Webtoon anticipates 9.4%-12.2% revenue growth in Q3 2025 while advancing Disney partnership

Earnings Call Insights: WEBTOON Entertainment Inc. (WBTN) Q2 2025

MANAGEMENT VIEW

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Junkoo Kim, Founder and CEO, reported that both revenue and adjusted EBITDA came in above the top end of guidance for the second quarter, citing strong performance and user engagement initiatives. The company implemented "significant product uptake in May and June to enhance the user experience, making it easier for our readers to find new titles and drive engagement." Kim highlighted the launch of popular Japanese manga titles and announced a strategic expansion with Dark Horse Comics and a new partnership with Disney. Kim stated, "WEBTOON Entertainment and Disney are teaming up to bring iconic comics from Disney, Marvel, 20th Century Studio and Star Wars to our mobile vertical screw format."

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David J. Lee, CFO and COO, said, "During the second quarter, we grew revenue 5.5% on a constant currency basis, similar to last quarter with growth across all revenue streams. Reported revenue was up 8.5%. Net loss was $3.9 million compared to a net loss of $76.6 million in the year prior, driven by lower G&A expenses associated with the IPO, which took place in the prior year quarter. Adjusted EBITDA was $9.7 million compared to $20.4 million in the same quarter of 2024." Lee also noted that English platform WebComic app MAU was up 19% for the second consecutive quarter.

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Yongsoo Kim, Chief Strategy Officer, emphasized that partnerships with established IP such as Disney are "bringing a lot of new users to WEBTOON platform" and expected to increase user consumption and acquisition.

OUTLOOK

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For the third quarter of 2025, management expects revenue growth in the range of 9.4% to 12.2% on a constant currency basis, with anticipated revenue between $380 million and $390 million. Lee stated, "We anticipate third quarter adjusted EBITDA in the range of $2 million to $7 million, representing an adjusted EBITDA margin in the range of 0.5% to 1.8%."

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Lee clarified that "the Q3 guide does not include any short-term impact from the collaboration...with Disney," emphasizing that the strategic benefits of the Disney partnership are expected over the mid- to long term.

FINANCIAL RESULTS

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Reported revenue for Q2 2025 increased 8.5% year-over-year. Adjusted EBITDA was $9.7 million, and net loss was $3.9 million, a significant improvement from the $76.6 million net loss in the prior year, mainly due to lower G&A expenses following the IPO.

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Gross profit for the quarter was $87.3 million, with gross margin at 25.1%, up from 22% in Q1. Total G&A expenses were $65 million for the quarter. Adjusted earnings per share for the quarter was $0.07.

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Revenue growth was driven by 2.0% growth in paid content, 10.2% growth in advertising, and 42.6% growth in IP adaptations on a constant currency basis. Japan and Korea led growth, with Japan's LINE manga remaining the #1 overall app for revenue for the second consecutive quarter.

Q&A

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Eric James Sheridan, Goldman Sachs: Asked about the Disney and Dark Horse Comics partnerships and their impact on user growth and monetization. Lee responded that "the power of Disney's IP...is a standout for us" and that the collaboration is expected to "accelerate new user growth" but no short-term financial benefit is included in Q3 guidance.

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Benjamin Black, Deutsche Bank: Inquired about marketing aspects of the Disney partnership and onboarding process changes. Lee explained the importance of "attracting new users faster" and detailed new onboarding and personalization features, noting "there's more product updates to come."

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Mark Mahaney, Evercore ISI: Asked about advertising outlook and partnership terms. Lee reported "advertising continues to be a strong driver of growth" and video ads are expected to be an "alternative way to create more habit formation" but it is too early to disclose financial terms for Disney.

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Matthew Andrew Cost, Morgan Stanley: Asked if the focus on established IP conflicts with user-created content. Lee and Yongsoo Kim described the strategy as complementary, with new users from IP collaborations also exposed to original WEBTOON content.

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Doug Anmuth, JPMorgan: Sought detail on Q3 revenue acceleration. Lee stated that IP adaptation timing is a factor and that "the basis of our guidance...remains the same."

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Andrew Jordan Marok, Raymond James: Queried about Rest of World advertising excluding Wattpad impact. Lee explained that Wattpad is "not a significant revenue generator" but remains important for sourcing IP.

SENTIMENT ANALYSIS

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Analysts repeatedly pressed for specifics about the financial impact and terms of the Disney partnership, user growth, and monetization, reflecting a slightly positive but cautious tone focused on growth scalability and risk.

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Management maintained an optimistic and confident tone in both prepared remarks and Q&A, using phrases such as "we are extremely bullish" and "we are very excited about this particular relationship," but deferred or declined to share specific partnership economics.

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Compared to the previous quarter, management's tone remained positive but was more assertive about strategic partnerships and future growth drivers, while analysts remained focused on execution risks and the timing of financial impacts.

QUARTER-OVER-QUARTER COMPARISON

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Revenue growth guidance increased for Q3 2025 (9.4%-12.2% vs. Q2 guidance of 2.2%-5.2%).

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Strategic focus shifted towards major IP partnerships, notably Disney, with multiple new content launches and expanded product features compared to last quarter's focus on onboarding and platform improvements.

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Analysts continued to focus on user acquisition, monetization, and advertising trends, with more emphasis this quarter on the financial impact and scalability of high-profile partnerships.

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Management's confidence in partnerships and product improvements was more pronounced, highlighting long-term growth rather than immediate financial results.

RISKS AND CONCERNS

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Management cited ongoing challenges in Rest of World MAU due to government bans on Wattpad and the lingering effects of a security upgrade impacting search engine indexing. Lee noted, "It's taking longer than anticipated for the search engine to recrawl the majority of our pages, and we expect to see lingering effects on MAU in the near term."

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Wattpad is not currently a significant revenue driver but remains a critical source of original IP.

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Management expects continued investment in marketing and infrastructure, which may affect short-term profitability.

FINAL TAKEAWAY

WEBTOON Entertainment delivered strong Q2 2025 results, highlighted by growth across all major revenue streams, improved profitability, and the announcement of a long-term partnership with Disney to bring iconic franchises to its global platform. Guidance for Q3 2025 projects accelerated revenue growth, driven by ongoing product enhancements and strategic content collaborations. Management remains focused on scaling user engagement and monetization, while navigating operational headwinds in certain regions and making proactive investments to support future growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/wbtn/earnings/transcripts]

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* WEBTOON Entertainment Inc. (WBTN) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4812909-webtoon-entertainment-inc-wbtn-q2-2025-earnings-call-transcript]
* Webtoon Entertainment: A Compelling Growth Play [https://seekingalpha.com/article/4791028-webtoon-entertainment-a-compelling-growth-play]
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