Webtoon Reports 8 Percent Revenue Gain

Webtoon Entertainment (WBTN 81.20%), a global digital comics publisher and platform operator, reported results on August 12, 2025. Revenue (GAAP) reached $348.3 million, coming in $7.7 million above consensus and reflecting 8.5% GAAP revenue growth from the prior year. Adjusted earnings per share (EPS) of $0.07 topped the analyst projection of ($0.17), marking a $0.24 non-GAAP EPS surprise. The company also recorded a much-reduced net loss (GAAP) of $3.9 million, compared to a net loss of $76.6 million in the prior year. Despite these achievements, Adjusted EBITDA margin narrowed compared to Q2 2024, and profitability trailed the previous year, as heavier spending on marketing weighed on profits. Overall, Revenue reached $348.3 million (GAAP) and continued operational progress, offset by tighter margins and higher costs.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of Webtoon Entertainment's Business and Focus Areas

Webtoon Entertainment is a digital storytelling platform best known for web-comic and web-novel content. The company connects millions of readers and creators globally by delivering stories in a mobile-friendly, scrollable format. Its three primary revenue streams are paid digital content, advertising, and adapting intellectual property (IP) into new media like film and games.

Recently, Webtoon Entertainment has focused on expanding its reach and deepening user engagement through both technology upgrades and partnerships with major content owners. Central to its model is the "community flywheel," where creators and fans interact, driving an ongoing cycle of content creation and consumption. The company’s key success factors are growing its user and creator base, effective content monetization across multiple revenue streams, and building out its technology and platform features to increase global engagement.

Quarter in Review: Growth, Partnerships, and Investments

The quarter showed strong headline results, with revenue (GAAP) up 8.5% and beating analyst expectations. This came from robust expansion in all three of the company’s core revenue streams: Paid Content, Advertising, and IP Adaptations. Paid Content revenue in constant currency terms increased by 2.0%, Advertising revenue on a constant currency basis rose 10.2%, and IP Adaptations surged by 42.6% on a constant currency basis. The company achieved these gains while also increasing its spending on marketing, which it views as critical for long-term growth.

Adjusted EPS jumped to $0.07, well ahead of the expected loss, though it was lower than the prior year’s $0.18 (Adjusted, Q2 2024) due to heavier investment in operations. Adjusted EBITDA totaled $9.7 million, landing above company guidance. Adjusted EBITDA totaled $9.7 million, compared to $20.4 million in the second quarter of 2024, representing a decline of 52.5%. The margin compression -- adjusted EBITDA margin narrowed to 2.8% from 6.3% in the prior year -- was driven by increased investments in marketing. Marketing expenses (GAAP) rose to $31.1 million, up 32.6% compared to Q2 2024, reflecting the intensified effort to acquire and retain users, especially within English-speaking markets and globally. The company’s net loss (GAAP) declined sharply year over year, moving from ($76.6 million) to ($3.9 million), thanks mainly to the absence of the prior year’s one-time initial public offering (IPO) costs.

One of the most notable developments during the quarter was the announcement of a high-profile partnership with Disney. This collaboration aims to bring major franchises such as Marvel and Star Wars into the mobile, vertical-scroll comics format unique to the platform. Webtoon Entertainment also rolled out significant upgrades to its English-language app. Notably, A/B testing of new features led to a 9% increase in episodes read by targeted user groups, as observed in March 2025. -- a meaningful improvement for engagement metrics. The full impact of these improvements is expected to scale through the remainder of the year.

The company's business relies on keeping users engaged and active. However, certain user segments experienced declines, especially in the “rest of world” category, with “rest of world” monthly active users (MAU) declining 4.9% year-over-year in Q1 2025, largely linked to technical issues affecting Wattpad search and regulatory restrictions in some regions. While user growth plateaued or dipped in these cohorts, Webtoon Entertainment is addressing the issue by focusing future enhancements and investments on its core app product, where monetization is strongest.

Looking Ahead: Guidance and Priorities

Management provided guidance for the third quarter. It expects revenue to rise 9.4% to 12.2% on a constant currency basis, projecting a revenue range between $380 million and $390 million. Adjusted EBITDA is forecast between $2.0 million and $7.0 million, corresponding to an Adjusted EBITDA margin of 0.5% to 1.8%. These projections reflect continued expectations for topline growth but anticipate persistently slim profit margins due to ongoing investments in user growth and product initiatives.

As Webtoon Entertainment continues to scale, key priorities are international expansion, deeper engagement in English-language markets, and maximizing value from major IP partnerships such as the Disney deal. Management has indicated that platform innovation, particularly app feature enhancements and recommendation technology, will be crucial to driving higher user activity and monetization. Investors should continue monitoring trends in user engagement, the uptake of new content and partnerships, and whether revenue expansion sets the stage for future margin improvement.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.