WEBTOON (WBTN) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, March 3, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Founder and Chief Executive Officer — Junkoo Kim
• Chief Financial Officer — David J. Lee
• Head of Global Business — Yongsoo Kim

TAKEAWAYS

• Q4 Revenue -- $330.7 million, a decline of 4.1% on a constant currency basis and 6.3% on a reported basis, due to declines in advertising and IP adaptations offsetting paid content growth. (Fiscal Q4 ended Dec. 31, 2025.)
• Full-year revenue -- $1.4 billion, up 3.9% on a constant currency basis and 2.5% on a reported basis, with every revenue stream showing constant currency growth. (Fiscal year ended Dec. 31, 2025.)
• Net loss -- $336.5 million in Q4, compared to a $102.6 million loss the prior year, mainly because of goodwill impairments, primarily in Wattpad; full-year net loss was $373.4 million versus $152.9 million prior year.
• Adjusted EBITDA -- $0.6 million in Q4 versus negative $3.5 million prior year; full-year adjusted EBITDA of $19.4 million, down from $68 million prior year.
• Adjusted EPS -- $0.00 for Q4, up from negative $0.03; full-year adjusted EPS $0.15 compared to $0.57 prior year.
• Gross margin -- Expanded 100 basis points to 24.3% in Q4, attributed to discrete item recategorization; full-year gross margin was 23.3%, a decrease of 180 basis points.
• Q4 paid content revenue -- Up 0.4% on a constant currency basis; full-year paid content revenue up 1.5%.
• Q4 advertising revenue -- Declined 10.3% on a constant currency basis, largely in Korea; full-year advertising revenue grew 0.4% on a constant currency basis.
• Q4 IP adaptation revenue -- Declined 29.7% on a constant currency basis; however, full-year IP adaptation revenue rose 35.5%, driven by Korean theatrical and streaming projects.
• Korea Q4 revenue -- Fell 9% on a constant currency basis; Q4 Korea NPU rose 3.3% with a paying ratio at 15.1%, up 207 basis points.
• Japan Q4 revenue -- Down 1% on a constant currency basis; Q4 Japan MAU increased 0.5%, MPU declined 6.9%, ARPU rose 5.7% to $23.3 on a constant currency basis.
• Rest of World Q4 revenue -- Grew 0.8% on a constant currency basis; MPU rose 5.7%, ARPU declined 5.1% to $6.5.
• Q4 global MAU -- Declined 1.7%, with full-year total MAU at 157 million, down 7.1%.
• Wattpad automated traffic -- Estimated 10 percentage-point Q4 MAU uplift in certain non-core markets, no material business impact expected.
• Cash balance -- $582 million at year end plus $11 million in short-term deposits.
• Disney strategic agreement -- On January 8, 2026, The Walt Disney Company invested $32.8 million for 2.7 million shares and completed a co-development agreement for a new digital comics platform, targeted for launch in 2026.
• Disney collaboration content -- 12 reformatted titles launched, including stories from Spider-Man, Star Wars, Avengers, and others since August 2025.
• IP adaptation pipeline -- Amazon MGM Studios greenlit "Rural Rippers" for animation; over 20 new anime projects in Japan in 2025; Netflix announced live-action adaptation of "Viral Hit."
• 2026 Q1 outlook -- Projected revenue between $317 million and $327 million (negative 1.5% to positive 1.5% constant currency growth); adjusted EBITDA guidance of $0 to $5 million (0%-1.5% margin).
• AI personalization -- Management cited material progress in Korea and plans deployment to other markets as a driver of engagement and paying user growth.

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RISKS

• Net loss -- Q4 net loss expanded to $336.5 million from $102.6 million prior year due to goodwill impairments, predominantly from Wattpad.
• Declining MAU -- Global MAU was down 7.1% for the year and app MAU declined 4.3%, despite engagement initiatives.
• Q4 revenue contraction -- Quarterly revenue fell 4.1% on a constant currency basis, as declines in advertising and IP adaptations outpaced paid content gains.
• Advertising headwinds -- Q4 advertising revenue dropped 10.3% on a constant currency basis, mainly impacted by a single e-commerce partner in Korea.

SUMMARY

The Disney investment and co-development of a new digital comics platform mark WEBTOON Entertainment (NASDAQ:WBTN)'s most material strategic milestone cited in the call. Management announced a 2026 launch target for this platform and confirmed that WEBTOON Entertainment will recognize all revenue and costs, with licensing structures consistent with its core model. The company posted sharp swings in key financial metrics, including a large Q4 net loss traceable to Wattpad impairment and mixed revenue trends—declining in advertising and IP adaptations despite some paid content growth. Operating cash flow generation, disciplined cost management, and a substantial cash balance were cited as support for continued platform investment, including expanding AI-driven personalization and content discovery initiatives.

• CFO Lee maintained Q1 2026 revenue and adjusted EBITDA guidance within a tight range, and asserted confidence in returning to double-digit annualized growth by year-end, attributing this to paid content, advertising momentum, and IP adaptation leverage across markets.
• Management specified that Japan's infrastructure efforts are expected to complete in Q1, enabling redeployment toward AI recommendation improvements and positioning the region for resumed, multi-metric growth in the second half.
• The impact of automation-driven MAU increases was disclosed as non-material for future business outcomes, reflecting management's downplaying of short-term metric noise versus lasting user engagement.
• No new capital investment obligations from the Disney partnership were announced beyond the equity investment, with content and brand licensing terms stated as comparable to existing arrangements.

INDUSTRY GLOSSARY

• MAU: Monthly Active Users; measures unique users engaging with a platform within a given month.
• MPU/NPU: Monthly or Net Paying Users; counts users completing paid transactions in the platform per period.
• ARPU: Average Revenue Per User; average amount of revenue generated per user for a specified time frame.
• IP adaptation: Income from adapting and licensing original digital content (such as webtoons and web novels) as animation, live-action series, or film.
• Adjusted EBITDA/EPS: Earnings before interest, taxes, depreciation, and amortization (EBITDA), or earnings per share (EPS), adjusted to exclude non-recurring or non-operating items.

Full Conference Call Transcript

Junkoo Kim: I will make a few brief comments on our performance, and then David will provide more details on our results and outlook. For my full thoughts on the year, please refer to the shareholder letters posted on our investor relations website. We reported a solid 2025 result with revenue growth of 3.9% on a constant currency basis and adjusted EBITDA of over $19 million. We are pleased to see NPU growth from positive in the fourth quarter driven by growth in Korea, and in Rest of World. We made significant progress advancing our personalization tools throughout the year. As we have become more proficient with AI, we are now making increasingly personalized content recommendations that are unique to our users.

In Korea, where we have made the most progress, we also increased the content diversity at the same time. We are seeing NPU growth as users read more titles and episodes, as they get more relevant recommendations. We believe that we can take these learnings from Korea and apply them to other regions. We are excited that following the end of Q4, on 01/08/2026, The Walt Disney Company and WEBTOON Entertainment Inc. announced that we have completed the previously announced strategic agreement, including co-development of an all-new digital comics platform, as well as business processes to present an equity investment in WEBTOON Entertainment Inc., and we are targeting a 2026 launch for this new platform.

We have already launched a total of 12 reformat pilots on WEBTOON’s mobile vertical scroll format following the initial collaboration announcement with Disney in August 2025. This has included stories from Amazing Spider-Man, Star Wars, and Avengers, and we look forward to introducing an original series later this year. This is a powerful next step for our growing global business and a strong foundation for even greater collaboration with Disney in the years ahead. Finally, we continue to advance our flywheel with IP adaptations, which further keep users engaged with our platform. And I would like to highlight just a few examples here.

Animation continued to be a major initiative for us and we are excited to announce that Amazon MGM Studio greenlit Rural Rippers to be developed into a new animated series from production and Jim Henson content. In Japan, anime is a particular focus, and I am happy to announce that we reached our target of over 20 new anime projects in 2025. We are excited to have launched another anime series on Crunchyroll with Document the Blue Alpha this January. We are also seeing success with live action, as Netflix announced that Viral Hit will be adapted into a Japanese live-action series following the success of our anime adaptation in 2024.

Overall, we believe these financial and operational results demonstrate that our flywheel and strategy are working. Our ecosystem of creators, content, and users continues to drive the success of our business. That said, we acknowledge that we have an opportunity to accelerate our flywheel and realize our growth potential faster. We remain laser focused on deepening engagement across our platform to foster a stronger, more vibrant fandom and look forward to sharing more about our plans in the quarters ahead. With that, I will now turn the call over to David. David, please go ahead.

David J. Lee: Thank you, JK, and thank you, everyone, for joining us. For the fourth quarter, we reported revenue of $330.7 million in line with our expectations. Our reported revenue was down 4.1% on a constant currency basis and 6.3% on a reported basis, as paid content growth was more than offset by declines in advertising and IP adaptations. For the full year 2025, we reported revenue of $1.4 billion. Our reported revenue grew 3.9% on a constant currency basis, driven by constant currency growth in all revenue streams, and grew 2.5% on a reported basis.

We expanded gross margin by 100 basis points to 24.3% in the fourth quarter, as we lapped a number of discrete items that were recategorized from marketing to cost of revenue during the year. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher-margin businesses like advertising. Net loss was $336.5 million in the quarter compared to a loss of $102.6 million in the year prior, driven primarily by goodwill impairments. Net loss for the full year was $373.4 million compared to a loss of $152.9 million in the year prior. We exercised cost discipline through the quarter, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth.

Adjusted EBITDA was $0 in the quarter, exceeding the high end of guidance. This compares to a negative adjusted EBITDA of $3.5 million in the same quarter of 2024. For the full year, adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the year prior. As a result, our adjusted EPS for the quarter was $0.00 compared to a negative adjusted EPS of $0.03 in the prior year. And $0.15 for the full year compared to $0.57 in the prior year. Turning to operational health, we continue to focus on driving users to our app, as well as converting them to paying users.

While fourth quarter app MAU and Webtoon app MAU declined 6.5% and 2.6%, respectively, year over year, we were pleased to have driven MPU growth of 0.7%, evidence that our personalized content recommendations are working. Importantly, our English platform Webtoon app MAU was up 2.2% year over year. For the full year, NPU of 7.5 million declined 2.9% year over year. While app MAU declined 4.3%, Webtoon app MAU grew 1.9%. And English platform Webtoon app MAU was up 12.8% for the full year. Global MAU declined 1.7% in the quarter. We estimate that global MAU benefited from roughly a 10 percentage point increase in Wattpad activity resulting from automated web traffic in certain non-core markets.

While we saw a small increase starting in late Q3 2025, the web traffic peaked in Q4 2025, and we are seeing reduced impact in Q1 2026. Notably, this had no impact on app MAU and is not expected to have a material impact on our business. For the full year, total MAU of 157 million declined 7.1%. Now I would like to provide an update on our revenue streams at a consolidated level. Starting with paid content, in the quarter, we posted 0.4% revenue growth on a constant currency basis. For the full year, we posted 1.5% revenue growth on a constant currency basis.

While ARPU declined 0.3% in the quarter on a constant currency basis, we were pleased to see 4.6% growth for the full year. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. Advertising posted a decline of 10.3% in the fourth quarter on a constant currency basis year over year. In Korea, we saw similar declines from the same e-commerce advertising partners last quarter, but we experienced growth from other partners. Ad revenue from Naver was relatively consistent with the fourth quarter of the prior year. For the full year, we posted 0.4% advertising growth on a constant currency basis.

Finally, our IP Adaptation business saw revenue decline 29.7% year over year on a constant currency basis in Q4. As we have shared previously, revenue recognition for IP adaptations can be volatile from quarter to quarter, depending on the timing of key milestones for various projects. For the full year, IP adaptation revenue was up 35.5% on a constant currency basis. We had a strong year of IP adaptations in Korea, particularly driven by the theatrical success of My Daughter is a Zombie, and The Trameca on Netflix. Now I would like to look at our results in the context of core geographies.

In Korea, during the fourth quarter, our revenue declined 9% year over year on a constant currency basis, as growth in paid content was more than offset by a decline in advertising and IP adaptations. For the full year, we posted revenue growth of 5.9% on a constant currency basis. During the fourth quarter, while MAU of 24.3 million decreased 10.8%, we were pleased to see NPU of 3.7 million grow 3.3% and a paying ratio of 15.1%, reflecting an increase of 207 basis points compared to 2024. Korea ARPU on a constant currency basis was up 0.9% compared to 2024.

For the full year, Korea MAU was 24 million, decreasing 11.1% year over year, while Korea NPU was 3.6 million, declining 5.3% year over year. Full-year paying ratio was 14.8%, up 91 basis points year over year. Full-year Korea ARPU grew 4.7% to $8.2 on a constant currency basis. Moving to Japan, for the quarter, Japan revenue declined 1% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by single-digit growth in advertising and IP adaptations, all on a constant currency basis. For the full year, we posted 3.9% revenue growth on a constant currency basis.

LINE Manga continued to be the number one overall app by revenue, including mobile games, for the quarter as well as the full year, according to data.ai. Compared to Q4 2024, Japan’s MAU of 22.2 million increased 0.5%. MPU of 2.1 million declined 6.9%, and paying ratio of 9.5% was down 76 basis points year over year. Fourth quarter Japan ARPU of $23.3 grew 5.7% year over year on a constant currency basis. For the full year, Japan MAU increased 4.9% year over year to 23 million while Japan MPU of 2.2 million declined 0.1% year over year. Full-year paying ratio of 9.7% was down 49 basis points year over year, and ARPU grew 3.4% on a constant currency basis.

We expect to complete our infrastructure investments by the end of Q1 and redeploy engineering resources to support improvement across our personalized recommendation tools. We believe more personalized AI recommendations may drive NPU growth in Japan as we have done in Korea. In Rest of World, we saw revenue growth of 0.8% year over year on a constant currency basis in the quarter, driven by single-digit growth in paid content and triple-digit growth in IP adaptations, partially offset by a double-digit decline in advertising. For the full year, we posted a 2.1% revenue decline on a constant currency basis.

Fourth quarter MAU was flat year over year after including the 10% growth impact in Wattpad activity resulting from automated web traffic. MPU grew 5.7%, and paying ratio of 1.5% increased 8 basis points compared to the fourth quarter of last year. Fourth quarter Rest of World ARPU of $6.5 declined 5.1% year over year on a reported and a constant currency basis. For the full year, Rest of World MAU of 110 million decreased 8.4% year over year, while MPU of 1.7 million declined 1.5% year over year. Full-year paying ratio of 1.6% was up 11 basis points year over year. Full-year Rest of World ARPU increased 0.5% to $6.6 on a reported and constant currency basis.

Turning to profitability, gross profit for the quarter was $80.5 million compared to $82.3 million in the prior year. This resulted in a gross margin of 24.3%, which expanded 100 basis points compared to the prior year. Full-year gross profit was $322.2 million compared to $339.1 million in the prior year, translating to a gross margin of 23.3%, which decreased 180 basis points compared to the prior year. Adjusted EBITDA for the quarter was $0.6 million compared to a loss of $3.5 million in the prior year, and full-year adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the prior year.

On the cost side, total G&A expenses for the quarter were $65.4 million compared to $77.8 million in the prior year quarter as we exercised cost discipline. Total general and administrative expenses for the full year were $259.5 million compared to $332 million in the year prior. Interest income in the quarter was $4.5 million compared to $6 million in the prior year, and other loss was $9.2 million compared to $6.2 million in the prior year period. For the full year, interest income was $19.2 million compared to $15.8 million in the prior year, and other loss was $9.8 million compared to other income of $6.5 million in the prior year.

We had an income tax benefit of $18.4 million in the quarter, compared to an income tax expense of $4.9 million in the prior year. Income tax benefit for the full year was $16 million compared to tax expense of $3.6 million in the prior year. Depreciation and amortization was $10.6 million in the fourth quarter compared to $12.1 million in the prior year. Depreciation and amortization for the full year was $35.4 million compared to $40.1 million in the prior year. Net loss of $336.5 million was driven by impairment losses on goodwill, the majority of which was attributable to Wattpad. This compares to a net loss of $102.6 million in the prior year quarter.

Net loss for the full year was $373.4 million compared to net loss of $152.9 million last year. As a result, fourth quarter GAAP loss per share was $2.36 compared to a loss per share of $0.72 in the prior year period. And full-year loss per share was $2.66 compared to a loss per share of $1.21 in the prior year. Adjusted EPS was $0.00 in the quarter compared to a negative adjusted EPS of $0.03 in the prior year period, and full-year adjusted EPS was $0.15 compared to $0.57 in the year prior.

Our balance sheet remains strong, with a cash balance of $582 million and another $11 million of short-term deposits included in other current assets at year end. We generated $11.2 million in cash flow from operations during the year. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I would like to spend a few moments discussing our first quarter outlook. For the first quarter of 2026, we expect to deliver revenue growth in the range of negative 1.5% to positive 1.5% on a constant currency basis.

This represents revenue in the range of $317 million to $327 million based on current FX rates. We anticipate first quarter adjusted EBITDA in the range of $0 to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. We continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content, and users. As we have shared today, we are making numerous investments across all three of these areas that we believe will support a return to double-digit year-over-year growth by the end of the year. In closing, I am pleased with the progress we made in 2025.

We are encouraged by the positive signs we see in key metrics like MPU, and we look forward to executing our strategy in 2026. With that, I would like to turn it back to our operator to begin the Q&A session.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Our first question comes from the line of Mark Mahaney with Evercore.

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

What are the factors most likely that will get to that return to double-digit year-over-year growth by the end of the year? Thank you very much.

David J. Lee: Thanks, Mark. These are two good questions. Let me take them in turn. First, with regard to Disney, it has been some time since we last spoke to you, so I wanted to be complete. Since we last spoke, first, remember that Disney closed their investment in us on January 8, purchasing 2.7 million shares for approximately a purchase price of $32.8 million. It is also important that we have been hard at work with them. You will note that we have launched already with their collaboration 12 reformatted titles, including seven since the ’3.

And while I do not think I need to list them all, as you will find them in the materials that we provided, I am particularly impressed by the strength of those stories—stories that include Predator and Star Wars and even The Unbeatable Squirrel Girl, etcetera. But to your broader question, we have always talked about two elements. One, the ability to tell original stories that we have demonstrated success with in the past—new-to-the-world stories—and in our disclosure, we noted we are committed to doing so at least one this 2026 period. I think that is important, because I think new-to-the-world originals have powered a lot of the creator success as well as the consumer delight on our platform.

The second is we have committed to launching the new consumer platform. Remember, we intend to build and operate completely this new platform in collaboration with Disney; we committed to launching that by the end of the year. You will note that while I mentioned double-digit growth in revenue by the end of the year, I did not note any disclosed additional investment or burden on the company to achieve these outcomes with Disney. Let me turn to your second question because I think it is important. We recognize that in the guidance we have provided, which is flat growth for Q1, that there may be a misconception. We are very confident in our platform. Our flywheel is healthy.

We really will deliver double-digit growth by the end of the year, and it comes in three parts. First, you will see a return to the strong growth we have demonstrated in paid content, the core of our business. You will note that we mentioned that in Japan, which has become a very large business for us, where we are still number one in revenue when you include all consumer apps, including mobile games, for three quarters running, that we had to take time to invest in infrastructure.

While we complete that, we noted by the end of this quarter, Q1, and as a result, you could expect that will drive paid content growth towards the end of the year, as one example. The other is advertising. Korea is our most mature business, and we have been clear now in the last two quarterly releases on the impact of a single discrete advertiser and e-commerce provider. We also talk about the health broadly in our ability to grow our businesses and advertising in Korea and the upside future opportunity in Rest of World. This will also contribute to double-digit growth.

And then finally, crossover IP—8% of our total revenue in the reported quarter of Q4—the ability strategically for next-generation consumers, for example, in the U.S., where Yongsoo Kim has led growth in English Webtoon MAU and now you are seeing it in MPU, for them to see on the big screen, or on the small screen, stories that they can discover not just on our platform. And I will let the results come through the course of the year; I think this is an important component of our growth by 2026 as well.

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

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

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

David J. Lee: Thanks, Julian. Good questions. Let me address the first. We are a tech company at heart. And with regard to our business in Korea, we are very pleased to see that in our original business, you are still seeing strong performance. There, metrics like MPU are very important. Where we have approximately 50% household penetration in a market where we are an everyday household name, being able to see, as you saw, the total company delivered 0.7% increase in paying users, but Korea specifically, in the breakout you saw, delivered plus 3%. Because we have very strong awareness in Korea, product innovation and content presentation is an ongoing constant endeavor for us as a tech company.

And this AI-driven and machine learning–driven personalization engine is particularly relevant for our most mature market, because there is habit formation already in place. So we are pleased with that, and, frankly, I think you are going to see more of it outside of just our original foundation market. In fact, we even disclosed that as we have completed our infrastructure project in Japan, we specifically tried to be clear in our script that you will see machine learning–based recommendation engines and CRM that we think will help drive from a return to Japan business to the historic growth that you have seen in the past.

You will hear more about our intent to drive global innovation from one market across all markets, but AI is a proven tactic for us, and you will see more of it as we roll out more results this year. Your second question was with regard to creator content diversification, and I think your question was particularly focused on the market here in the U.S., or what we call the English-speaking markets. So first, I just want to draw attention to the fact that we have intentionally kept our investments in marketing and in product innovation in what we call Rest of World.

Our English Webtoon app MAU growth, which grew 22% and prior grew double digits, is now being accompanied with NPU growth. We did not break it out for you at that level of disclosure, but I wanted to call it out qualitatively as I think it is a meaningful milestone for the company. In order to create a healthy opportunity for creators, it starts with creating a growing and healthy base of paying users, which I think you are seeing today. And then I would point you to the ongoing comments by JK in his script, but also the shareholder letter, a number of the exciting crossover IP projects that we have talked about.

We talked about Chasing Red, starring Riverdale star Madelaine Petsch. We talked about Lore Olympus being greenlit by Amazon. These represent not just great opportunities for us and shareholders, but these represent proof points for that creator who is an amateur, one of the 24 million who wants to be published globally and have a voice. I think there will be more to come on this, but I think both the on-platform as well as the off-platform opportunities we will pursue are reasons why our creator ecosystem remains strong, and we are not seeing any pressure with regard to the strength of that part of our flywheel.

We think it continues to be foundational and a point of leverage for us.

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

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

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

David J. Lee: Great. And I will start, but Yongsoo will jump in shortly. With regard to what we have disclosed in the past, and here, I am not going to speak on behalf of Disney. I am going to focus more on our experience at WEBTOON. Remember, Benjamin, we have partnered with great companies in the past. And we have talked about the economics, the unit economics, of when we have our own original, as Jiangsu just mentioned, or when we have a wonderful, what we call reformatted title, from somebody else’s universe or platform.

When you take out the cost of reduced great hits, the ongoing cost structure and margin from a great piece of content, whether they are created by us as an original or by our creators or from outside our platform, we have never disclosed a meaningful margin drainage or impact. And I think from that, you can infer that we are very excited about collaborating not just with Disney, but with anyone who can see us as the destination for this growth we are seeing amongst Gen Z and Gen Alpha here in the U.S. I do not want to go more into detail on Disney. Yongsoo can provide some color on the strength of that relationship.

Let me briefly cover ads. When you look at our ads business, we are very careful to maintain the long-term proposition for Rest of World as we are quite early. And that includes actions we have taken to recently focus, for example, the Wattpad effort separate from our broader Webtoon opportunity in the U.S. This is an invest-in-the-fundamentals stage for Wattpad. And so I would love to be able to give you more milestones of progress, but we are just not yet there. We are much more focused on growing the paid content business in the U.S. with Global Webtoon, and putting in place the framework for advertising growth second.

Let me turn to Yongsoo for any comments you may have.

Yongsoo Kim: Yeah. Regarding the Disney initiative, as the operator of the new platform, WEBTOON Entertainment Inc. will recognize all revenue and cost. With respect to the content and brand licensing fee, the structure has been determined in a manner that is broadly consistent with our existing web comics model.

Operator: Thank you, Benjamin.

Benjamin Black: Thank you.

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

Dale (for Doug Anmuth): Hey. This is Dale on for Doug. Thanks for taking the questions. I have two as well. First one on your expectations to exit the year growing double digit. Appreciate the comment you gave on paid content versus advertising and by region. But could you break that down a little bit more and tell us if the excitement is more around what you are seeing on the MPU side, or is it more on the monetization side? Because in 2025, paid content growth appears to have been driven by ARPU growth. So just curious, like, how you guys are thinking about the drivers of the double-digit percent growth across those two.

And then secondly, appreciate the IP adaptation revenue is milestone driven and lumpy quarter over quarter. But curious if you could share how your 2026 pipeline looks, compares to 2025. And how much contribution from IP adaptation is needed to get to your double-digit percent growth exiting the year? Thank you.

David J. Lee: Good question, Dale. Thanks for them. First, with regard to the double-digit growth we expect by 2026, I think I was careful to make sure that you knew that would be driven by both paid content and an improvement in our advertising business trends as well. When one looks at paid content, as you know, the different flywheels we have in Korea, Japan, and Rest of the World are in different states. So let me have you recall what we have described in the past, as I think they are important.

In Korea, where we have a strong penetration and awareness, MPU and ARPU are critically important, as product innovation that we just discussed, including innovations in AI as well as the rollout of content, keep that market strong. We are pleased with the strength of that market. In Japan, when one excludes the recent effort to create the infrastructure to persist in the growth we saw in 2025, that is a market where LINE Manga is the number one app. And as you know, we have historically seen not just increases in ARPU, but also a fundamental increase in actual top-of-funnel metrics.

So there, we are very early with arguably less than 20% household penetration in a market that is very accustomed to purchasing our digital format. So I would expect that in the mid to long term, you should see Japan return to healthy growth, not just in ARPU, but also in more mid and top-of-funnel metrics. And then in Rest of World, we are very early. It is our largest addressable market. We are pleased to have noted the MCU year-on-year growth disclosed in the quarter, and the previously disclosed, for the last two quarters, growth in top-of-funnel Webtoon app MAU in English.

But we have not yet committed to significant at-scale revenue growth, as we are preparing that market, given its potential size, for mid to long-term opportunity in revenue. With regard to advertising, as I mentioned, Korea represents one of our larger opportunities in advertising, and a discrete reliance on one e-commerce provider accounted for some of the noise in the numbers in Q4 as disclosed. We believe we have a healthy business and a strong team in more mature markets, and we believe it is very early days for the growth in Rest of World.

Japan, as we have described in advertising, has consistently been an area of strength for us, particularly in rewarded video, and I would expect us to return to that strength by the end of this year as well. With regard to the IP pipeline, first, despite the quarterly shifts that you hear us discussing, I want to review the fact that IP adaptation revenue for all of fiscal 2025 grew a whopping 35.5%. So this is a very healthy business not measured in the swing between one quarter or the next, but zooming out more broadly as a lever point for us to create faster adoption. Qualitatively, I would say we are very pleased with our pipeline in 2026.

But we are cautious about promising a specific quarterly impact from that pipeline, as we all know that one quarter can shift when you are producing great IP hits. And I am turning it over to Yongsoo now for a comment.

Yongsoo Kim: Regarding the end-of-year growth, the growth of our platform business typically follows a pattern where MAU increases first, followed by NPU growth, which then drives revenue expansion. Last year, we shared updates on MAU growth for our English platform, and we are now seeing that momentum transfer into MPU growth in the region, with the MPU growth having resumed. In Japan, revenue growth was strong over the past two years, but MAU growth was somewhat stagnant. We believe we are now seeing the impact of that dynamic. In response, we are preparing initiatives aimed not only at driving revenue growth in Japan, but also at expanding the overall user base.

We expect this effort to begin delivering meaningful results in the second half of this year in Japan.

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

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

David J. Lee: Thank you, Matt. Appreciate the question. First, it is quite early going, candidly, in our collaboration with Disney. I think the pace that we are demonstrating is a reflection of just how large-scale the opportunity set is for us in this area—this area of, call it, reformatted stories on our platform. So we are pleased to present the 12, including the seven that we have recently announced since the ’3. But it is far too early for you to really have a meaningful sense on specific metrics. For us, I think this opportunity will not be measured in a quarter’s performance.

The collaboration with Disney was always intended for the long-term success of both enterprises, and we are very excited about that. So as Yongsoo mentioned, having an original this year and not just that, but being able to really build this consumer platform he mentioned and launch it before the end of the year—these are the areas we are focused on versus it being probably too early to give results on these important reformatted titles.

Matthew Cost: Great. Thank you.

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

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

David J. Lee: Well, it is interesting. When you look at the business with regard to Korea, we have a long history of great products built by our team that are absolutely anticipating future trends around performance. And I am not going to go through all of them, Andrew. We can do it in a meeting. But if you look at that business, we have set the pace in many ways for products that are very much tied to the publisher or the advertiser’s success on platform—rewarded video, but not just that. We talked to you about our off-platform deals with large e-commerce providers, one of which we just mentioned.

When you look at our business in Japan and Rest of the World, we are really just at the beginning stages of rolling out the infrastructure. You should anticipate, in the Rest of World business here in the U.S., for us to have long-term success, but it will take us time to establish the direct ad sales force and to build, for the North American market specifically, product offerings and advertising that are not just exported from our success in Japan and Korea. That is why we are very cautious about providing any short-term expectations for the business, as we recognize we have to build for the market, and that will take us time.

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

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