User Metrics - As of September 30, 2025, global Monthly Active Users (MAU) decreased by approximately 8.5% year-over-year to 155.4 million, with notable declines in Korea and Rest of World[126] - In Korea, MAU was approximately 24.6 million, down from 28.1 million in the same quarter of 2024, reflecting a significant decline[126] - Japan's MAU increased to 25.3 million, up from 22.5 million year-over-year, driven by growth in eBookJapan and increased marketing investments[127] - Rest of World MAU decreased to 105.5 million from 119.3 million, primarily due to government bans on Wattpad and a security upgrade affecting search traffic[128] Revenue and Financial Performance - Revenue for the three months ended September 30, 2025, increased by 8.7% to $378,041,000 compared to $347,915,000 in the same period of 2024[150] - Revenue for the nine months ended September 30, 2025, increased by 5.7% to $1,052,019,000 compared to $995,631,000 in the same period of 2024[160] - Total revenue for Q3 2025 was $378.0 million, an increase of 8.7% compared to $347.9 million in Q3 2024[181] - Paid content revenue reached $286.8 million in Q3 2025, a slight increase of 0.6% from $285.2 million in Q3 2024[181] - Advertising revenue decreased by 9.3% to $39.4 million in Q3 2025, down from $43.4 million in Q3 2024[181] - IP adaptations revenue surged by 168.7% to $51.9 million in Q3 2025, compared to $19.3 million in Q3 2024[181] User Monetization - Global Monthly Paying Users (MPU) reached 7.7 million with a paying ratio of 5.0%, an increase of 0.3% compared to the previous year[131] - In Korea, MPU decreased to around 3.7 million, but the paying ratio increased to 14.9%, up from 13.8% year-over-year[132] - Average Revenue per Paying User (ARPPU) increased to $12.4, reflecting a 2.8% growth compared to the same quarter of 2024, driven by a strategic shift from web to app[135] - ARPPU in Japan reached $23.6, a 2.4% increase year-over-year, indicating strong monetization in that market[136] Expenses and Losses - Cost of revenue rose by 15.1% to $295,267,000 for the three months ended September 30, 2025, up from $256,534,000 in 2024[152] - Marketing expenses increased by 7.5% to $35,166,000 for the three months ended September 30, 2025, compared to $32,719,000 in 2024[153] - General and administrative expenses decreased by 6.4% to $62,486,000 for the three months ended September 30, 2025, down from $66,747,000 in 2024[154] - Net loss for the three months ended September 30, 2025, was $11,050,000, a decrease of 155.3% compared to a net income of $19,986,000 in 2024[150] - The company reported a net loss of $36.9 million for the nine months ended September 30, 2025, adjusted for non-cash items totaling $60.3 million[188] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2025, was $3.6 million, down from $26.5 million in the same period of 2024[187] - As of September 30, 2025, the company had $584.6 million in cash and cash equivalents, primarily invested in short-term, highly liquid investments[185] - For the nine months ended September 30, 2025, net cash used in investing activities was $5.0 million, with significant payments for intangible assets and property[189] Future Outlook - The company anticipates future capital requirements will depend on growth rate and sales activities, with potential needs for additional financing[186] - The company believes that non-GAAP measures like Adjusted EBITDA and revenue on a constant currency basis provide useful insights into performance by excluding foreign currency volatility[179] - The company emphasizes that non-GAAP measures should not be considered in isolation from GAAP measures, as they have limitations[171]

Group 1: Market Overview - Major U.S. equities indexes experienced a decline, with technology shares significantly impacting the Nasdaq, which fell nearly 2% [1] - The S&P 500 and Dow Jones Industrial Average also reported lower performance following the end of the longest federal shutdown in U.S. history [1] Group 2: Company Performance - Cisco Systems (CSCO) saw its stock surge over 4% after the company raised its full-year profit outlook [3] - The Walt Disney Co. (DIS) shares dropped 9% due to weaker-than-expected revenue, particularly in its linear TV networks business [2] - Flutter Entertainment (FLUT) stock fell 11% after the company revised its full-year revenue and adjusted EBITDA forecasts downward [2] - WEBTOON Entertainment (WBTN) shares plummeted 25% after projecting a decline in fourth-quarter revenue [2] - Sealed Air (SEE) shares soared 19% following reports of potential talks with private-equity firm Clayton Dubilier & Rice for a private acquisition [3] - Firefly Aerospace (FLY) shares jumped 17% after posting better-than-expected results and a positive full-year revenue projection [3] Group 3: Commodity and Currency Movements - Oil futures rose nearly 1%, trading just above $59 per barrel [3] - Gold futures remained relatively unchanged at around $4,200 per ounce [3] - The yield on the 10-year Treasury note increased to 4.10% [3] - The U.S. dollar weakened against the euro, pound, and yen [3] - Cryptocurrency prices were mixed, with Bitcoin trading under $101,000 [3]

Core Insights - WEBTOON Entertainment Inc. (Nasdaq: WBTN) is a digital entertainment company specializing in web-based comics and storytelling, facing financial challenges despite its innovative platform [1] Financial Performance - For Q3 2025, WBTN reported an earnings per share (EPS) of -$0.09, missing the estimated EPS of -$0.04, indicating negative earnings with a price-to-earnings (P/E) ratio of approximately -21.86 [2][6] - The actual revenue for the third quarter was approximately $378 million, below the estimated $384.7 million, but the company achieved a revenue growth of 8.7%, with a constant currency revenue increase of 9.1%, primarily driven by Paid Content and IP Adaptations, despite a decline in Advertising revenue [3][6] - WBTN reported a net loss of $11.1 million but delivered an adjusted EBITDA of $5.1 million, surpassing the midpoint of its guidance range, indicating some ability to generate positive earnings before interest, taxes, depreciation, and amortization [4][6] Balance Sheet Strength - The company maintains a strong balance sheet with cash and cash equivalents totaling approximately $584.6 million and no debt, reflected in a low debt-to-equity ratio of about 0.018 and a current ratio of approximately 2.54, suggesting a strong ability to cover short-term liabilities [5]

Core Insights - Webtoon Entertainment (WBTN) reported revenue of $378.04 million for the quarter ended September 2025, reflecting an 8.7% increase year-over-year, but fell short of the Zacks Consensus Estimate by -1.35% [1] - The company's EPS was $0.04, a decrease from $0.22 in the same quarter last year, aligning with the consensus estimate [1] Financial Performance - Webtoon’s revenue breakdown includes: - Paid Content Revenue: $286.81 million, below the average estimate of $306.04 million [4] - IP Adaptations Revenue: $51.86 million, exceeding the average estimate of $26.31 million [4] - Advertising Revenue: $39.37 million, also below the average estimate of $51.09 million [4] - Monthly Active Users (MAU) totaled 155.4 million, lower than the estimated 164.82 million [4] - Monthly Paying Users (MPU) were reported as follows: - Korea: 3.7 million, slightly above the estimate of 3.69 million [4] - Japan: 2.3 million, below the estimate of 2.51 million [4] - Total MPU: 7.7 million, below the average estimate of 7.93 million [4] - Paying Ratios: - Korea: 14.9%, above the estimate of 14.1% [4] - Japan: 9.1%, below the estimate of 10.6% [4] - Rest of World: 1.6%, slightly above the estimate of 1.5% [4] Market Performance - Webtoon shares have returned -5.3% over the past month, contrasting with the Zacks S&P 500 composite's +4.6% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for outperformance in the near term [3]

Core Viewpoint - Webtoon Entertainment reported quarterly earnings of $0.04 per share, matching the Zacks Consensus Estimate, but down from $0.22 per share a year ago [1] - The company posted revenues of $378.04 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 1.35% [2] Financial Performance - Webtoon surpassed consensus EPS estimates three times over the last four quarters [2] - The company has also topped consensus revenue estimates three times in the same period [2] - Year-over-year revenue growth was observed, increasing from $347.92 million [2] Stock Performance - Webtoon shares have increased approximately 21.4% since the beginning of the year, outperforming the S&P 500's gain of 16.4% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for outperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.09, with projected revenues of $392.11 million, and for the current fiscal year, the EPS estimate is $0.24 on revenues of $1.45 billion [7] - The estimate revisions trend for Webtoon was favorable ahead of the earnings release, suggesting potential positive movements in stock performance [6] Industry Context - The Internet - Content industry, to which Webtoon belongs, is currently ranked in the bottom 16% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was $5.1 million, down from $28.9 million in the same quarter of 2024 [10][18] - Total revenue reached $378 million, an increase of 8.7% year-over-year, or 9.1% on a constant currency basis [4][10] - Net loss for the quarter was $11.1 million compared to a net income of $20 million in the prior year [10][19] - Adjusted earnings per share was $0.04, down from $0.22 in the prior year [20] Business Line Data and Key Metrics Changes - Revenue from paid content grew by 0.8% on a constant currency basis, driven by strength in Japan and the rest of the world, but offset by a decline in Korea [12] - Advertising revenue decreased by 8.9% on a constant currency basis, with declines in Korea and the rest of the world [13] - IP adaptations revenue increased by 171.8% year-on-year on a constant currency basis, driven by theatrical releases in Korea [14] Market Data and Key Metrics Changes - In Korea, revenue grew by 22.2% year-over-year on a constant currency basis, despite a decline in advertising [15] - Japan's revenue growth was 2% year-over-year, with MAU increasing by 12.6% [16] - The rest of the world saw a revenue decline of 0.7% year-over-year, primarily due to advertising declines [17] Company Strategy and Development Direction - The company is focusing on expanding its partnership with Disney to develop a new digital comics platform featuring over 35,000 comics [5][6] - The launch of video episodes aims to enhance user engagement and attract new users [6][7] - The company plans to co-produce 10 fan-favorite WEBTOON series with Warner Bros. Animation for global distribution [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver growth despite challenges, citing strong partnerships and product innovations [21] - The guidance for Q4 2025 anticipates a revenue decline of 5.1% to 2.3% on a constant currency basis, with expected revenue between $330 million and $340 million [20] - Management highlighted the importance of IP adaptations for user engagement and revenue growth [9][38] Other Important Information - The company is experiencing a decline in overall MAU by 8.5%, primarily due to issues with Wattpad [11][31] - Gross profit for the quarter declined by 9.4%, resulting in a gross margin of 21.9% compared to 26.3% in the prior year [18] Q&A Session Summary Question: Can you elaborate on the long-term vision of the Disney partnership? - Management indicated that the collaboration with Disney is still in early stages and aims to create original stories while maintaining the fundamental margin structure of the business [24][25] Question: What early engagement or monetization metrics are you seeing with video episodes? - Management noted that it is too early to provide specific metrics but expressed optimism about the potential of video episodes to enhance user engagement [26][27] Question: Any updates on the Warner partnership and its economic terms? - Management stated that while they are excited about the partnership with Warner Bros. Animation, they are not ready to disclose specific economic terms yet [28][30] Question: How should we think about web novel users going forward? - Management acknowledged that Wattpad is a significant driver of MAU declines but emphasized its importance as a source of IP [31][33] Question: Can you discuss the drivers of the Q4 guidance? - Management explained that the anticipated revenue decline is primarily due to the timing of IP adaptations and not a fundamental business health issue [36][38]

Financial Performance - Total revenue for Q3 2025 was $378.0 million, an increase of 8.7% year-over-year, with a constant currency growth of 9.1%[6] - Net loss for the quarter was $11.1 million, compared to a net income of $20.0 million in Q3 2024[6] - Adjusted EBITDA was $5.1 million, down from $28.9 million in the prior year, resulting in an Adjusted EBITDA Margin of 1.4%[6] - Adjusted Earnings Per Share for Q3 2025 was $0.04, down from $0.22 in the prior year[6] - For Q4 2025, the company expects revenue to decline in the range of $330-$340 million, with an Adjusted EBITDA loss projected between $6.5 million and $1.5 million[7] - The company reported a basic loss per share of $0.09 for Q3 2025, compared to earnings of $0.15 per share in Q3 2024[39] - The net income margin for Q3 2025 was (2.9)%, a decline from 5.7% in Q3 2024, indicating a significant drop in profitability[39] - For the nine months ended September 30, 2025, the net loss was $36,902,000, an improvement from a loss of $50,349,000 in the same period of 2024[39] Cash and Assets - The company has approximately $584.6 million in cash and cash equivalents, with no debt[1] - Cash and cash equivalents increased to $584,575 as of September 30, 2025, compared to $572,402 as of December 31, 2024[26] - Total assets as of September 30, 2025, were $1,977,871, an increase from $1,935,334 as of December 31, 2024[27] - Total current liabilities increased to $334,260 as of September 30, 2025, from $313,224 as of December 31, 2024, reflecting a rise of 6.6%[27] Revenue Breakdown - Total revenue for the nine months ended September 30, 2025, increased by 5.7% to $1,052,019 thousand compared to $995,631 thousand in 2024[37] - Revenue on a Constant Currency Basis for the nine months ended September 30, 2025, was $1,076,043 thousand, reflecting an 8.1% increase from $995,486 thousand in 2024[37] - Paid Content Revenue for the nine months ended September 30, 2025, was $821,953 thousand, a 1.1% increase from $812,791 thousand in 2024[37] - IP Adaptations Revenue surged by 70.2% to $105,581 thousand for the nine months ended September 30, 2025, compared to $62,040 thousand in 2024[37] Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2025, was $3,578 thousand, down from $26,539 thousand in 2024[32] - Net cash used in investing activities for the nine months ended September 30, 2025, was $(5,029) thousand, compared to $(11,230) thousand in 2024[33] - Net cash provided by financing activities for the nine months ended September 30, 2025, was $1,407 thousand, significantly lower than $353,668 thousand in 2024[33] Marketing and Expenses - Marketing expenses for the three months ended September 30, 2025, were $35,166, an increase from $32,719 in the same period of 2024[29] - The company incurred stock-based compensation expenses of $9,625,000 in Q3 2025, down from $12,262,000 in Q3 2024[39] User Engagement - The company has approximately 155 million monthly active users, indicating a strong user base for its platforms[12] Strategic Partnerships - WEBTOON Entertainment is expanding its relationship with Disney, including a non-binding agreement for Disney to acquire a 2% equity interest[3] - The company plans to co-produce 10 animated projects with Warner Bros. Animation for global distribution[5] Foreign Currency and Interest - The company reported a foreign currency translation adjustment loss of $21,116 for the three months ended September 30, 2025[29] - Interest income for the three months ended September 30, 2025, was $4,638, a decrease from $6,512 in the same period in 2024[29] - Total interest income decreased to $(4,638,000) in Q3 2025 from $(6,512,000) in Q3 2024, while interest expense remained minimal at $2,000[39]

Core Insights - WEBTOON Entertainment reported a third quarter revenue growth of 8.7%, with a constant currency growth of 9.1%, driven by Paid Content and IP Adaptations [1][6][3] - The company experienced a net loss of $11.1 million, a significant decline from a net income of $20.0 million in the prior year, attributed to lower other income and higher income tax expenses [6][3] - Adjusted EBITDA was $5.1 million, down from $28.9 million in the previous year, resulting in an Adjusted EBITDA Margin of 1.4% compared to 8.3% [6][3] Financial Performance - Total revenue for the third quarter was $378.0 million, with Paid Content and IP Adaptations contributing to the growth, while Advertising revenue declined [6][3] - The diluted loss per share was $0.09, compared to diluted earnings per share of $0.15 in the prior year [6][3] - Cash and cash equivalents stood at approximately $584.6 million, with no debt reported [1][6] Strategic Developments - The company is expanding its relationship with Disney, including a non-binding agreement for Disney to acquire a 2% equity interest in WEBTOON Entertainment [3] - WEBTOON announced plans to co-produce 10 animated projects with Warner Bros. Animation for global distribution [8] Future Outlook - For the fourth quarter of 2025, the company expects Adjusted EBITDA guidance to include $16.5 million in non-cash expenses [4]

Core Insights - Webtoon Entertainment (WBTN) is a significant player in the digital storytelling space, focusing on comics and cartoons, and is preparing to announce its quarterly earnings on November 12, 2025, with an estimated EPS of approximately -$0.04 and projected revenue of around $384.7 million [1] Stock Performance - WBTN's stock has experienced a decline of 9.4% over the past two weeks, but a hammer chart pattern has emerged, indicating a potential trend reversal and suggesting that the stock may have found support [2] - The technical signal from the hammer pattern often points to a bottoming out of the stock, with a likely reduction in selling pressure [2] Analyst Sentiment - Wall Street analysts are optimistic about WBTN's future, with a strong consensus on raising earnings estimates, supporting the possibility of a trend reversal for the stock in the near term [3] - Despite a negative P/E ratio of -21.42, the price-to-sales ratio of 1.57 indicates that investors are willing to pay $1.57 for every dollar of sales [3] Financial Ratios - WBTN's enterprise value to sales ratio is approximately 1.16, reflecting the company's valuation relative to its sales [4] - The enterprise value to operating cash flow ratio is around -91.53, highlighting significant negative cash flow from operations, while the earnings yield is approximately -4.67%, indicating negative earnings [4] - The company maintains a low debt-to-equity ratio of about 0.018, suggesting a low level of debt relative to equity [4] Liquidity Position - WBTN's current ratio is approximately 2.54, indicating a strong liquidity position to cover its short-term liabilities, which may provide the company with the flexibility to navigate current challenges and capitalize on potential growth opportunities in the digital content market [5]

Core Viewpoint - Webtoon Entertainment (WBTN) has experienced a downtrend, losing 9.4% over the past two weeks, but a hammer chart pattern suggests a potential trend reversal as buying interest may be emerging to counteract selling pressure [1][2]. Technical Analysis - The hammer chart pattern indicates a possible bottoming out, with selling pressure likely subsiding. This pattern forms when there is a small candle body with a long lower wick, suggesting that bulls may be regaining control [2][4][5]. - The hammer pattern is significant when it appears at the bottom of a downtrend, signaling that bears may have lost control and a trend reversal could be imminent [5]. Fundamental Analysis - There has been a positive trend in earnings estimate revisions for WBTN, which is a bullish indicator. The consensus EPS estimate for the current year has increased by 3.7% over the last 30 days, indicating analysts' confidence in the company's earnings potential [7][8]. - WBTN currently holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises. Stocks with this ranking typically outperform the market [9][10].