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WEBTOON Entertainment Inc. 2026 Q2 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. WEBTOON Entertainment Inc. operates a global storytelling platform offering web-comics and web-novels through various regional offerings including WEBTOON, LINE MANGA, NAVER SERIES, eBookJapan, Munpia, and Wattpad. The company is a majority-owned subsidiary of NAVER Corporation. As of July 31, 2026, there were 135,711,070 shares of common stock outstanding.

Key Financial Metrics

Revenue Composition (Q2 2026): Paid Content ($263.9M), Advertising ($47.1M), IP Adaptations ($27.4M).

Key User Metrics (Q2 2026): Global Monthly Active Users (MAU) were 156.9 million (+0.5% YoY). Monthly Paying Users (MPU) were 7.5 million (+1.8% YoY). Paid Content ARPPU was $11.7 (-5.7% YoY).

Material Changes vs. Prior Period

• Revenue Decline: Reported revenue decreased 2.8% YoY in Q2 and 2.2% YoY YTD, primarily due to unfavorable foreign currency exchange rates. On a constant currency basis, revenue increased 5.2% in Q2 and 2.8% YTD.
• Cost Efficiency: Cost of revenue decreased 4.1% YoY in Q2, driven by a shift to higher-margin revenue streams and reduced third-party transaction fees.
• Marketing Spend: Marketing expenses increased 23.4% YoY in Q2 due to increased user acquisition efforts.
• Profitability: While the GAAP net loss widened in Q2 compared to Q2 2025, the YTD net loss narrowed by 9.6% compared to the prior year. Adjusted EBITDA margin was 1.6% in Q2 2026 compared to 2.8% in Q2 2025.
• Geographic Performance: Japan revenue declined significantly on a reported basis due to FX, while Korea and Rest of World showed growth. Japan ARPPU decreased 6.7% YoY, while Korea and Rest of World ARPPU increased.

Guidance, Outlook, and Risks

• Strategic Investments: The company committed $40.0 million to the NW Webcomic Adaptation Fund (40% limited partner) in July 2026. Additionally, in August 2026, the company entered an agreement to acquire a controlling interest in RI Games Holdings Inc. for approximately $100 million, expanding into game development.
• Capital Raise: In January 2026, the company completed a private placement with The Walt Disney Company, raising approximately $32.8 million for a ~2% equity stake.
• Liquidity: The company holds $583.1 million in cash and cash equivalents. Management believes this is sufficient for at least the next 12 months.
• Legal Proceedings: A putative securities class action lawsuit regarding the 2024 IPO reached an agreement-in-principle for settlement in July 2026; a hearing for preliminary approval is scheduled for September 2026. The company does not expect a material financial impact.
• Risks: Key risks include the ability to realize returns on new market entries (specifically gaming via RI Games), foreign currency volatility, and the outcome of ongoing litigation.

Investor Verification Checklist

• FX Impact: Verify the magnitude of foreign currency headwinds, as reported revenue declines mask underlying organic growth (5.2% constant currency growth in Q2).
• RI Games Acquisition: Review the terms of the RI Games Holdings acquisition, specifically the contingent payment obligations and the milestone requirements for the second closing.
• Disney Investment: Confirm the strategic implications of the Disney private placement and any associated tag-along or protective rights.
• Monetization Trends: Monitor the divergence between growing user bases (MAU/MPU) and declining ARPPU, particularly in the Japan market.
• Legal Settlement: Track the status of the IPO-related securities litigation settlement to ensure no unexpected liabilities arise.