WEBTOON’s first quarter results for 2026 met Wall Street’s revenue expectations, but the market responded negatively after management highlighted ongoing user declines and weaker IP adaptation revenue. Leadership attributed the quarter’s performance primarily to growth in paid content and advertising, partially offset by a sharp drop in IP adaptation sales. CFO David Lee explained that a change in monthly active user (MAU) reporting—removing automated and fake accounts—also contributed to lower reported user metrics. The company emphasized improved gross margin and cost discipline, yet acknowledged continued softness in core user trends and IP revenue.
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WEBTOON (WBTN) Q1 CY2026 Highlights:
- Revenue: $320.9 million vs analyst estimates of $320.5 million (1.5% year-on-year decline, in line)
- EPS (GAAP): -$0.07 vs analyst estimates of -$0.10 (26.4% beat)
- Adjusted EBITDA: $9.48 million vs analyst estimates of $2.42 million (3% margin, significant beat)
- Revenue Guidance for Q2 CY2026 is $337 million at the midpoint, below analyst estimates of $358.7 million
- EBITDA guidance for Q2 CY2026 is $2.5 million at the midpoint, below analyst estimates of $12.01 million
- Operating Margin: -2.5%, up from -8.2% in the same quarter last year
- Monthly Active Users: 145 million, down 5 million year on year
- Market Capitalization: $1.63 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From WEBTOON’s Q1 Earnings Call
- Mark Stephen Mahaney (Evercore ISI): Asked about the sustainability of gross margin improvements and whether the company’s investment philosophy would limit near-term profitability. CFO David Lee said margin gains are driven by mix shift and cost control, but confirmed that most profit upside will be reinvested for growth.
- Kunal Madhukar (Deutsche Bank): Inquired about the Disney digital comics platform timeline and what factors would drive the targeted return to double-digit growth. Lee stated the Disney collaboration is on track, and growth depends on paid content momentum, Japan’s recovery, and IP adaptation output.
- Eric James Sheridan (Goldman Sachs): Questioned whether monetization changes would alter competitive positioning for creators, and how advertising investments would translate to long-term returns. Management said they are focused on increasing creator value without changing revenue share and emphasized building foundational advertising capabilities.
- Dae Lee (JPMorgan): Sought clarification on the globalization strategy and the rationale behind unifying Canvas for some regions but not Korea/Japan. Management said global best practices and platform upgrades benefit all regions, with phased creator program expansion planned for Korea and Japan.
- Matthew Andrew Cost (Morgan Stanley): Asked how the new Canvas platform will increase the pipeline of breakout original content. Management highlighted that expanded translation and global exposure should help more amateur creators graduate to professional status and fuel the Originals and IP ecosystem.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will be monitoring (1) the pace of user stabilization and paying user growth, especially in Japan and Rest of World, (2) the monetization impact of the revamped Canvas platform and AI translation tools, and (3) execution progress on high-profile collaborations such as the Disney digital comics platform. Continued cost discipline and signs of improvement in advertising revenue mix will also be key areas to track.
WEBTOON currently trades at $12.09, down from $13.31 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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