Digital storytelling platform WEBTOON $(WBTN)$ reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 8.5% year on year to $348.3 million. Guidance for next quarter’s revenue was optimistic at $385 million at the midpoint, 2.3% above analysts’ estimates. Its GAAP loss of $0.03 per share was 84.1% above analysts’ consensus estimates.

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StockStory’s Take

WEBTOON’s second quarter results were well received by the market, driven by higher-than-expected revenue and a significant improvement in profitability compared to last year. Management attributed the quarter’s strength to new product features and high-profile content partnerships, particularly in English-speaking markets. CEO Junkoo Kim specifically highlighted the rollout of major Japanese manga titles and platform upgrades that increased user engagement. The company also cited ongoing expansion of its content library, with a focus on attracting both new and existing readers.

Looking ahead, WEBTOON’s management pointed to continued investment in product enhancements and strategic partnerships—most notably a new collaboration with Disney—as central to its growth outlook. CFO David Lee emphasized that while the Disney partnership is not expected to have a short-term financial impact, it is intended to drive long-term user growth and engagement, particularly among Gen Z audiences. The company plans to maintain elevated marketing spending to support these initiatives and expects improvements in monetization as new content and features are introduced.

Key Insights from Management’s Remarks

Management credited the quarter’s outperformance to expanded content offerings, product upgrades, and growing monetization in key English-language markets, while addressing challenges from user declines in other regions.

• English platform momentum: WEBTOON saw strong user activity and engagement in its English-language WebComic app, with management citing a 19% year-over-year increase in monthly active users $(MAU.AU)$ for the second consecutive quarter and effective rollout of new onboarding and personalization features.
• Content partnerships drive engagement: The launch of popular Japanese manga titles and new collaborations with publishers like Dark Horse Comics attracted millions of new readers to the platform, increasing engagement and content discovery.
• Disney collaboration announced: Management unveiled a multi-year partnership with Disney to bring major franchises—including Marvel, Star Wars, and Disney’s own properties—to WEBTOON in a mobile-optimized format, with plans for both reimagined classics and original series.
• Mixed regional performance: While English-speaking and Japanese markets posted higher engagement and monetization, Korea and Rest of World regions experienced user declines, primarily attributed to government bans and technical issues affecting Wattpad, a key part of WEBTOON’s ecosystem.
• Advertising and IP adaptations strengthen margins: Growth in advertising, especially in Korea and Japan, and a surge in intellectual property $(IP)$ adaptations, particularly in Korea, contributed to improved gross profit and operating margin, despite lingering challenges in the Rest of World segment.

Drivers of Future Performance

WEBTOON expects near-term revenue growth to be powered by continued content expansion and product improvements, but plans for heavier marketing investment will pressure margins.

• Strategic content partnerships: Management believes collaborations with Disney and other major publishers will accelerate user growth and engagement, particularly in English-speaking markets, but expects financial benefits to materialize over the medium to long term rather than immediately.
• Product innovation and monetization: Continued investment in platform features—like enhanced onboarding, personalization, and promotional tools—aims to increase user retention and drive higher average revenue per user (ARPU), especially in markets where monetization is still developing.
• Marketing and investment priorities: The company plans to maintain elevated marketing spending to support new user acquisition and content launches, which is expected to constrain near-term EBITDA margins even as revenue grows.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the rollout and early engagement metrics of Disney and Dark Horse Comics content on WEBTOON’s English app, (2) the effectiveness of new onboarding and personalization features in sustaining user growth, and (3) the normalization of user trends in impacted geographies, particularly as the effects of government bans and technical issues on Wattpad subside. Progress with new IP adaptation projects and advertising momentum in emerging markets will also be critical to monitor.

WEBTOON currently trades at $12.25, up from $9.36 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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