WEBTOON Entertainment Inc.
For the period ended Sep 30, 2026. Filed Nov 9, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 9, 2026
WBTN$9.93+2.7%Stored close · as of Nov 9, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001997859-26-000089
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-09.
0001997859-26-000099
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 131 current paragraphs.
76 unchanged; 41 reworded; 10 added; 9 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 20 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
While MAU increased 2.7% year-over-year, MPU decreased by approximately 3.1%. This decrease was primarily driven by declines in MPU in Japan and Rest of World of 12.9% and 8.0%, respectively, partially offset by a 5.2% increase in MPU in Korea.
Current report
•In Rest of World, our MPU decreased to 1.6 million with a paying ratio of 1.4%, compared to MPU of 1.7 million and a paying ratio of 1.6% as of the quarter ended September 30, 2025.
Current report
•In Rest of World, our ARPPU for the quarter ended September 30, 2026, has decreased to $6.8, or a 0.2% decrease compared to the same quarter of 2025.
Current report
Revenue decreased by $15.3 million, or 4.0% for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This decrease was primarily attributable to unfavorable foreign currency exchange rates, primarily the depreciation of the Japanese yen and the Korean won against the U.S. dollar, and a $14.3 million decrease in IP Adaptations revenue, primarily due to the timing of revenue recognition on productions in Korea against a higher prior-year base and continued declines in game and publishing revenue in Korea, partially offset by a $10.3 million increase in Advertising revenue, primarily driven by growth in Korea and Rest of World.
Current report
Gain (Loss) on Equity Method Investments, Net
Current report
Comparison of the Nine Months Ended September 30, 2026 and September 30, 2025
Current report
Other income (loss), net, decreased by $1.9 million, or 327.9%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The decrease was primarily attributable to a $6.1 million unfavorable change in net foreign currency gains (losses), primarily resulting from exchange rate movements at the end of the third quarter on foreign currency-denominated cash and investment balances, and a $0.4 million unfavorable change in other items, primarily lower non-operating retirement benefit income. These were partially offset by a $4.5 million favorable change in net unrealized gain (loss) on financial assets measured at fair value.
Current report
Our material cash requirements from known contractual obligations include our commitments to NW Webcomic Adaptation Fund, L.P. and under the RI Games Holdings Agreements, each described below, in addition to our operating lease obligations, debt obligations and purchase commitments described in Note 7. Leasesand Note 8. Commitments and Contingencies.
Current report
Under the RI Games Shareholders Agreement, following the second closing and through June 30, 2030, we may be required to fund capital increases of RI Games Holdings of up to KRW 50 billion (approximately $36.8 million) in cash, and if specified revenue targets are achieved, to fund a further capital increase up to a specified maximum and to purchase the Seller’s remaining 6,000 shares for not less than KRW 100 billion (approximately $73.6 million), payable in combination of cash and shares of our common stock. The obligations are denominated in Korean won; the first closing payment is translated at the exchange rate on the payment date and the remaining amounts at the exchange rate as of September 30, 2026. See Note 8. Commitments and Contingenciesand Note 16. Equity Method Investments.
Current report
Subsequent to September 30, 2026, we received cash distributions of $5.8 million from Tap Future Information Corporation, one of our equity investments, prior to the completion of its merger with Drama Times Inc. in October 2026. In connection with the merger, we exchanged our equity interest for Series A1 preferred shares of Drama Times Inc. See Note 19. Subsequent Events.
Removed paragraphs (9)
Previous report
While MAU increased 0.5% year-over-year, MPU grew by approximately 1.8%. This shift reflects the success of our content recommendation initiatives, which are driving higher conversion through better relevance.
Previous report
•In Rest of World, our MPU is 1.7 million with a paying ratio of 1.5%, which has remained similar to the prior year's comparable quarter.
Previous report
•In Rest of World, our ARPPU for the quarter ended June 30, 2026, has increased to $6.9, or a 4.4% increase compared to the same quarter of 2025, primarily driven by reader habituation in paying to view content.
Previous report
Other income (loss), net, increased by $3.8 million, or (280.8%), for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The change was primarily attributable to a $0.4 million increase in net foreign currency income, and a $3.4 million increase in net unrealized gain on financial assets measured at fair value during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.
Previous report
Comparison of the Six Months Ended June 30, 2026 and June 30, 2025
Previous report
Revenue decreased by $15 million, or 2.2% for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This decrease was primarily attributable to unfavorable foreign currency exchange rates.
Previous report
Under the RI Games Shareholders Agreement, from and after the second closing until June 30, 2030, we may be required to subscribe for newly issued shares of RI Games Holdings for up to KRW 50 billion (approximately $33.2 million) in cash. If specified revenue thresholds are achieved, we may also be required to purchase the Seller’s remaining 6,000 shares for no less than KRW 100,000,002,000 (approximately $66.5 million), of which no less than KRW 50 billion (approximately $33.2 million) is payable in cash and the balance in shares of our common stock, and to fund a further capital increase in cash up to a specified maximum. These requirements arise from and after the second closing; if the second closing does not occur by a specified outside date for reasons not attributable to the Seller, the RI Games Shareholders Agreement would terminate automatically, other than certain provisions that survive in accordance with those terms, and substantially all of these requirements would lapse, except for such obligations that have accrued prior to the termination.
Previous report
Substantially all of these amounts are contingent on events that may not occur, and the amount of the additional capital increase is not determinable at this time. We expect to fund them from cash and cash equivalents on hand and cash generated from operations. We do not expect these commitments to materially affect our liquidity. The obligations are denominated in Korean won and have been translated at the 60-day average of Hana Bank’s end-of-day rate through August 6, 2026. U.S. dollar amounts will vary with exchange rates.
Previous report
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, however, may 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.
Reworded paragraphs (41)
Previous wording
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.
Current wording
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, including app MAU and web-comic app MAU; monthly paying users, or MPU, and paying ratio; 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.
Previous wording
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.
Current wording
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. App MAU and web-comic app MAU are subsets of MAU. App MAU refers to users who visited one of our mobile applications at least once in the applicable calendar month, averaged over each month in the given period, and web-comic app MAU refers to users who visited one of our web-comic mobile applications, rather than our web-novel mobile applications, at least once in the applicable calendar month, averaged over each month in the given period. NAVER SERIES, which offers both web-comics and web-novels, is included in web-comic app MAU.
Previous wording
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.
Current wording
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. We track app MAU and web-comic app MAU as indicators of engagement on our mobile applications, consistent with our strategy to drive app users, who are typically more engaged and present better monetization opportunities compared to web users.
Previous wording
As of the quarter ended June 30, 2026, our global MAU was approximately 156.9 million. The global MAU increased by approximately 0.5% compared to June 30, 2025.
Current wording
As of the quarter ended September 30, 2026, our global MAU was approximately 159.6 million. The global MAU increased by approximately 2.7% compared to September 30, 2025. App MAU was approximately 73.8 million as of the quarter ended September 30, 2026, compared to 80.4 million as of the same quarter of 2025, a decline of 8.2%, primarily due to a decline in Wattpad app users. Web-comic app MAU was approximately 44.8 million as of the quarter ended September 30, 2026, compared to 45.2 million as of the same quarter of 2025, a decline of 0.9%.
Previous wording
•In Korea, our MAU was approximately 24.3 million as of the quarter ended June 30, 2026, compared to MAU of 23.0 million as of the same quarter of 2025.
Current wording
•In Korea, our MAU was approximately 25.6 million as of the quarter ended September 30, 2026, compared to MAU of 24.6 million as of the same quarter of 2025.
Previous wording
•In Japan, our MAU was 21.8 million as of the quarter ended June 30, 2026, compared to MAU of 22.6 million as of the same quarter of 2025.
Current wording
•In Japan, our MAU was 22.3 million as of the quarter ended September 30, 2026, compared to MAU of 25.3 million as of the same quarter of 2025. This decrease was primarily attributable to a decline in users on eBookJapan.
Previous wording
•In Rest of World, our MAU was 110.7 million as of the quarter ended June 30, 2026, which increased from 110.5 million as of the comparable prior year period. This increase was primarily attributable to content, product and marketing initiatives, including brand marketing campaigns related to major IP, which contributed to user acquisition.
Current wording
•In Rest of World, our MAU was 111.7 million as of the quarter ended September 30, 2026, which increased from 105.5 million as of the comparable prior year period. This increase was primarily attributable to growth in Wattpad web users.
Previous wording
As of the quarter ended June 30, 2026, our global MPU was 7.5 million with a paying ratio of 4.8%, which is an increase of 0.1% compared to the paying ratio for the quarter ended June 30, 2025 of 4.7%. By geographic regions, Korea, Japan, and Rest of World contributed 50.4%, 27.4% and 22.2% of global MPU, respectively. Paying ratio varies due to the user’s ability and propensity to pay across different regions and different product offerings.
Current wording
During the quarter ended September 30, 2026, our global MPU was 7.5 million with a paying ratio of 4.7%, which is a decrease of 0.3% compared to the paying ratio for the quarter ended September 30, 2025 of 5.0%. By geographic regions, Korea, Japan, and Rest of World contributed 51.9%, 27.1% and 21.0% of global MPU, respectively. Paying ratio varies due to the user’s ability and propensity to pay across different regions and different product offerings.
Previous wording
•In Korea, our MPU have increased to around 3.8 million with a paying ratio of 15.5%, compared to MPU of 3.4 million and a paying ratio of 14.9% as of the quarter ended June 30, 2025.
Current wording
•In Korea, our MPU have increased to around 3.9 million with a paying ratio of 15.1%, compared to MPU of 3.7 million and a paying ratio of 14.9% as of the quarter ended September 30, 2025.
Previous wording
•In Japan, our MPU have reached 2.1 million with a paying ratio of 9.4%, compared to MPU of 2.3 million and a paying ratio of 10.0% as of the quarter ended June 30, 2025.
Current wording
•In Japan, our MPU have decreased to 2.0 million with a paying ratio of 9.1%, compared to MPU of 2.3 million and a paying ratio of 9.1% as of the quarter ended September 30, 2025.
Previous wording
Engagement is a key aspect to drive our monetization. For the quarter ended June 30, 2026, our ARPPU decreased to $11.7, or a 5.7% 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.
Current wording
Engagement is a key aspect to drive our monetization. For the quarter ended September 30, 2026, our ARPPU decreased to $12.3, or a 0.8% decline, compared to the same quarter of 2025. On a constant currency basis, our ARPPU increased by 4.2%. The reduction in ARPPU stemmed primarily from unfavorable foreign currency exchange rates and a substantial redistribution of the paying user base to areas generating less average revenue per paying user, factors that overshadowed the increases in monetization in Korea and Japan on a constant currency basis. We continue to focus on driving users to the app, as well as converting them to paying users, by advancing our personalization tools.
Previous wording
•In Korea, our ARPPU for the quarter ended June 30, 2026, has increased to $8.3, or a 5.0% increase compared to the same quarter of 2025.
Current wording
•In Korea, our ARPPU for the quarter ended September 30, 2026, has increased to $9.4, or a 17.6% increase compared to the same quarter of 2025.
Previous wording
•In Japan, our ARPPU for the quarter ended June 30, 2026, has decreased to $22.1, or a 6.7% decrease compared to the same quarter of 2025.
Current wording
•In Japan, our ARPPU for the quarter ended September 30, 2026, has decreased to $22.3, or a 5.8% decrease compared to the same quarter of 2025.
Previous wording
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 Taxesin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Current wording
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
Previous wording
The following table sets forth our condensed consolidated statements of operations for the three and six months ended June 30, 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.
Current wording
The following table sets forth our condensed consolidated statements of operations for the three and nine months ended September 30, 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 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.
Previous wording
On a constant currency basis, our revenue increased by $18.1 million, or 5.2%, primarily due to increases in Paid Content revenue and Advertising revenue. We estimate that foreign exchange fluctuations had a total negative impact of approximately $27.9 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.
Current wording
On a constant currency basis, our revenue increased by $0.6 million, or 0.2%, primarily due to increases in Paid Content revenue and Advertising revenue, partially offset by a decrease in IP Adaptations revenue. We estimate that foreign exchange fluctuations had a total negative impact of approximately $15.9 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.
Previous wording
Our cost of revenue decreased by $10.7 million, or 4.1%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 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, and a decrease in total sales commissions and content fees paid to creators.
Current wording
Our cost of revenue decreased by $25.1 million, or 8.5%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 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, and a decrease in total sales commissions and content fees paid to creators.
Previous wording
Marketing expense increased by $7.3 million, or 23.4%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to increased marketing spend to acquire users and drive traffic across our offerings.
Current wording
Marketing expense increased by $3.9 million, or 11.2%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to increased marketing spend to acquire users and drive traffic across our offerings.
Previous wording
General and administrative expenses increased by $0.4 million, or 0.6%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily driven by a $2.9 million increase in stock-based compensation expense due to timing of grants, which was partially offset by decreases in other general and administrative costs.
Current wording
General and administrative expenses increased by $0.2 million, or 0.3%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to an increase in other general and administrative costs, largely offset by decreases in depreciation and amortization and stock-based compensation expense.
Previous wording
Interest income decreased by $0.4 million, or 8.7%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The decrease was attributable to lower interest rates as compared to the second quarter of 2025.
Current wording
Interest income decreased by $0.5 million, or 10.1%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The decrease was attributable to lower interest rates as compared to the third quarter of 2025.
Previous wording
Gain (loss) on equity method investment, net, increased by $0.6 million, or (974.2%), for the six months ended June 30, 2026, as compared to the six months ended June 30, 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.
Current wording
Gain (loss) on equity method investment, net, decreased by $1.7 million, or 96.5%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to a $1.1 million impairment loss recognized on an equity method investment during the three months ended September 30, 2026, and a $0.6 million decrease in the Company’s share of net income of equity method investees. 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.
Previous wording
Other income (loss), net, decreased by $0.8 million, or 64.2%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The change was primarily attributable to a $1.7 million increase in net unrealized gain on financial assets measured at fair value, which was offset by a $1.7 million increase in net foreign currency losses and a $0.6 million increase in net periodic benefit costs during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.
Current wording
Other income (loss), net, decreased by $1.1 million, or 57.7%, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The change was primarily attributable to an increase of $4.3 million in net foreign currency losses, primarily resulting from exchange rate movements at the end of the quarter on foreign currency-denominated cash and investment balances. This was partially offset by a $2.8 million favorable change in net unrealized gain (loss) on financial assets measured at fair value and a $0.5 million favorable change in other items, primarily non-operating retirement benefit income.
Previous wording
Income tax benefit decreased by $7.8 million, or 933.8%, for the three months ended June 30, 2026, compared to the three months ended June 30, 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.
Current wording
Income tax benefit (expense) changed by $1.2 million, or 184.5%, for the three months ended September 30, 2026, from an expense of $0.6 million for the three months ended September 30, 2025, primarily driven by the change in jurisdictional profits and losses. 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.
Previous wording
Revenue decreased by $9.8 million, or 2.8% for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. This decrease was primarily attributable to unfavorable foreign currency exchange rates.
Current wording
Revenue decreased by $29.9 million, or 2.8%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. This decrease was primarily attributable to unfavorable foreign currency exchange rates and a $20.9 million decrease in IP Adaptations revenue, primarily due to the timing of revenue recognition on productions in Korea, partially offset by a $12.0 million increase in Advertising revenue.
Previous wording
On a constant currency basis, our revenue increased 18.8 million, or 2.8%, primarily due to increases in Paid Content revenue and Advertising revenue. We estimate that foreign exchange fluctuations had a total negative impact of approximately $33.4 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.
Current wording
On a constant currency basis, our revenue increased $19.4 million, or 1.8%, primarily due to increases in Paid Content revenue and Advertising revenue, partially offset by a decrease in IP Adaptations revenue. We estimate that foreign exchange fluctuations had a total negative impact of approximately $49.3 million on our reported revenue for the nine months ended September 30, 2026. Refer to the Non-GAAP Financial Measures section of this report for a quantitative reconciliation and a description of how we calculate these measures.
Previous wording
Our cost of revenue decreased by $26.9 million, or 5.2%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 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 decrease in stock-based compensation expense due to timing of grants, and a decrease in total sales commissions and content fees paid to creators.
Current wording
Our cost of revenue decreased by $52.0 million, or 6.4%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 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 decrease in stock-based compensation expense due to timing of grants, and a decrease in total sales commissions and content fees paid to creators.
Previous wording
Marketing expense increased by $6.2 million, or 10.0%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increased marketing spend to acquire users and drive traffic across our offerings.
Current wording
Marketing expense increased by $10.2 million, or 10.4%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, primarily due to increased marketing spend to acquire users and drive traffic across our offerings.
Previous wording
General and administrative expenses decreased by $5.7 million, or 4.4%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was primarily driven by a $3.9 million decrease in stock-based compensation expense due to timing of grants and a decrease in non-labor expenses.
Current wording
General and administrative expenses decreased by $5.5 million, or 2.9%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The decrease was primarily driven by a $5.5 million decrease in stock-based compensation expense due to timing of grants and a decrease in non-labor expenses.
Previous wording
Interest income decreased by $1.2 million, or 11.6%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was attributable to lower interest rates as compared to the six months ended June 30, 2025.
Current wording
Interest income decreased by $1.6 million, or 11.1%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The decrease was attributable to lower interest rates as compared to the nine months ended September 30, 2025.
Previous wording
Gain (loss) on equity method investment, net, increased by $0.5 million, or 94.9%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 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.
Current wording
Gain (loss) on equity method investment, net, decreased by $1.0 million, or 63.5%, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, primarily due to a $1.1 million impairment loss recognized on an equity method investment during the nine months ended September 30, 2026. 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.
Previous wording
Income tax expense increased by $(7.9) million, or 460.3%, for the six months ended June 30, 2026, compared to the six months ended June 30, 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.
Current wording
Income tax expense increased by $6.7 million, or 287.9%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily driven by the change in jurisdictional profits and losses. 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.
Previous wording
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 (Gain) 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.
Current wording
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 (Gain) 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
Previous wording
(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 June 30, 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) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business; and (iii) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the six months ended June 30, 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; (iii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business; and (iv) a penalty, and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the three and six months ended June 30, 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.
Current wording
(2)Represents specific costs that are discrete to the periods presented and are not indicative of our core ongoing operations. For all periods presented, these amounts included 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. For the three months ended September 30, 2026, these amounts also included (i) our portion of the related settlement, (ii) third-party advisory fees, including financial, tax and commercial due diligence and legal advisory fees, incurred in connection with acquisition-related transactions and (iii) professional fees and severance costs directly related to the strategic restructuring initiative of our Wattpad business. The nine months ended September 30, 2026 also included advisory fees related to the Purchase Agreement that do not qualify as equity issuance costs, and a penalty and related professional fees, arising from a resolved regulatory matter concerning foreign exchange transaction reporting. For the three and nine months ended September 30, 2025, these amounts also included professional service fees associated with the initial implementation of Sarbanes-Oxley (“SOX”) compliance and IPO readiness.
Previous wording
(3)Represents unrealized net (gain) loss of financial assets measured at FVPL, which include the Company's equity investments.
Current wording
(3)Represents unrealized net (gain) loss of financial assets measured at fair value, which include the Company's equity investments.
Previous wording
Cash and cash equivalents, along with the proceeds generated from the issuance of equity securities, constitute our main liquidity sources. At June 30, 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.
Current wording
Cash and cash equivalents, along with cash generated from operations and the proceeds generated from the issuance of equity securities, constitute our main liquidity sources. At September 30, 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. As of September 30, 2026, we had $548.4 million of cash and cash equivalents, primarily held in bank deposits and other short-term, highly liquid investments with original maturities of three months or less. We believe these balances will be sufficient to fund our working capital requirements and the commitments described below for at least the next 12 months based on our current operating plans.
Previous wording
In July 2026, we committed $40.0 million as a 40% limited partner in NW Webcomic Adaptation Fund, L.P. (the “Fund”), a content investment fund co-sponsored with N Investment Co., Ltd., a wholly-owned subsidiary of NAVER Corporation. The Fund is not consolidated in our financial statements; we account for our interest as an equity method investment. As of the date of this filing, we have funded $10 million of this commitment, with the remaining $30 million payable in three equal annual installments of $10 million on each of the first three anniversaries of the initial closing. Under the partnership agreement, our obligation to fund capital for the repayment of Fund indebtedness is unconditional, and our maximum exposure under this commitment is $30.0 million, net of amounts funded. We intend to fund capital contributions from existing cash and cash equivalents and do not expect this commitment to materially affect our near-term liquidity.
Current wording
In July 2026, we committed $40.0 million as a 40% limited partner in NW Webcomic Adaptation Fund, L.P. (the “Fund”), a content investment fund in which N Investment Co., Ltd., a wholly-owned subsidiary of NAVER Corporation and a related party, has committed the remaining $60.0 million. We account for our interest as an equity method investment and do not consolidate the fund. As of September 30, 2026, we had funded $10.0 million, and our remaining commitment of $30.0 million is payable in three equal annual installments of $10 million beginning in August 2027. Our obligation to fund capital for the repayment of Fund indebtedness is unconditional. See Note 8. Commitments and Contingencies, Note 15. Related Party Transactions, and Note 16. Equity Method Investments.
Previous wording
In addition, on August 6, 2026, subsequent to the balance sheet date, we entered into the RI Games Holdings Agreements with the Seller and other parties thereto, as applicable, pursuant to which we agreed to acquire up to 9,000 shares of common stock of RI Games Holdings, a South Korea-based game developer, for aggregate consideration of KRW 150,000,003,000 (approximately $100 million). We entered into the RI Games Holdings Agreements to acquire a controlling interest in RI Games Holdings and to provide additional equity funding to RI Games Holdings following that acquisition. See Note 19. Subsequent Eventsfor more information on the transactions described above.
Current wording
On August 6, 2026, we entered into the RI Games Holdings Agreements to acquire, in two closings, up to 9,000 shares, or approximately 60%, of the common stock of RI Games Holdings, a South Korea-based game developer, for aggregate consideration of KRW 150,000,003,000 (approximately $108.9 million). We entered into the RI Games Holdings Agreements to acquire a controlling interest in RI Games Holdings and to provide additional equity funding to RI Games Holdings following the second closing. On August 14, 2026, we paid KRW 49,983 million ($35.3 million) in cash at the first closing, which we funded with cash on hand. The second closing purchase price of KRW 100,017 million (approximately $73.6 million), also payable in cash, may become due within the next twelve months, depending on when the applicable conditions are satisfied, including a specified commercial launch milestone.
Previous wording
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 June 30, 2026, we had $583.1 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 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 acquisitions and strategic investments, repayment of debt, working capital, capital expenditures, geographic expansion and other general corporate purposes.
Current wording
Historically, we have also relied on capital contributions from NAVER to finance our operations, repay or repurchase indebtedness, finance acquisitions and fund our capital expenditures. NAVER has no contractual obligation to provide additional capital to us. Our future capital requirements will depend on many factors, including our growth rate, sales and marketing activities and the factors described in the section entitled “Risk Factors” in the Annual Report. Our expected primary uses of capital are acquisitions and strategic investments, repayment of debt, working capital, capital expenditures, geographic expansion and other general corporate purposes. We may require additional financing through the incurrence of indebtedness, the issuance of additional equity or a combination of these sources, and such financing may not be available on favorable terms, or at all, particularly given disruption in global financial markets resulting from high inflation and interest rates. 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.
Previous wording
Net cash used in operating activities increased $5.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was primarily driven by a $20.1 million increase in cash used in receivables, primarily due to the timing of billings, a $10.1 million increase in cash used for other assets, a smaller increase in other liabilities, which provided $7.5 million less cash than in the prior year, and a $5.8 million decrease in non-cash stock-based compensation expense. These were partially offset by a $14.1 million favorable change in income tax receivable, a $14.0 million reduction in cash outflows for accrued expenses, an $8.3 million increase in cash provided by contract liabilities, and a $3.5 million reduction in cash outflows for accounts payable.
Current wording
Net cash (used in) provided by operating activities changed by $15.5 million, from net cash provided of $3.6 million for the nine months ended September 30, 2025, to net cash used of $11.9 million for the nine months ended September 30, 2026. The change was primarily driven by a $22.1 million increase in cash used in receivables, primarily due to the timing of billings, an $11.3 million decrease in cash provided by other liabilities, a $9.5 million increase in cash used for other assets, and a $7.7 million decrease in non-cash stock-based compensation expense. These were partially offset by a $10.3 million reduction in cash outflows for accrued expenses, a $10.5 million decrease in non-cash deferred tax benefit, an $8.3 million increase in cash provided by contract liabilities, a $6.1 million decrease in net loss, and a $3.7 million favorable change in income tax receivable.
Previous wording
For the six months ended June 30, 2026, net cash used in investing activities was $10.3 million, compared to $5.7 million net cash provided by investing activities for the six months ended June 30, 2025. The increase in net cash used was primarily attributable to a reduction in proceeds from the maturities of short-term investments.
Current wording
For the nine months ended September 30, 2026, net cash used in investing activities was $57.7 million, compared to $5.0 million for the nine months ended September 30, 2025. The increase in net cash used was primarily attributable to cash paid of $35.3 million for the first closing of our investment in RI Games Holdings and $10.0 million funded to NW Webcomic Adaptation Fund, L.P., and a $21.9 million decrease in proceeds from the maturities of short-term investments, partially offset by a $6.0 million decrease in purchases of debt and equity securities, a $4.5 million decrease in payments made for short-term investments and a $4.1 million increase in proceeds from loan receivables. In addition, during the three months ended September 30, 2026, we capitalized $0.3 million of internal-use software development costs related to the Wattpad re-platforming project.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Gain (Loss) on Equity Method Investment, Net
Current report — wording carried from elsewhere
Taxesin the accompanying notes to our unaudited Condensed Consolidated Financial Statements included in this Report for more information.
Current report — wording carried from elsewhere
Gain (Loss) on Equity Method Investment, Net
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
This data should be read 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.
Previous report — wording carried elsewhere
In the short term, under the RI Games Purchase Agreement, we expect to pay KRW 49,983,334,333 (approximately $33.2 million) in cash at the first closing. The second closing purchase price of KRW 100,016,668,667 (approximately $66.5 million), also payable in cash, may become due within the next twelve months, depending on when the applicable conditions are satisfied, including a specified commercial launch milestone.