Webtoon Entertainment Inc. ((WBTN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Webtoon Entertainment’s latest earnings call painted a cautiously hopeful but uneven picture for investors. Management highlighted modest full-year growth, a return to positive adjusted EBITDA and strategic wins with Disney and key intellectual property, yet these positives were offset by a steep GAAP net loss, Q4 revenue declines and visible pressure on user metrics across several regions.
Full-Year Revenue Growth
Webtoon reported full-year 2025 revenue of about $1.4 billion, representing 3.9% growth on a constant-currency basis and 2.5% reported growth versus the prior year. The top line is still expanding, but the pace remains modest for a digital platform business that once grew far faster.
Adjusted EBITDA Turnaround
The company delivered full-year adjusted EBITDA of $19.4 million, down sharply from $68 million a year earlier but importantly still positive. In Q4 2025, adjusted EBITDA of $0.6 million beat the high end of guidance and marked a turnaround from the $3.5 million loss recorded in Q4 2024.
Disney Deal Deepens Strategic Ties
Management spotlighted its strategic agreement with The Walt Disney Company, under which Disney bought roughly 2.7 million Webtoon shares for about $32.8 million, or around 2% equity. The partners plan a joint digital comics platform slated for 2026, with 12 reformatted Disney titles already live on Webtoon’s service.
IP Adaptations Drive High-Value Growth
Intellectual property adaptations were a bright spot, with adaptation revenue up 35.5% on a constant-currency basis for 2025. Wins included Amazon MGM greenlighting “Lore Olympus,” around 20 new anime projects in Japan, the DARK MOON anime launch on Crunchyroll and several live-action projects under development.
AI-Led Personalization and MPU Improvement
The company pointed to early benefits from AI-driven recommendations, noting that global monthly paying users grew 0.7% in Q4. Korea led with MPU up 3.3%, while the rest of the world saw MPU climb 5.7%, and leadership stressed plans to replicate Korean learnings across other markets.
Gross Margin Expansion via Higher-Margin Revenue
Webtoon expanded its Q4 gross margin by 100 basis points to 24.3%, helped by a greater focus on higher-margin activities. Management said cross-border content distribution and an expanding advertising business should support further margin improvement over time.
Cost Discipline and Lower G&A
General and administrative expenses fell notably as the company tightened costs, with quarterly G&A dropping to $65.4 million from $77.8 million a year earlier. For the full year, G&A declined to $259.5 million from $332.0 million, signaling meaningful operating discipline.
Cash-Rich, Capital-Efficient Model
The balance sheet remains a key support for the equity story, with year-end cash of $582 million plus $11 million in short-term deposits. Webtoon generated $11.2 million in operating cash flow for 2025, and management described the business as capital-efficient with ample flexibility for long-term investments.
Infrastructure and Regional Product Milestones
Management expects key infrastructure investments to be finished by the end of Q1 2026, freeing engineers to focus more on personalization tools. In Japan, infrastructure upgrades are expected to underpin a renewed growth push once they are fully in place.
Large GAAP Net Loss and Goodwill Impairments
Beneath the strategic progress, Webtoon reported a sizable GAAP net loss, including a Q4 2025 loss of $336.5 million versus $102.6 million a year earlier. The full-year loss widened to $373.4 million from $152.9 million, driven largely by goodwill impairments tied mostly to Wattpad.
Q4 Revenue Decline and Quarterly Headwinds
Fourth-quarter 2025 revenue fell to $330.7 million, down 4.1% on a constant-currency basis and 6.3% reported. While paid content continued to grow, these gains were more than offset by declines in advertising and IP adaptation revenue during the quarter.
Advertising and IP Adaptation Volatility
The quarter underlined how volatile Webtoon’s higher-margin streams can be, with advertising revenue down 10.3% year over year on a constant-currency basis. IP adaptation revenue proved even choppier, dropping 29.7% as milestone-driven timing shifted income out of Q4.
MAU Pressure and User Base Challenges
Total monthly active users fell 7.1% for the year to 157 million, while app MAU declined 4.3% and Korea MAU slid about 11.1%. Global MAU also dipped 1.7% in Q4, underscoring that Webtoon is battling to stabilize and re-energize its audience.
Regional Monetization Weaknesses
Regional trends remained uneven, with Korea particularly soft as full-year MPU declined 5.3% alongside the double-digit MAU drop. In Japan, MPU edged down 0.1% despite ARPU growth, and the rest of world region saw MAU fall 8.4% and revenue down 2.1% on a constant-currency basis.
Decline in Adjusted Profitability Metrics
Adjusted profitability deteriorated despite staying above water, with full-year adjusted EBITDA falling from $68 million to $19.4 million. Adjusted EPS also slipped, dropping from $0.57 to $0.15, signaling that rising costs and softer top-line momentum are squeezing earnings power.
Other Losses and Income Volatility
Other line items added noise to the P&L, as Q4 other loss widened to $9.2 million from $6.2 million a year earlier. For the full year, Webtoon posted a $9.8 million other loss versus other income of $6.5 million previously, alongside fluctuating interest income.
Quality Issues in MAU from Automated Traffic
Management disclosed that automated web traffic on Wattpad in certain noncore markets artificially lifted MAU by around 10 percentage points at its Q4 peak. This inflated user figures and is being dialed back in early 2026, suggesting headline MAU trends may overstate recent underlying engagement.
Near-Term Guidance and Long-Term Ambitions
For Q1 2026, Webtoon expects constant-currency revenue to range from a 1.5% decline to a 1.5% increase, implying $317 million to $327 million in sales and adjusted EBITDA of $0 to $5 million. Management still aims to return to double-digit year-over-year revenue growth by the end of 2026, supported by completed infrastructure work, more AI-led personalization and the planned 2026 launch of the new Disney digital-comics platform.
Webtoon’s earnings call offered a blend of strategic promise and financial growing pains that investors will need to weigh carefully. The company is leaning on its IP pipeline, Disney partnership, AI personalization and strong cash position, but must first navigate weak user trends, volatile high-margin revenue and a flat near-term outlook before any hoped-for acceleration in 2026 materializes.