WEBTOON Entertainment (NASDAQ:WBTN) 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.
Margins improve as marketing spending rises
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.
Engagement and regional performance
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, while MPU increased 10.4% to 3.8 million. ARPU climbed 14.8% at constant currency.
- Japan: Revenue declined 6.7% at constant currency. Triple-digit growth in IP adaptations was more than offset by single-digit declines in paid content and advertising. MAU fell 3.3% to 21.8 million, though it increased sequentially. MPU declined 9.5% year over year to 2.1 million.
- Rest of world: Revenue grew 11.1% at constant currency, supported by paid-content growth and double-digit growth in advertising and IP adaptations. MAU increased 0.2% to 110.7 million, while MPU declined 0.6% to 1.7 million. ARPU rose 4.4% to $6.90.
Advertising revenue rose 11.5% at constant currency, led by Korea and the rest of the world, while Japan advertising declined. Lee said rest-of-world advertising revenue increased more than 20% at constant currency. Paid-content revenue increased 4.3% at constant currency, with MPU growth of 1.8% and ARPU growth of 2.5%.
AI features and content initiatives
Kim highlighted several AI-related product initiatives intended to expand audience reach and deepen engagement. The company launched a beta auto-translation program in May for eligible English-language Canvas creators and plans to expand it to a broader group later this year.
WEBTOON also introduced Bios in Korea, an AI interactive story-chat service that enables users to hold conversations with characters based on official worlds approved by creators. The company plans to expand Bios to Japan later this year.
In Korea, WEBTOON launched Cuts Make, an AI-powered short-form animation tool that lets users create content based on official IP. Kim said new content rose 136% during its first week, while the number of creators using the tool grew 188% from the prior week.
The company also said it expects to introduce an original series through its Disney collaboration later this year and remains positioned to launch a new digital comics platform with Disney before year-end.
Expanding IP adaptation investments
President Yongsoo Kim said WEBTOON made two strategic investments during the third quarter to expand its IP adaptation business. The company invested in RI Games Holdings, which it said will help it develop games based on established WEBTOON IP. WEBTOON and RI Games Holdings plan to develop and launch multiple games over the next four years.
Lee said the investment will result in a 60% ownership stake across two closings, while RI Games Holdings will continue to operate independently. He said the partnership combines WEBTOON’s content pipeline and user-engagement data with the game developer’s specialized expertise.
WEBTOON and Naver also formed a limited partnership in July to establish a $100 million IP adaptation fund. Yongsoo Kim said the fund is intended to help the company move beyond a licensing-only model, secure stronger IP rights and participate more directly in the economic upside of adaptations.
The company said multiple WEBTOON adaptations performed strongly during the quarter, including three series that reached Netflix’s global Top 10.
Third-quarter outlook
For the third quarter of 2026, WEBTOON projected constant-currency revenue growth of 0.7% to 3.3%, representing reported revenue of $358 million to $368 million based on current exchange rates. It forecast adjusted EBITDA of $0 million to $5 million, implying an adjusted EBITDA margin of 0% to 1.4%.
Lee said the company’s expected return to double-digit growth by the end of the year depends on continued strength in Korea and advertising, a recovery in Japan through local content, engagement efforts and distribution partnerships, and the timing of IP-related revenue.
About WEBTOON Entertainment (NASDAQ:WBTN)
Webtoon Entertainment Inc operates WEBTOON, a leading digital comics platform offering a diverse library of user-generated and professionally produced webcomics. The company enables creators around the world to publish serialized content in a vertical-scrolling format optimized for mobile and web consumption. Through its platform, readers can access thousands of titles across genres such as romance, fantasy, drama, and action, with both free-to-read episodes and advanced access options supported by microtransactions and advertising.
Founded as part of Naver Corporation and launched internationally in 2014, Webtoon Entertainment has grown rapidly by fostering a direct connection between comic creators and global audiences.
