Webtoon Entertainment reports Q1 net loss despite meeting revenue projections

Digital comics platform posts mixed results as profitability concerns persist amid currency pressures

(Webtoon)

Webtoon Entertainment, the global arm of South Korea’s Naver Webtoon, reported a net loss of $22 million in the first quarter, despite slightly exceeding revenue forecasts.

The Los Angeles-based webcomics platform, which went public in June 2024, recorded revenue of $325.7 million, narrowly surpassing the $324 million estimate from analysts surveyed by Zacks Investment Research.

While the figure remained largely unchanged from the $326.7 million reported a year earlier, revenue increased 5.3 percent on a constant currency basis, suggesting stable underlying performance despite ongoing currency headwinds with the US dollar trading above 1,400 Korean won since late 2024.

Japan continued to serve as Webtoon’s strongest market, contributing over half of the company’s total revenue for the quarter. The region posted 9.4 percent revenue growth on a constant currency basis, supported by the performance of Line Manga, which maintained its status as Japan’s top-grossing non-gaming app.

“We have grown our presence in Japan, which represented over 50 percent of our revenue in Q1,” said founder and CEO Kim Jun-Koo during the earnings call. “Japan grew all three businesses in this quarter: paid content, advertising and IP adaptations.”

The company has been pivoting from exporting Korean content to developing local creator ecosystems in overseas markets. This model has shown particular traction in Japan, where the platform now serves as a channel for distributing Japanese content to other regions.

English-language markets also reported year-over-year engagement gains, with monthly active users of the webcomic app rising 19 percent. The company said this preceded upcoming platform enhancements in May, including new content discovery tools to improve user experience.

Despite growth in several key areas, Webtoon reported a net loss of $22 million, a reversal from the $6.2 million in net income during the same quarter last year. The decline was attributed to increased general and administrative expenses associated with going public, as well as higher marketing spending. Adjusted EBITDA dropped to $4.1 million from $22.2 million year over year.

Since its initial public offering, Webtoon’s stock has underperformed, falling nearly 30 percent since the start of 2025, compared to the S&P 500’s 0.6 percent gain during the same period. Shares rose 3.35 percent in after-hours trading following Tuesday’s earnings release.

For the second quarter, the company forecasts revenue between $335 million and $345 million, representing 2.2 to 5.2 percent growth on a constant currency basis. Adjusted EBITDA is projected to fall between $500,000 and $5.5 million.

Addressing potential concerns over proposed US tariffs on foreign-produced films, company executives said they do not expect a material impact on core operations.

“We do not see any impact by any announcements, particularly tariffs on our core business -- with the exception of swings in reported FX rates on our results, but not on the core health of our business,” said CFO and COO David Lee.