WEBTOON Entertainment Q2 Earnings Call Highlights

WEBTOON Entertainment 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.

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. 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.

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, w...