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WEBTOON Entertainment Inc. (WBTN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $378.0M (+8.7% YoY; +9.1% constant currency), Adjusted EBITDA was $5.1M, GAAP diluted EPS was -$0.09, and gross margin fell to 21.9% .
  • Versus Wall Street (S&P Global) consensus, revenue was slightly below ($384.7M* est vs $378.0M actual), “Primary EPS” (normalized) was better than consensus (-$0.073* est vs $0.04* actual), while EBITDA missed (consensus $5.58M* vs GAAP EBITDA -$7.12M actual; Adjusted EBITDA $5.1M) . Values with asterisks retrieved from S&P Global.
  • Q4 2025 guidance: revenue $330–$340M (constant-currency decline 5.1%–2.3%) and Adjusted EBITDA loss of $6.5M to $1.5M, including $16.5M non-cash items (actuarial losses, minimum guarantee write-down); drivers include timing lumpiness in IP adaptations and Korea ad partner headwinds .
  • Strategic catalysts: non-binding term sheet to build a new Disney digital comics platform and for Disney to acquire a 2% equity interest; new Warner Bros. Animation partnership; product innovation in short-form video (Video Episodes, CUT/UGC) .

What Went Well and What Went Wrong

What Went Well

  • IP adaptations surged: revenue +168.7% YoY (constant currency +171.8%); “My Daughter Is a Zombie” was Korea’s #1 movie by attendance YTD and drove strong platform engagement; pipeline of ~20 anime projects in Japan .
  • English webcomic app traction: app MAU +12% YoY with rising conversion to paid users, supported by reformat launches and product changes; management sees this as a key monetization lever .
  • Execution vs guidance: Adjusted EBITDA landed above the midpoint of the Q3 guidance range (actual $5.1M vs $2–$7M guided) amid constant-currency revenue growth .

What Went Wrong

  • Margin compression: gross margin declined to 21.9% (from 26.3% LY) due to reclassifying “free coin” expenses into cost of revenue and higher labor investment; management expects margins to improve over time with cross-border distribution .
  • Advertising softness: ad revenue -9.3% YoY (constant currency -8.9%) on declines in Korea and Rest of World, partially offset by Japan pre-roll strength; Korea impacted by a major e-commerce ad partner .
  • User metrics pressure: global MAU -8.5% YoY (to 155.4M) and MPU -2.2% (to 7.7M), primarily due to Wattpad bans in two countries and earlier search indexing issues (now resolved) .

Financial Results

Consolidated P&L and Margins (USD)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$325.7 $348.3 $378.0
Gross Profit ($M)$71.6 $87.3 $82.8
Gross Margin %22.0% 25.1% 21.9%
Operating Income (Loss) ($M)$(26.6) $(8.8) $(14.9)
Net Income (Loss) ($M)$(22.0) $(3.9) $(11.1)
Diluted EPS ($)$(0.17) $(0.03) $(0.09)
Adjusted EBITDA ($M)$4.1 $9.7 $5.1
Adjusted EBITDA Margin %1.3% 2.8% 1.4%
Adjusted EPS ($)$0.03 $0.07 $0.04

Segment Revenue (USD)

SegmentQ1 2025Q2 2025Q3 2025
Paid Content ($M)$260.2 $274.9 $286.8
Advertising ($M)$39.9 $45.2 $39.4
IP Adaptations ($M)$25.6 $28.1 $51.9

KPIs

KPIQ1 2025Q2 2025Q3 2025
MAU (M)153.3 156.1 155.4
MPU (M)7.4 7.4 7.7
Paying Ratio %4.8% 4.7% 5.0%
ARPPU ($)$11.8 $12.4 $12.4
ARPPU (constant currency) ($)$12.4 $12.0 $12.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/OutcomeChange
RevenueQ3 2025$380–$390M Actual $378.0M Below guided range
Adjusted EBITDAQ3 2025$2.0–$7.0M Actual $5.1M Achieved within range
Revenue (constant currency)Q3 2025+9.4%–12.2% +9.1% actual Slightly below
RevenueQ4 2025N/A$330–$340M New
Adjusted EBITDAQ4 2025N/A$(6.5)M to $(1.5)M New
Non-cash items in Adj. EBITDAQ4 2025N/A$16.5M non-cash (actuarial losses, MG write-down) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Disney collaborationQ2: Launch ~100 reformatted comics; strong publisher pipeline Non-binding term sheet for new comics platform (35,000 titles) and Disney 2% equity interest; additional titles announced at NYCC Accelerating strategic scope
Short-form videoEarly “New & Hot” trailers (Q1); product enhancements driving discovery Launch of Video Episodes (EN); launch of CUT UGC in Korea (1,000 creators, videos >1M views) Engagement building
AdvertisingQ1/Q2 strength in Korea/Japan; ROW impacted by Wattpad YoY decline; Korea impacted by major e-commerce partner; Japan pre-roll strong; ROW softness persists Mixed/under pressure
Wattpad/regulatoryQ1: search indexing issue; one-country ban; Q2: second-country ban Search issue resolved; bans in two countries continue to weigh on MAU Stabilizing sequentially, structural headwind persists
IP adaptationsQ1/Q2: strong pipeline; multiple streamers; anime ramp Revenue spike driven by “My Daughter Is a Zombie”; variability from milestone timing acknowledged Lumpy but strategically positive
English app MAU/monetizationQ1/Q2: EN app MAU +19% and +19%, discovery features EN webcomic app MAU +12% YoY; conversion to paid rising Improving monetization signals

Management Commentary

  • “We are pleased to deliver another quarter that showcased the progress we have made driving product improvements… We achieved Adjusted EBITDA above the midpoint of our guidance and total revenue was up 9.1% on a constant currency basis” — Junkoo Kim, CEO .
  • “We broadened our relationship with Disney… to develop an all-new digital comics platform… and a non-binding agreement for Disney to acquire a 2% equity interest” — Junkoo Kim .
  • “Our English-platform webcomic app MAU was up 12% year-over-year, demonstrating continued momentum in this important region” — David Lee, CFO/COO .
  • “Gross margin… 21.9% vs 26.3% LY; free coin expenses moved to cost of revenue; invested in labor… margin can improve over time with cross-border content distribution” — David Lee .
  • “We intend to enter into an agreement to co-produce 10 fan-favorite WEBTOON series for global distribution” — Warner partnership announcement .

Q&A Highlights

  • Disney economics and timing: Management emphasized the collaboration is early, no material Q3/Q4 financial impact disclosed yet, and does not change fundamental margin structure near-term .
  • Video Episodes engagement: Very early; intended to deepen Gen Z engagement and support leadership in format; upside considered long-term .
  • Warner Bros. Animation: Initial slate referenced; specifics on timing/economics not disclosed; expected as a growth catalyst, including English originals .
  • Q4 guide drivers: Revenue decline primarily from IP adaptation milestone timing; Korea advertising variability tied to a large e-commerce partner; included $16.5M non-cash in Adj. EBITDA guidance .
  • Wattpad: Search indexing resolved; bans in two countries remain; expect stabilization as these effects lap but timing uncertain .

Estimates Context

Metric (Q3 2025)Consensus*ActualBeat/Miss
Revenue ($M)$384.7*$378.0 Miss
Primary EPS ($)-$0.073*$0.04*Beat (normalized)
EBITDA ($M)$5.58*-$7.12 Miss (GAAP)
Primary EPS – # of Estimates3*——
Revenue – # of Estimates7*——

Values with asterisks retrieved from S&P Global. Note: Company-reported GAAP diluted EPS was -$0.09 in Q3 , while S&P’s “Primary EPS” reflects normalized EPS ($0.04*), which aligns with company-reported Adjusted EPS of $0.04 .

Key Takeaways for Investors

  • Topline beat narrative is mixed: revenue grew 8.7% YoY on strong IP adaptations, but came in slightly below consensus; advertising decline and margin pressure weighed on profitability .
  • Near-term risk skew: Q4 guide (revenue $330–$340M, Adj. EBITDA loss) and disclosed $16.5M non-cash items suggest EPS/EBITDA pressure; IP adaptation timing remains lumpy and can swing quarterly prints .
  • Strategic upside: Disney platform term sheet and prospective 2% equity stake enhance long-term narrative; Warner animation slate can extend IP lifecycles and brand reach, especially in English markets .
  • Monetization signals: EN webcomic app MAU +12% YoY and rising conversion to paid underpin Paid Content growth potential despite broader MAU headwinds from Wattpad .
  • Watch ads mix: Japan pre-roll resilience vs Korea partner variability; recovery in ROW ads likely depends on Wattpad stabilization and infrastructure buildout .
  • Margin path: Gross margin compression (21.9%) tied to cost reclassifications and labor investment; management expects improvement with cross-border content strategies .
  • Trading lens: Expect sensitivity to guidance and IP pipeline timing in upcoming quarters; positive headlines around Disney/Warner and short-form video engagement may serve as catalysts between earnings events .