WEBTOON Entertainment (NASDAQ:WBTN) executives said the company ended 2025 with positive momentum in paying users and progress in AI-driven personalization, while results for the fourth quarter reflected pressure in advertising and the timing-driven nature of IP adaptations.
Fourth-quarter and full-year results
CFO and COO David Lee said WEBTOON reported fourth-quarter revenue of $330.7 million, which he described as in line with expectations. Revenue declined 4.1% year-over-year on a constant-currency basis (6.3% on a reported basis), as paid content growth was more than offset by declines in advertising and IP adaptations.
Profitability metrics were mixed. Lee said gross margin expanded 100 basis points year-over-year in the fourth quarter to 24.3%, attributing the change to lapping items that had been recategorized from marketing to cost of revenue during the year. Full-year gross margin was 23.3%, down 180 basis points from the prior year.
WEBTOON posted a fourth-quarter net loss of $336.5 million, compared to a $102.6 million loss a year earlier, primarily due to goodwill impairments. Lee said the majority of the impairment was attributable to Wattpad. Full-year net loss was $373.4 million, compared with $152.9 million the prior year.
On a non-GAAP basis, adjusted EBITDA was $0.6 million in the quarter, exceeding the high end of guidance and improving from a negative $3.5 million in the prior-year quarter. Full-year adjusted EBITDA was $19.4 million, down from $68 million in the prior year. Adjusted EPS was $0.00 in the quarter and $0.15 for the year.
User trends and AI personalization
Management emphasized improvements in monetization and personalization tools. Lee said fourth-quarter app MAU (monthly active users) and Webcomic app MAU declined 6.5% and 2.6% year-over-year, respectively, but MPU grew 0.7%, which he said was evidence that personalized content recommendations were working. He added that English platform Webcomic app MAU increased 2.2% year-over-year in the quarter and rose 12.8% for the full year.
Junkoo Kim said the company made “significant progress” advancing personalization tools throughout the year and is using AI to deliver increasingly personalized recommendations. He highlighted Korea as the market where the company has seen the most progress, and said greater content diversity alongside improved recommendations has helped users read more titles and episodes.
Lee also discussed global MAU trends, noting that total MAU declined 7.1% to 157 million for the full year. In the quarter, the company estimated global MAU benefited from roughly a 10 percentage point increase in Wattpad activity tied to automated web traffic in certain non-core markets. He said the traffic peaked in Q4 2025, is seeing reduced impact in Q1 2026, had no impact on app MAU, and is not expected to materially impact the business.
Revenue stream performance: paid content, ads, and IP adaptations
Paid content was the most stable contributor in the quarter. Lee said paid content revenue increased 0.4% year-over-year on a constant-currency basis in Q4 and grew 1.5% for the full year. While constant-currency ARPU declined 0.3% in Q4, he said ARPU increased 4.6% for the full year.
Advertising declined 10.3% year-over-year on a constant-currency basis in the fourth quarter, though full-year advertising grew 0.4% on a constant-currency basis. Lee said Korea saw similar declines tied to the same e-commerce advertising partners as in the prior quarter, while ad revenue from NAVER was relatively consistent year-over-year and the company saw growth from other partners.
IP adaptation revenue fell 29.7% year-over-year on a constant-currency basis in Q4, which Lee said reflected the volatility of milestone-based revenue recognition. For the full year, IP adaptation revenue rose 35.5% on a constant-currency basis. Lee cited a strong year in Korea driven by the theatrical success of My Daughter Is a Zombie and The Trauma Code on Netflix.
Regional performance: Korea, Japan, and rest of world
In Korea, fourth-quarter revenue declined 9.1% year-over-year on a constant-currency basis, as paid content growth was offset by declines in advertising and IP adaptations. Korea MAU fell 10.8% to 24.3 million, while MPU grew 3.3% to 3.7 million and the paying ratio rose to 15.1%, up 207 basis points year-over-year. Full-year Korea revenue increased 5.9% on a constant-currency basis.
Japan revenue declined 1.0% year-over-year on a constant-currency basis in the quarter, with a single-digit decline in paid content offset by single-digit growth in advertising and IP adaptations. For the full year, Japan revenue rose 3.9% on a constant-currency basis. Lee said LINE Manga remained the number one overall app by revenue in Japan (including mobile games) for both the quarter and full year, citing data.ai. Japan MAU increased 0.5% to 22.2 million in Q4, while MPU declined 6.9% to 2.1 million and the paying ratio fell to 9.5%.
In rest of world, Q4 revenue grew 0.8% year-over-year on a constant-currency basis, driven by paid content growth and “triple-digit” growth in IP adaptations, partially offset by a double-digit decline in advertising. Full-year rest-of-world revenue declined 2.1% on a constant-currency basis. Management also pointed to improving monetization, with Q4 MPU up 5.7% and a higher paying ratio.
Disney partnership, IP flywheel, and 2026 outlook
Management highlighted several strategic initiatives, including a completed agreement with The Walt Disney Company. Junkoo Kim said WEBTOON and Disney completed the previously announced strategic agreement on Jan. 8, 2026, including development of an all-new digital comics platform and Disney’s approximately 2% equity investment in WEBTOON. Lee later added that Disney purchased 2.7 million shares for approximately $32.8 million.
Executives said WEBTOON has already launched 12 reformatted Disney-related titles in WEBTOON’s mobile vertical scroll format, with Lee citing examples such as Predator and Star Wars, and Junkoo Kim citing Amazing Spider-Man, Star Wars, and Avengers. They said an original series is planned, and the companies are targeting a 2026 launch for the new platform. Chief Strategy Officer Yongsoo Kim said the most time-intensive component is development of the new product, focusing on discovery and recommendation.
On economics, Yongsoo Kim said WEBTOON will recognize all revenue and cost as the operator of the new platform, and that the content and brand licensing fee structure was determined in a way “broadly consistent” with WEBTOON’s existing business model. Lee said the company has not disclosed a meaningful margin impact from content sources such as originals versus licensed/reformatted titles.
WEBTOON also pointed to its “flywheel” of IP adaptations supporting engagement. Junkoo Kim cited Amazon MGM Studios green-lighting Lore Olympus for development into an animated series from WEBTOON Productions and The Jim Henson Company, a January launch of DARK MOON: THE BLOOD ALTAR on Crunchyroll, and Netflix’s plan to adapt Viral Hit into a Japanese live-action series. In Q&A, management also referenced Chasing Red starring Madelaine Petsch as an example of crossover opportunity.
For first-quarter 2026, Lee guided to constant-currency revenue growth in a range of -1.5% to +1.5%, representing $317 million to $327 million based on current FX rates, and adjusted EBITDA of $0 million to $5 million. Lee told analysts the company expects to return to double-digit year-over-year revenue growth by the end of 2026, citing contributions from paid content, improving advertising trends, and crossover IP, while cautioning that IP adaptation timing can shift quarter to quarter.
About WEBTOON Entertainment (NASDAQ:WBTN)
Webtoon Entertainment Inc operates WEBTOON, a leading digital comics platform offering a diverse library of user-generated and professionally produced webcomics. The company enables creators around the world to publish serialized content in a vertical-scrolling format optimized for mobile and web consumption. Through its platform, readers can access thousands of titles across genres such as romance, fantasy, drama, and action, with both free-to-read episodes and advanced access options supported by microtransactions and advertising.
Founded as part of Naver Corporation and launched internationally in 2014, Webtoon Entertainment has grown rapidly by fostering a direct connection between comic creators and global audiences.
