WBTN Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics:

Revenue: $339 million, a decline of 2.8% year-over-year but a growth of 5.2% on a constant currency basis.

Adjusted EBITDA: $5.5 million, exceeding guidance but down from $9.7 million in Q2 2025.

Net Loss: $14.6 million, compared to a net loss of $3.9 million in the prior year, attributed to increased marketing expenses and higher income tax.

Adjusted EPS: $0.04, down from $0.07 in the prior year.

Gross Margin: Expanded by nearly 100 basis points to 26%.

Monthly Active Users (MAU): Increased 0.5% globally; however, app MAU declined 8.0% year-over-year.

Average Revenue Per User (ARPU): Increased by 2.5% on a constant currency basis.

2Strategic Updates and Business Highlights:

AI Initiatives: Launched AI-powered features such as auto-translation and interactive storytelling to enhance user engagement and expand audience reach.

Off-Platform IP Adaptation: Significant investments in Allied Games Holdings to create immersive gaming experiences based on proven IP, alongside a $100 million IP adaptation fund in partnership with NAVER.

Content Performance: Multiple WEBTOON adaptations performed well, with three series reaching Netflix's global top 10.

Video Innovations: Launched CutCut, an AI-powered animation tool, leading to a 136% increase in new CANVAS titles and a 188% rise in creator participation.

3Forward Guidance and Outlook:

Q3 2026 Revenue Guidance: Expected growth of 0.7% to 3.3% on a constant currency basis, translating to revenue between $358 million and $368 million.

Adjusted EBITDA Guidance: Anticipated to be in the range of $0 to $5 million.

Long-term Growth Expectation: Aiming to return to double-digit revenue growth by the end of 2026, supported by ongoing AI initiatives and off-platform adaptations.

4Challenges and Points of Concern:

Declining Metrics: Significant declines in app MAU and overall user engagement metrics, particularly in Japan and the Rest of World regions.

Net Loss Increase: A notable increase in net loss raises concerns about profitability amidst rising marketing expenses.

Japan Market Struggles: Revenue declined 6.7% year-over-year in Japan, with efforts needed to enhance local content and partnerships to stabilize growth.

Marketing Expense Management: Increased marketing spend without immediate returns could impact future profitability.

5Notable Q&A Insights:

User Engagement: Average user engagement is approximately 30 minutes per day, with higher engagement among paying users, though specific metrics for paid users were not disclosed.

Marketing Strategy: Marketing investments are being strategically allocated, with a focus on growth in under-penetrated markets like Japan and the Rest of World, while maintaining efficiency in mature markets like Korea.

Japan Growth Strategy: Emphasis on local content and partnerships to drive growth, with a commitment to improving engagement and distribution.

IP Commercialization: The shift towards direct ownership of IP adaptations, particularly in gaming, aims to enhance revenue potential and reduce reliance on licensing models. Overall, while WBTN demonstrated solid revenue growth in certain areas and strategic investments in AI and IP adaptations, challenges in user engagement and profitability, particularly in Japan, present ongoing risks that the company must navigate.