WEBTOON’s first quarter was met with a significant negative market reaction following results that fell short of Wall Street expectations. Management attributed flat year-over-year revenue to a tough comparison with last year, influenced by one-time events such as an extra day in February and a successful IP adaptation. CEO Junkoo Kim highlighted the continued strength in Japan, which now contributes over half of total revenue, and emphasized expanding the local creator ecosystem. Meanwhile, CFO David Lee pointed to higher administrative and marketing expenses as key factors behind the decline in profitability and outlined that a drop in rest-of-world monthly active users (MAUs) was mainly driven by Wattpad disruptions.

Is now the time to buy WBTN? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions WEBTOON’s Q1 Earnings Call

• Eric Sheridan (Goldman Sachs) asked about the timing and expected output of user growth initiatives; CFO David Lee responded that investments in product and content innovation are expected to yield more visible engagement improvements in the second half of the year.
• Mark Mahaney (Evercore) questioned the sustainability of MAU growth in Korea; Lee clarified that while the market is mature, app-based engagement and ARPU are key, with product enhancements expected to drive future growth.
• Matthew Witkos (Morgan Stanley) inquired about the impact of Wattpad’s security update and government ban; Lee stated that these disruptions were the main reason for the decline in rest-of-world MAUs and that remediation efforts are underway.
• Doug Anmuth (JPMorgan) sought clarity on the monetization impact of global IP partnerships; Lee said that while margins differ, both original and licensed content are critical for attracting new users and maintaining engagement.
• Andrew Marok (Raymond James) asked whether the major product rollouts for the English app are complete or ongoing; Lee emphasized that significant updates are being implemented now, with further enhancements expected throughout the year.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will closely track (1) the impact of new onboarding and content discovery features on user engagement and monetization, (2) the resolution of Wattpad’s technical and regulatory issues affecting global MAUs, and (3) the scaling of high-profile IP partnerships and their contribution to expanding WEBTOON’s presence in English-speaking markets. The pace of margin recovery amid ongoing investment will also be a key benchmark.

WEBTOON currently trades at $9.37, down from $9.87 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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