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WE

WEBTOON Entertainment Inc. (WBTN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $325.7M, roughly flat YoY (-0.3%) but +5.3% on a constant currency basis; Adjusted EBITDA was $4.1M (1.3% margin) at the top end of guidance while GAAP diluted EPS was -$0.17 and Adjusted EPS was $0.03 .
  • Versus S&P Global consensus, revenue modestly beat ($325.7M vs $324.0M*) and Primary EPS materially beat (-$0.134* vs 0.03*), though note the company’s GAAP diluted EPS was -$0.17; EBITDA underperformed relative to consensus (est. $3.23M* vs actual -$18.20M*) .
  • Regional mix supported by Japan strength (revenue +6.4% to $164.3M; +9.4% CC) offsetting pressure in Korea (reported revenue $117.7M, +3.6% CC) and Rest of World (revenue $43.7M, -4.0% CC) .
  • Q2 2025 guidance: revenue $335–$345M (CC growth 2.2%–5.2%) and Adjusted EBITDA $0.5–$5.5M (margin 0.1%–1.6%); product upgrades and licensed IP (IDW’s Godzilla, Sonic; Fullmetal Alchemist) targeted to drive engagement through H2’25 .
  • Near-term stock narrative pivots on English-language app product rollouts (AI-powered discovery, “New & Hot,” search revamp) and ongoing Japan momentum; watch resolution of Wattpad web indexing and the government ban, FX headwinds, and public company cost drag .

What Went Well and What Went Wrong

What Went Well

  • Japan delivered broad-based growth: revenue +6.4% YoY (+9.4% CC), MPU +5.2%, paying ratio up to 10.3%, with LINE Manga ranked #1 by revenue in Japan’s non-game app market .
  • Engagement/product innovation: AI-powered recommendations, revamped onboarding, Home/Search/“New & Hot” tabs; A/B tests showed a 9% increase in episodes read among test users .
  • Licensed IP pipeline as user-acquisition lever: launch partnerships with IDW (Godzilla, Sonic), reformatted manga (Fullmetal Alchemist), plus Spanish-language successes (“Mala Influencia,” “Sigue Mi Voz”) to broaden reach beyond Originals .

Management quotes:

  • “We reported strong first quarter results with revenue and adjusted EBITDA both coming in at the top end of our guidance range...” — Junkoo Kim, CEO .
  • “We are pleased to maintain our top position in Japan with LINE Manga ranking #1... according to Sensor Tower.” — Junkoo Kim, CEO .
  • “Users in our test groups show a 9% increase in the number of episodes read.” — Company shareholder letter .

What Went Wrong

  • GAAP profitability deterioration vs prior year: net loss of $22.0M vs net income of $6.2M YoY due to higher public company G&A and marketing; gross margin compressed to 22.0% from 25.2% on SBC in cost of revenue, a Japan creator revenue-share true-up, and reclassification of Korea “free coin” marketing to cost of revenue .
  • MAU/MPU pressure in Rest of World: MAU down 12.9% and MPU down 5.9% YoY, primarily linked to Wattpad’s January security change impacting search indexing and a continuing government ban in one country .
  • Korea softness on reported metrics: revenue down on FX, MAU -10.3%, MPU -10.6%, ARPPU down on reported basis, though ARPPU grew +6.7% CC; NAVER web MAU methodology change also affected reported MAU .

Financial Results

Summary Metrics vs Prior Periods

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$326.7 $352.8 $325.7
Diluted EPS (GAAP) ($)$0.06 ($0.72) ($0.17)
Adjusted EPS ($)$0.20 ($0.03) $0.03
Gross Margin (%)25.2% 23.3% 22.0%
Adjusted EBITDA ($USD Millions)$22.2 ($3.5) $4.1
Adjusted EBITDA Margin (%)6.8% (1.0%) 1.3%

Revenue Streams

MetricQ1 2024Q1 2025
Paid Content Revenue ($USD Millions)$266.9 $260.2
Paid Content Revenue (Constant Currency) ($USD Millions)$266.7 $274.2
Advertising Revenue ($USD Millions)$37.0 $39.9
Advertising Revenue (Constant Currency) ($USD Millions)$37.0 $42.0
IP Adaptations Revenue ($USD Millions)$22.9 $25.6
IP Adaptations Revenue (Constant Currency) ($USD Millions)$22.9 $27.6

Geography

MetricQ1 2024Q1 2025
Korea Revenue ($USD Millions)$126.8 $117.7
Japan Revenue ($USD Millions)$154.4 $164.3
Rest of World Revenue ($USD Millions)$45.5 $43.7

KPIs

MetricQ1 2024Q4 2024Q1 2025
MAU (Millions)171.3 163.3 153.3
MPU (Millions)7.8 7.5 7.4
Paying Ratio (%)4.5% 4.6% 4.8%
ARPPU ($)$11.5 $12.0 $11.8
ARPPU (Constant Currency) ($)$11.5 $12.5 $12.4

Estimates vs Actuals (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$324.0*$325.7
Primary EPS ($)($0.134)*$0.03*
EBITDA ($USD Millions)$3.23*($18.20)*

Values marked with * retrieved from S&P Global. Note: S&P’s “Primary EPS” appears closer to normalized/adjusted EPS. The company reported GAAP diluted EPS of ($0.17) and Adjusted EPS of $0.03 . Values retrieved from S&P Global.

Callouts:

  • Bold beat: Revenue modest beat; Primary EPS significant beat.
  • Miss: EBITDA miss vs consensus; company reported Adjusted EBITDA $4.1M (vs GAAP EBITDA negative) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025$318–$328; CC growth 1.7%–4.8% Actual $325.7 Met; top end of range
Adjusted EBITDA ($USD Millions)Q1 2025$0.5–$5.5; margin 0.2%–1.7% Actual $4.1; margin 1.3% In-line
Revenue ($USD Millions)Q2 2025—$335–$345; CC growth 2.2%–5.2% New
Adjusted EBITDA ($USD Millions)Q2 2025—$0.5–$5.5; margin 0.1%–1.6% New

Earnings Call Themes & Trends

TopicQ3 2024 (Prev)Q4 2024 (Prev)Q1 2025 (Current)Trend
AI/product innovationIntroduced AI recs in Korea; strong app MAU ex-webnovel 2% weekly episodes/view lift; onboarding revamp; Highlights testing Full rollout of onboarding/Home/Search/“New & Hot”; 9% episode-read lift in tests Accelerating deployment
Japan momentumRevenue +13.5% CC; strong pipeline Revenue +18.9% CC; 164 new Originals; MPU +15%; paying ratio up Revenue +6.4% (+9.4% CC); MPU +5.2%; LINE Manga #1 Sustained leader
Rest of World healthWattpad important for IP; not paid content driver Ban in one country drove 2/3 of ROW MAU decline Wattpad security change hit indexing; ban persists; ROW revenue -4% CC Under pressure; remediation underway
Advertising+24.3% CC in Q3 +27.4% CC in Q4; new formats (Offerwall, Rewarded Video) +13.6% CC in Q1; Korea/Japan strength; NA remains early Growing; NA mid/long-term
Licensed IP/adaptationsSolid pipeline; revenue +5.3% CC in Q3 Project delays in Korea; overall FY +6.7% CC Spanish titles on Netflix/Prime; IDW & manga partnerships Pipeline diversified
Macro/tariffs/FX—FX headwinds in 1H25 reiterated No tariff impact noted; FX swings cited; resilient micro-transactions model Monitor FX; content resilient

Management Commentary

  • Strategy and platform health: “Our flywheel of creators, content, and users continue to drive significant value... revenue and adjusted EBITDA both at the top end of guidance.” — Junkoo Kim .
  • Product focus: “We have a number of initiatives... revamp of the Home, Search, and ‘New & Hot’ tabs... users in our test groups show a 9% increase in episodes read.” — Shareholder letter .
  • Regional priorities: “Japan grew all 3 businesses... LINE Manga ranking #1... we are taking Japanese content to other markets.” — Junkoo Kim .
  • Profitability drivers/constraints: “Gross margin 22% vs 25.2% prior year due to one-time SBC, Japan creator revenue share true-up, and reclassification of free coin marketing to cost of revenue.” — David Lee .
  • Monetization model resilience: “Our ARPU is around $12 per month... micro transactions... option to read by watching ads.” — Junkoo Kim .

Q&A Highlights

  • User growth investments: Management emphasized sustained marketing and infrastructure spend with Q2 Adjusted EBITDA still positive, viewing product cadence in H2’25 as pay-off for long-term profitable growth .
  • Local content/global export: Japan creators can publish globally; examples include “Oversummoned, Overpowered, and Over It!” and “Beloved Incompetent Stepmom” performing well on English platforms .
  • Korea MAU methodology and outlook: Emphasis on revenue/ARPPU growth over MAU volatility; NAVER web MAU methodology change affects reported MAU only .
  • Monetization of licensed IP: Licensed franchises augment audience without replacing Originals; margin structure differs but necessary for U.S. competitiveness .
  • Wattpad issues: Security indexing change and country ban drove ROW MAU declines; remediation underway though impacts may persist into Q2/Q3 .

Estimates Context

  • Q1 2025 performance vs S&P Global consensus: modest revenue beat and a material Primary EPS beat; EBITDA missed. Expect near-term estimate revisions focused on: (1) stronger Japan run-rate, (2) advertising trajectory (Korea/Japan), (3) temporary margin headwinds (SBC/cost reclass) and public company G&A. Values retrieved from S&P Global.
MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$324.0*$325.7
Primary EPS ($)($0.134)*$0.03*
EBITDA ($USD Millions)$3.23*($18.20)*

Values marked with * retrieved from S&P Global. Note alignment: S&P’s “Primary EPS” resembles normalized/adjusted EPS; GAAP diluted EPS was ($0.17) .

Key Takeaways for Investors

  • Japan remains the growth engine; maintain overweight to narratives tied to LINE Manga leadership and cross-border content exports driving paid engagement .
  • Near-term trading catalyst: H2’25 product rollouts (AI-driven discovery, “New & Hot,” search) with early 9% episode-read lift should improve conversion/ARPPU; watch Q2 call for initial impact metrics .
  • Monitor ROW recovery: Resolution of Wattpad indexing and country ban will be key to stabilizing MAU; the effect is more on advertising/IP sourcing than paid content revenue .
  • Margin lens: Expect gross margin to normalize as one-time cost items pass; public company G&A still elevated in near term; Adjusted EBITDA guidance remains conservative but positive .
  • FX sensitivity: Reported results face FX headwinds in 1H’25; constant-currency trends show underlying growth (+5.3% CC in Q1) .
  • Content strategy: Licensed IP (IDW, Fullmetal Alchemist) supplements Originals to smooth content cycles and aid user acquisition in English markets without displacing core creator ecosystem .
  • Positioning: Favor medium-term thesis on engagement and monetization improvements; near-term stock moves likely around guidance trajectory, Japan strength, and visibility into English app metrics from product changes .