WEBTOON Reports Slight Revenue Decline in Q1 2025, Operating Loss of $26.6 Million

WEBTOON Entertainment Inc. reported a slight decline in revenue for the first quarter of 2025, generating $325.7 million compared to $326.7 million in the same period of 2024, marking a decrease of 0.3%. The company's revenue streams included $260.2 million from Paid Content, down 2.5% year-over-year, while Advertising revenue increased by 7.8% to $39.9 million, and IP Adaptations revenue rose by 11.7% to $25.6 million. Despite the overall revenue decline, the company experienced a significant increase in interest income, which surged by 314% to $5.1 million, attributed to earnings from its IPO proceeds.

The company's financial performance was impacted by rising costs, with total costs of revenue increasing by 4% to $254.1 million, primarily due to higher stock-based compensation expenses. Marketing expenses also saw a substantial rise of 61.9%, totaling $31.5 million, as WEBTOON invested in growth initiatives. General and administrative expenses increased by 37% to $66.7 million, driven by higher salaries and stock compensation expenses associated with an expanded workforce following its public listing. As a result, WEBTOON reported an operating loss of $26.6 million, a stark contrast to the operating income of $14.2 million recorded in the previous year.

In terms of user engagement, WEBTOON's monthly active users (MAU) decreased by approximately 10.5% year-over-year to around 153 million, with notable declines in Korea and the Rest of World segments. The MAU in Korea fell to 24.2 million from 27 million, while the Rest of World segment dropped to 107.3 million from 123.2 million. Conversely, Japan saw a slight increase in MAU, reaching 21.9 million. The company reported 7.4 million monthly paying users (MPU), with a paying ratio of 4.8%, reflecting a slight increase from the previous year.

Strategically, WEBTOON continues to focus on expanding its content offerings and enhancing user engagement through various initiatives, including adaptations of its content into other media formats. The company is also working on improving its internal controls and financial reporting processes, following the identification of material weaknesses in its internal control over financial reporting. Looking ahead, WEBTOON anticipates that its existing cash reserves of $550.1 million will support its operational needs for at least the next 12 months, while also exploring opportunities for future growth and potential acquisitions.