WEBTOON's Q3 2025: Contradictions Emerge on Disney Partnership, Webcomic Growth, and Advertising Strategy

Date of Call: November 12, 2025

Financials Results

• Revenue: $378M, up 8.7% YoY (9.1% constant currency)
• EPS: $0.04 adjusted EPS, down from $0.22 a year ago; GAAP loss per share $0.09 vs. $0.15 EPS prior year
• Gross Margin: 21.9%, compared to 26.3% in the prior year

Guidance:

• Revenue for Q4 2025 expected $330M–$340M, a decline of 5.1%–2.3% YoY on a constant currency basis.
• Adjusted EBITDA expected loss of $6.5M–$1.5M (adjusted EBITDA margin: -2% to -0.4%); guidance includes $16.5M of noncash expenses (actuarial losses and minimum-guarantee write-downs).
• Company will maintain marketing investment; infrastructure updates largely finishing in Q4 but some items may extend into early 2026.
• Expect improved product flow and monetization beginning in 2026.

Business Commentary:

* Revenue and Financial Performance: - WEBTOON Entertainment reported total revenue of $378 million for Q3 2025, up 8.7% or 9.1% on a constant currency basis compared to Q3 2024. - This growth was driven by increased paid content and IP adaptations, although offset by a decline in advertising revenue.

• Adjusted EBITDA and Earnings:
• Adjusted EBITDA for Q3 was $5.1 million, coming in above the midpoint of the guidance range.

• Net loss was $11.1 million compared to a net income of $20.0 million in the prior year, primarily due to lower other income and a higher income tax expense.

• MAU and User Engagement:

• Webcomic app MAU increased 1.5% globally and was up 12% year-over-year in English-speaking markets, excluding web novel users.

• The increase in English WebComic app MAU reflects recent product updates and new formats like video episodes, which are promising for future monetization.

• Disney Partnership and Content Expansion:

• WEBTOON announced a collaboration with Disney, including a non-binding term sheet for Disney to acquire a 2% equity interest in WEBTOON.

• This partnership aims to develop a new digital comics platform featuring Disney's IP, with the potential for future collaborations and revenue growth.

• IP Adaptations and Warner Bros. Animation:

• IP adaptations revenue increased 171.8% year-on-year on a constant currency basis in Q3, driven by Korea and Rest of World.
• WEBTOON plans to develop a slate of animated projects with Warner Bros. Animation, which could bring new user engagement and revenue streams.

Sentiment Analysis:

Overall Tone: Neutral

• Management highlighted 'solid third quarter results' with adjusted EBITDA of $5.1M and $378M revenue (up 8.7% YoY), but also guided Q4 to a revenue decline ($330M–$340M) and an adjusted EBITDA loss (-$6.5M to -$1.5M) noting $16.5M of noncash charges. Leadership expressed confidence in long‑term growth via Disney and Warner partnerships while acknowledging near‑term lumpiness from IP timing and ad variability.

Q&A:

• Question from Benjamin Black (Deutsche Bank AG): Maybe first, can you elaborate on the long-term vision of the Disney partnership Beyond the initial slate of titles, how should we be thinking about maybe the revenue potential and the margin profile of the new joint platform compared to some of the core WEBTOON app? And then secondly, you launched video episodes. What early engagement or monetization metrics are you seeing relative to sort of static webcomic.
  Response: Too early to quantify financial impact; Disney collaboration is long‑term and currently small (5–7 titles launched of a larger slate); management does not expect it to materially alter WEBTOON’s margin structure and provided no Q3/Q4 financial contribution; video episodes and other formats are early experiments with upside down the road.

• Question from Matthew Cost (Morgan Stanley): Two, if I could. I guess just starting with the new Warner partnership, anything you can share about the timing of when that rolls out and anything that you're able to share in terms of the economic terms of it from a revenue or margin perspective? And then secondarily, just on the user figures. So you provided a very helpful context about kind of Wattpad and the web novel MAU growth versus the webcomic MAU growth. I guess, are you considering in the future kind of breaking those out as part of your regular disclosure? And if not, how should we think about the web novel users going forward? Is that a number that could continue to decline? Is it something that is of any concern or just kind of a natural variation in the business if it does?
  Response: Warner deal announced for ~10 projects but no timing or economics disclosed and it won't change the core business model; company will focus on webcomic (especially English webcomic) MAU as the key paid‑content driver; Wattpad MAU weakness is driven by search‑index fixes and government bans in two countries and requires future quarters to clarify persistence.

• Question from Douglas Anmuth (JPMorgan Chase & Co): David, can you just talk a little bit more about the drivers of the 4Q guide, the slower revenue growth? Just trying to understand -- I know you mentioned IP adaptation, some of the lumpiness there, but also trying to understand how much is tied to the Korea advertiser advertising from the e‑com partner that declined in 3Q and what kind of visibility you have there? And then just putting that all together, like how you're positioned into '26.
  Response: Q4 guide slowdown is primarily due to timing/lumpiness of IP adaptation milestones; paid content is up but IP timing drives headline decline; the ad hit in Korea was largely one large e‑commerce customer and not viewed as a structural business issue; guide also includes $16.5M noncash items but management remains constructive on 2026.

• Question from Andrew Marok (Raymond James & Associates): Two, if I could. So maybe first, just if you could elaborate a little bit on the engagement that you've seen with some of the Disney content to date. I mean, obviously, you've mentioned that there's a lag between the content coming on to the platform, the monetization because of the free episodes. But just how that engagement curve is progressing relative to expectations? And then maybe one more on advertising. If you could just maybe talk a bit about advertiser appetite for new platforms and new channels to devote spend to and kind of what we're hearing is maybe a little bit of a mixed or an uncertain environment into Q4.
  Response: Early Disney engagement is positive but too early to provide metrics; advertising interest exists—pre‑roll ads are performing well in Japan—but Rest‑of‑World monetization and ad scale are still being built and require further infrastructure and time.

Contradiction Point 1

Disney Partnership Details and Impact on Revenue

It involves the level of specifics provided about the Disney partnership and its impact on revenue, which are critical for understanding the strategic direction and potential revenue impact of the collaboration.

What are the timing and financial terms of the Warner partnership, and will webcomic and web novel MAU be reported separately? - Matthew Cost (Morgan Stanley, Research Division)

2025Q3: Regarding Warner, it's an exciting collaboration, but specifics aren't available yet. - David Lee(CFO, COO & Director)

How does acquiring established IP like Dark Horse Comics impact user growth and monetization over the next few years, and how do unit economics between content providers and the platform evolve as these agreements scale? - Eric James Sheridan (Goldman Sachs)

2025Q2: WEBTOON's partnership with Disney is strategic, involving numerous iconic franchises. It offers unique growth opportunities for both parties, particularly in reaching Gen Z users. The collaboration spans several years but does not yet incorporate financial benefits, prioritizing the long-term strategic value for both. - David J. Lee (CFO, COO & Director)

Contradiction Point 2

Webcomic MAU Growth and Wattpad Impact

It highlights the discrepancy in the reported growth and impact of Webcomics and Wattpad on the overall MAU numbers, which are crucial for revenue guidance and market positioning.

What are the timing and economic terms of the Warner partnership, and will webcomic and web novel MAU reporting be separated? - Matthew Cost (Morgan Stanley, Research Division)

2025Q3: Webcomic MAU growth is vital for guiding future revenue, especially in English-speaking markets. Wattpad's decline impacts total MAU, but webcomic growth remains strong. We're addressing Wattpad's issues and hope to provide more clarity in coming quarters. - David Lee(CFO, COO & Director)

What caused the Wattpad search indexing issue, and what is its impact? - Matthew Witkos (Morgan Stanley)

2025Q1: Other impact, as Matthew mentioned, is the MAU decline on the Wattpad side. But I want to be clear that the MAU decline on the Wattpad side is not translating into a similar MAU decline on the Webtoon side. In fact, we said that the Webtoon app, webcomic app MAU grew by 4.2% globally during the quarter. - David Lee(CFO and COO)

Contradiction Point 3

Advertising Revenue Growth and North American Focus

It involves the reported growth rate and strategic focus of advertising revenue, particularly in North America, which are critical for revenue diversification and market expansion.

Can you elaborate on engagement with Disney content and advertiser interest in new platforms? - Andrew Marok (Raymond James & Associates, Inc., Research Division)

2025Q3: Advertisers are interested in new platforms, especially in North America. We're building out infrastructure to capitalize on this. - David Lee(CFO, COO & Director)

What are realistic expectations for Korean MAU growth, and how is North American advertising revenue? - Mark Mahaney (Evercore)

2025Q1: Advertising revenue grew by 13.6% year-over-year. North America advertising is early days; we focus on building our foundation, but we see potential. - David Lee (CFO and COO)

Contradiction Point 4

IP Slate Timing and Its Impact on Revenue

It involves the impact of IP slate timing on revenue, which is a critical factor for investors in understanding financial performance and growth prospects.

What are the key drivers of the 4Q revenue guidance and your positioning for '26? - Douglas Anmuth (JPMorgan Chase & Co, Research Division)

2025Q3: IP adaptation timing impacts Q4 revenue. - David Lee(CFO, COO & Director)

What was the bigger impact driver in Q1: IP slate timing or political unrest in Korea? Also, how does IP slate timing affect traffic acquisition? - Unidentified Analyst (JPMorgan)

2024Q4: IP slate timing affects short-term results but not mid- to long-term growth. - David Lee(CFO and COO)

Contradiction Point 5

Focus on Webcomic MAU and Paid Content Revenue

It involves the company's strategic focus on driving user growth and revenue through webcomics and paid content, which are key drivers of financial performance.

Can you provide the timing and economic terms of the Warner partnership, and will you separate webcomic and web novel MAU reporting? - Matthew Cost (Morgan Stanley, Research Division)

2025Q3: Webcomic MAU growth is vital for guiding future revenue, especially in English-speaking markets. - David Lee(CFO, COO & Director)

How is advertising scaling and what initiatives are driving ad growth? What impact are Webnovel users having on total app MAU? - Matthew Cost (Morgan Stanley)

2024Q4: MAU decline includes impacts from a country-wide Wattpad ban. The focus is on webcomic app MAU, which grew 6.7%, excluding webnovel users, highlighting Paid Content revenue potential. - David Lee(CFO and COO)