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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________________________________________________________________

FORM 10-Q

_________________________________________________________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-42144

_________________________________________________________________________

WEBTOON Entertainment Inc.

(Exact Name of Registrant as Specified in its Charter)

_________________________________________________________________________


Delaware			81-3830533
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

5700 Wilshire Blvd., Suite 220 Los Angeles, CA			90036 (Zip Code)

(Address of principal executive offices)

Registrant’s telephone number, including area code: (323) 424-3795

_________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common stock, par value $0.0001 per share

WBTN

Nasdaq Global Select Market

_________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 1, 2026, the registrant had 135,234,730 shares of common stock, par value $0.0001 per share, outstanding.

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			Page

Glossary			ii

Cautionary Note Regarding Forward-Looking Statements			iii

PART I-FINANCIAL INFORMATION			1

Item 1. Unaudited Financial Statements.			1

Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			3
Condensed Consolidated Statements of Stockholders’ Equity and Group Equity			4
Condensed Consolidated Statements of Cash Flows			5
Notes to the Condensed Consolidated Financial Statements			7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			33
Item 4. Controls and Procedures.			33

PART II-OTHER INFORMATION			34

Item 1. Legal Proceedings.			34
Item 1A. Risk Factors.			34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			35
Item 3. Defaults Upon Senior Securities.			35
Item 4. Mine Safety Disclosures.			35
Item 5. Other Information.			35
Item 6. Exhibits.			36

Signatures			37

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GLOSSARY

As used in this Quarterly Report on Form 10-Q (this “Report”), unless stated otherwise or the context otherwise requires:

•“amateur creator(s)” means creators who do not currently monetize their content as Paid Content on our platform as they are subject to our standard terms and conditions without Paid Content revenue sharing provisions. Amateur creators may monetize through other methods, including advertising if they meet certain viewership and subscriber thresholds.

•“Coins” means our in-app currency, which our users can purchase, earn by completing certain advertisement-associated actions or receive during in-app promotional events.

•“creators” means individuals who upload content to our platform and whose content remains available on our platform. Total creators include both amateur and professional creators.

•“eBookJapan” means our eBook (including digital manga, which is manga in a digital format), web-comic and web-novel offering in Japan dedicated to professional creators.

•“episode” means a periodically uploaded chapter or installment of a web-comic or web-novel title.

•“Fast Pass” means a digital pass that provides users with early access to upcoming episodes for ongoing series of content on our platform, which must be purchased with Coins.

•“IP Adaptations” means adaptations of certain content on our offerings into other media formats such as film, streaming series, games and merchandise.

•“LINE MANGA” means our web-comic and digital manga offering in Japan dedicated to both amateur and professional creators.

•“manga” means a style of Japanese comic books and graphic novels typically presented in print format.

•“MAU” or “monthly active users” means users who visited our offerings at least once in the applicable calendar month, averaged over each month in the given period.

•“MPU” or “monthly paying users” means users who have paid to access Paid Content in the applicable calendar month, averaged over each month in the given period.

•“Munpia” means, as context requires, Munpia Inc., one of our wholly-owned subsidiaries in Korea, or Munpia, the namesake web-novel offering and web-novel creator community in Korea run by Munpia Inc.

•“NAVER” means NAVER Corporation, a global information communications technology (ICT) company and our parent, and its subsidiaries and affiliates, excluding WEBTOON, unless context otherwise requires.

•“NAVER SERIES” means our eBook, web-comic and web-novel offering in Korea dedicated to professional creators.

•“NAVER WEBTOON” means NAVER WEBTOON Ltd., one of our wholly-owned subsidiaries in Korea that operates our offerings including WEBTOON and WEBTOON Korea.

•“offering” means our mobile applications, websites or specific sections within such applications and websites where our creators post content, including WEBTOON, WEBTOON Korea, LINE MANGA, NAVER SERIES, eBookJapan, Munpia and Wattpad.

•“Paid Content” means content on our offerings that our users need to pay to access, including through the use of Coins.

•“Paid Content Average Revenue per Paying User” or “ARPPU” means the average Paid Content revenue in a given month divided by the number of monthly paying users for such month, averaged over each month in the given period.

•“Paying ratio” means, with respect to a given period, the ratio of MPU divided by MAU.

•“Paying user” means, with respect to a given period, a user who has paid to access Paid Content on our platform.

•“professional creator(s)” means creators who monetize through Paid Content on our platform under formal creator agreements with Paid Content revenue sharing provisions.

•“title” means a sequential web-comic or web-novel story that is comprised of episodes.

•“Title Purchase” means a digital pass that provides users with access to all episodes from a series that is no longer publishing new episodes.

•“Wattpad” means, as context requires, Wattpad Corp., one of our wholly-owned subsidiaries in Canada which was acquired by NAVER in May 2021 and subsequently acquired by us from NAVER in June 2023, or Wattpad, the namesake global web-novel offering with a global community of creators who are mostly amateur creators that is run by Wattpad Corp.

•“web-comics” means digitally created and serialized stories expressed through vertical, continuous and graphical content.

•“web-novels” means digitally created, serialized and text-based stories.

•“WEBTOON” means, as context requires, WEBTOON Entertainment Inc., a Delaware corporation, and its consolidated subsidiaries, or WEBTOON, the namesake global web-comic offering run by NAVER WEBTOON.

•“WEBTOON Korea” means the NAVER WEBTOON platform, our web-comic offering in Korea.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

•expected operating results, such as revenue growth and earnings;

•economic and industry trends;

•the demand for our platform in general;

•our ability to continue to attract and empower creators to create engaging content;

•our ability to grow and retain our user base and strengthen our brand;

•our ability to increase engagement with users and strengthen our community;

•our ability to attract and retain our senior management team or key personnel;

•our ability to continue to innovate and expand our advertising business;

•our ability to increase paying ratio and strengthen our monetization capability;

•our ability to increase revenues from our intellectual property operations;

•our beliefs about and objectives for future operation;

•future acquisitions or investments;

•our ability to continue to grow across our current markets and expand into new markets;

•our ability to continue to innovate and enhance our offerings;

•the impact of our product development initiatives, including our use of artificial intelligence;

•the functionality and economics of our platform on mobile operating systems;

•our ability to maintain the security and availability of our platform;

•our ability to obtain, maintain, protect and enhance our intellectual property;

•the increased expenses associated with being a public company;

•our business model and expectations and management of future growth, including expansion in international markets and expenditures associated with such growth; and

•our ability to compete with existing and new competitors in existing and new markets.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to risks, uncertainties and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements.

More information on factors that could cause our actual results and financial condition to differ from those expressed in forward-looking statements is included from time to time in our reports filed with the Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026 (the “Annual Report”), particularly under Part I. Item 1A, “Risk Factors.” Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and under Part I. Item 1A. “Risk Factors” of our Annual Report to be a complete statement of all potential risks and uncertainties.

All forward-looking statements speak only as of the date of this Report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this Report. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this Report.

iii

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PART I-FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements.

WEBTOON Entertainment Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands of USD, except share and per share data)


	As of
	March 31, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	594,852	$	581,806
Receivables1, net of allowance for credit losses of $1,703 and $3,378 at March 31, 2026, and December 31, 2025, respectively	182,781		176,779

Prepaid expenses and other current assets, net2	73,369		72,647
Total current assets	851,002		831,232
Property and equipment, net	10,594		8,339
Operating lease right-of-use assets	20,510		23,705
Debt and equity securities	64,348		69,669
Intangible assets, net	150,923		157,804
Goodwill, net	330,832		336,825
Equity method investments	76,212		80,440
Deferred tax assets	23,643		22,302
Other non-current assets, net3	65,681		65,194
Total assets	$	1,593,745	$	1,595,510
Liabilities and equity
Current liabilities:
Accounts payable4	$	137,695	$	136,962
Accrued expenses5	53,837		66,690

Current portion of operating lease liabilities6	8,679		9,617
Contract liabilities	94,640		89,994
Taxes payable	7,000		4,136


Provisions and defined pension benefits	7,013		8,766
Other current liabilities	3,913		2,457
Total current liabilities	312,777		318,622
Non-current liabilities:
Long-term operating lease liabilities7	11,673		14,055
Defined severance benefits	24,502		25,069
Deferred tax liabilities	5,879		5,755
Other non-current liabilities	3,683		3,737
Total liabilities	$	358,514	$	367,238
Commitments and Contingencies (Note 8)
Redeemable non-controlling interest in subsidiary	$	24,336	$	24,540
Stockholders' equity:
Common stock, $0.0001 par value (2,000,000,000 authorized, 134,635,086 shares and 130,776,161 shares issued and outstanding as of March 31, 2026, and December 31, 2025, respectively)	$	13	$	13

Additional paid-in capital	2,177,445		2,137,926
Accumulated other comprehensive loss	(137,007)		(114,363)
Accumulated deficit	(862,579)		(853,124)

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Total stockholders' equity attributable to WEBTOON Entertainment Inc.	1,177,872		1,170,452
Non-controlling interests in consolidated subsidiaries	33,023		33,280
Total equity	1,210,895		1,203,732
Total liabilities, redeemable non-controlling interest, and equity	$	1,593,745	$	1,595,510

1.Includes amounts due from related parties of $54,303 and $55,156 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

2.Includes amounts due from related parties of $4,053 and $4,730 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

3.Includes amounts due from related parties of $33,786 and $33,913 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

4.Includes amounts due to related parties of $24,207 and $18,765 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

5.Includes amounts due to related parties of $6,048 and $6,849 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

6.Includes amounts due to related parties of $4,953 and $5,221 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

7.Includes amounts due to related parties of $3,933 and $5,371 as of March 31, 2026, and December 31, 2025, respectively. (See Note 15. Related Party Transactions)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands of USD, except share and per share data)


	Three Months Ended
		March 31, 2026		March 31, 2025
Revenue1		$	320,872	$	325,707
Cost of revenue2		(237,824)		(254,096)
Marketing3		(30,520)		(31,543)
General and administrative expenses4		(60,559)		(66,702)
Operating income (loss)		(8,031)		(26,634)
Interest income		4,374		5,113
Interest expense		(17)		(2)
Gain (loss) on equity method investments, net		(446)		(569)
Other income (loss), net5		(2,005)		2,670
Income (loss) before income tax		(6,125)		(19,422)
Income tax expense		(2,672)		(2,547)
Net income (loss)		$	(8,797)	$	(21,969)
Net income (loss) attributable to WEBTOON Entertainment Inc.		(9,455)		(22,389)
Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests		658		420
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		(23,747)		6,572
Share of other comprehensive loss of equity method investments, net of tax		(15)		(143)
Total other comprehensive income (loss), net of tax		(23,762)		6,429
Total comprehensive income (loss)		$	(32,559)	$	(15,540)
Total comprehensive income (loss) attributable to WEBTOON Entertainment Inc.		(32,099)		(15,999)
Total comprehensive income (loss) attributable to non-controlling interests and redeemable non-controlling interests		(460)		459

Weighted average shares outstanding
Basic		133,618,587		129,598,942
Diluted		133,618,587		129,598,942
Income (loss) per share attributable to WEBTOON Entertainment Inc.
Basic		$	(0.07)	$	(0.17)
Diluted		$	(0.07)	$	(0.17)

1.Includes amounts earned from related parties of $18,243 and $17,713 for the three months ended March 31, 2026, and March 31, 2025, respectively. (See Note 15. Related Party Transactions)

2.Includes amounts incurred from related parties of $27,071 and $28,131 for the three months ended March 31, 2026, and March 31, 2025, respectively. (See Note 15. Related Party Transactions)

3.Includes amounts incurred from related parties of $(1,729) and $(2,581) for the three months ended March 31, 2026, and March 31, 2025, respectively. (See Note 15. Related Party Transactions)

4.Includes amounts incurred from related parties of $7,817 and $6,913 for the three months ended March 31, 2026, and March 31, 2025, respectively. (See Note 15. Related Party Transactions).

5.Includes amounts earned from related parties of $408 and $411 for the three months ended March 31, 2026, and March 31, 2025, respectively. (See Note 15. Related Party Transactions)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Stockholders' Equity and Group Equity

(unaudited)

(in thousands of USD, except share and per share data)


	Common Stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity attributable to WEBTOON Entertainment Inc.		Non- controlling interests in consolidated subsidiaries		Total equity
	Shares	Amount
Balance as of December 31, 2024	128,587,944	$	13	$	2,103,931	$	(124,620)	$	(507,197)	$	1,472,127	$	47,754	$	1,519,881
Net Income (Loss)	—	—		—		—		(22,389)		(22,389)		233		(22,156)
Foreign currency translation adjustments, net of tax	—	—		—		6,533		—		6,533		22		6,555
Equity in income of equity method investees	—	—		—		(143)		—		(143)		—		(143)
Equity-based compensation and others	1,584,337	—		11,419		—		—		11,419		212		11,631


Balance as of March 31, 2025	130,172,281	$	13	$	2,115,350	$	(118,230)	$	(529,586)	$	1,467,547	$	48,221	$	1,515,768














Balance as of December 31, 2025	130,776,161	$	13	$	2,137,926	$	(114,363)	$	(853,124)	$	1,170,452	$	33,280	$	1,203,732
Net Income (Loss)	—	—		—		—		(9,455)		(9,455)		365		(9,090)
Foreign currency translation adjustments, net of tax	—	—		—		(22,629)		—		(22,629)		(622)		(23,251)
Equity in income of equity method investees	—	—		—		(15)		—		(15)		—		(15)
Equity-based compensation and others	1,192,168	—		7,036		—		—		7,036		—		7,036
Issuance of common stock through private placement, net	2,666,757	—		32,483		—		—		32,483		—		32,483

Balance as of March 31, 2026	134,635,086	$	13	$	2,177,445	$	(137,007)	$	(862,579)	$	1,177,872	$	33,023	$	1,210,895

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands of USD)


	For the Three Months Ended
	March 31, 2026		March 31, 2025
Operating activities:
Net income (loss)	$	(8,797)	$	(21,969)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for credit losses	(749)		443
Depreciation and amortization	7,998		8,437
Operating lease expense	2,541		1,985
Gain on foreign currency, net	(6,207)		(2,793)
Deferred tax benefit	(2,151)		(1,143)
Loss on debt and equity securities, net	2,627		930
Change in severance benefit, net	1,562		574
Loss on equity method investments, net	446		569

Stock-based compensation	7,625		18,253

Other non-cash items	(2,963)		(1,369)
Changes in operating assets and liabilities
Changes in receivables	(11,669)		750
Changes in other assets	(4,122)		(2,250)
Changes in accounts payable	4,083		(2,801)
Changes in accrued expenses	(9,321)		(15,342)
Changes in contract liabilities	7,501		(1,450)



Changes in other liabilities	2,516		(236)
Changes in operating lease liabilities	(2,767)		(1,240)


Net cash used in operating activities	$	(11,847)	$	(18,652)
Investing activities:
Proceeds from maturities of short-term investments	684		3,446

Proceeds from sale of property and equipment	23		77
Purchases of property and equipment	(3,148)		(536)
Purchases of debt and equity securities	—		(3,789)

Payment made for short-term investments	(1,368)		(4,824)
Payment made for loan receivable	(68)		(207)
Purchases of intangible assets	(2,867)		(2,444)


Other investing activities	—		249
Net cash used in investing activities	$	(6,744)	$	(8,028)
Financing activities:

Proceeds from issuance of common stock related to private placement, net	32,682		—
Proceeds from stock option exercise	—		82





Net cash provided by financing activities	$	32,682	$	82
Effect of exchange rate changes on cash and cash equivalents	(1,045)		4,332
Cash and cash equivalents:
Net increase (decrease) in cash and cash equivalents	13,046		(22,266)
Cash and cash equivalents at beginning of the year	581,806		572,402
Cash and cash equivalents at end of the year	$	594,852	$	550,136
Supplemental disclosure:
Income taxes paid	$	2,711	$	6,826

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Reclassification of long-term advances to current	$	(10,901)	$	(28,973)
Increase in right-of-use assets recognized from new lease agreements	$	4	$	12,007





The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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WEBTOON Entertainment Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Note 1. Description of Business and Summary of Significant Accounting Policies

Organization and Description of Business

WEBTOON Entertainment Inc. (the "Parent"), together with its subsidiaries, (the "Company", "we", “us” or “our”), is a majority-owned subsidiary of NAVER Corporation (“NAVER”), who is a leading online and web-comic platform service company. We provide hosting services for web-comics through both web and mobile applications and offer thousands of titles with episodes that are updated on a daily basis. We offer extensive and diverse genres of content, including fantasy, romance, and science fiction, on our platform. Platform refers to the various offerings through which we engage with users across diverse geographical markets including Korea, the United States, Japan, Southeast Asia, and Europe.

Basis of Presentation

The unaudited Condensed Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair statement of the results of the interim period. Certain information and note disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements as of and for the year ended December 31, 2025, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026. Interim results are not necessarily indicative of the results for a full year.

Reclassifications

Certain amounts reported for prior years have been reclassified to conform to the current year's presentation. None of these reclassifications impacted reported operating or net loss for any presented period.

Concentrations of Credit Risk

Cash and cash equivalents, receivables and loan receivables are potentially subject to concentration of credit risk. Cash and cash equivalents are placed with several financial institutions that management believes are of high credit quality. The Company’s receivables include amounts concentrated with three payment gateway companies representing 53.6% and 55.3% of the total receivables balance as of March 31, 2026, and December 31, 2025, respectively. Three borrowers represent 88.7% and 88.9% of the total loan receivables balance as of March 31, 2026, and December 31, 2025, respectively.

Performance Stock Units

During the three months ended March 31, 2026, the Company granted awards in the form of "Performance Stock Units" ("PSUs"), which provide recipients with the right to receive shares of the Company's common stock upon vesting, subject to the achievement of a market condition based on the Company's total shareholder return ("TSR") relative to a custom peer group over the performance period, and the recipient's continued service with the Company.

Compensation expense for PSU awards is recognized ratably over the requisite service period based on the grant-date fair value, regardless of whether the market condition is ultimately achieved. The grant-date fair value of PSU awards is estimated using a Monte Carlo simulation model and is not subsequently remeasured. All of the outstanding PSU awards at March 31, 2026, are classified as equity awards in accordance with ASC 718, given that these awards will be settled in shares of the Company's common stock upon vesting. See Note 9. Stock-Based Compensation for more information on the Company's PSU awards.

Goodwill and Impairment of Goodwill

Goodwill represents the excess of the purchase price and related costs over the fair value of the net identified tangible and intangible assets and liabilities assumed in a business combination. In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” goodwill is not amortized but is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. During the fiscal year ended December 31, 2025, the Company recorded a significant impairment charge to write down the carrying value of goodwill to its estimated fair value, reflecting adjusted expectations for future cash flows and market valuations. While no additional impairment was recognized during the current interim period, the Company estimates the fair value of its reporting units using a discounted cash flow methodology, which represents a Level 3 fair value measurement under ASC 820. This process involves significant

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management assumptions and judgments, including projected sales growth, gross margins, and the selection of an appropriate discount rate. There can be no assurance that the estimates and assumptions used in these tests will prove to be accurate predictions of the future, and further material impairment charges may be required in the near term.

Recent Accounting Pronouncements

On January 1, 2026, the Company adopted ASU 2025-05 and elected the practical expedient for measuring expected credit losses on a prospective basis. The adoption did not have a material impact on the Company's unaudited Condensed Consolidated Financial Statements.

Except for ASU 2025-05 adopted on January 1, 2026, there have been no significant changes to our accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 2. Revenue

Disaggregation of Revenue

The following table shows revenues disaggregated by revenue stream for the three months ended March 31, 2026, and March 31, 2025, respectively:


	Three Months Ended
		March 31, 2026		March 31, 2025
	(in thousands of USD)
Paid Content		$	261,438	$	260,226
Advertising		39,682		39,898
IP Adaptations		19,752		25,583
Total		$	320,872	$	325,707

The revenue stream disaggregation above takes into consideration how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Paid content revenue is generated from the provision of platform services that enable users to access content. Paid content revenue also includes $2.4 million and $2.6 million of physical book sales through the platform for the three months ended March 31, 2026, and 2025, respectively.

Advertising revenue represents amounts earned for the display of advertisements on our offerings or product placement within content.

IP Adaptations revenue originates from the internal development of film, streaming series, or other rich media format adaptations commissioned by third party studios or streaming platforms. The composition of this revenue stream was primarily as follows for the three month periods ended March 31, 2026, and 2025:

•Licensing fees (from sublicensing content to third parties): $3.0 million and $3.1 million, respectively.

•Merchandise sales (from external platforms, IP royalties, and pop-up stores): $1.4 million and $1.1 million, respectively.

The following table shows disaggregation of revenue by geography for the three months ended March 31, 2026 and 2025:


	Three Months Ended
		March 31, 2026		March 31, 2025
	(in thousands of USD)
Korea		$	120,421	$	117,741
Japan		154,291		164,258
Rest of World		46,160		43,708
Total		$	320,872	$	325,707

Contract Liabilities

Contract liabilities primarily include payments received for virtual currency prior to the Company satisfying its performance obligation to deliver content to the customer.

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We recognized revenues of $76.4 million and $71.8 million during the three months ended March 31, 2026, and 2025, respectively, that were included within Contract liabilities on the Condensed Consolidated Balance Sheets as of the beginning of the respective period.

Our remaining performance obligations were $94.6 million and $90.0 million as of March 31, 2026, and December 31, 2025, respectively, and we expect to recognize the entire amounts within one year of the respective dates.

Note 3. Loss per share

Basic earnings (loss) per share is computed using the weighted-average number of outstanding shares of common stock during the period, including vested restricted stock units ("RSUs"). Diluted earnings (loss) per share is computed using the weighted average number of outstanding shares of common stock and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of incremental shares issuable upon the assumed exercise of stock options and vesting of unvested RSUs and PSUs. For the three months ended March 31, 2026, and 2025, the Company's Korean subsidiaries and equity method investees each had outstanding stock options that will be settled in each respective subsidiary or equity method investee's common shares. The numerator of the Company's earnings (loss) per share include the Parent's proportionate share of the diluted earnings or loss per share impact of outstanding subsidiaries and equity method investees' stock options.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three months ended March 31, 2026, and 2025, respectively, (in thousands of USD, except share and per share amounts):


	Three Months Ended
		March 31, 2026		March 31, 2025
Basic earnings (loss) per share:
Net income (loss) attributable to WEBTOON Entertainment Inc.		$	(9,455)	$	(22,389)
Add: allocation to subsidiary / equity method investee participating security 1		(107)		(87)
Net income (loss) attributable to WEBTOON Entertainment Inc.		$	(9,562)	$	(22,476)
Shares used in computation:
Weighted-average common shares outstanding		133,618,587		129,598,942
Basic earnings (loss) per share:		$	(0.07)	$	(0.17)
Diluted earnings (loss) per share:
Net income (loss) attributable to WEBTOON Entertainment Inc.		$	(9,562)	$	(22,476)
Add: dilutive impact of subsidiary / equity method investee stock options		—		(3)
Diluted net income (loss) attributable to WEBTOON Entertainment Inc.		$	(9,562)	$	(22,479)
Shares used in computation:
Weighted-average common shares outstanding		133,618,587		129,598,942
Dilutive effect of stock options and unvested RSUs		—		—
Dilutive effect of unvested PSUs		—		—
Diluted weighted-average common shares outstanding		133,618,587		129,598,942
Diluted earnings (loss) per share		$	(0.07)	$	(0.17)

___________________________________________________________________________

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1.Represents net income/(loss) allocable to Jakga Company Inc. ("Jakga") redeemable convertible preferred stock which is a participating security per ASC 260.

The following potentially dilutive outstanding securities were excluded from the computation of diluted net earnings (loss) per share because their effect would have been anti-dilutive for the periods presented, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three Months Ended
		March 31, 2026	March 31, 2025
Stock options		10,470,017	10,824,760
Unvested RSUs		4,270,897	3,759,834
Unvested PSUs		267,720	—
Subsidiary / equity method investee stock options		443,657	332,597
Total		15,452,291	14,917,191

Note 4. Prepaid Expenses and Other Assets, net

Other Current Assets, net


	As of
	March 31, 2026		December 31, 2025
	(in thousands of USD)
Advance payments, net	$	40,530	$	38,138
Prepaid expenses	13,856		14,635
Term deposits	11,137		10,774
Other current assets, net	7,846		9,100
Total other current assets, net	$	73,369	$	72,647

Advance payments are primarily comprised of the advance payments for production of film contents and the payment of minimum guarantees to creators or publishers for their provision of content, such as web-comics, on the Company’s platform.

The advance payments for production of film contents are directly related to the contract that will be used to satisfy a future performance obligation and are expected to be recovered. These costs are amortized on a systematic basis consistent with the transfer of services to the customer to which the asset relates. The Company recorded amortization expense of $6.4 million and $11.6 million during the three months ended March 31, 2026, and 2025, respectively. The Company's balance of advance payments, net due to film production contracts was $31.9 million and $29.0 million as of March 31, 2026, and December 31, 2025, respectively.

The advance payments for minimum guarantees are amortized as associated commission expenses payable to creators or publishers are incurred. When the Company determines the estimated future commission expenses payable are less than the carrying amount of such advance payments, the remaining portion of that advance payment is charged to expense in the period in which such determination is made.

As of March 31, 2026, and December 31, 2025, $8.5 million and $8.7 million, respectively, of the term deposit balance was pledged to Sumitomo Mitsui Banking Corporation as a compensating balance deposit on contract liabilities of the Company’s subsidiary in accordance with the Payment Services Act in Japan.

Other Non-Current Assets, net


	As of
	March 31, 2026		December 31, 2025
	(in thousands of USD)
Advance payments, net	$	27,753	$	25,486
Long-term loans, net	29,292		30,890
Other non-current assets, net	8,636		8,818
Total other non-current assets, net	$	65,681	$	65,194

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Long-term advance payments represent the portion of advance payments expected to remain on the balance sheet beyond one year. When the Company determines the estimated future commission expenses payable are less than the carrying amount of the long-term advance payments, the remaining portion of that long-term advance payment is charged to expense in the period in which such determination is made. The Company's balance of advance payments, net due to film production contracts was $9.8 million and $7.3 million as of March 31, 2026, and December 31, 2025, respectively.

Note 5. Goodwill, net

The changes in the carrying amount of goodwill for the three months ended March 31, 2026, are as follows:




	(in thousands of USD)
Goodwill, net at December 31, 2025	$	336,825
Foreign currency translation adjustments	(5,993)
Goodwill, net at March 31, 2026	$	330,832

Note 6. Property and Equipment, net

Property and equipment, net consists of the following:


		As of
	Estimated Useful Lives	March 31, 2026		December 31, 2025

	(in years)	(in thousands of USD)
Land	Indefinite	$	105	$	110
Buildings	40	165		174
Equipment	3-5	13,654		13,775
Leasehold improvements	Lesser of lease term or useful life	3,191		3,280
Construction in progress		3,029		295
Property and equipment		$	20,144	$	17,634
Less: Accumulated depreciation		(9,550)		(9,295)
Property and equipment, net		$	10,594	$	8,339

Note 7. Leases

Supplemental disclosure of cash flow information related to operating leases is as follows for the three months ended March 31, 2026, and 2025, respectively:


	Three Months Ended
	March 31, 2026		March 31, 2025
	(in thousands of USD)
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,767	$	1,240
Right-of-use assets obtained in exchange for operating lease liabilities	$	4	$	12,007

In March 2025, LINE Digital Frontier entered into two lease agreements for office space. The leases commenced in March 2025, and expire in February 2030, with monthly payments of $0.1 million each, at a discount rate of 2.9%. Upon commencement, each of the two leases was recognized as a right-of-use asset in the amounts of $6.0 million and $6.0 million, respectively.

The Company subleases a portion of its operating lease right-of-use assets for buildings. Sublease income was $0.1 million and $0.1 million for the three months ended March 31, 2026, and 2025, respectively, and is included within Other income (loss), net on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

As of March 31, 2026, the Company has executed a lease agreement, which commences April 1, 2026, for the Company’s new headquarters. Costs incurred prior to the commencement date, including leasehold improvements and the security deposit, are recorded within Property and equipment, net and other current assets, net respectively.

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Note 8. Commitments and Contingencies

Contingencies

The Company records a loss contingency, consistent with ASC 450, when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses material contingencies when it believes a loss is not probable but reasonably possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss.

Legal Proceedings

The Company is involved in a number of claims pending with various courts, or otherwise unresolved as of March 31, 2026. Adverse results in these claims may include awards of damages and may also result in, or even compel a change in the Company’s business practices, which could materially impact the Company’s future financial results. The Company cannot determine the potential loss or a range of possible losses for cases in their initial stages or where there is an unclear and inconsistent interpretation of laws related to the industry-specific grievances across various jurisdictions. Though the outcome of pending lawsuits and claims cannot be anticipated with certainty, the Company does not expect adverse results from its pending lawsuits and claims, as of March 31, 2026. The timing and outcome of ongoing legal proceedings are uncertain by nature. Therefore, while management deems the chance of a significant loss for all pending claims, whether asserted or unasserted, to be remote, the resolution of one or more of these legal matters against the Company during the same reporting period in excess of management’s projections could negatively impact the Company’s unaudited Condensed Consolidated Financial Statements for that reporting period.

Securities Litigation

On September 5, 2024, a purported stockholder filed a putative class action lawsuit against the Company, its directors, and the underwriters of the Company’s initial public offering completed on June 28, 2024 (the “IPO”) in the federal court for the Central District of California, purportedly on behalf of all purchasers of shares of the Company’s common stock pursuant or traceable to the IPO Prospectus and the Company’s Registration Statement on Form S-1 (File No. 333-279863) relating to our IPO (the “Registration Statement”). The complaint alleges that the Registration Statement was materially false and misleading in violation of Sections 11 and 15 of the Securities Act of 1933. On October 10, 2024, the court ordered that the defendants are not required to answer or otherwise respond to the complaint, deferring any response until after the court rules on any motion by a purported class member to serve as lead plaintiff. On December 12, 2024, the court appointed a lead plaintiff and lead counsel. On February 3, 2025, the lead plaintiff filed an amended complaint, and on March 4, 2025, the Company, its directors, and the underwriters of the IPO moved to dismiss the amended complaint. On March 11, 2025, the lead plaintiff filed an opposition to this motion to dismiss, and on March 18, 2025, the Company, its directors, and the underwriters filed a reply in support of the motion to dismiss. On November 14, 2025, the court issued an order granting in part and denying in part the motion to dismiss. On December 2, 2025, the court issued an amended order granting in part and denying in part the motion to dismiss. On January 9, 2026, the WEBTOON defendants and underwriter defendants filed answers to the operative complaint. Fact discovery is ongoing. The Company intends to defend this case vigorously. At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses.

On November 15, 2024, a purported stockholder filed a shareholder derivative lawsuit against the Company’s directors, naming the Company as a nominal defendant, in the federal court for the Central District of California. The complaint focuses on the same allegations as the putative securities class action described above, including that the Company’s Registration Statement was materially false or misleading. The complaint includes claims for violations of Section 14 (a) of the Exchange Act, breach of fiduciary duties, and unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and contribution under Section 11(f) of the Securities Act of 1933, and Section 31D of the Exchange Act of 1934. On January 13, 2025, by stipulation of the parties, the court ordered the shareholder derivative lawsuit stayed pending resolution of the Company’s motion to dismiss in the putative securities class action. On April 24, 2026, by stipulation of the parties, the court ordered the shareholder derivative lawsuit stayed until the end of the fact discovery period in the securities class action (currently scheduled for November 30, 2026). At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses.

On May 5, 2026, a purported shareholder filed a shareholder derivative lawsuit against the Company’s directors, naming the Company as a nominal defendant, in the federal court for the Central District of California. The complaint focuses on similar allegations as the putative securities class action described above, including that the Company’s Registration Statement was materially false or misleading. The complaint includes claims for breach of fiduciary duties, aiding and abetting breach of fiduciary duties, unjust enrichment, waste of corporate assets, and contribution under Section

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11(f) of the Securities Act of 1933, and Section 31D of the Exchange Act of 1934. At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses.

Note 9. Stock-Based Compensation

Restricted Stock Units

The table below summarizes the Company’s RSU activity for the three months ended March 31, 2026:


	Number of RSUs	Weighted Average Grant-Date Fair Value
Balance as of December 31, 2025	3,298,513	$	13.69
Granted	2,279,353	$	9.02
Forfeited	(71,174)	$	13.98
Vested	(1,235,795)	$	9.48
Balance as of March 31, 2026	4,270,897	$	12.41

As of March 31, 2026, the total unrecognized compensation expense related to unvested RSUs was $39.8 million and is expected to be recognized over the remaining weighted-average service period of 1.6 years using the straight-line method and graded-vesting methods, as appropriate, net of estimated forfeitures.

Performance Stock Units

On March 26, 2026, the Company granted Performance Stock Units ("PSUs") to certain employees under the 2024 Omnibus Incentive Plan. The vesting of PSUs is subject to a market condition based on the Company's total shareholder return ("TSR") relative to a custom peer group over the performance period from January 1, 2026, through December 31, 2028, and the recipient's continued service with the Company.

The PSUs are eligible to be earned and vest from 0% to 200% of the target number of shares granted, depending on the Company's relative TSR percentile ranking among the peer group at the end of the performance period. The grant-date fair value of the PSU awards was estimated using a Monte Carlo simulation model, resulting in a weighted-average grant-date fair value of $13.27 per target share. The simulation was performed using an expected volatility of 69.8%, a risk-free interest rate of 3.9%, and an expected dividend yield of 0%.

The table below summarizes the Company’s PSU activity for the three months ended March 31, 2026:


	Number of PSUs	Weighted Average Grant-Date Fair Value
Balance as of December 31, 2025	—	$	—
Granted	267,720	$	13.27
Forfeited	—	$	—
Vested	—	$	—
Balance as of March 31, 2026	267,720	$	13.27

As of March 31, 2026, total unrecognized compensation expense related to unvested PSU awards was $3.3 million, which is expected to be recognized over a weighted-average remaining service period of approximately 2.94 years using the straight-line method.

The following table summarizes the Company's Phantom Unit activity for the three months ended March 31, 2026:


	Number of Phantom Units	Weighted Average Grant-Date Fair Value
Balance as of December 31, 2025	328,748	$	9.04
Granted	—	$	—
Forfeited	(3,152)	$	9.04
Vested	(198,941)	$	9.04
Balance as of March 31, 2026	126,655	$	9.04

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The following table summarizes the effects of all stock-based compensation in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the periods presented:


	Three Months Ended
		March 31, 2026		March 31, 2025
	(in thousands of USD)
Cost of revenue		$	1,543	$	4,780
Marketing		212		836
General and administrative expenses		5,870		12,637
Total		$	7,625	$	18,253

Note 10. Stockholders' Equity

On January 8, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a wholly owned indirect subsidiary of The Walt Disney Company (“Disney”), pursuant to which Disney purchased 2,666,757 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), representing an approximately 2% equity interest in the Company, for an aggregate purchase price of $32.8 million. The Shares were issued in a private placement in reliance on the exemption provided by Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering.

In connection with the Purchase Agreement, the Company has provided Disney with certain rights related to its investment in the Shares, including the ability to approve certain corporate actions that would adversely affect Disney or its affiliates and the ability to sell or otherwise transfer the Shares for the same consideration, on the same terms and subject to the same conditions as a sale or transfer made by NAVER Corporation or LY Corporation.

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Note 11. Income Taxes

The Company’s income tax provision for the three months ended March 31, 2026, is determined using an estimate of the Company’s annual effective tax rate, adjusted for any discrete items reflected in the relevant period. Income tax expense was $2.7 million and $2.5 million, with effective tax rates of (43.6)% and (13.1)%, during the three months ended March 31, 2026 and 2025, respectively. This includes a discrete tax benefit of $1.8 million and a discrete tax expense of $1.4 million for the three months ended March 31, 2026 and 2025, respectively, due to the return-to-provision true-up adjustments in Korea and Japan tax return filings.

The change in effective tax rate is primarily driven by the change in jurisdictional profits and losses. The provision for income taxes differs from the U.S. statutory federal tax rate of 21% primarily due to state income taxes, foreign income taxes, and the non-recognition of deferred tax assets due to a full valuation allowance against deferred tax assets in the U.S. and taxable loss generating subsidiaries in Korea, Canada, and Japan.

In evaluating the realizability of these deferred tax assets, we consider on a jurisdictional basis, the period of sustained taxable losses, the existence of taxable temporary differences, and available sources of future taxable income. As of March 31, 2026, we cannot objectively assert that these deferred tax assets are more likely than not to be realized and therefore we have maintained a valuation allowance. We intend to continue maintaining a valuation allowance on these deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. It is reasonably possible that within the next 12 months, we may have enough positive evidence to release part or all of the remaining valuation allowance in Japan. This release would reduce our income tax expense for the period, significantly impacting our net earnings. The timing and amount of the release depend on the Company’s actual profitability.

Note 12. Retirement Benefits

Defined severance benefits

The following table provides the components of net periodic benefit costs (income):


	Three Months Ended
		March 31, 2026		March 31, 2025
	(in thousands of USD)
Current service costs		$	1,272	$	1,190
Interest expense		339		268
Actuarial gain		(49)		(884)
Net periodic benefit costs (income)		$	1,562	$	574

Defined severance contribution

Defined severance expense was $0.7 million and $0.5 million for the three months ended March 31, 2026, and 2025, respectively.

Note 13. Segment and Geographic Information

Segment Information

The Company operates as one reportable segment, which derives its revenue from paid content, advertising, and IP adaptations revenue streams. Our chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. The CODM manages the Company as a consolidated ecosystem because the revenue streams are interrelated, and resources are shared.

The CODM uses net income (loss) as reported in our Condensed Consolidated Statements of Operations and Comprehensive Loss to assess performance and allocate resources such as employees and capital expenditures. Additionally, the net income (loss) is used to monitor trends in year-over-year or quarter-over-quarter performance comparisons and to compare actual results to forecasts.

The CODM receives and reviews expenses included in segment operating performance regularly. However, the CODM reviews general and administrative expenses on a more disaggregated basis to ensure the resources are in line with its business and operating needs.

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The measure of segment revenue and assets are reported on the Condensed Consolidated Statements of Operations and Comprehensive Loss as total sales and the Condensed Consolidated Balance Sheets as total assets, respectively.

All intercompany and intra-entity transactions and balances have been eliminated.

The following table presents reportable segment profit and loss, including significant expense categories, attributable to the Company's reportable segment for the periods presented:


	Three Months Ended
	March 31, 2026		March 31, 2025
	(in thousands of USD)
Revenue	$	320,872	$	325,707

Cost of revenue	237,824		254,096
Marketing	30,520		31,543
General and administrative expenses - labor related	26,514		23,373
General and administrative expenses - non-labor related	34,045		43,329
Interest income	(4,374)		(5,113)
Interest expense	17		2
Loss(income) on equity method investment, net	446		569

Other loss (income), net	2,005		(2,670)
Income tax expense (benefit)	2,672		2,547
Net Income (Loss)	$	(8,797)	$	(21,969)

The following non-cash expense items are also included in the measure of segment profit or loss reviewed by the CODM:
Stock-based compensation1	$	7,603	$	18,253
Depreciation and amortization	$	7,998	$	8,437

1The measure of stock-based compensation excludes expenses related to Phantom Units.

Geographic Information

Refer to Note 2. Revenue for revenues by location. The Company’s long-lived tangible assets as well as the Company’s operating lease right-of-use assets recognized on the Consolidated Balance Sheets as of March 31, 2026, and December 31, 2025, were located as follows:


	As of
	March 31, 2026		December 31, 2025

	(in thousands of USD)
Korea	$	12,097	$	14,131
Japan	14,366		15,620

Rest of World	4,641		2,294
Total long-lived tangible assets and operating lease right-of-use assets	$	31,104	$	32,045

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Note 14. Fair Value Measurements

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 3 Instruments.


			Level 3 Instruments			Valuation Techniques and Significant Inputs
			Debt and Equity Securities
						Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available (i) Transactions in similar instruments; (ii) discounted cash flow techniques; (iii) third party appraisals; (iv) binomial option pricing models; and (v) industry multiples and public comparables.

						Evidence of value in investees includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including (i) current financial performance as compared to projected performance; (ii) capitalization rates and multiples; and (iii) market yields implied by transactions of similar or related assets.

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of March 31, 2026, and December 31, 2025. These ranges do not represent a range of values for any single instrument. For example, the lowest discount rate for a particular redeemable convertible preferred stock investment may be appropriate for valuing that specific debt security but may not be appropriate for valuing any other debt securities in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets.

Level 3 Instruments

Amount

Valuation Techniques

Significant
Unobservable Inputs

Range of
Significant
Unobservable Inputs

As of March 31, 2026

Debt Securities

Redeemable convertible preferred stock

41,180

Option pricing model

Discount rate

8.64%-27.20%

Volatility

42.65%-51.46%

Total

41,180

Equity Securities

Redeemable convertible preferred stock

15,000

Measurement alternative

Contribution to investment fund

609

Measurement alternative

Private equity securities

697

Measurement alternative

Convertible preferred stock

5,862

Option pricing model

Discount rate

3.14%-5.81%

Volatility

42.65%-42.65%

Simple Agreement For Future Equity (SAFE)

1,000

Measurement alternative

Total

23,168

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As of December 31, 2025
Debt Securities
Redeemable convertible preferred stock	$	46,024	Option pricing model	Discount rate	8.25%-21.68%
				Volatility	39.98%-51.46%
Total	$	46,024
Equity Securities
Redeemable convertible preferred stock	$	15,000	Measurement alternative
Contribution to investment fund	642		Measurement alternative
Private equity securities	735		Measurement alternative
Convertible preferred stock	6,268		Option pricing model	Discount rate	2.35%-2.94%
				Volatility	51.46%-51.46%
Simple Agreement For Future Equity (SAFE)	1,000		Measurement alternative
Total	$	23,645

As noted above, either the binomial optional pricing model or market approach were used in the determination of fair value of Level 3 assets as of March 31, 2026, and December 31, 2025. The significant unobservable inputs used in the binomial option pricing model are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates or market yields is risk of default, rating of the investment, call provisions and comparable company investments.

The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease in the fair value.

The below tables present a summary of changes in fair value of Level 1 and Level 3 assets, included within Debt and equity securities in the Condensed Consolidated Balance Sheets, by investment type (in thousands of USD):


	Three Months Ended March 31, 2026
	Level 1		Level 3				Total
	Equity Securities		Equity Securities		Debt Securities		Debt & Equity Securities
Beginning balance, January 1	$	-	$	23,645	$	46,024	$	69,669


Net unrealized gain (loss)	-		(83)		(2,544)		(2,627)


Currency translation differences	-		(394)		(2,300)		(2,694)
Ending balance, March 31	$	-	$	23,168	$	41,180	$	64,348


	Three Months Ended March 31, 2025
	Level 1		Level 3				Total
	Equity Securities		Equity Securities		Debt Securities		Debt & Equity Securities
Beginning balance, January 1	$	3	$	22,034	$	48,142	$	70,179
Purchases	-		-		3,790		3,790

Net unrealized gain (loss)	-		225		(1,169)		(944)


Currency translation differences	-		12		87		99
Ending balance, March 31	$	3	$	22,271	$	50,850	$	73,124

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The Level 1 equity securities relate to investments in public equity securities that have readily determinable fair values.

The Level 3 debt securities relate to the Company's investments in privately held companies through the purchase of redeemable convertible preferred stock that meet the definition of a debt security.

The Level 3 equity securities relate to the Company's investments in privately held companies through the purchase of convertible preferred stock, private equity securities, Simple Agreement For Future Equity (SAFE), contribution to investment fund and redeemable convertible preferred stock. For these equity securities, the Company does not have the ability to exercise significant influence on the investee, and therefore accounts for them as equity securities under ASC Topic 321, Investments in Equity Securities. These equity securities include non-marketable equity investments without readily determinable fair values. The company has elected to account for these investments using the measurement alternative, under which the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. For the three months ended March 31, 2026, there were no upward or downward adjustments resulting from observable price changes, and no impairment losses were identified or recognized for these investments.

The following table presents a summary of the changes in the carrying value of our equity securities measured using the measurement alternative for the three months ended March 31, 2026:


	(in thousands of USD)
Beginning balance, December 31, 2025	$	17,377



Currency translation differences	(71)
Ending balance, March 31, 2026	$	17,306

For the three months ended March 31, 2026, and 2025, the Company did not recognize any realized gain or loss on its Level 3 equity or debt securities.

Note 15. Related Party Transactions

The Company’s Related Parties

NAVER and LY Corporation ("LY", formerly named Z Holdings Corporation) are the primary shareholders of the Parent. Related parties include NAVER's controlled affiliates, Company's management, Company directors, and stakeholders that hold significant influence over the Company. During the three months ended March 31, 2026, and 2025, the Company provided advertising services to NAVER group companies and LY giving rise to related party receivables as of March 31, 2026, and December 31, 2025. Additionally, during the three months ended March 31, 2026, and 2025, the Company received brand-usage and outsourcing services from NAVER and LY, which resulted in the Company recognizing related party payables as of March 31, 2026, and December 31, 2025.

In addition to the transactions mentioned above, the Company has a history of renting facilities from its parent, NAVER. Related party operating lease expenses were $1.3 million and $0.6 million during the three months ended March 31, 2026, and 2025, respectively, with related lease obligations of $8.9 million and $10.6 million as of March 31, 2026, and December 31, 2025, respectively (Refer to Note 7. Leases for additional information). The Company also subleases part of its office space to other related parties and the total other income generated from subleases was $0.1 million and $0.1 million for the three months ended March 31, 2026, and 2025, respectively.

Related Party Transactions and Balances

The Company entered into the following significant related party transactions during the periods presented:


	Three Months Ended
		March 31, 2026		March 31, 2025
	(in thousands of USD)
Revenue generated		$	18,243	$	17,713
Cost of revenue incurred		27,071		28,131
Marketing expenses incurred (cost reimbursed)		(1,729)		(2,581)
General and administrative expenses incurred		7,817		6,913
Other income, net		408		411

*all expenses are net amounts including reimbursement from its related parties

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The Company had the following significant balances due from and due to related parties as of March 31, 2026, and December 31, 2025:


	As of
	March 31, 2026		December 31, 2025
	(in thousands of USD)
Due from related parties
Receivables	$	54,303	$	55,156
Other current assets	$	4,053	$	4,730
Other non-current assets	$	6,784	$	5,496
Loan receivables	$	27,002	$	28,417
Due to related parties
Current portion of operating lease liabilities	$	4,953	$	5,221
Operating lease liabilities	$	3,933	$	5,371

Accounts payable	$	24,207	$	18,765
Accrued expenses	$	6,048	$	6,849

Note 16. Equity Method Investments

The Company accounts for investments using the equity method when the Company can exercise significant influence over operating and financial policies, but does not hold a controlling interest in the investee.


	(in thousands of USD)
Balance as of December 31, 2025	$	80,440
Share of net income (loss)	(446)
Share of other comprehensive income (loss)	(15)
Dividends	(280)
Currency translation differences	(3,487)
Balance as of March 31, 2026	$	76,212

There were no equity method acquisitions or disposals during the three months ended March 31, 2026.

Note 17. Redeemable Non-Controlling Interest in Subsidiary

The following table summarizes the activity related to the redeemable non-controlling interest in the subsidiary for the periods indicated below (in thousands of USD):


	2026		2025
Balance as of January 1,	$	24,540	$	36,580
Comprehensive income (loss) attributable to redeemable non-controlling interest	(204)		204
Balance as of March 31,	$	24,336	$	36,784

Note 18. Non-Controlling Interest in Subsidiaries

The Company has non-controlling interests in several of its subsidiaries. The balances of non-controlling interests as of March 31, 2026, and December 31, 2025, are as follows (in thousands of USD):


	As of
	March 31, 2026		December 31, 2025
Munpia 1	$	32,909	$	33,160

Bootcamp 2	114		120
Total	$	33,023	$	33,280

___________________________________________________________________________

1.The Munpia non-controlling interest balance excludes redeemable non-controlling interest (See Note 17. Redeemable Non-Controlling Interest in Subsidiary for detail).

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2.The portion of net assets in Bootcamp attributable to the LP represents a non-controlling interest.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operation should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes to those statements included in this Report and our audited Consolidated Financial Statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2025, included in the Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Report.

Overview

WEBTOON is a global storytelling platform where a vibrant community of creators and users discover, create and share new content. We have pioneered a cultural movement by revolutionizing the storytelling format and democratizing content creation and publication. WEBTOON empowers creators, by enabling them to participate economically in their own creation, and users, by offering an endless library of content.

Content on our platform tells stories, across formats. On our platform, creators tell long-form stories through serialized narratives in the form of short-form, bite-sized episodes, creating a habitual behavior with an engaged user base. These stories are primarily told in two ways—web-comics, a graphical comic-like medium, and web-novels, which are text-based stories. The web-comic medium tells stories using a continuous vertical-scroll format that is easily read on mobile devices. We are able to extend the reach, impact and monetization of our content by adapting it into other media formats such as film, streaming series, games, merchandise and print books.

Creators power our content engine by authoring immersive visual stories, developing imaginative new characters and inspiring fandoms. Our creator base ranges from the individual enthusiast with a love of storytelling to the professional author building a brand and an enterprise on our platform. WEBTOON provides creators with an opportunity to monetize their creativity through various means, including Paid Content, advertising and IP Adaptations.

Users come to our platform to discover and consume engaging and immersive content. Our creators tell stories that are relatable to global audiences, attracting users across age groups, geographies and genders. Our primary user base is Gen Z and millennials. WEBTOON helps fans discover engaging content across genres, with fresh, weekly releases.

Community reinforces the benefits to creators and users on our platform. We help users and creators build relationships and engage with one another over content. As users, or “fans,” often develop a personal connection to the titles on our platform, they relish the direct engagement with creators through both our comments section at the end of each episode and the “Creator Profile” section, where creators can post messages and users can respond directly. Fans also appreciate the ability to potentially influence how stories unfold and how their favorite characters evolve, as creators may choose to incorporate fans’ feedback. This enables a positive feedback loop for content creation and user engagement. This community engagement powers a flywheel of user engagement and creator readership, which in turn drives WEBTOON’s success.

Our platform continuously empowers and incentivizes creators to drive creation of unique long-form stories. These stories are enjoyed on our platform by a growing base of loyal fans and importantly, enable us to expand the audience base off-platform over time. This continuous cycle results in successful and durable franchises within our ever-growing content library, empowering us with a multitude of monetization opportunities through IP Adaptations.

Key Business Metrics

We believe our performance is dependent upon many factors, including the key metrics described below that we track and review to measure our performance, identify trends, formulate financial projections, and make strategic decisions.

Our offerings include WEBTOON, LINE MANGA, NAVER SERIES, eBookJapan, Munpia and Wattpad. We manage our business by tracking several operating metrics, including: monthly active users, or MAU; monthly paying users, or MPU; and Paid Content Average Revenue per Paying User, or ARPPU. For a definition of these operating metrics, please see the “Glossary.” As a management team, we believe each of these operating metrics provides useful information to investors and others.

Our year-over-year activity and quarter-over-quarter growth trends may fluctuate subject to various internal and external factors including (i) seasonality of our business where we see increased activity during holiday season, (ii) magnitude of our marketing campaigns, (iii) hiatus/return of creators and key titles on our platforms, (iv) TV shows, films, and/or gaming release based on our content as part of our IP Adaptation business, (v) our strategic decision to direct traffic

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to our mobile application may lead to fluctuations in trends as web users who view in both mediums may choose to continue to consume on our mobile application only and (vi) external factors impacting the global economy, our industry and our company.

Geographic Tracking

We review each metric by geography where our products are available and accessible. We categorize geographies into Korea, Japan, and Rest of World ("ROW") based on the location of our users:

•Korea includes WEBTOON Korea, NAVER SERIES, and Munpia where our content is in Korean and targeted at Korean speaking users.

•Japan includes LINE MANGA and eBookJapan where our content is in Japanese and targeted at Japanese speaking users.

•Rest of World includes WEBTOON in all other languages including English, Spanish, and more, as well as Wattpad, where our content is targeted at global users outside of Korea and Japan.

In particular, as a proxy for tracking our performance in North America, which we consider to be a key market, amongst Rest of World, we track users who consume WEBTOON offered in English in the U.S. and Canada based on such user’s Internet Protocol (IP) addresses (collectively “WEBTOON North America”). For clarity, the following cases are not counted as part of WEBTOON North America but counted as part of Rest of World: (i) where users consume non-English (e.g., Spanish) WEBTOON content while they are physically based in North America and (ii) where users consume non-WEBTOON products (e.g., Wattpad) while they are physically based in North America.

Our methodology of geographic tracking may include an immaterial number of users not geographically located within the above segmentation. For instance, where users consume WEBTOON Korea content while they are physically based outside of Korea, the users will be counted as part of Korea. While we believe that these metrics are reasonable estimates of our user base for the applicable period of measurement, and that the methodologies we employ and update from time-to-time to create these metrics are reasonable bases to identify trends in user behavior, the preparation of each of such metrics involves the use of estimates, judgments and assumptions, and our metrics may be materially affected if such estimates, judgments or good faith assumptions prove to be inaccurate. See “Risk Factors—Risks Related to Our Business, Industry and Operations—Our user metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could adversely affect our business and reputation.”

Trends in Monthly Active Users (MAU)

We define MAU as users based on each device logged in and each offering accessed from a single device and may include the same individual user multiple times if the user is logged in from multiple devices or if the user accesses multiple offerings from one device.

We strive to detect and minimize unauthorized access to our platform, fake user accounts and fraudulent accounts created by bots that inflate user activity and we have decided to exclude such users from our MAU calculation, starting from the quarter ended March 31, 2026, to ensure the accuracy and consistency of our MAU reporting. In the previous comparable period, amounts related to such activity were immaterial to our reported results.

We track MAU as an indicator of the scale of our active user base, user engagement and adoption. We also break out MAU by geographic region to help us understand the global engagement.

As of the quarter ended March 31, 2026, our global MAU was approximately 144.3 million. The global MAU decreased by approximately 5.9% compared to March 31, 2025, primarily due to a decrease of MAU in ROW.

•In Korea, our MAU was approximately 23.1 million as of the quarter ended March 31, 2026, compared to MAU of 24.2 million as of the same quarter of 2025.

•In Japan, our MAU was 21.1 million as of the quarter ended March 31, 2026, compared to MAU of 21.9 million as of the same quarter of 2025.

•In Rest of World, our MAU was 100.0 million as of the quarter ended March 31, 2026, which declined from 107.3 million as of the comparable prior year period. In addition, while we expected to see reduced automated web traffic in the first quarter of 2026 as we disclosed in our Annual Report, in March 2026, we saw a spike in automated web traffic in certain non-core markets, which we have excluded from our MAU calculation.

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Trends in Monthly Paying Users (MPU)

We define MPU as users who have paid to access Paid Content in the applicable calendar month, averaged over each month in the given period. We define paying ratio as the ratio of MPU divided by MAU for the respective periods.

We view MPU and paying ratio to be indicators of the strength of our monetization.

While MAU declined 5.9% year-over-year, MPU grew by approximately 2.2%. This shift reflects the success of our content recommendation initiatives, which are driving higher conversion through better relevance.

During the first quarter of 2026, we navigated foreign exchange headwinds. As of the quarter ended March 31, 2026, our global MPU was 7.5 million with a paying ratio of 5.2%, which is an increase of 0.4% compared to the paying ratio for the quarter ended March 31, 2025 of 4.8%. By geographic regions, Korea, Japan, and Rest of World contributed 49.5%, 27.4% and 23.1% of global MPU, respectively. Paying ratio varies due to the user’s ability and propensity to pay across different regions and different product offerings.

•In Korea, our MPU have increased to around 3.7 million with a paying ratio of 16.1%, compared to MPU of 3.4 million and a paying ratio of 14.2% as of the quarter ended March 31, 2025.

•In Japan, our MPU have reached 2.1 million with a paying ratio of 9.8%, compared to MPU of 2.2 million and a paying ratio of 10.3% as of the quarter ended March 31, 2025.

•In Rest of World, our MPU is 1.7 million with a paying ratio of 1.7%, which has remained similar to the prior year's comparable quarter.

Trends in Paid Content Average Revenue per Paying User (ARPPU)

We define ARPPU as average Paid Content revenue in a given month divided by the number of MPU for such month, averaged over each month in the given period.

We view ARPPU to be an indicator of both the strength of engagement and Paid Content monetization on our platform. Units are in U.S. dollars.

Engagement is a key aspect to drive our monetization. For the quarter ended March 31, 2026, our ARPPU decreased to $11.6, or a 1.7% decline, compared to the same quarter of 2025. The reduction in ARPPU stemmed primarily from a substantial redistribution of the paying user base to areas generating less average revenue per paying user, a factor that overshadowed the organic increases in monetization within each distinct market. We continue to focus on driving users to the app, as well as converting them to paying users, by advancing our personalization tools.

•In Korea, our ARPPU for the quarter ended March 31, 2026, has increased to $7.8, or a 4.0% increase compared to the same quarter of 2025.

•In Japan, our ARPPU for the quarter ended March 31, 2026, has increased to $22.5, or a 0.9% increase compared to the same quarter of 2025.

•In Rest of World, our ARPPU for the quarter ended March 31, 2026, has increased to $6.8, or a 4.4% increase compared to the same quarter of 2025, primarily driven by reader habituation in paying to view content.

Seasonality

Historically, while the magnitude and timing varies across regions, we experience higher levels of user engagement and monetization in the third quarter of the calendar year primarily as a result of increased use of our platform during the global vacation and holiday schedules of our users. In addition, many advertisers allocate the largest portion of their budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing. As we continue to diversify our sources of revenue, and in particular increase revenue from advertising, the seasonal impacts may be more pronounced in the fourth quarter in the future or different altogether.

Components of Results of Operations

Revenue

Our revenue is derived from three distinct revenue streams: Paid Content, Advertising and IP Adaptations.

Our Paid Content revenue represents revenue generated from the sale of content on our platform to users. Advertising revenue represents revenue earned for the display of advertisements on our platform, including in-stream placement within content. Our IP Adaptations revenue comprises of revenue generated from adaptations of certain content on our offerings into other media formats such as films, streaming series, games and merchandise, which may take the form of fixed licensing fees or other arrangements where we participate in the upside of such productions, or sales of

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merchandise. See Note 2. Revenue in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.

Cost of Revenue

Cost of revenue consists of Paid Content creator revenue shared with creators, app store fees and other variable costs. Creator revenue share includes commissions payable to creators or publishers based on revenue generated from Paid Content. App store fees include platform fees payable to companies that provide users with the ability to download the mobile application through application stores and make purchases directly through such applications (such as Google and Apple) and certain other payment-related costs. These expenses are lower in Korea where more people buy Coins through our website as opposed to purchases made through mobile applications. Other variable costs include, among other things, costs directly associated with our IP Adaptations business, including payroll and related personal expenses, amortization and production costs.

Marketing

Marketing expenses consist of expenses incurred for the promotion of our brand, costs associated with user acquisition and costs associated with loyalty marketing campaigns where we give away free Coins. Marketing expenses also include compensation costs related to sales and marketing personnel.

General and Administrative Expenses

General and administrative expenses consist of all our operating costs, excluding cost of revenue and marketing, and include costs related to operating and maintaining our platform, general corporate function costs, stock-based compensation expense (benefit) and depreciation and amortization of non-operating assets. See Note 9. Stock-Based Compensation in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.

Interest Income

Interest income primarily consists of interest earned on our short-term, highly liquid investments with original maturities of three months or less, which are mainly comprised of bank deposits, and interest income from loan receivables.

Interest Expense

Interest expense primarily consists of interest related to our outstanding debt obligations, including both short-term borrowings and long-term debt.

Gain (Loss) on Equity Method Investment, Net

Gain (loss) on equity method investment, net, includes recognized gain (loss) associated with our investments accounted for using the equity method. See Note 16. Equity Method Investments in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.

Other Income (Loss), Net

Other income (loss), net, primarily consists of gains or losses on valuation of debt and equity securities, net, income or loss on foreign currency, net, retirement benefit, net, and other non-operating income or loss, net.

Income Tax Benefit (Expense)

Income tax benefit (expense) primarily includes income taxes in certain federal, state, local, and foreign jurisdictions in which we conduct our business, primarily in the U.S., Korea, Japan and Canada. Foreign jurisdictions have different statutory tax rates from those in the U.S. Additionally, certain of our foreign earnings may also be taxable in the U.S. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of tax credits, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws. See Note 11. Income Taxes in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.

Results of Operations

Condensed Consolidated Statements of Operations and Comprehensive Loss

The following table sets forth our consolidated statement of operations for the three months ended March 31, 2026 and 2025, respectively. We have derived this data from our unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss. The information for each of the periods presented has been prepared on the same basis as our audited Consolidated Financial Statements and, in the opinion of management, reflects all adjustments of a normal, recurring nature that are necessary for the fair statement of the results of operations for the period. This data should be read

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in conjunction with our audited consolidated financial statements in the Annual Report, and unaudited Condensed Consolidated Financial Statements included in this Report. Historical results are not necessarily indicative of the results that may be expected in the future.


	Three Months Ended March 31,
(in thousands of USD)		2026		2025		% Change
Revenue		$	320,872	$	325,707	(1.5	%)
Cost of revenue		(237,824)		(254,096)		(6.4	%)
Marketing		(30,520)		(31,543)		(3.2	%)
General and administrative expenses		(60,559)		(66,702)		(9.2	%)
Operating income (loss)		(8,031)		(26,634)		(69.8	%)
Interest income		4,374		5,113		(14.5	%)
Interest expense		(17)		(2)		750.0	%
Loss on equity method investments, net		(446)		(569)		(21.6	%)
Other income (loss), net		(2,005)		2,670		(175.1	%)
Income (loss) before income tax		(6,125)		(19,422)		(68.5	%)
Income tax benefit (expense)		(2,672)		(2,547)		4.9	%
Net income (loss)		(8,797)		(21,969)		(60.0	%)
Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests		658		420		56.7	%
Net income (loss) attributable to WEBTOON Entertainment Inc.		$	(9,455)	$	(22,389)	(57.8	%)

Comparison of the Three Months Ended March 31, 2026 and March 31, 2025

Revenue


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Revenue	$	320,872	$	325,707	(1.5	%)
Paid Content	261,438		260,226		0.5	%
Advertising	39,682		39,898		(0.5	%)
IP Adaptations	19,752		25,583		(22.8	%)

Revenue decreased by $4.8 million, or 1.5% for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This decrease was primarily driven by significant foreign exchange headwinds and timing-related volatility in our IP Adaptations, partially offset by organic growth in Paid Content. Although we experienced a decline in advertising revenue from NAVER, this was offset by revenue from other partners.

On a constant currency basis, our revenue increased $0.7 million, or 0.2%. We estimate that foreign exchange fluctuations had a total negative impact of approximately $5.5 million on our reported revenue for the quarter. Refer to the Non-GAAP Financial Measures section of this report for a quantitative reconciliation and a description of how we calculate these measures.

Cost of Revenue


	Three Months Ended March 31,
(in thousands of USD)	2026	2025	% Change
Cost of revenue	(237,824)	(254,096)	(6.4	%)

Our cost of revenue decreased by $16.3 million, or 6.4%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily attributable to a shift in the revenue mix to higher margin revenue streams, a reduction in third party transaction fees, a $3.2 million decrease in stock-based compensation expense due to timing of grants, and a decrease in total sales commissions and content fees paid to creators, reflecting lower revenue during the period.

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Marketing


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Marketing	$	(30,520)	$	(31,543)	(3.2	%)

Marketing expense decreased by $1.0 million, or 3.2%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to a strategic shift toward high-retention acquisition channels and a reduction in lower-efficiency promotional spend.

General and Administrative Expenses


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
General and administrative expenses	$	(60,559)	$	(66,702)	(9.2	%)

General and administrative expenses decreased by $6.1 million, or 9.2%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was primarily driven by a $6.8 million decrease in stock-based compensation expense due to timing of grants, which was partially offset by increases in other general and administrative costs. We expect our stock-based compensation expense to increase in the second quarter of 2026.

Interest Income


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Interest income	$	4,374	$	5,113	(14.5	%)

Interest income decreased by $0.7 million, or 14.5%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The decrease was attributable to lower interest rates as compared to the first quarter of 2025.

Gain (Loss) on Equity Method Investment, Net


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Gain (loss) on equity method investments, net	$	(446)	$	(569)	(21.6	%)

Gain (loss) on equity method investment, net, decreased by $0.1 million, or 21.6%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. See Note 16. Equity Method Investments in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on the Company's equity method investments.

Other Income (Loss), Net


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Other income (loss), net	$	(2,005)	$	2,670	(175.1	%)

Other income (loss), net, decreased by $4.7 million, or (175.1%), for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The change was primarily attributable to a $2.1 million increase in net foreign currency losses, a $1.7 million increase in net unrealized loss on financial assets measured at fair value, and a

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$0.9 million increase in net periodic benefit costs during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Income Tax Expense


	Three Months Ended March 31,
(in thousands of USD)	2026		2025		% Change
Income tax expense	$	(2,672)	$	(2,547)	4.9	%

Income tax expense increased by $0.1 million, or 4.9%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. See Note 11. Income Taxes in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information on our taxes.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, our management and our board of directors also consider EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, revenue on a constant currency basis, and revenue growth on a constant currency basis, ARPPU on a constant currency basis and ARPPU growth on a constant currency basis. We believe that these non-GAAP financial measures provide investors with additional useful information in evaluating our performance. Our non-GAAP financial measures should not be considered in isolation, or as substitutes for, financial information prepared in accordance with GAAP. Non-GAAP measures have limitations as they do not reflect all the amounts associated with our results of operations as determined in accordance with GAAP, and should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

We define EBITDA as net income(loss) before interest income, interest expense, income tax benefit (expense) and depreciation and amortization. We define Adjusted EBITDA as EBITDA with further adjustments to eliminate the effects of loss on equity method investments, effect of applying the valuation method of fair value through profit or loss (“FVPL”), impairment of goodwill, non-cash stock-based compensation and certain other non-recurring costs. We believe that EBITDA and Adjusted EBITDA provide useful information to investors regarding our performance, as it removes the impact of certain items that are not representative of our ongoing business, such as certain non-cash charges and variable charges. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures and are not intended to be substitutes for any GAAP financial measures. They should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP, such as consolidated net income (loss) or consolidated net income (loss) margin.

Using EBITDA as a performance measure has material limitations as compared to consolidated net income (loss), or other financial measures as defined under GAAP, as it excludes certain recurring items, which may be meaningful to investors. EBITDA excludes interest expense and interest income; however, as we have borrowed money to finance transactions and operations, or invested available cash to generate interest income, interest expense and interest income are elements of our cost structure and can affect our ability to generate revenue and returns for our stockholders. Further, EBITDA excludes depreciation and amortization; however, as we use capital and intangible assets to generate revenue, depreciation and amortization are necessary elements of our costs and ability to generate revenue. Finally, EBITDA excludes income taxes; however, as we are organized as a corporation, the payment of taxes is a necessary element of our operations. Any measure, including EBITDA, that excludes interest expense, depreciation and amortization and income taxes has material limitations as compared to net income. When using EBITDA as a performance measure, management compensates for these limitations by comparing EBITDA to net loss in each period, to allow for the comparison of the performance of the underlying core operations with the overall performance of the company on a full-cost, after-tax basis.

You are also encouraged to evaluate our calculation of Adjusted EBITDA and Adjusted EBITDA Margin, and the reasons we consider these adjustments appropriate for supplemental analysis. In evaluating these measures, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA and Adjusted EBITDA Margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of these measures in the future, and any such modification may be material. Adjusted EBITDA and Adjusted EBITDA Margin have their limitations as analytical tools, and you should not

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consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:

•Adjusted EBITDA does not include the interest expense and the cash requirements necessary to service interest or principal payments on our debt;

•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for replacement of assets that are being depreciated or amortized;

•Adjusted EBITDA excludes the impact of charges and receipts resulting from matters we do not find indicative of our ongoing operations; and

•Other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do.

The following table presents a reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods presented.


	Three Months Ended March 31,
(in thousands of USD, except percentages)		2026			2025
Net income (loss)		$	(8,797)		$	(21,969)
Interest income		(4,374)			(5,113)
Interest expense		17			2
Income tax expense		2,672			2,547
Depreciation and amortization		7,998			8,437
EBITDA		$	(2,484)		$	(16,096)
Stock-based compensation expense(1)		7,625			17,035
Restructuring, advisory and legal fees(2)		1,267			1,642
Loss (gain) on fair value instruments, net(3)		2,627			930
Loss (gain) on equity method investments, net(4)		446			569
Adjusted EBITDA(5)		$	9,481		$	4,080
Net income (loss) margin		(2.7)		%	(6.7)		%
Adjusted EBITDA Margin		3.0		%	1.3		%

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(1)Represents non-cash stock-based compensation expense related to WEBTOON’s equity incentive plan and stock-based compensation plans of NAVER and Munpia, including amounts which are cash settled. See Note 9. Stock-Based Compensation in the accompanying notes to our unaudited Condensed Consolidated Financial Statements in this Report for further details on the amounts included within.

(2)Represents specific costs that are discrete to the periods presented and are not indicative of our core ongoing operations. For the three months ended March 31, 2026, these amounts were comprised of (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business; (ii) one-time advisory fees related to the Purchase Agreement that do not qualify as equity issuance costs; and (iii) professional fees directly related to the strategic restructuring initiative of our Wattpad business. For the three months ended March 31, 2025, these amounts included (i) non-routine legal and professional fees associated with the defense of the 2024 IPO-related shareholder litigation, which are outside the ordinary course of business, and (ii) professional service fees associated with the initial implementation of Sarbanes-Oxley (“SOX”) compliance and IPO readiness.

(3)Represents unrealized net loss (gain) of financial assets measured at FVPL, which include the Company's equity investments.

(4)Represents our proportionate share of recognized losses associated with our investments accounted for using the equity method. See Note 16. Equity Method Investments in the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report.

(5)Totals may not foot due to rounding.

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Use of Constant Currency

We provide revenue, including period-over-period growth rates, adjusted to remove the impact of foreign currency rate fluctuations and the impact of deconsolidated and transferred operations, which we refer to as revenue on a constant currency basis. We calculate revenue on a constant currency basis in a given period by applying the average currency exchange rates in the comparable period of the prior year to the local currency revenue in the current period. We calculate revenue growth (as a percentage) on a constant currency basis by determining the increase in current period revenue over prior period revenue, where current period foreign currency revenue is translated using prior period average currency exchange rates. We calculate revenue (including growth rates) on a constant currency basis in each of our revenue streams - Paid Content, Advertising and IP Adaptations - using the same method as laid out herein.

We provide ARPPU, including period-over-period growth rates, on a constant currency basis for our Paid Content revenue streams as average Paid Content revenue on a constant currency basis in a given month divided by the number of MPU for such month, averaged over each month in the given period. As discussed above, we calculate revenue on a constant currency basis in a given period by applying the average currency exchange rates in the comparable period of the prior year to the local currency revenue in the current period and excluding deconsolidated and transferred operations. We calculate ARPPU growth rates (as a percentage) on a constant currency basis as the increase in current period ARPPU over prior period ARPPU, with current period foreign currency ARPPU translated using prior period average currency exchange rates and excluding deconsolidated and transferred operations.

We believe providing revenue, revenue growth rates, ARPPU and ARPPU growth rates on a constant currency basis helps our investors better understand our underlying performance because they exclude the effects of foreign currency volatility and impacts of deconsolidated and transferred operations that are not indicative of our actual results of operations. Adjusting revenue or ARPPU to remove the effects of foreign currency rate fluctuations, deconsolidation, and transfer of operations results in non-GAAP measures that management uses to help make informed decisions by removing the volatility caused by foreign currency rate fluctuations and the impact of deconsolidated and transferred operations, allowing us to assess whether the business is fundamentally healthy and growing. Additionally, these metrics support management in efficiently allocating resources and determining priorities by providing a basis for evaluating the competitiveness and growth potential of the business itself. It is for these reasons that management believes these non-GAAP metrics add value, but they have their limitations as analytical tools for not reflecting all the amounts associated with our results of operations as determined in accordance with GAAP, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.

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The following table presents a reconciliation of revenue to revenue on a constant currency basis, and ARPPU to ARPPU on a constant currency basis, respectively, for each of the periods presented.


	Three Months Ended March 31,
(in thousands of USD, except percentages)		2026		2025		Change
Total Revenue		$	320,872	$	325,707	(1.5%)

Effects of foreign currency rate fluctuations		5,491		-		N/A
Revenue on a Constant Currency Basis		$	326,363	$	325,707	0.2%
Paid Content Revenue		261,438		260,226		0.5%

Effects of foreign currency rate fluctuations		4,797		-		N/A
Paid Content Revenue on a Constant Currency Basis		$	266,235	$	260,226	2.3%
Advertising Revenue		39,682		39,898		(0.5%)
Effects of foreign currency rate fluctuations		541		-		N/A
Advertising Revenue on a Constant Currency Basis		$	40,223	$	39,898	0.8%
IP Adaptations Revenue		19,752		25,583		(22.8%)

Effects of foreign currency rate fluctuations		153		-		N/A
IP Adaptations Revenue on a Constant Currency Basis		$	19,905	$	25,583	(22.2%)
Paid Content Average Revenue Per Paying User ("ARPPU")
Korea Paid Content Revenue		$	86,888	$	77,027	12.8%
Korea ARPPU		$	7.8	$	7.5	4.0%

Effects of foreign currency rate fluctuations		0.1		-		N/A
Korea ARPPU on a Constant Currency Basis		$	7.9	$	7.5	5.1%
Japan Paid Content Revenue		139,182		150,401		(7.5%)
Japan ARPPU		22.5		22.3		0.9%
Effects of foreign currency rate fluctuations		0.6		-		N/A
Japan ARPPU on a Constant Currency Basis		$	23.2	$	22.3	3.7%
Rest of World Paid Content Revenue		35,368		32,798		7.8%
Rest of World ARPPU		6.8		6.5		4.4%


Rest of World ARPPU on a Constant Currency Basis		$	6.8	$	6.5	4.4%

Liquidity and Capital Resources

Cash and cash equivalents, along with the proceeds generated from the issuance of equity securities, constitute our main liquidity sources. By March 31, 2026, our principal liquidity was derived from the residual net proceeds of our 2024 Initial Public Offering (IPO), a subsequent private placement, and a strategic equity investment secured in the first quarter of 2026.

On January 8, 2026, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a wholly owned indirect subsidiary of The Walt Disney Company (“Disney”), pursuant to which Disney purchased 2,666,757 shares of our common stock, par value $0.0001 per share (the “Shares”), representing an approximately 2% equity interest in the Company, for an aggregate purchase price of $32.8 million. The Shares were issued in a private placement in reliance on the exemption provided by Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering. We received net proceeds of approximately $32.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

Historically, we have relied primarily upon cash generated from operations and cash provided by NAVER through capital contributions to finance our operations, repay or repurchase indebtedness, finance acquisitions and fund our capital expenditures. NAVER does not have any contractual obligation to provide additional capital to us and therefore there can be no assurance that NAVER will continue to provide additional capital in the form of debt or equity investment in the future to enable us to operate our business. As of March 31, 2026, we had $594.9 million of cash and cash equivalents, which were primarily invested in short-term, highly liquid investments with original maturities of three months or less from the date of purchase and are mainly comprised of bank deposits. We believe that our existing cash and cash equivalent balances will be sufficient to support our working capital requirements for at least the next 12 months based on our current operating plans. However, our future capital requirements will depend on many factors, including our growth rate, sales

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and marketing activities and other factors affecting our business, including those described in the section entitled “Risk Factors” in the Annual Report. Our expected primary uses of our capital on short and long-term bases are for repayment of debt, interest payments, working capital, capital expenditures, geographic expansion and other general corporate purposes.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights, which may require us to seek additional financing. To the extent additional funds are necessary to meet our liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of indebtedness, the issuance of additional equity or a combination of these potential sources of funds. Such financing, may however, not be available to us on favorable terms, or at all. In particular, high inflation and interest rates have resulted, and may continue to result, in significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds on commercially reasonable terms or at all, our business, financial condition and results of operations could be adversely affected. See “Risk Factors—Risks Related to Our Business, Industry and Operations—We may require additional capital to support our business in the future, and this capital might not be available on reasonable terms, if at all,” in the Annual Report.

Consolidated Statements of Cash Flows

The following table summarizes our cash flows for the period presented:


	Three Months Ended March 31,
(in thousands of USD)	2026		2025
Net cash used in operating activities	$	(11,847)	$	(18,652)
Net cash used in investing activities	(6,744)		(8,028)
Net cash provided by financing activities	32,682		82
Effect of exchange rate changes on cash and cash equivalents	(1,045)		4,332
Net increase (decrease) in cash and cash equivalents	$	13,046	$	(22,266)

Operating Activities

Net cash used in operating activities improved by $6.8 million for the three months ended March 31, 2026, primarily driven by a $13.2 million reduction in net loss, along with $6.8 million and $8.9 million decreases in cash outflows for the settlement of accounts payable and contract liabilities, respectively. These improvements were partially offset by a $12.4 million increase in cash used for receivables, driven by the timing of billings and increased prepayments for content or services. Additionally, the year-over-year improvement was moderated by a $10.6 million reduction in non-cash stock-based compensation and fluctuations in gains on foreign currency transactions.

Investing Activities

For the three months ended March 31, 2026, net cash used in investing activities was $6.7 million, compared to $8.0 million for the three months ended March 31, 2025. The decrease in net cash used was primarily attributable to a reduction in purchases of marketable securities, largely offset by increased capital expenditures related to facility preparations.

Financing Activities

For the three months ended March 31, 2026, net cash provided by financing was $32.7 million, related to proceeds from issuance of common stock related to a private placement.

Critical Accounting Policies and Estimates

Our unaudited Condensed Consolidated Financial Statements and the related notes thereto included in this Report are prepared in accordance with GAAP. The preparation of our unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those Condensed Consolidated Financial Statements and the accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

There have been no material changes to our critical accounting policies and estimates as described in the Annual Report. Refer to Note 1.Description of Business and Summary of Significant Accounting Policies in the accompanying notes to the unaudited Condensed Consolidated Financial Statements for recently adopted and issued accounting pronouncements, if any, since the filing of our Annual Report for the year ended December 31, 2025.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For a discussion of our market risks, see “Quantitative and Qualitative Disclosures About Market Risk” in Part II Item 7A of our Annual Report.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, has evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at a level of reasonable assurance.

Limitations on the Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are subject to legal proceedings, claims and investigations relating to intellectual property, data privacy and data protection, privacy and other torts, illegal or objectionable content, consumer protection, securities, labor and employment, contractual rights, civil rights infringement, false or misleading advertising, governmental investigations and other legal proceedings that arise in the ordinary course of our business. This risk is enhanced in certain jurisdictions outside of the U.S. where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in the U.S. It is not possible to predict the timing and ultimate outcome of a pending or ongoing legal proceeding with certainty, and our assessment of the materiality of a legal proceeding, including any accruals taken in connection therewith, may not be consistent with the ultimate outcome of the legal proceeding. In addition, our current estimates of the potential impact of pending or ongoing legal proceedings on our business, financial condition or results of operations could change from time to time in the future. For additional information about our legal proceedings, see Note 8. Commitments and Contingencies to our unaudited Condensed Consolidated Financial Statements included in this Report.

Securities Litigation

Item 1A. Risk Factors.

Our risk factors are set forth in the "Risk Factors" in Part I. Item 1A of our Annual Report. There have been no material changes to our risk factors since the filing of such Annual Report.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2024)
3.2						Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 1, 2024)
10.1*#						S ecurities Purchase Agreeme nt dated January 8, 2026 , by and between WEBTOON Entertainment Inc., and Accelerator Investments LLC.
10.2						H o us ing Assistance Policy (i nc o rporated by reference to Exhibit 1 0.1 to the Registrant ’s Current Report on Form 8-K filed with the SEC on March 30, 2026)
10.3†						Amended Long-Term Assignment Letter between the Company and Yongsoo Kim dated March 26, 2026 (incorporated by reference to Exhibit 10.1 to the Regi strant ’s Current Report on Form 8-K filed with the SEC on March 30, 2026)
10.4*†						Sec ondment Letter between the Company and David Lee dated May 7 , 2026
10.5*†						F orm of Performance Stock Unit Agreement under the 2024 Omnibus Incenti ve Plan
31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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*Filed herewith

**Furnished herewith

†Management compensatory plan or contract

# Certain of the exhibits and schedules to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.