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What changed in WEBTOON Entertainment Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WEBTOON Entertainment Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+278 added−267 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-11)

Top changes in WEBTOON Entertainment Inc.'s 2025 10-K

278 paragraphs added · 267 removed · 226 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

35 edited+6 added−2 removed81 unchanged
Biggest changeThe SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. 8 Table of Contents Investors and others should note that we may announce material information to our investors using our investor relations website (https://ir.webtoon.com), SEC filings, press releases, public conference calls and webcasts.
Biggest changeInvestors and others should note that we may announce material information to our investors using our investor relations website (https://ir.webtoon.com), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues.
For additional information on risks relating to intellectual property, please see the sections titled “Risk Factors—Risks Related to Intellectual Property—Claims by others that we infringe, misappropriate or otherwise violate their intellectual property rights through the activities of our creators or users or the content on our platform could subject us to liability,” “Risk Factors—Risks Related to Intellectual Property—Failure to obtain, maintain, protect and enforce our proprietary and intellectual property rights could adversely affect our business,” “Risk Factors—Risks Related to Intellectual Property—Failure to adequately protect, enforce and defend our rights in our proprietary and intellectual property rights could adversely affect our business” and “Risk Factors—Risks Related to Intellectual Property—We use open-source software on our platform, which may pose particular intellectual property risks to, and could adversely affect, our business.” Human Capital Resources Employees As of December 31, 2024, we employed approximately 1,800 full-time employees across the globe.
For additional information on risks relating to intellectual property, please see the sections titled “Risk Factors—Risks Related to Intellectual Property—Claims by others that we infringe, misappropriate or otherwise violate their intellectual property rights through the activities of our creators or users or the content on our platform could subject us to liability,” “Risk Factors—Risks Related to Intellectual Property—Failure to obtain, maintain, protect and enforce our proprietary and intellectual property rights could adversely affect our business,” “Risk Factors—Risks Related to Intellectual Property—Failure to adequately protect, enforce and defend our rights in our proprietary and intellectual property rights could adversely affect our business” and “Risk Factors—Risks Related to Intellectual Property—We use open-source software on our platform, which may pose particular intellectual property risks to, and could adversely affect, our business.” Human Capital Resources Employees As of December 31, 2025, we employed approximately 1,800 full-time employees across the globe.
For additional information, please see the sections titled “Risk Factors—Risks Related to Our Business, Industry and Operations—If the security of our platform is compromised, it could compromise our and our creators’ and users’ personal, sensitive, confidential and proprietary information, disrupt our internal operations and harm public perception of our platform, which could adversely affect our business and reputation,” “Risk Factors—Risks Related to Our Business, Industry and Operations—We anticipate that our ongoing efforts related to privacy, data protection and cybersecurity, and content review will identify instances of misuse of user data or other undesirable activity by third parties on our platform” and “Risk Factors—Risks Related to Government Regulations and Legal Proceedings—We are subject to complex and 6 Table of Contents evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.” Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention, or engagement, any of which could significantly harm our business.
For additional information, please see the sections titled “Risk Factors—Risks Related to Our Business, Industry and Operations—If the security of our platform is compromised, it could compromise our and our creators’ and users’ personal, sensitive, confidential and proprietary information, disrupt our internal operations and harm public perception of our platform, which could adversely affect our business and reputation,” “Risk Factors—Risks Related to Our Business, Industry and Operations—We anticipate that our ongoing efforts related to privacy, data protection and cybersecurity, and content review will identify instances of misuse of user data or other undesirable activity by third parties on our platform” and “Risk Factors—Risks Related to Government Regulations and Legal Proceedings—We are subject to complex and evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.” Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention, or engagement, any of which could significantly harm our business.
Examples of our common features include: • Content Store Platform: Infrastructure to manage and support in-app business models, including Daily Pass, Fast Pass, tipping and free Coins. • Community Features: Creator profile page allowing creators to post announcements and surveys, and to communicate directly with users. • Royalty Settlement System: Manages revenue sharing settlements for creators and third-party production studios. 3 Table of Contents • Innovative Viewing Technology: To ensure a stable and seamless reading experience, we have purpose-built our own viewer technology specifically designed for mobile, vertical web-comic formats.
Examples of our common features include: • Content Store Platform: Infrastructure to manage and support in-app business models, including Fast Pass, Title Purchase, tipping and free Coins. 3 Table of Contents • Community Features: Creator profile page allowing creators to post announcements and surveys, and to communicate directly with users. • Royalty Settlement System: Manages revenue sharing settlements for creators and third-party production studios. • Innovative Viewing Technology: To ensure a stable and seamless reading experience, we have purpose-built our own viewer technology specifically designed for mobile, vertical web-comic formats.
We monitor payback and return on advertising spend to assess our success at efficiently attracting and maintaining engagement of users Our user acquisition strategy varies by region: • In Korea, we achieved broad user adoption and penetration of the population with strong brand affinity as of the year ended December 31, 2024. As a result, our marketing spend is limited.
We monitor payback and return on advertising spend to assess our success at efficiently attracting and maintaining engagement of users Our user acquisition strategy varies by region: • In Korea, we achieved broad user adoption and penetration of the population with strong brand affinity as of the year ended December 31, 2025. As a result, our marketing spend is limited.
We consider these two groups of creators separately because their intention is often distinct: amateur creators may come to our platform simply for the love of our unique form of storytelling and to connect with an engaged and like-minded audience, and the vast majority of the 24 million creators on our platform are amateur creators.
We consider these two groups of creators separately because their intention is often distinct: amateur creators may come to our platform simply for the love of our unique form of storytelling and to connect with an engaged and like-minded audience, and the vast majority of the 27 million creators on our platform are amateur creators.
Broadly, we compete for users and creators with companies in the following categories: • social media platforms, such as Instagram, Pinterest, Snap, Facebook, YouTube, TikTok and Twitch; 4 Table of Contents • over-the-top platforms, such as Comcast, Disney and ViacomCBS; • gaming companies, such as Activision Blizzard (subsidiary of Microsoft), Electronic Arts, Take-Two, Valve, Unity and Zynga; and • video streaming services, such as Netflix.
Broadly, we compete for users and creators with companies in the following categories: • social media platforms, such as Instagram, Pinterest, Snap, Facebook, YouTube, TikTok and Twitch; • over-the-top platforms, such as Comcast, Disney and ViacomCBS; • gaming companies, such as Activision Blizzard (subsidiary of Microsoft), Electronic Arts, Take-Two, Valve, Unity and Zynga; and • video streaming services, such as Netflix.
However, each of these frameworks and defenses is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments. In addition, 5 Table of Contents pending or recently adopted legislation in the U.S. and EU may impose additional obligations or liability on us associated with content published by users to our platform.
However, each of these frameworks and defenses is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments. In addition, pending or recently adopted legislation in the U.S. and EU may impose additional obligations or liability on us associated with content published by users to our platform.
Available Information We make available on our website (https://ir.webtoon.com) under “Financials” our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish them to the SEC.
Available Information 8 Table of Contents We make available on our website (https://ir.webtoon.com) under “Financials” our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish them to the SEC.
It is imperative that we secure the creative assets, performance and user data (including personal information) that are critical to our business. We devote considerable resources to our security program and regularly test the security of our services with the intent to ensure that user assets are securely stored, managed and otherwise processed.
It is imperative that we secure the creative assets, performance and user data (including personal information) that are critical to our business. We devote 5 Table of Contents considerable resources to our security program and regularly test the security of our services with the intent to ensure that user assets are securely stored, managed and otherwise processed.
Although we are not presently involved in intellectual property lawsuits, we may face allegations from third parties, including our competitors and “non-practicing entities,” that we have infringed, misappropriated or otherwise violated their intellectual property rights. There can be no guarantee that future lawsuits will not have a materially adverse impact on us.
Although we are not presently involved in intellectual property lawsuits, we may face allegations from third parties, including our competitors 7 Table of Contents and “non-practicing entities,” that we have infringed, misappropriated or otherwise violated their intellectual property rights. There can be no guarantee that future lawsuits will not have a materially adverse impact on us.
These strategies include highly publicized competitions on our platform and educational resources that we offer creators for free. We also participate in comic or anime conventions, such as Comic Con, where we often sponsor individual creators. We do not currently leverage any paid marketing spend on creator acquisition. Our Competition We compete for both users and creators.
These strategies include highly publicized competitions on our platform and educational resources that we offer creators for free. We also participate in comic or anime conventions, such as Comic Con, where we often sponsor individual creators. We do not currently leverage any paid marketing spend on creator acquisition.
Our brand, platform, market position, reputation for innovation and cultivation and creator-centric culture support our ability to recruit best-in-class talent. As of December 31, 2024, we had 900 employees in our service and business functions, accounting for approximately 50% of our full-time employees, and 500 employees in our tech functions, accounting for approximately 27% of our full-time employees.
Our brand, platform, market position, reputation for innovation and cultivation and creator-centric culture support our ability to recruit best-in-class talent. As of December 31, 2025, we had 900 employees in our service and business functions, accounting for approximately 50% of our full-time employees, and 500 employees in our tech functions, accounting for approximately 28% of our full-time employees.
We must also expeditiously remove 7 Table of Contents any infringing content upon acquiring actual knowledge of such infringement or, in the absence of actual knowledge, if we become aware of facts or circumstances from which infringing activity is apparent.
We must also expeditiously remove any infringing content upon acquiring actual knowledge of such infringement or, in the absence of actual knowledge, if we become aware of facts or circumstances from which infringing activity is apparent.
Our organic traffic benefits from partnerships with local creators or other popular technology platforms, such as our partnerships with Discord, Patreon, DC Comics and HYBE Entertainment, as well as through our IP Adaptations.
Our organic traffic benefits from partnerships with local creators or other popular technology platforms, such as our partnerships with DC Comics, Duolingo and HYBE Entertainment, as well as through our IP Adaptations.
Our privacy policy and terms and conditions of use describe our practices concerning the use, transmission, disclosure and other processing of user information, including personal information, and are posted on our website.
Our privacy policy and terms and conditions of use describe our practices concerning the use, 6 Table of Contents transmission, disclosure and other processing of user information, including personal information, and are posted on our website.
As of the end of December 2024, we also had 120 pending patent applications in the U.S. and abroad. There can be no assurance that each of our patent applications will result in the issuance of a patent. In addition, any resulting issued patents may have claims narrower than those in our patent applications.
As of the end of December 2025, we also had more than 130 pending patent applications in the U.S. and abroad. There can be no assurance that each of our patent applications will result in the issuance of a patent. In addition, any resulting issued patents may have claims narrower than those in our patent applications.
We compete to attract and retain our users, and for their engagement hours and spend, with multiple technology and content platforms. We also compete with similar technology and content platforms to provide creators with attractive opportunities to reach consumers and earn money.
Our Competition 4 Table of Contents We compete for both users and creators. We compete to attract and retain our users, and for their engagement hours and spend, with multiple technology and content platforms. We also compete with similar technology and content platforms to provide creators with attractive opportunities to reach consumers and earn money.
This community engagement powers a flywheel of user engagement and creator readership, which in turn drives WEBTOON’s success. 1 Table of Contents This vibrant ecosystem is amplified by our foundational technology and artificial intelligence capabilities, which enable content creation, along with our content discovery and recommendation engines.
This 1 Metrics are as of the year ended December 31, 2025. 1 Table of Contents community engagement powers a flywheel of user engagement and creator readership, which in turn drives WEBTOON’s success. This vibrant ecosystem is amplified by our foundational technology and artificial intelligence capabilities, which enable content creation, along with our content discovery and recommendation engines.
The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this Annual Report are intended to be inactive textual references only.
It is possible that the information that we post on social media could be deemed to be material information. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this Annual Report are intended to be inactive textual references only.
As of the end of December 2024, we owned 129 issued patents in the U.S. and foreign countries relating to aspects of our actual or contemplated operations and technologies (of which 19 are U.S. patents). Our issued patents are scheduled to expire between 2028 and 2042.
As of the end of December 2025, we had over 150 issued patents in the U.S. and foreign countries relating to aspects of our actual or contemplated operations and technologies (of which over 20 are U.S. patents). Our issued patents are scheduled to expire between 2028 and 2042.
Occasionally, we may choose to rely entirely on our in-house production capability to produce the adaptation, if we determine the potential reward to be substantially in excess of the investment risk and the magnitude of the required investment to be manageable. Our Technology Architecture A number of core principles underpin our technology architecture, which ensure scalability, reliability and flexibility.
Occasionally, we may choose to rely entirely on our in-house production capability to produce the adaptation, if we determine the potential reward to be substantially in excess of the investment risk and the magnitude of the required investment to be manageable.
Our back-end advertiser product is built on NAVER’s or a third party’s advertising platform. We offer five front-end advertiser products: 2 Table of Contents Display Ads Display ads are non-intrusive banners viewable at the end of an episode and on the “Home” section, among other sections.
We offer five front-end advertiser products: 2 Table of Contents Display Ads Display ads are non-intrusive banners viewable at the end of an episode and on the “Home” section, among other sections.
Any current and future patents, trademarks and other intellectual property or other proprietary rights we own or license, or otherwise have a right to use, may be contested, circumvented or found unenforceable or invalid in certain jurisdictions.
Despite our diligent efforts, we may not be able to obtain or maintain sufficient protection for or successfully enforce our intellectual property. Any current and future patents, trademarks and other intellectual property or other proprietary rights we own or license, or otherwise have a right to use, may be contested, circumvented or found unenforceable or invalid in certain jurisdictions.
We host an annual internal conference called “WEBTOON We Are” aimed at sharing the diverse work experiences and perspectives of our employees and bringing together teams from various geographies and functions. In 2024, the conference featured 29 speakers with over 2,101 participants, a majority of our employees.
We host an annual internal conference called “WEBTOON We Are” aimed at sharing the diverse work experiences and perspectives of our employees and bringing together teams from various geographies and functions.
In turn, users build relationships with creators through real-time feedback and praise on content; fandoms built around popular characters, storylines or in-story universes; and monetary support through payments for access to content.
By creating and publishing new and diverse content, creators on our platform help drive the scale of our user base. In turn, users build relationships with creators through real-time feedback and praise on content; fandoms built around popular characters, storylines or in-story universes; and monetary support through payments for access to content.
As of the end of December 2024, we were the registered holder of 323 trademarks and have 107 trademark applications in the U.S. and foreign countries. There can be no assurance that each of our trademark applications will result in the issuance of a trademark or that each resulting trademark registration will be able to be maintained.
There can be no assurance that each of our trademark applications will result in the issuance of a trademark or that each resulting trademark registration will be able to be maintained. As of December 31, 2025, we were the registered holder of over 60 domestic and international domain names.
This leads to a greater velocity of content generation. Advertising Advertising revenue represents revenue earned for the display of advertisements on our platform, including in-stream placement within content. Our high-intent, sought-after user base attracts advertisers. We will continue to invest in optimization and measurement capabilities to better align with our advertising partners’ objectives.
This leads to a greater velocity of content generation. As of December 31, 2025, we had approximately 27.0 million web-novel creators and had generated over 67.0 million web-novel stories on our platform. Advertising Advertising revenue represents revenue earned for the display of advertisements on our platform, including in-stream placement within content. Our high-intent, sought-after user base attracts advertisers.
WEBTOON empowers creators, by enabling them to participate economically in their own creation, and users, by offering an endless library of content. Our Platform Our creators, users and content drive a powerful community flywheel. By creating and publishing new and diverse content, creators on our platform help drive the scale of our user base.
WEBTOON empowers creators, by enabling them to participate economically in their own creation, and users, by offering an endless library of content. Our community connected 27 million creators with approximately 157 million monthly active users in over 150 countries around the world. 1 Our Platform Our creators, users and content drive a powerful community flywheel.
The information contained in, or that can be accessed through, our website is not part of, or incorporated by reference in, this Annual Report.
The information contained in, or that can be accessed through, our website is not part of, or incorporated by reference in, this Annual Report. The SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Web-comics are optimized for scrolling and often include unique special effects, such as sounds and animations. Web-comics generate the vast majority of revenue on our platform. • Web-novels are digitally created, weekly serialized stories expressed through text with many titles releasing new content three to five times a week.
Web-comics are optimized for scrolling and often include unique special effects, such as sounds and animations. Web-comics generate the vast majority of revenue on our platform.
We seek to protect our proprietary inventions relevant to our business through patent protection; however, we are not dependent on any particular patent or application for the operation of our business. We have registered the “WEBTOON” wordmark and logo as trademarks in certain classes of goods and services in the U.S. and other key jurisdictions in which we maintain operations.
We seek to protect our proprietary inventions relevant to our business through patent protection; however, we are not dependent on any particular patent or application for the operation of our business.
We believe growth in advertising revenue will come from both existing advertising partners already on our platform, as well as acquisition of new advertising partners as we expand our advertising products. Our front-end advertiser product includes multiple ways to reach users in a native and organic way.
We will continue to invest in optimization and measurement capabilities to better align with our advertising partners’ objectives. We believe growth in advertising revenue will come from both existing advertising partners already on our platform, as well as acquisition of new advertising partners as we expand our advertising products.
We also utilize various means, including our proprietary technology Toon Radar, to prevent and monitor unauthorized use of our intellectual property. Toon Radar uses two functions: pre-blocking based on analysis of piracy patterns, and post-blocking based on tracking pirate IDs from watermarked content.
Toon Radar uses two functions: pre-blocking based on analysis of piracy patterns, and post-blocking based on tracking pirate IDs from watermarked content. The two functions work in synergy, collecting piracy-related data and leveraging it to improve machine learning on piracy patterns.
As of December 31, 2024, we were the registered holder of approximately 46 domestic and international domain names. We continually monitor the registration of our domain names, trademarks and service marks in the U.S. and in certain locations outside the U.S.
We continually monitor the registration of our domain names, trademarks and service marks in the U.S. and in certain locations outside the U.S. We also utilize various means, including our proprietary technology Toon Radar, to prevent and monitor unauthorized use of our intellectual property.
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The two functions work in synergy, collecting piracy-related data and leveraging it to improve machine learning on piracy patterns. Despite our diligent efforts, we may not be able to obtain or maintain sufficient protection for or successfully enforce our intellectual property.
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As of December 31, 2025, we had approximately 400 thousand web-comic creators, and had published over 500 thousand web-comic stories on our platform. • Web-novels are digitally created, weekly serialized stories expressed through text with many titles releasing new content three to five times a week.
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We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information.
Added
Our front-end advertiser product includes multiple ways to reach users in a native and organic way. Our back-end advertiser product is built on NAVER’s or a third party’s advertising platform.
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During the year-ended December 31, 2025, examples of our IP Adaptations included the theatrical release of My Daughter is a Zombie and The Trauma Cod e on Netflix.
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Animation continues to be a major initiative for us, and we have recently announced that Amazon MGM Studios greenlit Lore Olympus to be developed into a new animated series in conjunction with The Jim Henson Company. Our Technology Architecture A number of core principles underpin our technology architecture, which ensure scalability, reliability and flexibility.
Added
We also hold various trademark rights, including registrations for the “WEBTOON” wordmark and logo as trademarks in certain classes of goods and services in the U.S. and other key jurisdictions in which we maintain operations.
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As of the end of December 2025, we were the registered holder of over 390 trademarks and had more than 115 pending trademark applications in the U.S. and foreign countries.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeYou should consider an investment in shares of our common stock to be risky, and you should invest in shares of our common stock only if you can withstand a significant loss and wide fluctuations in the market value of your investment. 44 Table of Contents We have identified certain material weaknesses in our internal control over financial reporting, and if our remediation of such material weaknesses is not effective, or if we experience additional material weaknesses or otherwise are unable to implement and maintain effective internal control over financial reporting in the future, investors could lose confidence in the accuracy and completeness of our financial reports and the market price of shares of our common stock could be adversely affected.
Biggest changeIf we are unable to maintain effective internal control over financial reporting in the future, we may fail to prevent or detect material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline.
Risks Related to Our Business, Industry and Operations • We have experienced rapid growth in recent periods, and our historical growth rates may not be indicative of our future performance. • Our growth depends on our ability to attract and empower creators and our ability to properly support and incentivize our creators to create compelling, engaging and interactive content. • Our growth depends on our ability to retain, attract and engage with our users, and our ability to anticipate, understand and respond appropriately to market trends and rapidly changing user preferences in a timely manner. • If we fail to retain or increase our paying users or if we fail to maintain or continue to increase our paying ratio, our business, financial condition or results of operations could be adversely affected. • We operate in highly competitive markets, and we face significant competition to attract and empower our creators and users. • Maintaining and enhancing the market recognition and reputation of our brands is a critical component of our relationship with creators, users and other third parties. • Our growth depends on our ability to innovate and expand our advertising business and to develop effective advertising products. • We intend to continue to diversify our monetization strategy and increase revenues from IP Adaptations, which may not be successful. • We intend to continue to expand our presence in existing and into new geographic markets and execute upon our growth initiatives, and our international expansion efforts may not be successful. • We face a variety of risks associated with conducting business around the world, and these risks will increase as we continue to expand our presence into new geographic markets. 9 Table of Contents • Our future growth depends on our ability to continue innovating our platform to offer attractive features and safe and civil experiences for our creators and users. • We depend on effectively operating with mobile operating systems, hardware, technologies, products, standards and networks that we do not control, and changes to any of these or our platform could adversely affect our user retention, growth, engagement and monetization. • We have a history of net losses, and we anticipate increasing expenses in the future, and we may not achieve or maintain profitability. • If we fail to control our content-related costs, the expenses we incur may exceed the increase in revenues. • The future success of our business relies heavily on our sales and marketing efforts, and if we fail to maintain sales and marketing efficiency, the marketing expenses we incur as we grow may exceed the increase in revenues.
Risks Related to Our Business, Industry and Operations • We have experienced rapid growth in recent periods, and our historical growth rates may not be indicative of our future performance. • Our growth depends on our ability to attract and empower creators and our ability to properly support and incentivize our creators to create compelling, engaging and interactive content. • Our growth depends on our ability to retain, attract and engage with our users, and our ability to anticipate, understand and respond appropriately to market trends and rapidly changing user preferences in a timely manner. • If we fail to retain or increase our paying users or if we fail to maintain or continue to increase our paying ratio, our business, financial condition or results of operations could be adversely affected. • We operate in highly competitive markets, and we face significant competition to attract and empower our creators and users. • Maintaining and enhancing the market recognition and reputation of our brands is a critical component of our relationship with creators, users and other third parties. • Our growth depends on our ability to innovate and expand our advertising business and to develop effective advertising products. 9 Table of Contents • We intend to continue to diversify our monetization strategy and increase revenues from IP Adaptations, which may not be successful. • We intend to continue to expand our presence in existing and into new geographic markets and execute upon our growth initiatives, and our international expansion efforts may not be successful. • We face a variety of risks associated with conducting business around the world, and these risks will increase as we continue to expand our presence into new geographic markets. • Our future growth depends on our ability to continue innovating our platform to offer attractive features and safe and civil experiences for our creators and users. • We depend on effectively operating with mobile operating systems, hardware, technologies, products, standards and networks that we do not control, and changes to any of these or our platform could adversely affect our user retention, growth, engagement and monetization. • We have a history of net losses, and we anticipate increasing expenses in the future, and we may not achieve or maintain profitability. • If we fail to control our content-related costs, the expenses we incur may exceed the increase in revenues. • The future success of our business relies heavily on our sales and marketing efforts, and if we fail to maintain sales and marketing efficiency, the marketing expenses we incur as we grow may exceed the increase in revenues.
Among other things, our Amended Charter or Amended Bylaws includes the following provisions: • authorizing “blank check” preferred stock that our Board could issue to increase the number of outstanding shares to discourage a takeover attempt; • providing for a classified board of directors with staggered, three-year terms, which could delay the ability of stockholders to change the membership of a majority of our Board; • not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limiting the ability of stockholders to call a special stockholder meeting; • prohibiting stockholders from acting by written consent at any time when NAVER beneficially owns, in the aggregate, less than 35% in voting power of our common stock; • establishing advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings; • at any time when NAVER owns, in the aggregate, less than 35% in voting power of our stock entitled to vote generally in the election of directors, the removal of directors other than NAVER Group Directors and LY Group Directors (as each of these terms is defined in our Amended Charter) only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; • providing that our Board is expressly authorized to amend, alter, rescind or repeal our Amended Bylaws; and • at any time when NAVER beneficially owns, in the aggregate, less than 50% in our voting power entitled to vote generally in the election of directors (the “Trigger Event”), requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of common stock to amend provisions of our Amended Charter relating to the management of our business, our Board, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our Amended Bylaws.
Among other things, our Amended Charter or Amended Bylaws includes the following provisions: • authorizing “blank check” preferred stock that our Board could issue to increase the number of outstanding shares to discourage a takeover attempt; • providing for a classified board of directors with staggered, three-year terms, which could delay the ability of stockholders to change the membership of a majority of our Board; • not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; 47 Table of Contents • limiting the ability of stockholders to call a special stockholder meeting; • prohibiting stockholders from acting by written consent at any time when NAVER beneficially owns, in the aggregate, less than 35% in voting power of our common stock; • establishing advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings; • at any time when NAVER owns, in the aggregate, less than 35% in voting power of our stock entitled to vote generally in the election of directors, the removal of directors other than NAVER Group Directors and LY Group Directors (as each of these terms is defined in our Amended Charter) only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; • providing that our Board is expressly authorized to amend, alter, rescind or repeal our Amended Bylaws; and • at any time when NAVER beneficially owns, in the aggregate, less than 50% in our voting power entitled to vote generally in the election of directors (the “Trigger Event”), requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of common stock to amend provisions of our Amended Charter relating to the management of our business, our Board, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our Amended Bylaws.
Pursuing acquisition targets, signing and closing acquisitions and investment transactions and integrating acquired businesses, brands, assets and technologies into our ongoing operations involve numerous potential risks that could adversely affect our business, financial condition or results of operations, including: • diverting management’s attention from other business priorities; • receiving necessary consents, clearances and approvals in connection with a transaction, including under antitrust and competition laws, which could delay or prevent the completion of a transaction or otherwise restrict our ability to realize the expected financial or strategic goals of a transaction; • successfully integrating the operations, technologies, services, products, systems and features of the acquired businesses, brands or assets in an effective, timely and cost-efficient manner; • to the extent applicable, integrating operations across different cultures and languages and addressing the particular economic, currency, political and regulatory risks associated with specific countries; • realizing the full extent of the expected benefits or synergies as a result of a transaction, within the anticipated time frame or at all; • successfully operating new lines of business, services, products or geographic markets; • achieving distribution expansion related to services, products, categories and geographic markets; • retaining key creators, users, employees, partners and suppliers of the acquired business; • conforming standards, controls, procedures and policies of the acquired business with our own; • developing and launching products and services with acquired technologies; and • other unanticipated problems or liabilities.
Pursuing acquisition targets, signing and closing acquisitions and investment transactions and integrating acquired businesses, brands, assets and technologies into our ongoing operations involve numerous potential risks that could adversely affect our business, financial condition or results of operations, including: • diverting management’s attention from other business priorities; • receiving necessary consents, clearances and approvals in connection with a transaction, including under antitrust and competition laws, which could delay or prevent the completion of a transaction or otherwise restrict our ability to realize the expected financial or strategic goals of a transaction; • successfully integrating the operations, technologies, services, products, systems and features of the acquired businesses, brands or assets in an effective, timely and cost-efficient manner; • to the extent applicable, integrating operations across different cultures and languages and addressing the particular economic, currency, political and regulatory risks associated with specific countries; • realizing the full extent of the expected benefits or synergies as a result of a transaction, within the anticipated time frame or at all; • successfully operating new lines of business, services, products or geographic markets; • achieving distribution expansion related to services, products, categories and geographic markets; 19 Table of Contents • retaining key creators, users, employees, partners and suppliers of the acquired business; • conforming standards, controls, procedures and policies of the acquired business with our own; • developing and launching products and services with acquired technologies; and • other unanticipated problems or liabilities.
In addition, governmental agencies in the countries in which we, our users or creators are located have blocked, and could block in the future, access to or require a license for our platform, our website, our application stores or the internet generally for a number of reasons, including privacy, data protection, cybersecurity, confidentiality or regulatory concerns which may include, among other things, governmental restrictions on certain content in a particular country and a requirement that user information be stored on servers in a country within which we operate.
In addition, governmental agencies in the countries in which we, our users or creators are located have blocked, and could block in the future, access to or require a license for parts or all of our platform, our website, our application stores or the internet generally for a number of reasons, including privacy, data protection, cybersecurity, confidentiality or regulatory concerns which may include, among other things, governmental restrictions on certain content in a particular country and a requirement that user information be stored on servers in a country within which we operate.
We have incurred net losses from our inception until we generated a net income of $6.2 million for the three months ended March 31, 2024 and had a net loss for the year ended December 31, 2024.
We have incurred net losses from our inception until we generated a net income of $6.2 million for the three months ended March 31, 2024 and had a net loss for the year ended December 31, 2025.
NAVER beneficially owns a majority of the total voting power of our outstanding shares of common stock As such, other stockholders may be unable to affect the outcome of any matter submitted to our stockholders for approval and NAVER is generally able to control, whether directly or indirectly through its ability to elect and remove directors, and subject to applicable law, all matters affecting us without the approval of other stockholders, including: • determinations with respect to our business direction and policies, including the election and removal of directors and the appointment and removal of officers; • determinations with respect to corporate transactions, such as mergers, business combinations or dispositions of assets; • our financing and dividend policies; • our compensation and benefit programs and other human resources policy decisions; • determinations with respect to tax matters; and • changes to any other agreements that may adversely affect us.
NAVER beneficially owns a majority of the total voting power of our outstanding shares of common stock As such, other stockholders may be unable to affect the outcome of any matter submitted to our stockholders for approval and NAVER is generally able to control, whether directly or indirectly through its ability to elect and remove directors, and subject to applicable law, all matters affecting us without the approval of other stockholders, including: • determinations with respect to our business direction and policies, including the election and removal of directors and the appointment and removal of officers; • determinations with respect to corporate transactions, such as mergers, business combinations or dispositions of assets; • our financing and dividend policies; • our compensation and benefit programs and other human resources policy decisions; • determinations with respect to tax matters; and 43 Table of Contents • changes to any other agreements that may adversely affect us.
The market price of shares of our common stock has in the past, and may in the future, fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • changes in laws or regulations applicable to our industry or offerings; • speculation about our business in the press or the investment community; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • share price and volume fluctuations attributable to inconsistent trading levels of our shares; • our ability to protect our intellectual property and other proprietary rights and to operate our business without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of others; • sales of our common stock by us or our significant stockholders, officers and directors; • the expiration of contractual lock-up agreements; • the development and sustainability of an active trading market for our common stock; • success of competitive products or services; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or significant changes to our key personnel; • the effectiveness of our internal controls over financial reporting; • changes in our capital structure, such as future issuances of debt or equity securities; • our entry into new markets; • tax developments in the U.S., Europe or other markets; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in accounting principles; • litigation or governmental investigations initiated against us; • reputational issues, including reputations issues involving our competitors and their products, NAVER and our third-party partners; • overall market fluctuations and domestic and worldwide economic and political conditions, including related to geopolitical issues or the COVID-19 pandemic; and • other factors described in this “Risk Factors” section and elsewhere in this Annual Report.
The market price of shares of our common stock has in the past, and may in the future, fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • changes in laws or regulations applicable to our industry or offerings; • speculation about our business in the press or the investment community; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • share price and volume fluctuations attributable to inconsistent trading levels of our shares; 44 Table of Contents • our ability to protect our intellectual property and other proprietary rights and to operate our business without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of others; • sales of our common stock by us or our significant stockholders, officers and directors; • the expiration of contractual lock-up agreements; • the development and sustainability of an active trading market for our common stock; • success of competitive products or services; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or significant changes to our key personnel; • the effectiveness of our internal controls over financial reporting; • changes in our capital structure, such as future issuances of debt or equity securities; • our entry into new markets; • tax developments in the U.S., Europe or other markets; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in accounting principles; • litigation or governmental investigations initiated against us; • reputational issues, including reputations issues involving our competitors and their products, NAVER and our third-party partners; • overall market fluctuations and domestic and worldwide economic and political conditions, including related to geopolitical issues; and • other factors described in this “Risk Factors” section and elsewhere in this Annual Report.
Despite a reliability program focused on anticipating and solving issues that may impact the availability of our platform and precautions taken at the data centers, such as disaster recovery and business continuity arrangements, the occurrence of spikes in usage volume, the occurrence of a natural disaster, hacking event or act of terrorism, cyberattacks or other security incidents, a decision to close the facilities without adequate notice, or our inability to secure additional or replacement data center capacity as needed or other unanticipated problems at the data centers could result in interruptions or delays on our platform, impede our ability to scale our operations or have other adverse impacts upon our business and adversely impact our ability to serve our creators and users.
Despite a reliability 23 Table of Contents program focused on anticipating and solving issues that may impact the availability of our platform and precautions taken at the data centers, such as disaster recovery and business continuity arrangements, the occurrence of spikes in usage volume, the occurrence of a natural disaster, hacking event or act of terrorism, cyberattacks or other security incidents, a decision to close the facilities without adequate notice, or our inability to secure additional or replacement data center capacity as needed or other unanticipated problems at the data centers could result in interruptions or delays on our platform, impede our ability to scale our operations or have other adverse impacts upon our business and adversely impact our ability to serve our creators and users.
Any intellectual property claim asserted against us, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using or recall products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or otherwise violate; • make substantial payments for legal fees, settlement payments or other costs or damages; • obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology or content; or • redesign or rebrand the allegedly infringing products to avoid infringement, misappropriation or other violation, which could be costly, time-consuming or impossible.
Any intellectual 36 Table of Contents property claim asserted against us, or for which we are required to provide indemnification, may require us to do one or more of the following: • cease selling or using or recall products that incorporate the intellectual property rights that we allegedly infringe, misappropriate or otherwise violate; • make substantial payments for legal fees, settlement payments or other costs or damages; • obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology or content; or • redesign or rebrand the allegedly infringing products to avoid infringement, misappropriation or other violation, which could be costly, time-consuming or impossible.
Risks Related to Government Regulation and Legal Proceedings • We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage. • The success of our growth strategy depends on our ability to provide a safe online environment for children. • We are subject to complex and evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.
Risks Related to Government Regulation and Legal Proceedings • We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage. • The success of our growth strategy depends on our ability to provide a safe online environment for children. • We are subject to complex and evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, 10 Table of Contents claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.
We believe that the growth of our business depends on a number of factors, including our ability to: • continue to attract and empower creators to create engaging content; • attract users and strengthen our brands; • increase engagement with users and strengthen our community; • increase our paying ratio and strengthen our monetization capability; • continue to innovate and expand our advertising business; • increase revenues from our IP Adaptations with increasing bargaining power vis-a-vis third-party intellectual property adaptation partners (e.g., studios, publishers, financiers, distributors, producers and potential buyers); • expand our presence into new geographic markets; • continue to innovate our platform; and • maintain sales and marketing efficiency.
We believe that the growth of our business depends on a number of factors, including our ability to: • continue to attract and empower creators to create engaging content; • attract users and strengthen our brands; • increase engagement with users and strengthen our community; • increase our paying ratio and strengthen our monetization capability; • continue to innovate and expand our advertising business; • increase revenues from our IP Adaptations with increasing bargaining power vis-a-vis third-party intellectual property adaptation partners (e.g., studios, publishers, financiers, distributors, producers and potential buyers); • expand our presence into new geographic markets; • continue to innovate our platform; and 11 Table of Contents • maintain sales and marketing efficiency.
If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the stock exchange on which our common stock is listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial 45 Table of Contents reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected, and we could become subject to litigation or investigations by the stock exchange on which our common stock is listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
The risk of an adverse result or the actual adverse result in litigation may also require us to seek licenses from third parties, which may or may not be available on commercially reasonable terms or at all, pay ongoing royalties or become subject to injunctions requiring us to remove content, limit access to our platform or take other steps to prevent infringement, each of which could prevent us from pursuing some or all of our business and result in our users deferring or limiting their use of our platform, which could adversely affect our financial condition and results of operations.
The risk of an 37 Table of Contents adverse result or the actual adverse result in litigation may also require us to seek licenses from third parties, which may or may not be available on commercially reasonable terms or at all, pay ongoing royalties or become subject to injunctions requiring us to remove content, limit access to our platform or take other steps to prevent infringement, each of which could prevent us from pursuing some or all of our business and result in our users deferring or limiting their use of our platform, which could adversely affect our financial condition and results of operations.
Many factors, some of which are beyond our control, are important to maintaining and enhancing our brands and may negatively impact our brands and reputation if not properly managed, including our ability to: • maintain highly engaged users as user preferences evolve and as we expand into new markets; • increase brand awareness among existing and potential users and creators through various means of marketing and branding activities; and • adopt new technologies or adapt our platform and our systems to new user or creator requirements or emerging industry standards.
Many factors, some of which are beyond our control, are important to maintaining and enhancing our brands and may negatively impact our brands and reputation if not properly managed, including our ability to: • maintain highly engaged users as user preferences evolve and as we expand into new markets; 14 Table of Contents • increase brand awareness among existing and potential users and creators through various means of marketing and branding activities; and • adopt new technologies or adapt our platform and our systems to new user or creator requirements or emerging industry standards.
See “Risk Factors—Risks Related to Our Business, Industry and Operations—If we, or our service providers, experience outages, constraints, disruptions or degradations in service, platform support or technological infrastructure, our ability to provide reliable services to our users 21 Table of Contents and maintain the performance of our platform could be negatively impacted.” Managing these relationships inherently involves a lesser degree of control over business operations and compliance matters, thereby potentially increasing our reputational, legal, financial and operational risk.
See “Risk Factors—Risks Related to Our Business, Industry and Operations—If we, or our service providers, experience outages, constraints, disruptions or degradations in service, platform support or technological infrastructure, our ability to provide reliable services to our users and maintain the performance of our platform could be negatively impacted.” Managing these relationships inherently involves a lesser degree of control over business operations and compliance matters, thereby potentially increasing our reputational, legal, financial and operational risk.
DPF may be in flux as such adequacy decision has been challenged, and is likely to face additional challenges, at the Court of Justice of the European Union. In addition, in June 2023, the U.S. and UK announced a commitment in principle to establish a “data bridge” to extend the EU-U.S.
DPF may be in flux as such adequacy decision has been challenged, and may face additional challenges, at the Court of Justice of the European Union. In addition, in June 2023, the U.S. and UK announced a commitment in principle to establish a “data bridge” to extend the EU-U.S.
In addition, noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions against us, our officers or our employees, disgorgement of profits, suspension or debarment from contracting with the U.S. government or other persons, reputational harm, adverse media coverage and other collateral consequences.
In addition, noncompliance with anti-corruption, anti-bribery, or anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties or injunctions against us, our officers or our employees, disgorgement of profits, suspension or debarment from contracting with the U.S. government or other persons, reputational harm, adverse media 35 Table of Contents coverage and other collateral consequences.
Further, our Amended Charter provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our director, officer, employee or agent (the “Federal Forum Provision”).
Further, our Amended Charter provides that, unless we consent in writing to the selection of 48 Table of Contents an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our director, officer, employee or agent (the “Federal Forum Provision”).
If some or all of the services agreements with NAVER, LY Corporation (as successor in interest to LINE Corporation) or their respective subsidiaries are terminated, including, in certain cases, without cause by NAVER, LY Corporation or their respective subsidiaries, we may not be able to bring the services and functions covered thereby in-house and, even if we are able to do so, we may need to continue to rely on third parties for all or part of these functions.
If some or all of the services agreements with NAVER, LY Corporation (as successor in interest to LINE Corporation) or their respective subsidiaries are terminated, including, in certain cases, without cause by NAVER, LY Corporation or their respective subsidiaries, we may not be able to bring the services and functions covered thereby in-house and, even if we are able to do so, we may need to continue to rely on third parties for all or part of these 20 Table of Contents functions.
If we fail to cater to the fast changing needs and preferences of our users, in particular our younger generation of users whose appetite may evolve from time to time and who may have higher demand in the quality and entertaining level of content, and, as a result, fail to deliver suitable content and a satisfactory user experience, our paying users will not find our Paid Content attractive or may find our Daily Pass or Fast Pass expensive.
If we fail to cater to the fast changing needs and preferences of our users, in particular our younger generation of users whose appetite may evolve from time to time and who may have higher demand in the quality and entertaining level of content, and, as a result, fail to deliver suitable content and a satisfactory user experience, our paying users will not find our Paid Content attractive or may find our Fast Pass or Title Purchase expensive.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source 40 Table of Contents agreement, such use could inadvertently occur, or could be alleged to have occurred, in part because open-source license terms are often ambiguous.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source agreement, such use could inadvertently occur, or could be alleged to have occurred, in part because open-source license terms are often ambiguous.
If AI Tools are incorrectly designed or the data used to train them is incomplete, inadequate or biased in some way, our use of AI Tools may inadvertently reduce our efficiency or cause unintentional or unexpected outputs that are incorrect, do not match our business goals, do not comply with our policies or interfere with the performance of our platform, services, business and reputation.
If AI Tools are incorrectly designed or the data used to train them is incomplete, inadequate or biased in some way, our use of AI Tools may inadvertently reduce our efficiency or cause unintentional or unexpected outputs that are incorrect, do not match our 41 Table of Contents business goals, do not comply with our policies or interfere with the performance of our platform, services, business and reputation.
If the cash we receive from our subsidiaries pursuant 46 Table of Contents to dividends and other arrangements is insufficient to fund any of our obligations, or if a subsidiary is unable to pay future dividends or distributions to us to meet our obligations, we may be required to raise cash through, among other things, the incurrence of debt (including convertible or exchangeable debt), the sale of assets or the issuance of equity.
If the cash we receive from our subsidiaries pursuant to dividends and other arrangements is insufficient to fund any of our obligations, or if a subsidiary is unable to pay future dividends or distributions to us to meet our obligations, we may be required to raise cash through, among other things, the incurrence of debt (including convertible or exchangeable debt), the sale of assets or the issuance of equity.
We are subject to complex and evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.
We are subject to complex and evolving federal, state and international laws, regulations, rules, standards and contractual obligations regarding privacy, data protection and cybersecurity, which could result in investigations, 29 Table of Contents claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could adversely affect our business.
The UK GDPR currently imposes the same obligations as the GDPR in most material respects, but we cannot fully predict how the 30 Table of Contents Data Protection Act, the UK GDPR and other United Kingdom data protection laws or regulations may develop in the medium to longer term, nor the effects of divergent laws and guidance regarding how personal data will be regulated.
The UK GDPR currently imposes the same obligations as the GDPR in most material respects, but we cannot fully predict how the Data Protection Act, the UK GDPR and other United Kingdom data protection laws or regulations may develop in the medium to longer term, nor the effects of divergent laws and guidance regarding how personal data will be regulated.
The potential effects of new and evolving legislation relating to privacy, data protection and cybersecurity are far-reaching, create the potential for a patchwork of overlapping 32 Table of Contents but different laws, and may require us to modify practices and policies and, incur substantial costs and expenses in an effort to comply, or restrict our operations.
The potential effects of new and evolving legislation relating to privacy, data protection and cybersecurity are far-reaching, create the potential for a patchwork of overlapping but different laws, and may require us to modify practices and policies and, incur substantial costs and expenses in an effort to comply, or restrict our operations.
These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K generally within four days of determining an incident is material. We are subject to laws and regulations worldwide, many of which are unsettled and still developing, and noncompliance with such laws and regulations could subject us to liability.
These new cybersecurity disclosure rules also require the disclosure of material cybersecurity incidents in a Form 8-K generally within four days of determining an incident is material. 33 Table of Contents We are subject to laws and regulations worldwide, many of which are unsettled and still developing, and noncompliance with such laws and regulations could subject us to liability.
Given the Company’s significant costs and expenses, including user acquisition costs associated with our business plan, we may not achieve or maintain profitability in the full fiscal year 2025 or future periods.
Given the Company’s significant costs and expenses, including user acquisition costs associated with our business plan, we may not achieve or maintain profitability in the full fiscal year 2026 or future periods.
If any third party were able to establish that our trademarks or trade names were infringing their marks, that third party may be able to block our ability to use the infringing trademark or trade name and we may be required to re-brand one or more of our products offered under the infringing trademark or trade name, which may require substantial time and monetary 38 Table of Contents expenditure.
If any third party were able to establish that our trademarks or trade names were infringing their marks, that third party may be able to block our ability to use the infringing trademark or trade name and we may be required to re-brand one or more of our products offered under the infringing trademark or trade name, which may require substantial time and monetary expenditure.
If, in the future, the KFTC determines that NAVER WEBTOON has engaged in transactions that violate the fair trade laws and regulations, it may be subject to an administrative and criminal fine, surcharge or other actions, which could adversely affect our business, financial condition and results of operations.
If, in the future, the KFTC determines that NAVER WEBTOON has engaged in transactions that violate the fair trade laws and regulations, it 42 Table of Contents may be subject to an administrative and criminal fine, surcharge or other actions, which could adversely affect our business, financial condition and results of operations.
Any number of factors could adversely affect user retention, growth or engagement, including if: • we are unable to continue to offer content that users find highly engaging, that work with a variety of mobile operating systems, web browsers, other systems and networks and that achieve a high level of market acceptance, particularly in markets that we are targeting for expansion; • we are unable to convert users like we do in Korea and Japan; • users increasingly engage with competing products or services, particularly social media platforms, online content platforms and mobile games; • we are unable to obtain, manage and prioritize content to ensure users are presented with content that is appropriate, interesting, useful and relevant to them; • we are unable to introduce new and exciting features, products or services, or those we introduce are not favorably received; • initiatives designed to attract and retain users and engagement are unsuccessful or discontinued, whether as a result of actions by us, users, creators, third parties or otherwise; • we are unable to provide a compelling and intuitive user experience and environment, particularly relating to the delivery, quality, volume, design and layout of the content and advertisements delivered on our platform; • we are unable to provide adequate customer service to users or creators, or maintain relationships with key platform partners such as advertisers; • there are increased concerns of users or creators, or we suffer any incidents, relating to privacy, data protection, cybersecurity or safety; • there are changes mandated by legislation, regulatory authorities or litigation that adversely affect our platform, content, users or creators; or • we adopt terms, policies or procedures related to areas such as sharing, content, user data or advertising that are perceived negatively by our users or the general public. 12 Table of Contents There is no guarantee that we will not experience an erosion of our user base or a decline in engagement levels.
Any number of factors could adversely affect user retention, growth or engagement, including if: • we are unable to continue to offer content that users find highly engaging, that work with a variety of mobile operating systems, web browsers, other systems and networks and that achieve a high level of market acceptance, particularly in markets that we are targeting for expansion; • we are unable to convert users like we do in Korea and Japan; • users increasingly engage with competing products or services, particularly social media platforms, online content platforms and mobile games; • we are unable to obtain, manage and prioritize content to ensure users are presented with content that is appropriate, interesting, useful and relevant to them; • we are unable to introduce new and exciting features, products or services, or those we introduce are not favorably received; • initiatives designed to attract and retain users and engagement are unsuccessful or discontinued, whether as a result of actions by us, users, creators, third parties or otherwise; • we are unable to provide a compelling and intuitive user experience and environment, particularly relating to the delivery, quality, volume, design and layout of the content and advertisements delivered on our platform; • we are unable to provide adequate customer service to users or creators, or maintain relationships with key platform partners such as advertisers; • there are increased concerns of users or creators, or we suffer any incidents, relating to privacy, data protection, cybersecurity or safety; • there are changes mandated by legislation, regulatory authorities or litigation that adversely affect our platform, content, users or creators; or • we adopt terms, policies or procedures related to areas such as sharing, content, user data or advertising that are perceived negatively by our users or the general public.
In the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and us or any of our Affiliates, such Identified Person shall, to the fullest extent permitted by law, have no duty to communicate or offer such transaction or other business opportunity to us or any of our affiliates.
In the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity for itself, herself or himself and us or any of our Affiliates, such Identified Person shall, to the fullest extent 21 Table of Contents permitted by law, have no duty to communicate or offer such transaction or other business opportunity to us or any of our affiliates.
We do not directly process purchases of Coins on our platform, and, thus, any information about those purchases (e.g., debit and credit card numbers and expiration dates, personal information and billing addresses) is disclosed only to the third-party online platform and service providers facilitating Coins purchases by users.
We do not directly process purchases of Coins on our platform, and, thus, any information about those purchases 22 Table of Contents (e.g., debit and credit card numbers and expiration dates, personal information and billing addresses) is disclosed only to the third-party online platform and service providers facilitating Coins purchases by users.
In addition, the quality of counterfeit products cannot be guaranteed, and poor quality or defects in such products would affect our reputation, which may materially and adversely affect our business, financial condition and operating results. 39 Table of Contents Our intellectual property rights in content on our platform are limited by the terms of our agreements with content creators.
In addition, the quality of counterfeit products cannot be guaranteed, and poor quality or defects in such products would affect our reputation, which may materially and adversely affect our business, financial condition and operating results. Our intellectual property rights in content on our platform are limited by the terms of our agreements with content creators.
Since PIPA and other Korean laws, regulations and 31 Table of Contents orders in connection with personal information are complex and evolving and are subject to interpretation by government regulators which may change over time, we are subject to the risk of claims by regulators for our failure to comply with such laws, regulations and orders despite our efforts to comply with them.
Since PIPA and other Korean laws, regulations and orders in connection with personal information are complex and evolving and are subject to interpretation by government regulators which may change over time, we are subject to the risk of claims by regulators for our failure to comply with such laws, regulations and orders despite our efforts to comply with them.
We continually seek to address technical issues in our ability to record our user data and improve our accuracy, but given the complexity of the systems involved, the rapidly changing nature of mobile devices and operating systems, how our platform manages identity and the way our users access our platform, we expect these issues to continue.
We continually seek to address technical issues in our ability to 24 Table of Contents record our user data and improve our accuracy, but given the complexity of the systems involved, the rapidly changing nature of mobile devices and operating systems, how our platform manages identity and the way our users access our platform, we expect these issues to continue.
If a significant number of our creators no longer provide content, we may experience an overall reduction in the quality of user experiences, which could adversely affect users’ interest in our platform and lead to a loss of revenue opportunities and adversely affect our 11 Table of Contents results of operations.
If a significant number of our creators no longer provide content, we may experience an overall reduction in the quality of user experiences, which could adversely affect users’ interest in our platform and lead to a loss of revenue opportunities and adversely affect our results of operations.
While we have implemented measures designed to prevent unauthorized access to, or loss of, personal, sensitive, confidential or proprietary information, mobile malware, viruses, hacking, social engineering, spam and phishing attacks have occurred and may occur on our systems in the future.
While we have implemented measures designed to prevent unauthorized access to, or loss of, personal, sensitive, confidential or proprietary information, 25 Table of Contents mobile malware, viruses, hacking, social engineering, spam and phishing attacks have occurred and may occur on our systems in the future.
We anticipate that further growth of our business will be 10 Table of Contents required to address any significant growth in our user base and creators and to take advantage of favorable market opportunities. Any future growth will likely place significant demands on our managerial, operational, administrative and financial resources.
We anticipate that further growth of our business will be required to address any significant growth in our user base and creators and to take advantage of favorable market opportunities. Any future growth will likely place significant demands on our managerial, operational, administrative and financial resources.
An inactive trading market could also impair our ability to raise capital by selling shares of our common stock, our ability to attract and motivate our employees through equity incentive awards and our ability to acquire businesses, brands, assets or 43 Table of Contents technologies by using shares of our common stock as consideration.
An inactive trading market could also impair our ability to raise capital by selling shares of our common stock, our ability to attract and motivate our employees through equity incentive awards and our ability to acquire businesses, brands, assets or technologies by using shares of our common stock as consideration.
If third parties obtain patent protection with respect to such technologies, they may assert that our platform and technology infringes their patents and seek to charge us a licensing fee or otherwise preclude the use of our platform and technology.
If third parties 38 Table of Contents obtain patent protection with respect to such technologies, they may assert that our platform and technology infringes their patents and seek to charge us a licensing fee or otherwise preclude the use of our platform and technology.
If we are ultimately unable to 24 Table of Contents achieve or improve profitability at the level or during the time frame anticipated by securities or industry analysts, investors and our stockholders, the trading price of our common stock may decline.
If we are ultimately unable to achieve or improve profitability at the level or during the time frame anticipated by securities or industry analysts, investors and our stockholders, the trading price of our common stock may decline.
As a result, capital appreciation in the price of our common stock, if any, may be your only source of gain on an investment in our common stock. Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price.
As a result, capital appreciation in the price of our common stock, if any, may be your only source of gain on an investment in our common stock. 46 Table of Contents Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price.
In addition, various “non-practicing entities,” and other intellectual property rights holders may attempt to assert intellectual property claims against us or seek to monetize the intellectual property rights they own to extract value through 35 Table of Contents licensing or other settlements. Our intellectual property rights may not be able to withstand any third-party claims challenging them.
In addition, various “non-practicing entities,” and other intellectual property rights holders may attempt to assert intellectual property claims against us or seek to monetize the intellectual property rights they own to extract value through licensing or other settlements. Our intellectual property rights may not be able to withstand any third-party claims challenging them.
If people do not perceive our platform to be useful, reliable or trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency, duration or level of their engagement.
If people do not perceive our platform to be useful, reliable or trustworthy, we may not be able to attract or retain users or otherwise maintain or increase the frequency, duration or level 12 Table of Contents of their engagement.
If we are less successful in 19 Table of Contents our hiring efforts, or, if we cannot retain highly skilled employees and key personnel, then our business, financial condition or results of operations could be adversely affected.
If we are less successful in our hiring efforts, or, if we cannot retain highly skilled employees and key personnel, then our business, financial condition or results of operations could be adversely affected.
Accordingly, the remedies and damages available to us for unauthorized use of certain content on our platform may be limited. We may not be able to protect our intellectual property rights throughout the world.
Accordingly, the remedies and damages available to us for unauthorized use of certain content on our platform may be limited. 39 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
For example, complaints alleging infringement, misappropriation or other violation of intellectual property rights, breaches of certain Korean laws (e.g., labor standards laws and fair-trade laws) and product-related claims may be investigated and prosecuted as criminal offenses with both the company and the company’s executive officers being named as defendants in such proceedings.
For example, complaints alleging infringement, misappropriation or other violation of intellectual property rights, breaches of certain Korean laws (e.g., labor standards laws and fair-trade laws) and product-related claims may be investigated and prosecuted as criminal offenses with both the company and the company’s executive officers being named as defendants in such proceedings. These risks change over time.
In addition, we or our employees, agents, representatives, business partners or third-party intermediaries may have direct or indirect interactions 34 Table of Contents with officials and employees of government agencies or state-owned or affiliated entities.
In addition, we or our employees, agents, representatives, business partners or third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities.
Such ESG matters may also impact our suppliers or customers, which could augment existing or cause additional impacts to our business or operations. 27 Table of Contents Our business and reputation may be harmed by changes in business, economic or political conditions that impact global markets, or by a systemic market event.
Such ESG matters may also impact our suppliers or customers, which could augment existing or cause additional impacts to our business or operations. Our business and reputation may be harmed by changes in business, economic or political conditions that impact global markets, or by a systemic market event.
If it becomes more difficult for our users to access and engage with our platform on their mobile devices, if our users choose not to access or use our platform application on their mobile devices or if our users choose to use mobile products that do not offer access to our platform, our business and user retention, growth and engagement could be adversely affected.
If it becomes more difficult for our users to access and engage with our platform on their mobile devices, if our users choose not to access or use our platform application on their mobile 17 Table of Contents devices or if our users choose to use mobile products that do not offer access to our platform, our business and user retention, growth and engagement could be adversely affected.
Conflicts of interest could arise in the future between us, on the one hand, and NAVER or LY Corporation, 20 Table of Contents on the other hand, concerning, among other things, potential competitive business activities or business opportunities.
Conflicts of interest could arise in the future between us, on the one hand, and NAVER or LY Corporation, on the other hand, concerning, among other things, potential competitive business activities or business opportunities.
Concerns over global economic or market conditions, a recession or economic slowdown, geopolitical issues, including continued hostilities in Europe and the Middle East, the impacts of the COVID-19 pandemic, the availability and cost of credit and slowing economic growth have contributed to general economic uncertainty and diminished expectations for the global economy.
Concerns over global economic or market conditions, a recession or economic slowdown, geopolitical issues, including continued hostilities in Europe and the Middle East, the availability and cost of credit and slowing economic growth have contributed to general economic uncertainty and diminished expectations for the global economy.
To the extent elevated inflation remains, we may experience further cost increases for our operations. Risks Related to Government Regulations and Legal Proceedings We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.
To the extent elevated inflation remains, we may experience further cost increases for our operations. 28 Table of Contents Risks Related to Government Regulations and Legal Proceedings We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.
It includes establishment of fundamental rules on personal information management, appointment of personnel responsible for personal information management, and provision of regular training courses on privacy and security breaches and implementation of physical and technical security control measures.
It includes establishment of fundamental rules on personal information management, appointment of personnel responsible for personal information management, and provision of regular training courses on privacy and security breaches and 32 Table of Contents implementation of physical and technical security control measures.
However, we cannot guarantee that we have entered into such agreements with each party who has developed intellectual property on our behalf and each party that has or may have had access to our confidential information, know-how or trade secrets, and such agreements may be 37 Table of Contents insufficient or breached.
However, we cannot guarantee that we have entered into such agreements with each party who has developed intellectual property on our behalf and each party that has or may have had access to our confidential information, know-how or trade secrets, and such agreements may be insufficient or breached.
Any failure to preserve our culture could negatively affect our future success, including 23 Table of Contents our ability to retain and recruit personnel and to effectively focus on and pursue our mission to build a leading story-based entertainment platform that engages and inspires creators and users globally.
Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our mission to build a leading story-based entertainment platform that engages and inspires creators and users globally.
Changes to these laws, regulations, rules, standards or obligations could require us to change our business strategy, take on more onerous obligations and impact the functionality of our platform.
Changes to these laws, regulations, rules, standards or obligations could require us to change our business strategy, take on more onerous 30 Table of Contents obligations and impact the functionality of our platform.
As a result, our user growth, retention and engagement could be harmed. We are subject to various governmental export control, trade sanctions and import laws and regulations that require our compliance and could subject us to liability if we violate these controls.
As a result, our user growth, retention and engagement could be harmed. 34 Table of Contents We are subject to various governmental export control, trade sanctions and import laws and regulations that require our compliance and could subject us to liability if we violate these controls.
Similarly, at any time, these operating system 17 Table of Contents providers or application stores can change their policies on how we operate on their operating system or in their application stores by, for example, applying content moderation for applications and advertising or imposing technical or code requirements.
Similarly, at any time, these operating system providers or application stores can change their policies on how we operate on their operating system or in their application stores by, for example, applying content moderation for applications and advertising or imposing technical or code requirements.
We may not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights. If we fail to protect our intellectual property rights adequately, unauthorized third parties could copy and distribute our content.
We may not be able to protect our intellectual property rights if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property rights, including unauthorized use by artificial intelligence. If we fail to protect our intellectual property rights adequately, unauthorized third parties could copy and distribute our content.
We may continue to expand such usage in the future.There are significant risks involved in utilizing AI Tools and no assurance can be provided that the usage of such AI Tools will enhance our business or assist our business in being more efficient or profitable. AI Tools may have errors or inadequacies that are not easily detectable.
There are significant risks involved in utilizing AI Tools and no assurance can be provided that the usage of such AI Tools will enhance our business or assist our business in being more efficient or profitable. AI Tools may have errors or inadequacies that are not easily detectable.
Expanding our 15 Table of Contents presence into new geographic markets and having creators and users globally is accompanied by certain financial, economic and political risks, including: • local and regional economic environments and policies in the markets we serve, including interest rates, monetary policy, inflation, economic growth, recession, commodity prices and currency controls or other limitations on the ability to expatriate cash; • currency devaluations in jurisdictions experiencing high inflation rates or significant currency exchange fluctuations; • compliance with local regulations and laws, including in some jurisdictions, local regulations related to privacy, data protection and cybersecurity, content monitoring, preclusion and removal of online entertainment platforms, particularly as these rules apply to interactions with children; • lack of well-established, reliable or impartial legal systems in certain countries in which we operate and difficulties in enforcing contractual, intellectual property or other rights; • labor market disruptions or increase in labor costs in individual countries or regions; • foreign ownership and investment restrictions and potential nationalization or expropriation of our foreign assets; • sovereign risk related to a default by, or deterioration in, the creditworthiness of local governments, particularly in emerging markets; • political or social upheavals, economic instability, repression or human rights issues; and • other geopolitical events, including natural disasters, disruptions to markets due to war, armed conflict, terrorism, epidemics or pandemics and actions taken in response to these events, including increased trade controls, sanctions and other restrictive measures.
Expanding our presence into new geographic markets and having creators and users globally is accompanied by certain financial, economic and political risks, including: • local and regional economic environments and policies in the markets we serve, including interest rates, monetary policy, inflation, economic growth, recession, commodity prices and currency controls or other limitations on the ability to expatriate cash; • currency devaluations in jurisdictions experiencing high inflation rates or significant currency exchange fluctuations; • compliance with local regulations and laws, including in some jurisdictions, local regulations related to privacy, data protection and cybersecurity, content monitoring, preclusion and removal of online entertainment platforms, particularly as these rules apply to interactions with children; • lack of well-established, reliable or impartial legal systems in certain countries in which we operate and difficulties in enforcing contractual, intellectual property or other rights; • labor market disruptions or increase in labor costs in individual countries or regions; • foreign ownership and investment restrictions and potential nationalization or expropriation of our foreign assets; • sovereign risk related to a default by, or deterioration in, the creditworthiness of local governments, particularly in emerging markets; • political or social upheavals, economic instability, repression or human rights issues; and • other geopolitical events, including natural disasters, disruptions to markets due to war, armed conflict, terrorism, epidemics or pandemics and actions taken in response to these events, including increased trade controls, sanctions and other restrictive measures. 16 Table of Contents Any of the foregoing risks could have a significant impact on our ability to offer our platform in new geographic markets, could harm our ability to generate revenue internationally and, consequently, adversely affect our business, financial condition and results of operations.
Our ability to monitor our third-party service providers’ data security is limited. Some of our third-party service providers may store or have access to our data and, despite such contractual provisions, may not have effective controls, processes or practices to protect our information from loss, unauthorized disclosure, unauthorized use or misappropriation or other cyberattacks or security incidents.
Some of our third-party service providers may store or have access to our data and, despite such contractual provisions, may not have effective controls, processes or practices to protect our information from loss, unauthorized disclosure, unauthorized use or misappropriation or other cyberattacks or security incidents.
We currently generate a substantial majority of our revenues from Paid Content distribution. We also generate a portion of our revenues from online advertising. We plan to strengthen revenue contribution from our other monetization methods, such as monetizing content on our platform via adaptations into film, streaming series and other rich media formats.
We also generate a portion of our revenues from online advertising. We plan to strengthen revenue contribution from our other monetization methods, such as monetizing content on our platform via adaptations into film, streaming series and other rich media formats.
Foreign governments may censor our platform in their countries, restrict access to our platform from their countries entirely, impose other restrictions that may affect their citizens’ ability to access our platform for an extended period of time or even indefinitely, require data localization or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with or would require us to rebuild our platform or the infrastructure for our platform.
Foreign governments have in the past and may continue to censor parts or all of our platform in their countries, restrict access to parts or all of our platform from their countries entirely, impose other restrictions that may affect their citizens’ ability to access parts or all of our platform for an extended period of time or even indefinitely, require data localization or impose other laws or regulations that we cannot comply with, would be difficult for us to comply with or would require us to rebuild parts or all of our platform or the related infrastructure.
Conditions in our market could change rapidly and significantly as a result of technological advancements, the emergence of new entrants into the market, partnering or acquisitions by our competitors, continuing market consolidation or changing creator and user preferences, which can be difficult to predict or prepare for.
We expect competition to continue to increase in the future. Conditions in our market could change rapidly and significantly as a result of technological advancements, the emergence of new entrants into the market, partnering or acquisitions by our competitors, continuing market consolidation or changing creator and user preferences, which can be difficult to predict or prepare for.
Any failure or perceived failure by us to comply with our privacy policies, our obligations to users or other third parties relating to privacy, data protection or cybersecurity or our other policies or obligations relating to privacy, data protection or cybersecurity or any actual or perceived compromise of security, including any such compromise that results in the unauthorized release, transfer or other processing of personal information or other user or creator data, may result in governmental investigations and enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could cause our creators and users to lose trust in us, any or all of which could have an adverse effect on our business, financial condition or results of operations. 29 Table of Contents We make public statements about our use and disclosure of personal information through our privacy policies, information on our website and press statements.
Any failure or perceived failure by us to comply with our privacy policies, our obligations to users or other third parties relating to privacy, data protection or cybersecurity or our other policies or obligations relating to privacy, data protection or cybersecurity or any actual or perceived compromise of security, including any such compromise that results in the unauthorized release, transfer or other processing of personal information or other user or creator data, may result in governmental investigations and enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could cause our creators and users to lose trust in us, any or all of which could have an adverse effect on our business, financial condition or results of operations.
The technologies on our platform are complex software products, and maintaining the sophisticated internal and external technological infrastructure required to reliably deliver these 22 Table of Contents experiences and technologies is expensive and complex.
The technologies on our platform are complex software products, and maintaining the sophisticated internal and external technological infrastructure required to reliably deliver these experiences and technologies is expensive and complex.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages, such as: • larger sales and marketing budgets and resources; • broader and more established relationships and brand recognition with users and creators; • greater resources to make acquisitions and enter into strategic partnerships; • lower labor and research and development costs; • stronger competitive positions in certain geographic regions or user demographics; • larger and more mature intellectual property portfolios; and • substantially greater financial, technical and other resources. 13 Table of Contents We expect competition to continue to increase in the future.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages, such as: • larger sales and marketing budgets and resources; • broader and more established relationships and brand recognition with users and creators; • greater resources to make acquisitions and enter into strategic partnerships; • lower labor and research and development costs; • stronger competitive positions in certain geographic regions or user demographics; • larger and more mature intellectual property portfolios; and • substantially greater financial, technical and other resources.
On June 4, 2021, the European Commission published two sets of new SCCs, which took effect on June 27, 2021.
On June 4, 2021, the European Commission published two sets of new SCCs, which 31 Table of Contents took effect on June 27, 2021.
For instance, we rely on certain local creators or popular technology platforms, such as our partnerships with Discord, Patreon and DC Comics, to drive user acquisitions, especially in new markets.
For instance, we rely on certain local creators or popular technology platforms, such as our partnerships with DC Comics, Duolingo and HYBE Entertainment to drive user acquisitions, especially in new markets.
As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and, beginning the first full fiscal year after the completion of the IPO, provide an annual management report on the effectiveness of internal control over financial reporting, to which our independent registered public accounting firm will need to attest in accordance with guidelines set forth by the Public Company Accounting Oversight Board (“PCAOB”).
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting, to which our independent registered public accounting firm will need to attest in accordance with guidelines set forth by the Public Company Accounting Oversight Board (“PCAOB”).
In addition, we are monitoring developments with the EU’s Digital Services Act (“DSA”), which came into force on November 16, 2022, and will become fully applicable on February 17, 2024. The DSA imposes new content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online.
In addition, we are monitoring developments with the EU’s Digital Services Act (“DSA”), which came into force on November 16, 2022. The DSA imposes content moderation obligations, notice and transparency obligations, advertising restrictions and other requirements on digital platforms to protect consumers and their rights online.
These risks change over time. 41 Table of Contents As a result of these current and changing risks, our Korean subsidiaries’ executive officers have in the past been named, and may be named in the future, in criminal investigations or proceedings stemming from our operations.
As a result of these current and changing risks, our Korean subsidiaries’ executive officers have in the past been named, and may be named in the future, in criminal investigations or proceedings stemming from our operations.
There can be no assurance that we will be able to retain or increase paying users or that paying users will maintain or increase their spending.
There can be no 13 Table of Contents assurance that we will be able to retain or increase paying users or that paying users will maintain or increase their spending.
New features or enhancements and changes to the existing features of our platform could fail to attain sufficient market acceptance for many reasons, including: • failure to predict market demand accurately in terms of functionality and to supply features that meet this demand in a timely fashion; • defects, bugs, errors or failures; • negative publicity about performance or effectiveness; • delays in releasing new features or enhancements on our platform; and • introduction or anticipated introduction of competing products by competitors. 16 Table of Contents The failure to obtain market acceptance could adversely affect our brands, business, financial condition and results of operations.
New features or enhancements and changes to the existing features of our platform could fail to attain sufficient market acceptance for many reasons, including: • failure to predict market demand accurately in terms of functionality and to supply features that meet this demand in a timely fashion; • defects, bugs, errors or failures; • negative publicity about performance or effectiveness; • delays in releasing new features or enhancements on our platform; and • introduction or anticipated introduction of competing products by competitors.
We may determine in our discretion that it is not feasible or practical to implement or complete certain of our ESG-related initiatives, or to meet previously set goals and targets based on cost, timing or other considerations.
Such initiatives are voluntary, not binding on our business or management and subject to change. We may determine in our discretion that it is not feasible or practical to implement or complete certain of our ESG-related initiatives, or to meet previously set goals and targets based on cost, timing or other considerations.
Disputes also may arise between us and creators regarding intellectual property subject to a content creator agreement, including: • the scope of rights granted under the agreement and other interpretation-related issues; • our financial and other obligations under the agreement; • whether to accept opportunities to license or otherwise grant rights to the content to third parties; • our right to negotiate independently with a potential licensee, studio, financier, distributor, producer and/or other potential purchaser of intellectual property rights in the content in our role as a publisher and/or producer; and • the ownership of intellectual property resulting from the joint use of intellectual property by creators and us.
Although we attempt to protect our intellectual property by entering into such agreements with certain creators, such agreements may be insufficient or breached. 40 Table of Contents Disputes also may arise between us and creators regarding intellectual property subject to a content creator agreement, including: • the scope of rights granted under the agreement and other interpretation-related issues; • our financial and other obligations under the agreement; • whether to accept opportunities to license or otherwise grant rights to the content to third parties; • our right to negotiate independently with a potential licensee, studio, financier, distributor, producer and/or other potential purchaser of intellectual property rights in the content in our role as a publisher and/or producer; and • the ownership of intellectual property resulting from the joint use of intellectual property by creators and us.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWhen a cybersecurity incident occurs, information is escalated to the CISO and DPO who may convene IT Compliance Committee meetings to discuss findings, actions taken, potential disclosure obligations, impact and recurrence prevention plan depending on the severity of the incident.
Biggest changeWhen a cybersecurity incident occurs, information is escalated to the CISO and DPO who may convene IT 49 Table of Contents Compliance Committee meetings to discuss findings, actions taken, potential disclosure obligations, impact and recurrence prevention plan depending on the severity of the incident.
Despite our efforts, the risk of unauthorized access, modification, theft, misuse and other cybersecurity attacks cannot be eliminated entirely. We 49 Table of Contents have experienced, and may continue to experience, cybersecurity incidents in our normal course of business.
Despite our efforts, the risk of unauthorized access, modification, theft, misuse and other cybersecurity attacks cannot be eliminated entirely. We have experienced, and may continue to experience, cybersecurity incidents in our normal course of business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters, consisting of approximately 22,296 square feet of office space in Los Angeles, California, is leased through 2025. We lease additional office space in Korea, Japan and Canada. We also operate several data centers in Korea, Singapore, Germany and the U.S. pursuant to various lease agreements.
Biggest changeWe lease additional office space in Korea, Japan and Canada. We also operate several data centers in Korea, Singapore, Germany and the U.S. pursuant to various lease agreements. We intend to lease additional space as we add employees and expand geographically.
We intend to lease additional space as we add employees and expand geographically. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any expansion of our operations.
We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any expansion of our operations.
Added
Item 2. Properties Our corporate headquarters, consisting of approximately 22,296 square feet of office space in Los Angeles, California, is leased through the second quarter of 2026. Upon expiration of the current lease, we expect to relocate to a new facility in the area consisting of approximately 25,000 square feet of office space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor additional information about our legal proceedings, see Note 10. Commitments and Contingencies to our audited consolidated financial statements included in this Annual Report.
Biggest changeThough 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. For additional information about our legal proceedings, see Note 10. Commitments and Contingencies to our audited consolidated financial statements included in this Annual Report.
Item 3. Legal Proceedings We are involved in a number of claims pending with various courts, or otherwise unresolved as of December 31, 2024. Adverse results in these claims may include awards of damages and may also result in, or even compel a change in our business practices, which could materially impact our future financial results.
Item 3. Legal Proceedings We are involved in a number of claims pending with various courts, or otherwise unresolved as of December 31, 2025. Adverse results in these claims may include awards of damages and may also result in, or even compel a change in our business practices, which could materially impact our future financial results.
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, and the Section 31D of the Exchange Act.
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 50 Table of Contents mismanagement, waste of corporate assets, and contribution under Section 11(f) of the Securities Act, and the Section 31D of the Exchange Act.
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 50 Table of Contents serve as lead plaintiff. On December 12, 2024, the court appointed a lead plaintiff and lead counsel.
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. The Company intends to defend this case vigorously.
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.
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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 deny in part the motion to dismiss.
Added
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. The Company intends to defend this case vigorously.
Added
On December 9, 2025, by stipulation of the parties, the court ordered the shareholder derivative lawsuit stayed until the court in the putative securities class action holds a scheduling conference and issues a scheduling order. 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 52 Table of Contents Use of Proceeds On June 26, 2024, our Registration Statement was declared effective by the SEC.
Biggest changeThe comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 52 Table of Contents Repurchases of Equity Securities by Issuer and Affiliated Purchases None.
As of the close of business on February 28, 2025, there were 11 stockholders of record of our common stock (excluding beneficial owners whose shares are held in the name of Cede & Co.).
As of the close of business on February 27, 2026, there were 13 stockholders of record of our common stock (excluding beneficial owners whose shares are held in the name of Cede & Co.).
Removed
The Company received net proceeds of approximately $319.7 million from the IPO (including from the partial exercise of the underwriters’ overrallotment option), after deducting underwriting discounts and commissions payable by us. The net proceeds were used for general corporate purposes. Repurchases of Equity Securities by Issuer and Affiliated Purchases None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+28 added−15 removed86 unchanged
Biggest changeYear Ended December 31, (in thousands of USD, except percentages) 2024 2023 Change 2023 2022 Change Total Revenue $ 1,348,478 $ 1,282,748 5.1% $ 1,282,748 $ 1,079,388 18.8% Effect of deconsolidated and transferred operations (147) (12,406) (98.8%) (10,930) (24,794) (55.9%) Effects of foreign currency rate fluctuations 86,861 - N/A 34,065 - N/A Revenue on a Constant Currency Basis $ 1,435,192 $ 1,270,342 13.0% 1,305,883 1,054,594 23.8% Paid Content Revenue 1,083,026 1,028,960 5.3% 1,028,959 851,871 20.8% Effect of deconsolidated and transferred operations (122) (6,042) (98.0%) (4,650) (9,283) (49.9%) Effects of foreign currency rate fluctuations 69,237 - N/A 30,198 - N/A Paid Content Revenue on a Constant Currency Basis $ 1,152,141 $ 1,022,918 12.6% 1,054,507 842,588 25.2% Advertising Revenue 166,087 145,452 14.2% 145,452 145,056 0.3% Effects of foreign currency rate fluctuations 8,129 - N/A 2,824 - N/A Advertising Revenue on a Constant Currency Basis $ 174,216 $ 145,452 19.8% 148,276 145,056 2.2% IP Adaptations Revenue 99,365 108,336 (8.3%) 108,336 82,461 31.4% Effect of deconsolidated and transferred operations (25) (6,364) (99.6%) (6,280) (15,511) (59.5%) Effects of foreign currency rate fluctuations 9,495 - N/A 1,043 - N/A IP Adaptations Revenue on a Constant Currency Basis $ 108,835 $ 101,972 6.7% $ 103,099 $ 66,950 54.0% Paid Content Average Revenue Per Paying User ("ARPPU") Korea Paid Content Revenue $ 352,521 $ 386,193 (8.7%) $ 386,193 $ 445,004 (13.2%) Korea ARPPU 7.84 7.93 (1.1%) 7.93 8.60 (7.8%) Effect of deconsolidated and transferred operations - (0.12) (100.0%) (0.10) (0.18) (44.4%) Effects of foreign currency rate fluctuations 0.45 - N/A 0.13 - N/A Korea ARPPU on a Constant Currency Basis $ 8.29 $ 7.81 6.1% $ 7.96 $ 8.42 (5.5%) Japan Paid Content Revenue 594,302 527,489 12.7% 527,489 328,979 60.3% Japan ARPPU 22.12 22.50 (1.7%) 22.50 14.83 51.7% Effects of foreign currency rate fluctuations 1.80 - N/A 1.03 - N/A Japan ARPPU on a Constant Currency Basis $ 23.92 $ 22.50 6.3% $ 23.53 $ 14.83 58.7% Rest of World Paid Content Revenue 136,203 115,277 18.2% 115,277 77,888 48.0% Rest of World ARPPU 6.57 5.40 21.7% 5.40 3.19 69.3% Effect of deconsolidated and transferred operations - - N/A - - N/A Effects of foreign currency rate fluctuations - - N/A - - N/A Rest of World ARPPU on a Constant Currency Basis $ 6.57 $ 5.40 21.7% $ 5.40 $ 3.19 69.3% Liquidity and Capital Resources On June 28, 2024, we completed our initial public offering (“IPO”) in which we issued and sold 15,000,000 shares of common stock at a public offering price of $21.00 per share.
Biggest changeThe 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. 64 Table of Contents Year Ended December 31, (in thousands of USD, except percentages) 2025 2024 Change 2024 2023 Change Total Revenue $ 1,382,705 $ 1,348,478 2.5% $ 1,348,478 $ 1,282,748 5.1% Effect of deconsolidated and transferred operations - (147) (100.0%) (147) (12,406) (98.8%) Effects of foreign currency rate fluctuations 17,682 - N/A 86,861 - N/A Revenue on a Constant Currency Basis $ 1,400,387 $ 1,348,331 3.9% 1,435,192 1,270,342 13.0% Paid Content Revenue 1,087,496 1,083,026 0.4% 1,083,026 1,028,960 5.3% Effect of deconsolidated and transferred operations - (122) (100.0%) (122) (6,042) (98.0%) Effects of foreign currency rate fluctuations 11,491 - N/A 69,237 - N/A Paid Content Revenue on a Constant Currency Basis $ 1,098,987 $ 1,082,904 1.5% 1,152,141 1,022,918 12.6% Advertising Revenue 164,257 166,087 (1.1%) 166,087 145,452 14.2% Effects of foreign currency rate fluctuations 2,510 - N/A 8,129 - N/A Advertising Revenue on a Constant Currency Basis $ 166,767 $ 166,087 0.4% 174,216 145,452 19.8% IP Adaptations Revenue 130,952 99,365 31.8% 99,365 108,336 (8.3%) Effect of deconsolidated and transferred operations - (25) (100.0%) (25) (6,364) (99.6%) Effects of foreign currency rate fluctuations 3,682 - N/A 9,495 - N/A IP Adaptations Revenue on a Constant Currency Basis $ 134,634 $ 99,340 35.5% $ 108,835 $ 101,972 6.7% Paid Content Average Revenue Per Paying User ("ARPPU") Korea Paid Content Revenue $ 331,158 $ 352,521 (6.1%) $ 352,521 $ 386,193 (8.7%) Korea ARPPU 7.77 7.84 (0.9%) 7.84 7.93 (1.1%) Effect of deconsolidated and transferred operations - - N/A - (0.12) (100.0%) Effects of foreign currency rate fluctuations 0.44 - N/A 0.45 - N/A Korea ARPPU on a Constant Currency Basis $ 8.21 $ 7.84 4.7% $ 8.29 $ 7.81 6.1% Japan Paid Content Revenue 621,540 594,302 4.6% 594,302 527,489 12.7% Japan ARPPU 23.16 22.12 4.7% 22.12 22.50 (1.7%) Effects of foreign currency rate fluctuations (0.28) - N/A 1.80 - N/A Japan ARPPU on a Constant Currency Basis $ 22.88 $ 22.12 3.4% $ 23.92 $ 22.50 6.3% Rest of World Paid Content Revenue 134,799 136,203 (1.0%) 136,203 115,277 18.2% Rest of World ARPPU 6.60 6.57 0.5% 6.57 5.40 21.7% Effects of foreign currency rate fluctuations - - N/A - - N/A Rest of World ARPPU on a Constant Currency Basis $ 6.60 $ 6.57 0.5% $ 6.57 $ 5.40 21.7% Liquidity and Capital Resources On June 28, 2024, we completed our initial public offering (“IPO”) in which we issued and sold 15,000,000 shares of common stock at a public offering price of $21.00 per share.
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. See Note 17. Disposition and Business Combination in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
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. See Note 17. Disposition and Business Combinations in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
For the years ended December 31, 2024, and December 31, 2023, we elected to bypass a qualitative assessment and performed a quantitative assessment to fulfill our annual goodwill impairment testing requirements under U.S. GAAP. See Note 7.
For the years ended December 31, 2025, and December 31, 2024, we elected to bypass a qualitative assessment and performed a quantitative assessment to fulfill our annual goodwill impairment testing requirements under U.S. GAAP. See Note 7.
We received net proceeds of approximately $26.8 million therefrom, 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.
We received net proceeds of approximately $26.8 million therefrom, after deducting underwriting discounts and commissions and offering expenses payable by us. 65 Table of Contents 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.
Our deferred tax assets are recorded net of valuation allowances when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods. 66 Table of Contents Business Combinations From time to time, we may enter into business combinations.
Our deferred tax assets are recorded net of valuation allowances when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax assets will not be realized in future periods. Business Combinations From time to time, we may enter into business combinations.
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 define Adjusted EBITDA as EBITDA 61 Table of Contents 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.
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 11.
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 57 Table of Contents expense (benefit) and depreciation and amortization of non-operating assets. See Note 11 .
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.
As discussed above, we calculate revenue on a 63 Table of Contents 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.
Description of Business and Summary of Significant Accounting Policies in the accompanying notes to our audited consolidated financial statements included elsewhere in this Annual Report for more information.
Description of Business and Summary of Significant Accounting Policies in the accompanying notes to our audited consolidated financial statements included elsewhere in this Annual Report for more information. 68 Table of Contents
Our paying ratio is relatively lower as compared to Korea or Japan due to the inclusion of Wattpad. Wattpad has a different monetization model that primarily focuses on advertising and the business is in its early stage of monetizing its content.
The paying ratio for the Rest of World is relatively lower as compared to Korea or Japan due to the inclusion of Wattpad. Wattpad has a different monetization model that primarily focuses on advertising and the business is in its early stage of monetizing its content.
Risk Factors” of this Annual Report. This section of this Annual Report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Risk Factors” of this Annual Report. This section of this Annual Report generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
As of December 31, 2024, we had $572.4 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.
As of December 31, 2025, we had $581.8 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.
The carrying values were based on each respective reporting unit’s net asset balance as of October 1, 2024, and included directly attributable assets and liabilities, including goodwill. 67 Table of Contents Recent Accounting Pronouncements See Note 1.
The carrying values were based on each respective reporting unit’s net asset balance as of October 1, 2025, and included directly attributable assets and liabilities, including goodwill. Recent Accounting Pronouncements See Note 1.
Goodwill, net and Intangible Assets, net , in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information. Income (Loss) on Equity Method Investment, Net Income (loss) on equity method investment, net, includes recognized income (loss) associated with our investments accounted for using the equity method. See Note 18.
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 18 . Equity Method Investments in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
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.
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. 62 Table of Contents The following table presents a reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods presented.
We describe our accounting policy for business combinations in Note 1. Description of Business and Summary of Significant Accounting Policies in the accompanying notes to our consolidated financial statements. Goodwill and Intangible Assets In addition to intangible assets acquired individually, we have identified intangible assets and generated significant goodwill through our acquisitions.
Description of Business and Summary of Significant Accounting Policies in the accompanying notes to our consolidated financial statements. Goodwill and Intangible Assets In addition to intangible assets acquired individually, we have identified intangible assets and generated significant goodwill through our acquisitions.
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 decreased to around 3.7 million with a paying ratio of 15.4%, compared to MPU of 4.1 million and a paying ratio of 16.3% as of the year ended December 31, 2023. • In Japan, our MPU have reached 2.2 million with a paying ratio of 10.2%, compared to MPU of 2.0 million and a paying ratio of 9.2% as of the year ended December 31, 2023. • In Rest of World, our MPU is 1.7 million with a paying ratio of 1.4%, which has remained similar to the year ended December 31, 2023, reflecting our current strategic plans and marketing discipline to focus on select markets for long-term value creation.
Paying ratio varies due to the user’s ability and propensity to pay across different regions and different product offerings. • In Korea, our MPU decreased to around 3.6 million with a paying ratio of 14.8%, compared to MPU of 3.7 million and a paying ratio of 13.9% as of the year ended December 31, 2024. • In Japan, our MPU was 2.2 million with a paying ratio of 9.7%, compared to MPU of 2.2 million and a paying ratio of 10.2% as of the year ended December 31, 2024. • In Rest of World, our MPU was 1.7 million with a paying ratio of 1.5%, which has remained similar to the year ended December 31, 2024, reflecting our current strategic plans and marketing discipline to focus on select markets for long-term value creation.
Debt in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information. 57 Table of Contents Impairment Losses on Goodwill Impairment losses on goodwill primarily consist of recognized losses resulting from our annual goodwill impairment test. See Note 7.
Impairment Losses on Goodwill Impairment losses on goodwill primarily consist of recognized losses resulting from our annual goodwill impairment test. See Note 7. Goodwill, net and Intangible Assets, net , in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
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.” Consolidated Statements of Cash Flows The following table summarizes our cash flows for the period presented: Year Ended December 31, (in thousands of USD) 2024 2023 Net cash provided by (used in) operating activities $ 17,883 $ 14,804 Net cash used in investing activities (17,276) (51,982) Net cash provided by (used in) financing activities 353,867 (6,499) Effect of exchange rate changes on cash and cash equivalents (13,817) (4,287) Net increase (decrease) in cash and cash equivalents $ 340,657 $ (47,964) Operating Activities For the year ended December 31, 2024, net cash provided by operating activities was $17.9 million, which primarily consisted of a net loss of $152.9 million, adjusted for certain non-cash items of $185.6 million.
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.” Consolidated Statements of Cash Flows The following table summarizes our cash flows for the period presented: Year Ended December 31, (in thousands of USD) 2025 2024 Net cash provided by operating activities $ 11,216 $ 17,883 Net cash used in investing activities (7,498) (17,276) Net cash provided by (used in) financing activities 1,466 353,867 Effect of exchange rate changes on cash and cash equivalents 4,220 (13,817) Net increase (decrease) in cash and cash equivalents $ 9,404 $ 340,657 Operating Activities For the year ended December 31, 2025, net cash provided by operating activities was $11.2 million, which primarily consisted of a net loss of $373.4 million, adjusted for certain non-cash items of $410.6 million.
The remaining goodwill at the Wattpad, Munpia, LDF and Wattpad WEBTOON Studios reporting units following impairment were $437.2 million, $154.2 million, $71 million and $2.9 million, respectively. No goodwill impairment was recorded for the LDF reporting unit given as its fair value substantially exceeded its respective carrying value.
The remaining goodwill at the Wattpad, Munpia, Wattpad WEBTOON Studios, Purple Duck, and LDF reporting units following impairment were $179.9 million, $85.6 million, $0.0 million, $0.01 million and $71.3 million, respectively. No goodwill impairment was recorded for the LDF reporting unit given as its fair value substantially exceeded its respective carrying value.
The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies.
The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. 67 Table of Contents We describe our accounting policy for business combinations in Note 1.
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. 63 Table of Contents 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.
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.
Cost of Revenue Year Ended December 31, (in thousands of USD) 2024 2023 % Change Cost of revenue $ (1,009,410) $ (987,258) 2.2 % Our cost of revenue increased by $22.2 million, or 2.2%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Cost of Revenue Year Ended December 31, (in thousands of USD) 2025 2024 % Change Cost of revenue $ (1,060,524) $ (1,009,410) 5.1 % Our cost of revenue increased by $51.1 million, or 5.1%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
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.
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.
(in thousands of USD, except percentages) Year Ended December 31, 2024 2023 2022 Net Loss $ (152,912) $ (144,759) $ (132,523) Plus (minus): Interest income (15,820) (3,009) (1,166) Interest expense 45 79 844 Income tax expense 3,604 12,006 14,369 Depreciation and amortization 40,074 38,359 34,735 EBITDA $ (125,009) $ (97,324) $ (83,741) Impairment losses on goodwill (1) 69,743 63,412 — Stock-based compensation expense (2) 82,321 3,220 (525) Loss on fair value instruments, net (3) (2,263) 22,677 190 Restructuring and IPO-related costs (4) 42,050 4,330 — Loss on equity method investments, net (5) 1,123 12,339 4,694 Adjusted EBITDA $ 67,965 $ 8,654 $ (79,382) Net loss margin (11.3) % (11.3) % (12.3) % Adjusted EBITDA Margin 5.0 % 0.7 % (7.4) % ______________ (1) Represents impairment losses on goodwill for Wattpad Corp., Wattpad WEBTOON Studios Corp, Munpia Inc. and Jakga Company Inc.
(in thousands of USD, except percentages) Year Ended December 31, 2025 2024 2023 Net Loss $ (373,387) $ (152,912) $ (144,759) Plus: Interest income (19,170) (15,820) (3,009) Interest expense 56 45 79 Income tax (benefit) expense (16,022) 3,604 12,006 Depreciation and amortization 35,431 40,074 38,359 EBITDA $ (373,092) $ (125,009) $ (97,324) Impairment losses on goodwill and other intangible assets (1) 336,486 69,743 63,412 Stock-based compensation expense (2) 41,907 82,321 3,220 Loss (gain) on fair value instruments, net (3) 8,604 (2,263) 22,677 Restructuring and IPO-related costs (4) 6,816 42,050 4,330 Loss (gain) on equity method investments, net (5) (1,282) 1,123 12,339 Adjusted EBITDA $ 19,439 $ 67,965 $ 8,654 Net loss margin (27.0) % (11.3) % (11.3) % Adjusted EBITDA Margin 1.4 % 5.0 % 0.7 % ______________ (1) Represents impairment losses on goodwill for Wattpad Corp., Wattpad WEBTOON Studios Corp, Munpia Inc., Purple Duck and Jakga Company Inc.
On October 1, 2024, we performed a quantitative annual impairment test for all reporting units, which resulted in $46.7 million, $20.3 million and $2.7 million impairment of goodwill at Wattpad, Munpia, and Wattpad WEBTOON Studios reporting units, respectively.
On October 1, 2025, we performed a quantitative annual impairment test for all reporting units, which resulted in $257.2 million, $74.0 million, $2.9 million, and $1.4 million impairment of goodwill at Wattpad, Munpia, Wattpad WEBTOON Studios, and Purple Duck reporting units, respectively.
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 12. Income Taxes in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
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 12 .
Results of Operations Consolidated Statements of Operations and Comprehensive Loss The following table sets forth our consolidated statement of operations for 2024 and 2023. This data should be read in conjunction with our audited consolidated financial statements. Historical results are not necessarily indicative of the results that may be expected in the future.
This data should be read in conjunction with our audited consolidated financial statements. Historical results are not necessarily indicative of the results that may be expected in the future.
Units are in U.S. dollar. Engagement is a key aspect to drive our monetization. For the year ended December 31, 2024, our ARPPU has increased to $11.7, or 6.2% growth compared to December 31, 2023.
Units are in U.S. dollar. 56 Table of Contents Engagement is a key aspect to drive our monetization. For the year ended December 31, 2025, our ARPPU has increased to $12.1, or 3.5% growth compared to December 31, 2024.
In addition to adjustments for foreign currency exchange fluctuations, we have also adjusted revenue to exclude the impact of deconsolidation of Jakga and LOCUS and its subsidiaries, and the transfer of SERIES ON, one of our offerings, from NAVER WEBTOON to NAVER to improve comparability between the two periods.
In addition to adjustments for foreign currency exchange fluctuations, we have also adjusted revenue to exclude the impact of deconsolidation of Jakga to improve comparability between the two periods.
In prior periods, we only adjusted for interest expense because interest income amounts were insignificant. Prior comparable periods have now been recast to conform to the current presentation. Likewise, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable periods have been recast to conform to the current presentation.
Prior comparable period has been recast to conform to the current presentation. Likewise, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable period has been recast to conform to the current presentation.
Also, immediately subsequent to the closing of the IPO, we issued and sold 2,380,952 shares of common stock to NAVER U.Hub Inc., a wholly-owned subsidiary of NAVER, in a private placement at $21.00 per share and received $50 million in proceeds. 64 Table of Contents On July 26, 2024, the underwriters partially exercised the over-allotment option to purchase 1,371,549 shares of common stock at $21.00 per share, which was closed on July 30, 2024.
Also, immediately subsequent to the closing of the IPO, we issued and sold 2,380,952 shares of common stock to NAVER U.Hub Inc., a wholly-owned subsidiary of NAVER, in a private placement at $21.00 per share and received $50 million in proceeds.
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. 61 Table of Contents 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.
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.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form S-1/A (File No. 333-279863) which was declared effective by the SEC on June 26, 2024.
Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K which was filed with the SEC on March 11, 2025.
We do not monetize web users in North America, which is why we are focused on converting users to the app. The MAU for the Rest of World is a relatively larger portion compared to Korea and Japan as it includes Wattpad, which has a large global user base.
The MAU for the Rest of World is a relatively larger portion compared to Korea and Japan as it includes Wattpad, which has a large global user base.
Other Income (Loss), Net Year Ended December 31, (in thousands of USD) 2024 2023 % Change Other income (loss), net $ 6,482 $ (23,574) (127.5) % Other income (loss), net, increased by $30.1 million, or 127.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Other Income (Loss), Net Year Ended December 31, (in thousands of USD) 2025 2024 % Change Other income (loss), net $ (9,808) $ 6,482 (251.3) % Other income (loss), net, decreased by $16.3 million, or 251.3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Interest Expense Interest expense primarily consists of interest related to our outstanding debt obligations, including both short-term borrowings and long-term debt. See Note 9.
Interest Expense Interest expense primarily consists of interest related to our outstanding debt obligations, including both short-term borrowings and long-term debt. See Note 9. Debt in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information.
Income Tax Expense Year Ended December 31, (in thousands of USD) 2024 2023 % Change Income tax expense $ (3,604) $ (12,006) (70.0) % Income tax expense decreased by $8.4 million, or 70.0%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Income Tax Expense Year Ended December 31, (in thousands of USD) 2025 2024 % Change Income tax benefit (expense) $ 16,022 $ (3,604) (544.6) % Income tax benefit (expense) increased by $19.6 million, or 544.6%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
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 year ended December 31, 2024, our global MAU was approximately 166 million.
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. Starting January 1, 2025, NAVER adjusted their methodology for measuring MAU in Korea.
Equity Method Investments in the accompanying notes to our audited consolidated financial statements included in this Annual Report for more information. Other Income (Loss), Net Other income, 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.
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.
Year Ended December 31, (in thousands of USD) 2024 2023 % Change Revenue $ 1,348,478 $ 1,282,748 5.1 % Cost of revenue (1,009,410) (987,258) 2.2 % Marketing (107,783) (121,086) (11.0) % General and administrative expenses (331,984) (210,762) 57.5 % Operating income (loss) (100,699) (36,358) 177.0 % Interest income 15,820 3,009 425.8 % Interest expense (45) (79) (43.0) % Impairment losses on goodwill (69,743) (63,412) 10.0 % Loss on equity method investments, net (1,123) (12,339) (90.9 %) Other income (loss), net 6,482 (23,574) (127.5) % Income (loss) before income tax (149,308) (132,753) 12.5 % Income tax expense (3,604) (12,006) (70.0 %) Net income (loss) (152,912) (144,759) 5.6 % Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests (9,007) (28,304) (68.2 %) Total comprehensive loss attributable to WEBTOON Entertainment Inc. $ (143,905) $ (116,455) 23.6 % 58 Table of Contents Comparison of the Years Ended December 31, 2024 and December 31, 2023 Revenue Year Ended December 31, (in thousands of USD) 2024 2023 % Change Revenue $ 1,348,478 $ 1,282,748 5.1 % Paid Content 1,083,026 1,028,960 5.3 % Advertising 166,087 145,452 14.2 % IP Adaptations 99,365 108,336 (8.3 %) Revenue increased by $65.7 million, or 5.1%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily related to strong growth in Paid Content and Advertising, partially offset by our exposure to weaker foreign currencies.
Year Ended December 31, (in thousands of USD) 2025 2024 % Change Revenue $ 1,382,705 $ 1,348,478 2.5 % Cost of revenue (1,060,524) (1,009,410) 5.1 % Marketing (126,149) (107,783) 17.0 % General and administrative expenses (259,543) (331,984) (21.8 %) Operating loss (63,511) (100,699) (36.9) % Interest income 19,170 15,820 21.2 % Interest expense (56) (45) 24.4 % Impairment losses on goodwill and other intangible assets (336,486) (69,743) 382.5 % Gain (loss) on equity method investments, net 1,282 (1,123) (214.2 %) Other income (loss), net (9,808) 6,482 (251.3) % Loss before income tax (389,409) (149,308) 160.8 % Income tax benefit (expense) 16,022 (3,604) (544.6 %) Net loss (373,387) (152,912) 144.2 % Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests (27,460) (9,007) 204.9 % Total comprehensive loss attributable to WEBTOON Entertainment Inc. $ (345,927) $ (143,905) 140.4 % Comparison of the Years Ended December 31, 2025 and December 31, 2024 Revenue Year Ended December 31, (in thousands of USD) 2025 2024 % Change Revenue $ 1,382,705 $ 1,348,478 2.5 % Paid Content 1,087,496 1,083,026 0.4 % Advertising 164,257 166,087 (1.1 %) IP Adaptations 130,952 99,365 31.8 % Revenue increased by $34.2 million, or 2.5%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily related to strong growth in IP Adaptations.
As of the year ended December 31, 2024, our global MPU reached 7.7 million with a paying ratio of 4.6%, which is a slight increase compared to the paying ratio for the year ended December 31, 2023. By geographic regions, Korea, Japan, and Rest of World contributed 48.6%, 29.0% and 22.4% of global MPU, respectively.
We view MPU and paying ratio to be indicators of the strength of our monetization. As of the year ended December 31, 2025, our global MPU reached 7.5 million with a paying ratio of 4.8%, which is a slight increase compared to the paying ratio for the year ended December 31, 2024.
(“Wattpad WEBTOON Studios”) reporting units, respectively, as of October 1, 2024. As of the October 1, 2024, annual impairment testing date, four reporting units had goodwill – Munpia, Wattpad WEBTOON Studios, Wattpad, and LDF (in each case, including its subsidiaries, if any).
As of the October 1, 2025, annual impairment testing date, five reporting units had goodwill – Wattpad, Munpia, Wattpad WEBTOON Studios, Purple Duck and LDF.
This increase was primarily due to losses during the year ended December 31, 2023, related to valuation of financial assets measured at fair value of approximately $7.8 million, $6.8 million, and $5.3 million 60 Table of Contents related to NAVER Z Co., Ltd, Contents First, Inc., and Clova Games, Inc., respectively, that did not occur during the year ended December 31, 2024, and positive fluctuations in foreign currency exchange rates of approximately $5.4 million during the year ended December 31, 2024, when compared to the year ended December 31, 2023.
This decrease was primarily due to losses during the year ended December 31, 2025, related to valuation of financial assets measured at fair value of approximately $7.7 million and $0.8 million related to Contents First Inc. and Bifrost Co., Ltd respectively.
The increase was primarily driven by higher balances due to proceeds from the IPO and higher interest rates compared to the prior year.
The increase was primarily driven by higher balances due to proceeds from the IPO and higher interest rates compared to the prior year. Interest Expense Year Ended December 31, (in thousands of USD) 2025 2024 % Change Interest expense $ (56) $ (45) 24.4 % Interest expense was immaterial for the years ended December 31, 2025, and December 31, 2024.
Roughly two-thirds of the decline was isolated to one country where the government banned a number of global content sites, including Wattpad. 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.
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.
The non-cash items primarily consisted of stock-based compensation of $87.4 million, impairment losses of $69.7 million, and depreciation and amortization of approximately $40.1 million, which was offset by a decrease of $24.5 million in deferred tax expenses. The net cash outflow from changes in our operating assets and liabilities was primarily due to unfavorable foreign currency translation adjustments.
The non-cash items primarily consisted of impairment losses of $336.5 million, stock-based compensation of $41.9 million, and depreciation and amortization of approximately $35.4 million, which was offset by a decrease of $29.0 million in a deferred tax benefit.
(See Note. 11 - Stock-Based Compensation for more information about our stock-based compensation expense) 59 Table of Contents Interest Income Year Ended December 31, (in thousands of USD) 2024 2023 % Change Interest income $ 15,820 $ 3,009 425.8 % Interest income increased by $12.8 million, or 425.8%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Interest Income Year Ended December 31, (in thousands of USD) 2025 2024 % Change Interest income $ 19,170 $ 15,820 21.2 % Interest income increased by $3.4 million, or 21.2%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Loss on Equity Method Investment, Net Year Ended December 31, (in thousands of USD) 2024 2023 % Change Loss on equity method investments, net $ (1,123) $ (12,339) (90.9) % Loss on equity method investment, net, decreased by $11.2 million, or 90.9%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Goodwill, net and Intangible Assets, net and Critical Accounting Policies and Estimates - Goodwill and Intangible Assets for further details on our impairment losses on goodwill. 60 Table of Contents Gain (Loss) on Equity Method Investment, Net Year Ended December 31, (in thousands of USD) 2025 2024 % Change Gain (loss) on equity method investments, net $ 1,282 $ (1,123) 214.2 % Gain (loss) on equity method investment, net, increased by $2.4 million, or 214.2%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Marketing Year Ended December 31, (in thousands of USD) 2024 2023 % Change Marketing $ (107,783) $ (121,086) (11.0) % Marketing expenses decreased by $13.3 million, or 11.0%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
General and Administrative Expenses Year Ended December 31, (in thousands of USD) 2025 2024 % Change General and administrative expenses $ (259,543) $ (331,984) (21.8 %) General and administrative expenses decreased by $72.4 million, or 21.8%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Impairment Losses on Goodwill Year Ended December 31, (in thousands of USD) 2024 2023 % Change Impairment losses on goodwill $ (69,743) $ (63,412) 10.0 % Impairment losses on goodwill increased by $6.3 million, or 10.0%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, which was primarily due to higher impairment losses related to our webnovel businesses.
Impairment Losses on Goodwill and Other Intangible Assets, Net Year Ended December 31, (in thousands of USD) 2025 2024 % Change Impairment losses on goodwill and other intangible assets, net $ (336,486) $ (69,743) 382.5 % Impairment losses on goodwill and other intangible assets, net increased by $266.7 million, or 382.5%, for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
Our decrease in 55 Table of Contents MAU for the year ended December 31, 2024, was driven largely by short-term engagement impacts from political turbulence in Korea. • In Japan, our MAU have reached 21.9 million as of the year ended December 31, 2024, compared to MAU of 21.2 million as of the year ended December 31, 2023, largely attributable to growth of LINE Manga and local Japanese title launches.
Our decrease in MAU for the year ended December 31, 2025, was driven largely by the impact of political turbulence in Korea during the fourth quarter of 2024, which did not fully recover during the year ended December 31, 2025. • In Japan, our MAU reached 23 million as of the year ended December 31, 2025, compared to MAU of 22 million as of the year ended December 31, 2024, largely attributable to growth in eBookJapan and increased investments in marketing.
During the fourth quarter of December 31, 2024, there was a material change in the cash flow assumptions that led to the impairment of goodwill arising from a delay in realizing synergies and returns from investments in content creation and IP Adaptations, the postponement of releases for major works, the ongoing Wattpad ban in a certain country, and the delay in web-novel video production at the Munpia, Wattpad, and Wattpad WEBTOON Studios Corp.
During the fourth quarter of the year ended December 31, 2025, there was a material change in the cash flow assumptions that led to the impairment of goodwill for the Wattpad, Munpia, Wattpad WEBTOON Studios Corp. (“Wattpad WEBTOON Studios”), and Purple Duck reporting units as of October 1, 2025.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $17.3 million, primarily due to payments made for short-term investments of $77.4 million, and purchases of intangible assets of $10.7 million, which was offset by proceeds received from maturities of short-term investments of approximately $68.0 million. 65 Table of Contents Financing Activities For the year ended December 31, 2024, net cash provided by financing activities was $353.9 million, consisting primarily of $293.0 million in proceeds from the IPO, net of underwriting discounts and commissions, and $50.0 million in proceeds from issuance of common stock related to private placement, and $26.8 million in proceeds, net of underwriting discounts and commissions, from the exercise of the over-allotment option by the underwriters in connection with the IPO, which was offset by payments of IPO costs of $11.2 million Critical Accounting Policies and Estimates We believe that the following accounting policies and estimates involve a high degree of judgment and complexity.
Investing Activities For the year ended December 31, 2025, net cash used in investing activities was $7.5 million, primarily due to payments made for short-term investments of $26.4 million, and purchases of intangible assets of $10.3 million, which was offset by proceeds received from maturities of short-term investments of approximately $42.5 million.
The growth in ARPPU was driven primarily by our strategic effort to shift users from web to the app by continuing to improve our recommendation models. • In Korea, our ARPPU for the year ended December 31, 2024, has decreased to $7.8, or 1.2% decrease compared to the year ended December 31, 2023. • In Japan, our ARPPU for the year ended December 31, 2024 has decreased to $22.1, or 1.7% decrease compared to the year ended December 31, 2023, but still remained relatively comparable. • In Rest of World, our ARPPU for the year ended December 31, 2024 has increased to $6.6, or 21.6% growth compared to the year ended December 31, 2023, primarily driven by reader habituation in paying to view content. 56 Table of Contents Seasonality Historically, while the magnitude and timing varies across regions, we experienced 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.
Seasonality Historically, while the magnitude and timing varies across regions, we experienced 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.
Such increase was primarily due to stock based compensation expense of $12.2 million for the year ended December 31, 2024, compared to $1.2 million for the year ended December 31, 2023, and overall increases in commissions and fees paid to creators, associated with higher revenues.
The decrease was primarily driven by lower stock-based compensation expense of $30.9 million, compared to $75.2 million for the year ended December 31, 2024.
The increases of $20.6 million, or 14.2%, in advertising revenue, was largely driven by double-digit growth in Japan and ROW. Such increases were largely offset by the Company's exposure to weaker foreign currencies including the KRW and JPY.
The decrease of $1.8 million, or 1.1%, in advertising revenue was driven by declines in Korea and Rest of World, largely offset by double-digit growth in Japan.
In addition, we continued to optimize and improve our existing AI-based personalized content recommendation capabilities. • In Rest of World, our MAU was approximately 120.1 million as of the year ended December 31, 2024, which declined from 122.9 million as of December 31, 2023. The decline was primarily attributable to decline in web users.
We expect to complete our infrastructure investments by the end of the first quarter of 2026, and redeploy engineering resources to support improvements across our personalized recommendation tools. • In Rest of World, our MAU was approximately 110 million as of the year ended December 31, 2025, which declined from 120 million as of December 31, 2024.
This decrease was primarily due to recognized losses of $11.0 million associated with our investments in AtoZ Corporation during the year ended December 31, 2023, which we account for using the equity method. See Note 18. Equity Method Investments for more information.
This increase resulted from better performance of certain of the companies equity method investments during the year ended December 31, 2025, as compared to the prior year. See Note 18 . Equity Method Investments for more information.
Removed
The global MAU decreased by approximately 1.5% compared to December 31, 2023, primarily due to decreases in ROW MAU driven by a government ban on Wattpad in one country, and slight decreases in Korea MAU. These decreases were offset by continued growth in Japan.
Added
Korea is the only region where NAVER serves as a source of our MAU data. NAVER adjusted their methodology for identifying and counting web users for all of NAVER’s services. This change only affected MAU in Korea. All the other regions are continuing to report their metrics in the same way as previous quarters.
Removed
By geographic regions, Korea, Japan, and Rest of World contributed 14.6%, 13.2%, and 72.2% of global MAU, respectively. • In Korea, our MAU was approximately 24.4 million as of the year ended December 31, 2024, compared to MAU of 24.9 million as of the year ended December 31, 2023.
Added
A table reconciling previously reported MAU in Korea for fiscal quarters in 2024 to MAU in Korea using the new methodology was provided in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed with the SEC on May 14, 2025.
Removed
Our user base in Korea is highly engaged, and our cohorts have demonstrated deeper engagement and levels of consumption over time.
Added
Accordingly, MAU in Korea presented in this Annual Report reflects the new methodology for all periods shown to ensure comparability. 55 Table of Contents As of the year ended December 31, 2025, our global MAU was approximately 157 million. The global MAU decreased by approximately 7.1% compared to December 31, 2024, primarily due to decreases in Korea MAU.
Removed
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.
Added
These decreases were offset by continued growth in Japan. By geographic regions, Korea, Japan, and Rest of World contributed 15.3%, 14.7%, and 70.0% of global MAU, respectively. We estimate that global MAU benefited from a roughly 2.7% increase in Wattpad activity resulting from automated web traffic in certain non-core markets.
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We plan to continue to leverage our successful pattern of engagement to drive monetization, especially as we have seen our highly engaged users in North America reading a similar number of episodes to users in other mature markets.
Added
While we saw a small increase starting late in the third quarter of 2025, the web traffic peaked in the fourth quarter of 2025. We expect to see reduced impact in the first quarter of 2026.
Removed
The decreases were a result of increased efficiencies with our marketing, as we reported higher revenue on similar levels of marketing spend from last year on a global basis.
Added
For risks related to user metrics, 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.” • In Korea, our MAU was approximately 24 million as of the year ended December 31, 2025, compared to MAU of 27 million as of the year ended December 31, 2024.
Removed
General and Administrative Expenses Year Ended December 31, (in thousands of USD) 2024 2023 % Change General and administrative expenses $ (331,984) $ (210,762) 57.5 % General and administrative expenses increased by $121.2 million, or 57.5%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily driven by stock-based compensation expense of $75.2 million, compared to $6.7 million for the year ended December 31, 2023, a one-time bonus of $30.0 million granted to the CEO for a successful IPO, and increased costs associated with being a public company.
Added
In addition, we continued to optimize and improve our existing AI-based personalized content recommendation capabilities.
Removed
The increase in stock-based compensation expense for the year ended December 31, 2024, was largely attributable to the consummation of the IPO, at which performance obligation for vesting had been achieved.
Added
The decrease was primarily attributable to government bans on Wattpad in certain countries, as well as the impact of a Wattpad security upgrade which unintentionally affected search engine indexing, causing a dip in search traffic.
Removed
Interest Expense Year Ended December 31, (in thousands of USD) 2024 2023 % Change Interest expense $ (45) $ (79) (43.0) % Interest expense decreased by approximately $0.03 million, or 43.0%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to lower balances on our short-term borrowings during the year, and zero balances at December 31, 2024.
Added
The search engine indexing issue, as described above, was fully resolved as of the year ended December 31, 2025; however, we expect to see a period of time for search traffic to fully stabilize and return to historical levels.
Removed
Goodwill, net and Intangible Assets, net and Critical Accounting Policies and Estimates - Goodwill and Intangible Assets for further details on our impairment losses on goodwill.
Added
By geographic regions, Korea, Japan, and Rest of World contributed 47.4%, 29.9% and 22.7% of global MPU, respectively.
Removed
This decrease was primarily driven by a release of a valuation allowance upon completion of the LDF-eBIJ Merger.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed9 unchanged
Biggest changeFor example, with a stronger USD against KRW and JPY, for the year ended December 31, 2024, our revenue was $86.9 million, or 6.0%, lower than our revenue on a constant currency basis.
Biggest changeFor example, with a stronger USD against KRW and JPY, for the year ended December 31, 2025, our revenue was $17.7 million, or 1.3%, lower than our revenue on a constant currency basis.
We do not enter into investments for trading or speculative purposes. 68 Table of Contents
We do not enter into investments for trading or speculative purposes. 69 Table of Contents
Interest Rate Risk Our cash and cash equivalents primarily consist of cash on hand and 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. As of December 31, 2024, we had $572.4 million of cash and cash equivalents.
Interest Rate Risk Our cash and cash equivalents primarily consist of cash on hand and 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. As of December 31, 2025, we had $581.8 million of cash and cash equivalents.