 % Change
Income tax expense
$ (1,715) $ (8,575) (80.0 %)
Income tax expense decreased by $6.9 million, or 80.0%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, which was primarily attributable to the change in position from income before income tax during the six months ended June 30, 2024, to loss before income tax in the six months ended June 30, 2025, for the entities included in our effective tax rate.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, our management and our board of directors also consider EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, revenue on a constant currency basis, and revenue growth on a constant currency basis, ARPPU on a constant currency basis and ARPPU growth on a constant currency basis. We believe that these non-GAAP financial measures provide investors with additional useful information in evaluating our performance. 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 GAAP measures.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
We define EBITDA as net income(loss) before interest income, interest expense, income tax expense and depreciation and amortization. Starting with the third quarter of 2024, our calculation of EBITDA has been revised to adjust for interest income in addition to interest expense. In prior periods, we only adjusted for interest expense because interest income amounts were insignificant. Prior comparable periods have now been recast to conform to the current presentation. Likewise, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable periods have been recast to conform to the current presentation. We define Adjusted EBITDA as EBITDA with further adjustments to eliminate the effects of loss on equity method investments, effect of applying the
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valuation method of fair value through profit or loss ("FVPL"), impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. We believe that EBITDA and Adjusted EBITDA provide useful information to investors regarding our performance, as it removes the impact of certain items that are not representative of our ongoing business, such as certain non-cash charges and variable charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures and are not intended to be substitutes for any GAAP financial measures. They should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP, such as consolidated net income (loss) or consolidated net income (loss) margin.
Using EBITDA as a performance measure has material limitations as compared to consolidated net income (loss), or other financial measures as defined under GAAP, as it excludes certain recurring items, which may be meaningful to investors. EBITDA excludes interest expense and interest income; however, as we have borrowed money to finance transactions and operations, or invested available cash to generate interest income, interest expense and interest income are elements of our cost structure and can affect our ability to generate revenue and returns for our stockholders. Further, EBITDA excludes depreciation and amortization; however, as we use capital and intangible assets to generate revenue, depreciation and amortization are necessary elements of our costs and ability to generate revenue. Finally, EBITDA excludes income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. Any measure, including EBITDA, that excludes interest expense, depreciation and amortization and income taxes has material limitations as compared to net income. When using EBITDA as a performance measure, management compensates for these limitations by comparing EBITDA to net loss in each period, to allow for the comparison of the performance of the underlying core operations with the overall performance of the company on a full-cost, after-tax basis.
You are also encouraged to evaluate our calculation of Adjusted EBITDA and Adjusted EBITDA Margin, and the reasons we consider these adjustments appropriate for supplemental analysis. In evaluating these measures, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of these measures in the future, and any such modification may be material. Adjusted EBITDA and Adjusted EBITDA Margin have their limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:
•Adjusted EBITDA does not include the interest expense and the cash requirements necessary to service interest or principal payments on our debt;
•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated or amortized;
•Adjusted EBITDA excludes the impact of charges and receipts resulting from matters we do not find indicative of our ongoing operations; and
•Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do.
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The following table presents a reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods presented.
Three Months Ended June 30, Six Months Ended June 30,
(in thousands of USD, except percentages) 2025 2024 2025 2024
Net income (loss) $ (3,883) $ (76,568) $ (25,852) $ (70,335)
Interest income (4,910) (2,043) (10,023) (3,278)
Interest expense 2 11 4 44
Income tax expense
(832) 1,907 1,715 8,575
Depreciation and amortization 8,407 8,915 16,844 17,950
EBITDA $ (1,216) $ (67,778) $ (17,312) $ (47,044)
Stock-based compensation expense(1)
8,463 53,817 25,498 56,043
Restructuring and IPO-related costs(2)
1,476 36,204 3,118 37,720
Loss (gain) on fair value instruments, net(3)
1,446 (1,772) 2,376 (5,143)
Loss (income) on equity method investments, net(4)
(507) (120) 62 932
Adjusted EBITDA(5)
$ 9,662 $ 20,351 $ 13,742 $ 42,508
Net income (loss) margin (1.1) % (23.9) % (3.8) % (10.9) %
Adjusted EBITDA Margin 2.8 % 6.3 % 2.0 % 6.6 %
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(1)Represents non-cash stock-based compensation expense related to WEBTOON's equity incentive plan and stock-based compensation plans of NAVER and Munpia, including amounts which are cash settled. See Note 7. Stock-Based Compensation in the accompanying notes to our unaudited Condensed Consolidated Financial Statements in this Report for further details on the amounts included within.
(2)Represents non-recurring expenses that we do not consider representative of the operating performance of the business. For the three and six months ended June 30, 2025, these amounts include legal fees and advisory fees. For the three and six months ended June 30, 2024, these amounts were comprised of a $30.0 million one-time CEO bonus and legal and advisory fees related to the IPO.
(3)Represents unrealized net loss (gain) 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. See Note 14. Equity Method Investmentsin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report.
(5)Totals may not foot due to rounding.
Use of Constant Currency
We provide revenue, including period-over-period growth rates, adjusted to remove the impact of foreign currency rate fluctuations and the impact of deconsolidated and transferred operations, which we refer to as revenue on a constant currency basis. 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 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. In addition to adjustments for foreign currency exchange fluctuations, we have also adjusted revenue to exclude the impact of deconsolidation of Jakga to improve comparability between the two periods. We calculate revenue (including growth rates) 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. See Note 13. Dispositionin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
We provide ARPPU, including period-over-period growth rates, on a constant currency basis for our Paid Content revenue streams as average Paid Content revenue on a constant currency basis in a given month divided by the number of MPU for such month, averaged over each month in the given period. As discussed above, 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 and excluding deconsolidated and transferred operations. We calculate ARPPU growth rates (as a percentage) on a constant currency basis as the increase in current period ARPPU over prior period ARPPU, with current period foreign currency ARPPU translated using prior period average currency exchange rates and excluding deconsolidated and transferred operations.
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We believe providing revenue, revenue growth rates, ARPPU and ARPPU growth rates on a constant currency basis helps our investors better understand our underlying performance because they exclude the effects of foreign currency volatility and impacts of deconsolidated and transferred operations that are not indicative of our actual results of operations. Adjusting revenue or ARPPU to remove the effects of foreign currency rate fluctuations, deconsolidation, and transfer of operations results in non-GAAP measures that management uses to help make informed decisions by removing the volatility caused by foreign currency rate fluctuations and the impact of deconsolidated and transferred operations, allowing us to assess whether the business is fundamentally healthy and growing. Additionally, these metrics support management in efficiently allocating resources and determining priorities by providing a basis for evaluating the competitiveness and growth potential of the business itself. It is for these reasons that management believes these non-GAAP metrics add value, but they have their limitations as analytical tools for not reflecting all the amounts associated with our results of operations as determined in accordance with GAAP, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
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.
Three Months Ended June 30, Six Months Ended
June 30,
(in thousands of USD, except percentages) 2025 2024 Change 2025 2024 Change
Total Revenue $ 348,271 $ 320,972 8.5% $ 673,978 $ 647,716 4.1%
Effect of deconsolidated and transferred operations - - N/A - (145) (100.0%)
Effects of foreign currency rate fluctuations (9,543) - N/A 8,833 - N/A
Revenue on a Constant Currency Basis $ 338,728 $ 320,972 5.5% $ 682,811 $ 647,571 5.4%
Paid Content Revenue 274,913 260,709 5.4% 535,139 527,564 1.4%
Effect of deconsolidated and transferred operations - - N/A - (120) (100.0%)
Effects of foreign currency rate fluctuations (9,003) - N/A 5,020 - N/A
Paid Content Revenue on a Constant Currency Basis $ 265,910 $ 260,709 2.0% $ 540,159 $ 527,444 2.4%
Advertising Revenue 45,220 40,419 11.9% 85,118 77,415 9.9%
Effects of foreign currency rate fluctuations (694) - N/A 1,516 - N/A
Advertising Revenue on a Constant Currency Basis $ 44,526 $ 40,419 10.2% $ 86,634 $ 77,415 11.9%
IP Adaptations Revenue 28,138 19,844 41.8% 53,721 42,737 25.7%
Effect of deconsolidated and transferred operations - - N/A - (25) (100.0%)
Effects of foreign currency rate fluctuations 153 - N/A 2,297 - N/A
IP Adaptations Revenue on a Constant Currency Basis $ 28,291 $ 19,844 42.6% $ 56,017 $ 42,712 31.2%
Paid Content Average Revenue Per Paying User ("ARPPU")
Korea Paid Content Revenue $ 80,645 $ 83,939 (3.9%) $ 157,671 $ 174,881 (9.8%)
Korea ARPPU $ 7.9 $ 7.5 5.0% $ 7.7 $ 7.7 (0.3%)
Effects of foreign currency rate fluctuations 0.2 - N/A 0.6 - N/A
Korea ARPPU on a Constant Currency Basis $ 8.1 $ 7.5 8.3% $ 8.3 $ 7.7 7.5%
Japan Paid Content Revenue 161,076 142,257 13.2% 311,477 284,465 9.5%
Japan ARPPU 23.7 21.2 11.8% 23.0 21.7 6.1%
Effects of foreign currency rate fluctuations (1.7) - N/A (0.5) - N/A
Japan ARPPU on a Constant Currency Basis $ 22.0 $ 21.2 3.8% $ 22.5 $ 21.7 3.7%
Rest of World Paid Content Revenue 33,193 34,514 (3.8%) 65,991 68,218 (3.3%)
Rest of World ARPPU 6.6 6.5 2.2% 6.5 6.4 2.8%
Rest of World ARPPU on a Constant Currency Basis $ 6.6 $ 6.5 2.2% $ 6.5 $ 6.4 2.8%
Liquidity and Capital Resources
On June 28, 2024, we completed our IPO in which we issued and sold 15,000,000 shares of common stock at a public offering price of $21.00 per share. We received net proceeds of approximately $281.7 million from the IPO, after deducting underwriting discounts and commissions and offering expenses payable by us.
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Also, immediately subsequent to the closing of the IPO, we issued and sold 2,380,952 shares of common stock to NAVER U.Hub Inc., a wholly-owned subsidiary of NAVER, in a private placement at $21.00 per share and received $50 million in proceeds.
On July 26, 2024, the underwriters partially exercised the over-allotment option to purchase 1,371,549 shares of common stock at $21.00 per share, which was closed on July 30, 2024. We received net proceeds of approximately $26.8 million therefrom, after deducting underwriting discounts and commissions and offering expenses payable by us.
Historically, we have relied primarily upon cash generated from operations and cash provided by NAVER through capital contributions to finance our operations, repay or repurchase indebtedness, finance acquisitions and fund our capital expenditures. NAVER does not have any contractual obligation to provide additional capital to us and therefore there can be no assurance that NAVER will continue to provide additional capital in the form of debt or equity investment in the future to enable us to operate our business. As of June 30, 2025, we had $581.5 million of cash and cash equivalents, which were primarily invested in short-term, highly liquid investments with original maturities of three months or less from the date of purchase and are mainly comprised of bank deposits. We believe that our existing cash and cash equivalent balances will be sufficient to support our working capital requirements for at least the next 12 months based on our current operating plans. However, our future capital requirements will depend on many factors, including our growth rate, sales and marketing activities and other factors affecting our business, including those described in the section entitled "Risk Factors" in the Annual Report. Our expected primary uses of our capital on short- and long-term bases are for repayment of debt, interest payments, working capital, capital expenditures, geographic expansion and other general corporate purposes.
We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights, which may require us to seek additional financing. To the extent additional funds are necessary to meet our liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of indebtedness, the issuance of additional equity or a combination of these potential sources of funds. Such financing, may however, not be available to us on favorable terms, or at all. In particular, high inflation and interest rates have resulted, and may continue to result, in significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds on commercially reasonable terms or at all, our business, financial condition and results of operations could be adversely affected. See "Risk Factors-Risks Related to Our Business, Industry and Operations-We may require additional capital to support our business in the future, and this capital might not be available on reasonable terms, if at all." in the Annual Report.
Consolidated Statements of Cash Flows
The following table summarizes our cash flows for the period presented:
Six Months Ended June 30,
(in thousands of USD) 2025 2024
Net cash provided by (used in) operating activities $ (12,951) $ 22,394
Net cash provided by (used in) investing activities
5,711 (7,306)
Net cash provided by (used in) financing activities 229 336,053
Effect of exchange rate changes on cash and cash equivalents 16,155 (10,581)
Net increase (decrease) in cash and cash equivalents $ 9,144 $ 340,560
Operating Activities
For the six months ended June 30, 2025, net cash used in operating activities was $13.0 million, which primarily consisted of net loss of $25.9 million, adjusted for certain non-cash items of $40.3 million. The non-cash items included stock-based compensation of $25.5 million, depreciation and amortization of approximately $16.8 million, and operating lease expense of $4.5 million, which was partially offset by a gain of $3.6 million on foreign currency, net. The net cash outflow from changes in our operating assets and liabilities was primarily due to a decrease in our accrued expenses, an increase in our other assets, and a decrease in accounts payable, which was partially offset by an increase in contract liabilities.
Investing Activities
For the six months ended June 30, 2025, net cash provided by investing activities was $5.7 million, consisting of proceeds from maturities of short-term investments of approximately $32.3 million, which was primarily offset by payment made for short-term investments of $16.6 million, and purchases of intangible assets of $4.5 million.
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Financing Activities
For the six months ended June 30, 2025, net cash provided by financing was minimal, and related to exercise of stock options.
Critical Accounting Policies and Estimates
Our unaudited Condensed Consolidated Financial Statements and the related notes thereto included in this Report are prepared in accordance with GAAP. The preparation of our unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those Condensed Consolidated Financial Statements and the accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.
There have been no material changes to our critical accounting policies and estimates as described in the Annual Report. Refer to Note 1. Description of Business and Summary of Significant Accounting Policiesin the accompanying notes to the unaudited Condensed Consolidated Financial Statements for recently adopted and issued accounting pronouncements, if any, since the filing of our Annual Report for the year ended December 31, 2024.
Webtoon Entertainment Inc. published this content on August 13, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 13, 2025 at 20:36 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]