Webtoon (WBTN) Q1 2026 Earnings Transcript

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DATE

May 11, 2026, 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Junkoo Kim
• Chief Financial Officer — David Lee
• President — Yongsoo Kim

TAKEAWAYS

• Revenue -- $320.9 million, a 1.5% decrease year over year, but up 0.2% on a constant currency basis, driven by paid content and advertising growth offset by a decline in IP adaptations.
• Gross Margin -- 25.9%, expanded by 390 basis points due to cross-border content distribution strategy and higher-margin advertising business growth.
• Net Loss -- $8.8 million, narrowed from $22 million year over year, primarily reflecting improved gross profit.
• Adjusted EBITDA -- $9.5 million, representing 132% growth from $4.1 million in the prior year and above the high end of prior guidance.
• Adjusted EPS -- $0.07, up from $0.03 a year ago.
• Global MAU -- Declined 5.9% year over year, reflecting a new methodology excluding automated traffic and bot accounts since this quarter.
• App MPU -- Increased by 2.2%, indicating ongoing success of personalized content recommendation initiatives.
• English Platform Webcomic App MAU -- Rose 3.1% year over year, driven by new title launches.
• Paid Content Revenue -- Grew 2.3% on a constant currency basis, supported by corresponding MPU and ARPU increases.
• Advertising Revenue -- 0.8% yearly growth on a constant currency basis, with Korean ad revenue down from Naver but offset by gains from other partners.
• IP Adaptations Revenue -- Declined 22.2% year over year on a constant currency basis, with management referencing milestone-based variability in recognition.
• Korea Revenue -- Increased 3.2% (constant currency), as double-digit growth in paid content compensated for double-digit decline in IP adaptations and a single-digit drop in advertising.
• Korea MPU -- 3.7 million, up 8.5%; Paying ratio 16.1%, a 189 basis point rise; ARPU up 5.1% (constant currency).
• Japan Revenue -- Decreased 3.4% (constant currency), with single-digit decline in paid content, single-digit growth in advertising, and triple-digit growth in IP adaptations.
• Japan MPU -- 2.1 million, down 8.3%; Paying ratio at 9.8%, falling 50 basis points; ARPU up 3.7% to $23.20 (constant currency).
• Rest of World Revenue -- Grew 5.6% (constant currency), led by paid content and advertising, partially offset by decline in IP adaptations.
• Rest of World MPU -- Up 3.3%; Paying ratio up 17 basis points to 1.7%; ARPU increased 4.4% year over year to $6.80.
• Gross Profit -- $83 million, a 16% increase from the prior year, contributing to higher margin expansion.
• Adjusted EBITDA Margin -- 3% for the quarter, an increase of 170 basis points.
• Total G&A Expenses -- $60.6 million, down from $66.7 million year over year amid cost discipline initiatives.
• Cash Balance -- $595 million, with an additional $11 million in short-term deposits classified as other current assets.
• Q2 2026 Guidance -- Revenue expected between $332 million and $342 million, representing 1.7%-4.6% constant currency growth; Adjusted EBITDA guidance is $0 to $5 million with corresponding margin range of 0%-1.5%.
• Canvas Platform Changes -- Introduction of a unified international Canvas platform, opt-in AI-powered translation, and expanded ad revenue share to supported languages, aiming to simplify global creator distribution and monetization.
• Creator Compensation -- Over $2.7 billion paid to creators from 2021-2025; management updated this to $2.8 billion for 2021-2026 during the call.
• Disney Collaboration -- Since Q4, five new titles launched, including two Star Wars series; management reiterated the new digital comic platform remains on track to launch by year-end.
• Leadership Changes -- Yongsoo Kim elevated to President to lead global operations; Yugi [inaudible] became Chief Product Officer, focusing on product improvement, particularly in Japan.
• Strategic Focus -- Increased investment in AI, cross-regional feature adoption, development of local original content in Japan, and growth in mega IP franchises; management emphasized both organic and inorganic opportunities.

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RISKS

• MAU Decline -- MAU fell 5.9% year over year, reflecting management action to exclude bot and unauthorized traffic, which could pressure reported user trends.
• Japan MPU Trend -- "Japan's MAU of 21.1 million declined 3.6%. MPU of 2.1 million declined 8.3%," highlighting persistent challenges in user monetization in the Japanese market.
• IP Adaptations Volatility -- IP adaptations revenue fell 22.2%, with management noting the "revenue recognition for IP can vary quarterly based on the achievement of certain milestones," contributing to business unpredictability.
• Low Q2 Profitability Guidance -- Adjusted EBITDA expected between $0 and $5 million for Q2 with margins of 0%-1.5%, indicating near-term investment-led margin pressure.

SUMMARY

WEBTOON Entertainment (NASDAQ:WBTN) reported a revenue decrease but achieved higher gross margin and sharply increased adjusted EBITDA, reflecting disciplined cost management and mix improvements. Management introduced a globalized Canvas platform with AI translation and expanded ad revenue share, signaling a strategic focus on scaling creator monetization and international content reach. Despite decreased global MAU from refined measurement, the company posted continued MPU and ARPU growth, particularly on the English platform. Operationally, management cited strong momentum in Korea's paid content and detailed plans to strengthen product and local content in Japan, with the latter market remaining a turnaround focus. Guidance for Q2 calls for modest revenue growth and low profitability, as investments in creators, platform innovation, and global expansion persist.

• Management reconfirmed the Disney digital comic platform remains on track for launch by year-end, reinforced by multiple new IP title releases since Q4.
• Leadership transitions have repositioned key executives to accelerate product and content innovation globally, while region-specific management aims to address local market challenges.
• Continued strategic investments intend to drive a return to double-digit revenue growth by Q4 2026, including in AI features, localized content, and global creator ecosystems.
• Expanded MAU reporting methodology may affect comparability of future user metrics, as management now removes detected bots and unauthorized activity from the count.

INDUSTRY GLOSSARY

• MAU (Monthly Active Users): Number of unique users engaging with the platform at least once in a month.
• MPU (Monthly Paying Users): Unique users who made at least one payment on the platform in a month.
• ARPU (Average Revenue Per User): Per-user revenue calculated over a set period, typically monthly or quarterly.
• IP Adaptations: Revenue stream generated from transforming original story content into alternate media forms, such as films or TV series.
• Canvas: WEBTOON’s platform section for amateur creators, distinct from “Originals” which feature professionally curated or promoted content.

Full Conference Call Transcript

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

We are introducing a unified international platform to support global distribution across several languages, including English, Spanish, and French, which we believe will make it easier than ever for creators to share their stories all over the world. We are also introducing an opt-in AI-powered translation program where creators have a choice to translate and distribute their series in other languages. As part of this update, we are also expanding our ad revenue share to our supported Canvas languages. Helping creators monetize their content on our platform remains an important part of our strategy, and we have a strong track record of driving this. From 2021 to 2025, we paid out an impressive $2.7 billion to our creators.

Looking ahead, we want to grow that sum even more, and we will continue to invest to make our creator ecosystem more robust. Moving on to a quick update on our Disney collaboration. Since the end of the fourth quarter, we have launched another five titles, including Star Wars [inaudible] Black, White, and Red, Star Wars [inaudible], Wings of Starlight, and Mickey and Formula One Racing [inaudible]. We look forward to introducing another original series later this year, and remain well positioned to launch the new digital comic platform before the end of this year. Moving on to IP adaptations, I want to highlight a couple of recent successes.

We celebrated Valentine's Day this year with the release of two of our Wattpad web novels as film adaptations. Love Me, Love Me was released on Prime Video, where it reached global number one during April launch week, while Kissing Is the Easy Part was released on Qubi. We are also excited to release a webcomic adaptation of Kissing Is the Easy Part on WEBTOON Entertainment Inc. Common stock in the next few months, moving the titles through our global ecosystem to unlock value for this fan-favorite web novel. Our Korean content continues to demonstrate its universal appeal beyond just our country of origin.

In March, we co-hosted the world premiere of The Legend of [inaudible] Soldier at Series Mania, Europe's biggest TV festival. The series is scheduled to premiere in Korea in May 2026, with concurrent global streaming on Disney+ and HBO Max in select regions. Before I conclude, I want to share a leadership update. As we announced in March, we have elevated Yongsoo Kim to President to lead our global operations. He has been a key member of our management team over the last few years with a demonstrated track record of driving innovation through his deep leadership, and I believe Yongsoo will play a key role in accelerating the execution of our global business.

We believe we are off to a strong start this year and look forward to driving further innovation throughout the rest of this year. With that, I will now turn the call over to David. David, please go ahead.

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

We narrowed our net loss to $8.8 million in the quarter compared to a loss of $22 million in the year prior, driven primarily by improved gross profit. We reported adjusted EBITDA of $9.5 million, well above the high end of guidance, as we exercised cost discipline, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth of 132% in the quarter. This compares to an adjusted EBITDA of $4.1 million in the same quarter of 2025. As a result, our adjusted EPS for the quarter was $0.07 compared to an adjusted EPS of $0.03 in the prior year. Turning to operational health, global MAU declined 5.9% in the quarter.

In March 2026, we saw a spike in automated web traffic in certain non-core markets. We strive to detect and minimize unauthorized access to our platform, fake user accounts, and fraudulent accounts created by bots that inflate user activity, and starting from the quarter ending 03/31/2026, we decided to exclude such users from our MAU calculation to ensure accuracy and consistency of our MAU reporting. We continue to focus on driving users to our app as well as converting them to paying users.

While app MAU and webcomic app MAU declined 6.7% and 3.0%, respectively, year over year, we are pleased to have driven MPU growth of 2.2%, as our initiatives focused on recommending more relevant content to our users have been performing well. Importantly, our English platform webcomic app MAU increased by 3.1% year over year. I would like to highlight a couple of successful new title launches in the first quarter that contributed to this growth. Ties That Bind Us, a hit Wattpad web novel, was adapted into a webcomic in March 2026 and has already garnered over 5 million views. Another strong performer, Shifting Tails, launched in February and has consistently ranked in the top 20 amongst English platform titles.

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 2.3% revenue growth on a constant currency basis. We are pleased to report another quarter of solid MPU growth of 2.2% in Q1. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. ARPU also increased 0.1% in the quarter on a constant currency basis. Advertising grew 0.8% in the first quarter on a constant currency basis year over year. In Korea, we experienced a decline in ad revenue from Naver, offset by an increase from other partners.

Finally, our IP adaptations business saw revenue decline 22.2% year over year on a constant currency basis in Q1. As we have noted previously, revenue recognition for IP can vary quarterly based on the achievement of certain milestones. Now I would like to look at our results in the context of core geographies. In Korea during the first quarter, our revenue grew 3.2% year over year on a constant currency basis, driven by double-digit growth in paid content, offset by double-digit decline in IP adaptations and single-digit decline in advertising. During the first quarter, MAU of 23.1 million decreased 4.3%.

We were pleased to see MPU of 3.7 million grow 8.5%, and a paying ratio of 16.1% increasing 189 basis points compared to 2025. Korea ARPU on a constant currency basis was up 5.1% compared to 2025. Moving to Japan, for the quarter, Japan revenue declined 3.4% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by single-digit growth in advertising and triple-digit growth in IP adaptations, all on a constant currency basis. Japan's MAU of 21.1 million declined 3.6%. MPU of 2.1 million declined 8.3%, and the paying ratio of 9.8% was down 50 basis points year over year.

First quarter Japan ARPU of $23.20 grew 3.7% year over year on a constant currency basis. We completed our infrastructure projects by the end of Q1, and we have redeployed resources to improve user experience on our platform. Yugi [inaudible], who was recently elevated to Chief Product Officer, successfully drove growth in MPU in Korea in his former role as head of Korean content services, and we expect Yugi to spend a substantial amount of time focusing on our Japan business. In Rest of World, we saw revenue growth of 5.6% year over year on a constant currency basis in the quarter, driven by single-digit growth in paid content and advertising, offset by a single-digit decline in IP adaptations.

First quarter Rest of World MAU declined 6.7% year over year. While the paying ratio of 1.7% increased 17 basis points compared to the first quarter of last year, we are pleased to see MPU growth of 3.3%. Rest of World ARPU of $6.80 also increased 4.4% year over year, on a reported and constant currency basis. Turning to profitability, gross profit for the quarter grew 16% year over year to $83 million. This resulted in a gross margin of 25.9%, which expanded 390 basis points compared to the prior year. Adjusted EBITDA for the quarter increased 132% to $9.5 million. This resulted in an adjusted EBITDA margin of 3%, which expanded 170 basis points compared to the prior year.

On the cost side, total G&A expenses for the quarter were $60.6 million compared to $66.7 million in the prior year quarter as we exercised cost discipline. Interest income in the first quarter was $4.4 million compared to $5.1 million in the prior year, and other loss was $2 million compared to other income of $2.7 million in the prior year period. We had an income tax expense of $2.7 million in the quarter compared to $2.5 million in the prior year. Depreciation and amortization was $8 million in the first quarter compared to $8.4 million in the prior year. Net loss was $8.8 million, driven primarily by higher gross profit.

This compares to a net loss of $22 million in the prior year quarter. As a result, Q1 GAAP loss per share was $0.07 compared to a loss per share of $0.17 in the prior year period. Adjusted EPS was $0.07 in the quarter, compared to an adjusted EPS of $0.03 in the prior year period. Our balance sheet remains strong, with a cash balance of $595 million and another $11 million of short-term deposits included in other current assets. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I would like to spend a few moments discussing our second quarter outlook.

For 2026, we expect to deliver revenue growth in the range of 1.7% to 4.6% on a constant currency basis. This represents revenue in the range of $332 million to $342 million based on current FX rates. We anticipate second quarter adjusted EBITDA in the range of $0 to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. The fundamentals of our business are strong, and we expect to see an improvement in Japan and advertising trends as we move through the course of the year. Additionally, we are continuing to make investments throughout the year in our creators, content, and users in order to drive our near- and long-term success.

We continue to expect these drivers will support a return to double-digit revenue growth by the end of the year. With that, I would like to turn it back to the operator to begin the Q&A session.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star then one on your telephone keypad. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound. If you are muted locally, please remember to unmute your device. Please standby while we compile the Q&A roster. As a reminder, we will ask everyone to stick to one question and one follow-up so we can take as many questions as possible. Our first question comes from the line of Mark Stephen Mahaney with Evercore ISI. Your line is open. Please go ahead.

Mark Stephen Mahaney: Thank you. I would like to ask two questions, please. Gross margins: you have some nice trends working. Talk about where gross margins can go in the medium term, not next quarter, but in the next year or two. And what are the key drivers? Is it primarily this average mix shift towards advertising? What else would be in there? And then secondly, could you talk a little bit about your financial philosophy? As you hopefully reaccelerate revenue growth per your guidance by the end of the year, are there enough investment opportunities out there that you want to keep that very low single-digit positive EBITDA?

Is that how you are thinking about running the business, that zero to five, single-digit millions in positive EBITDA generated each year? And any revenue upside, would you let it flow down to investments as opposed to just dropping to the bottom line? That is the philosophical question. Thank you very much.

David Lee: Thanks, Mark. It is David Lee, and then others will join after I go through your two questions. They are interrelated. Let me answer the sources before we talk about, so to speak, the uses on your philosophy question. Regarding gross profit margin, as we noted in the quarter, the 390 bp increase to 25.9% really had two major drivers. The one that I think persists is the benefit of mix shift, as we grow more of our paid content outside of our original market of Korea, which, as we have discussed in the past, has an improved gross profit margin, along with our future growth in our advertising business.

That certainly was not a major factor in this quarter, but it is broadly still a factor. Crossover IP, I believe, still represents the lowest form of customer acquisition investment, but it does have a lower gross profit margin. So when we see these hit crossover IPs hit a quarter or two, it will swing things. Broadly speaking within Q1, you will note in 2024 and in 2025, we did have some cleanup in attribution between marketing to COR, particularly in Japan and Korea. Going forward, I think we are relatively clean, and I think the mix benefit I just described is likely to persist.

But within the quarter, in addition to mix, there was an isolated improvement in our Japan business' gross profit margin associated with the Japan smartphone act. We do not intend to drop this benefit, approximately $3 million, to the bottom line. We continue to want to invest it, in our guidance frame, for additional growth. But that is a noteworthy improvement in the cost profile, not just for us, but many businesses in consumer tech in Japan. Let me turn to your philosophy question. We are very bullish on the persistent long-term growth of this business. That is why we talk about double-digit growth by Q4.

But we are intentional about investing, which you see in our Q2 guidance, behind the growth that we are excited about. Investments in Canvas that you saw us make a major improvement on. Investments in our core marketing in high-growth areas, the transition you are seeing in Rest of World. We are seeing real MPU growth—3% growth in what we call Rest of World and even higher if I were to break out the English-speaking portion of that. And so there are really strong reasons to invest for shareholder value. Long term, I do not think we are limited to, as you mentioned, single-digit adjusted EBITDA dollars or margin range.

I think this flywheel will continue to improve its growth prospects along with its profit margin. But I want to recognize we are still getting through our Q1 noise. We finished our infrastructure project in Japan, and we are reinvesting back into growth in Japan. That will take a few quarters, which is why we recognize that it is the right thing to do in the short term. Long term, however, we are very bullish on both the top-line growth and the long-term potential for profit.

Yongsoo Kim: We are focused on initiatives aimed at accelerating growth, including both organic and inorganic opportunities. This includes expanding video formats on the platform, strengthening digital character interaction and community features, and building mega IP franchises that can both extend the IP business and further drive platform growth. We look forward to sharing progress updates on these initiatives in future calls.

David Lee: Great. Why do we not go to our next question?

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

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

David Lee: Sure, and welcome to the coverage, Kunal. I look forward to meeting you in person and talking with you in greater depth. With regard to Disney, as JK mentioned, we are very excited about this collaboration, and we are on track. Specifically, we reiterated targeting a 2026 launch for the new consumer app platform. But we are not sitting on our heels. Since our last call, having five titles launched on our platform—two Star Wars titles, Wings of Starlight, Daredevil, and an original around the Mickey and Formula One racing storyline—continues to exhibit the progress that we intend to continue to make. We also mentioned an additional original series coming out later this year.

So I would characterize our collaboration with Disney as on track, very exciting, with much more to come.

Kunal Madhukar: Got it. Thanks. And then, quick follow-up on the revenue side. You mentioned getting back to double-digit growth by 2026. Can you talk about what are the different elements that go into that growth acceleration, and then how much does Japan play into it? Thank you.

David Lee: Yes. We are excited to drive to double-digit growth by the end of the year. Let me go through the components. As you get to know our business, paid content is our bread and butter, and our country of origin was Korea. So noting within the quarter a 13.9% constant currency growth in paid content in Korea reflects the fact that we are very confident in the health of our oldest flywheel, one that benefited from continued investment in product, our AI personalization engine, and a very exciting new development in character chat that was launched in June 2024, which, by the way, followed on in Japan, launching in February 2026.

We are also very excited about the work that we are partnering with Geniez on that Yongsoo can talk about, with regard to having AI-powered character avatars in the U.S. launching later this year. So continued investment in the product and the features that our readers want, and continued investment in the supply chain of great stories. We talked about Canvas, our amateur platform in English, having launched a new homepage, and then in May, a new app. This is showing up in things like Korea paid content increasing 13.9%. In Japan paid content, we just completed in Q1 a pretty important infrastructure investment.

This was us shoring up the infrastructure to drive growth in the latter part of this year by Q4. We also note that our advertising business will lap a challenging quarter a year-ago period by Q4. We talked about one large e-commerce player hurting the growth year ago in Korea. And we are relatively early in Rest of World, which we hope to begin to drive to growth by the end of this year. Finally, there is crossover IP. More and more great examples of consumers discovering our stories not just on our platform, but on big and small screens. There is an ebb and flow, and a quarter or two can make a difference.

We are very excited about the slate. That is why Junkoo mentioned in his shareholder letter the strength of the examples. All three of these components are areas we are investing in to drive to that double-digit growth number by the end of the year.

Yongsoo Kim: Across the WEBTOON Entertainment Inc. Common stock platform, we are continuing to see big inflows in Korea as well as in the U.S. and the broader Rest of World market. Once Japan returns to growth, we believe the platform can return to a more meaningful overall growth trajectory. Turning around active users and paying user growth in Japan remains our top priority. There are two key drivers behind these efforts. First, as David mentioned, we see significant opportunities through product innovation. At the same time, we are accelerating the development of local original content in Japan. We plan to further strengthen our investment in local content and creators, and more concrete plans are currently being developed.

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

Eric James Sheridan: Thanks so much for taking the question. Maybe a two-parter building on some of the themes we have talked about so far. In terms of changing the way in which you compensate or monetize creators on the platform, can you talk a little bit about how that might change your competitive positioning for creators across some of your key markets, not just the growth markets, for creators as well? That would be number one.

And then, understood on the easier comp as you get into the back part of the year with respect to advertising, but can you update us on some of the building blocks you are putting in place with respect to the advertising business that would sustain growth beyond 2026? And how should we be thinking about those investments turning into yield or output? Thank you.

David Lee: Thanks, Eric. Good questions. Let us cover the first and then the second. With regard to our competitive position, as the dominant leader in this format, we feel we are extremely competitive with regard to the aligned revenue share model that we continue to support. I do not think you can find another platform where any creator, even an amateur creator, can sit side by side with the platform and see mutual benefit, and that is not going to change. We have not talked about or forecast any need to invest more to be competitive.

In fact, I think we are increasingly providing great tools—tools like what you find in Canvas—where an AI-powered translation tool can take an original English amateur story into the other seven languages. Sharing our advertising revenue with amateurs is a low-cost but very aligned way to demonstrate to even those who have not yet had success as a creator that if they have a hit, we will power their growth beyond, consistent with what you see in successes on platforms like Amazon Prime and many Wattpad examples. This is a core strength of the business.

We will increasingly provide more and more value to creators and will maintain that alignment, with no change from a CFO standpoint in needing to increase the rev share. Rather, we are increasing the value that we give to creators in our existing model. I will also note that this model allows for us all to benefit because as a creator exports more stories beyond their country of origination, we see more opportunity in our company’s gross profit margin, as described earlier.

With regard to advertising, in the quarter, we talked about Korea—our most mature market for advertising—having been impacted by a lower level of advertising from our former parent Naver, but an increased level of support in diversifying our customers in advertising in Korea. That will continue, and we will see the benefit of that in future periods. In Japan, we did not break out the growth, but we are pleased with our advertising growth. In Rest of World, we are much more clear-eyed. Part of the leadership change with Yongsoo leading the business as our global President, and having him ask me to lead Wattpad directly as its President, is to put in place the fundamentals for the bigger game.

That means we are not driving to a short-term bump in Rest of World or North America advertising. We are much more focused on the bigger prize in 2027 and beyond. We will update you on those building blocks as we can.

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

We believe this creates meaningful benefits for both creators and users, further strengthening the flywheel of the platform.

Operator: Our next question comes from Dae Lee with JPMorgan. Your line is now open. Please go ahead.

Dae Lee: Great. Thanks for taking my questions. I have two. First, when you talk about leadership changes you have made recently—the shift from regional structures to integrated global leadership and your unification of the Canvas program also stood out as a way to bring down geographical barriers. When you talk about globalization of your platform, is this more about doing better work in Rest of World regions, or does that involve Korea and Japan as well, in thinking about the three distinct regions as a global platform overall? And I have a follow-up.

David Lee: Thanks, Dae. It is a great question. Let me start by offering this point of view. Globalization is about a few things. Principally for us, it is about applying best-in-class business practices to benefit more than one region. It is not just about Rest of World. Let me give you an example. We are very proud of the work we have done in Korea, our original market, in the last year—showing that 13.9% constant currency growth, increased experimentation in AI personalization, ARPU growth, and the ability to own titles, not just rent or license them. The phenomenal work in product and on business model in Korea has great relevance across the world.

As an example, we talk about a leadership change such as Yugi [inaudible], who led that work in Korea, now leading globally as Chief Product Officer and spending a lot of time investing in Japan with Yongsoo’s help. Canvas is another great example, where having a unified tech platform—being able to provide seven languages, not just one—does not eventually just benefit Rest of World. That benefits the entire global platform. From a finance standpoint, it is about allocation of capital and talent to the maximum impact, and it is a big lever for us across all regions.

Yongsoo Kim: One of the biggest changes under our global organization structure is on the product side. Today, WEBTOON Entertainment Inc. Common stock operates different platforms across Korea, Japan, and Rest of the World markets, and we see a significant opportunity to raise the overall platform standard by more quickly and efficiently scaling successful features across regions. This includes areas such as the content discovery engine, character-interactive features, and video-related features. By accelerating the sharing and adoption of successful product innovations across markets, we believe we can improve the user experience globally and drive stronger platform growth over time.

At the same time, leadership changes across both the tech side and our organization will help accelerate AI transformation across the product and the company as a whole. We expect to move faster in integrating AI-driven innovation into both the user experience and internal operations going forward.

Dae Lee: Got it. And as a follow-up, on the creator side, you unified Canvas. Is there a reason why Korea and Japan might be missing there? And when you talk about investing $50 million in creator support, can you give us examples of what kind of support was lacking on your platform that necessitated this type of investment in 2026? Thank you.

David Lee: Let me start with your second question first. Candidly, I do not think we were lacking any investment in our creators. It has been a 20-year passion for our founder, JK, and we have continuously invested in creators. In fact, we just updated a number—I want to make sure IR corrects me if it is wrong. I think it is a $2.8 billion creator revenue share number from $2.7 billion—creator investment that we have made over the five-year period from 2021 to 2026. We will update you if I am off by a decimal or two. This commitment is not going to change. And on your first question, let me have Yongsoo, our President, answer directly.

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

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

Matthew Cost: Great. Thanks for taking the question. I just want to follow up on the Canvas platform. In the shareholder letter, you made a comment about increasing the number of crossovers from Canvas to Originals. Is that going to be a function of exposing Canvas content to seven languages instead of one, so you will have a better level of visibility into what content would succeed in the Originals program? Help us understand what the new Canvas program will do, at a more granular level, to increase the conversion to the Originals side. Thank you.

David Lee: Thanks, Matt. I will start, and then I think Yongsoo will jump in. First, we have always seen great Originals emerge from our amateur platform, even on the Canvas of yesterday. We have given examples—having folks emerge who never had a voice before, like Rachel Smythe and many others, including on the Wattpad side—is a core part of our business model. It is the lowest-cost way for us to empower creators to write a story that we may not have suspected would be the global hit they eventually become. That is unchanged. Canvas is critically important for us in that way, and while the purpose is unchanged, there is a massive upgrade in its capability.

It starts with the new board we launched on April 21, and the whole app was refreshed on May 6. We have highlighted seven languages where you have AI-powered translation, but there are also more compelling tools for the amateur creator on Canvas to have a chance to graduate to being a hitmaker and eventually a professional creator. I would think of this as a wholesale improvement, soup to nuts, rather than a bet on any small part of it.

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

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

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