Webtoon Entertainment Narrows Q1 Operating Loss to 11.7 Billion Won... Aims for Recovery in Japanese Market and Platform Advancement (Comprehensive)

Operating Loss Down 70%, Losses Narrowed
Intellectual Property (IP) Business Revenue Down 22.8%
"Additional Original Series with Disney to Be Released Within the Year"

Webtoon Entertainment, the U.S. headquarters of NAVER Webtoon, recorded an operating loss of 11.7 billion won in the first quarter of this year, narrowing its losses. The company aims to recover double-digit revenue growth by the end of this year by regaining momentum in the Japanese market, which underperformed in Q1, and accelerating local original content development.

On May 11 (local time), Webtoon Entertainment announced in a public filing that its operating loss for the first quarter was provisionally tallied at 8.03 million dollars (11.7 billion won, based on an average quarterly exchange rate of 1,462.2 won), a 69.8% decrease compared to the same period last year. Revenue stood at 320.87 million dollars (469.2 billion won), a 1.5% decrease year-over-year.

Net loss for the first quarter was 8.8 million dollars (12.9 billion won), down 60%, while adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose 132% to 9.48 million dollars (13.9 billion won). The company was able to reduce losses by improving gross profit and cutting general and administrative (G&A) expenses through greater cost efficiency.

Paid content revenue, which accounted for the largest proportion of total revenue, rose 0.5% to 261.4 million dollars. Advertising revenue fell by 0.5% to 39.7 million dollars, and intellectual property (IP) business revenue dropped 22.8% to 19.8 million dollars.

Webtoon Entertainment explained that, excluding exchange rate factors, revenue in Korea increased by 3.2% year-over-year. The number of monthly paid users (MPUs) in Korea grew by 8.5%, while global MPUs (excluding Korea and Japan) rose by 3.3%. The company highlighted the growth in paid content in Korea, noted that infrastructure investment in Japan was completed in the first quarter, and expects continued profitability improvements as the creator ecosystem continues to expand.

David Lee, Chief Financial Officer (CFO) of Webtoon Entertainment, said during the earnings call, "The performance in Japan and the advertising business are expected to improve gradually within the year," adding, "We continue to invest in creators, content, and users."

In North America, Webtoon Entertainment is diversifying its content through global partnerships, including Disney, Marvel, and Star Wars reformatted webtoons with The Walt Disney Company, a commemorative 2026 Formula 1 webtoon, and a webtoon based on Xbox's 'Sea of Thieves.' CFO Lee stated, "Our collaboration with Disney is progressing as planned," and added, "Additional original series are also scheduled to be released within the year."

Global web novel platform Wattpad's web novels such as "Love Me Love Me" and "Kissing Is the Easy Part" have been released on Amazon Prime Video and the Tubi online video service (OTT) platforms.

To strengthen its user engagement platform, Webtoon Entertainment is expanding its artificial intelligence (AI) chatbot service 'CharacterChat' in Japan and has entered into a partnership with AI avatar production company Zinnis.

Webtoon Entertainment plans to invest more than 50 million dollars (around 70 billion won) this year in the global creative ecosystem, including discovering creators and new works. Within the first half of the year, the company plans to integrate "Canvas," its global amateur creator space currently operated in seven languages including English and Spanish, into a single platform and enhance its functionalities.

Kim Joongoo, Chief Executive Officer (CEO) of Webtoon Entertainment, stated, "We recorded robust results in the first quarter based on constant exchange rates," adding, "We will continue to introduce more diverse content by expanding the creative ecosystem and revamping Canvas, while pursuing business innovation and long-term growth through sustained investment."

This content was produced with the assistance of AI translation services.