WEBTOON's Q1 2025 Earnings Call: Conflicting Insights on Investment Strategies, Growth, and Marketing Approaches

Investment strategy and impact on financials, impact of IP slate timing on financial performance, user growth strategy and investment focus, marketing strategy and partnerships are the key contradictions discussed in WEBTOON Entertainment Inc.'s latest 2025Q1 earnings call.



Revenue and Earnings Performance:
- WEBTOON Entertainment reported first-quarter 2025 revenue and adjusted EBITDA at the top end of guidance, with revenue growth of 5.3% on a constant currency basis compared to a tough prior year comparison.
- The earnings were affected by higher general and administrative expenses, resulting in a net loss of $22 million, impacted by public company costs and higher marketing expenses.
- The strong performance was driven by growth across revenue streams, particularly in Japan, despite declines in Korea and the rest of the world.

User and Platform Engagement:
- Total company MAU was down 10.5%, driven by a decrease in the rest of the world, with Wattpad contributing significantly to this decline due to a security upgrade and a government ban in one country.
- English-speaking platform MAU for web comic apps increased by 19%, with a 4.2% overall increase in web comic app MAU when excluding web novel users, indicating strong engagement in key markets.
- The increase in English-speaking platform engagement is attributed to improved product changes and content offerings, with over 9% increase in episodes read in test groups.

Regional Revenue Growth:
- Japan posted 9.4% constant currency revenue growth, driven by all revenue streams, maintaining the top position with LINE Manga ranking number one.
- Korea saw 3.6% constant currency revenue growth, with significant improvements in advertising and IP adaptations despite a decline in paid content.
- The rest of the world faced a 4% decline in revenue, with a decline in paid content and advertising, primarily due to a decline in Wattpad revenue.

IP and Content Strategy:
- The company's cross-border strategy involves adapting Japanese content to other markets, with titles like Overturned and Overpowered ranking in the top 10 in the U.S. and France.
- The adaptation of Wattpad's Marla Influencia on Netflix drove new users, indicating the potential of IP adaptations to expand the user base.
- The focus on local content and global IP adaptations is aimed at driving user engagement and expanding market reach.