WEBTOON Entertainment Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 10, 2026

Key Takeaways

  • Neutral Sentiment: Revenue declined 2.8% year over year to $338.5 million, although it rose 5.2% on a constant-currency basis; gross margin expanded nearly 100 basis points to 26%.
  • Negative Sentiment: Net loss widened to $14.6 million from $3.9 million, while adjusted EBITDA fell to $5.5 million from $9.7 million as marketing investment increased; third-quarter adjusted EBITDA is expected at only $0-$5 million.
  • Positive Sentiment: Management highlighted AI initiatives including auto-translation, interactive story chat, and short-form animation tools, while paid users increased 1.8% and advertising revenue grew 11.5% on a constant-currency basis.
  • Positive Sentiment: WEBTOON is expanding its IP commercialization strategy through a majority investment in RI Games Holdings and a $100 million adaptation fund with Naver, aiming to capture more value from successful webcomic, animation, and gaming franchises.
  • Neutral Sentiment: Management expects third-quarter constant-currency revenue growth of 0.7%-3.3% and says it remains committed to exiting the fourth quarter at a double-digit growth run rate, with Japan’s recovery dependent on local content, engagement, and distribution partnerships.
AI Generated. May Contain Errors.
Earnings Conference Call
WEBTOON Entertainment Q2 2026
00:00 / 00:00

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Operator

I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead.

Soohwan Kim
Soohwan Kim
VP of Investor Relations at WEBTOON Entertainment

Good afternoon, and thank you for joining us. As a reminder, our remarks today will include forward-looking statements, including those regarding our future plans, objectives, expected performance, and our guidance for the next quarter. Actual results may vary materially from stated statements. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings, including those in the Risk Factors section of our filings with the SEC. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we will discuss today will include both GAAP and non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release.

Soohwan Kim
Soohwan Kim
VP of Investor Relations at WEBTOON Entertainment

Non-GAAP financial measures should be considered in addition to, and not as a substitute for, GAAP measures. Joining me today on the call are Junkoo Kim, Founder and CEO, Yongsoo Kim, President, and David Lee, CFO. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

Thank you, everyone, for joining us today. I will begin by providing a brief overview of the quarter, and Yongsoo will share more detail on a few strategic investments we announced today. David will then walk through our financial results in more detail. As always, I encourage you to read our shareholder letter, which is available on our investor relations website. We delivered another solid quarter, with revenue of $338.5 million and adjusted EBITDA of $5.5 million, reflecting continued execution across the business, and I am proud of the progress we are making. This quarter, we are introducing a new strategic direction that we believe will power our flywheel into the future. This includes further investment in AI-powered initiatives that strengthen and expand our core on-platform business, which I will share in more detail.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

We are also scaling our off-platform IP adaptation business to create greater franchise value and bring more fans back to our global platform. Yongsoo will share more on this in a moment. Turning to AI. This quarter, we took meaningful steps to further integrate AI across our platform with features designed to strengthen our flywheel by expanding audience reach, deepening engagement, and creating new opportunities for creators. Fandoms are built on connection and shared passion, and our AI initiatives are designed to further strengthen this sense of community. A great example is our AI-powered auto translation program. By making it easier for stories to reach readers across languages, we can help creators expand their global audience and give users access to more content in their native language.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

We launched the beta program in May for eligible English language canvas creators, and the early response from both users and creators has been encouraging. We look forward to expanding the program later this year to a broader group of canvas creators, and we believe it has the potential to become an important driver of growth. We are also going beyond simple character chat with Bios, an AI interactive storychat service that we introduced this quarter in Korea, where fans hold conversations with characters and build stories of their own. Bios brings to life the characters fans already love, built on official world with the approval of the creators who made them. Initiatives like this move webcomics from a one-way reading experience to a deeply engaging and interactive one, and the early result has been positive. We are planning to expand this service to Japan later this year.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

We also continue our video innovation in Korea. We recently launched Cuts Make, a new AI-powered short-form animation tool that lets fans create and participate in their favorite story using official IP. In its first week, new content rose 136%, and the number of creators making content grew 188% over the week prior. Video initiatives overall remain an important focus area for us, and we are continuing to explore short animation as a way to extend how users experience our IP. Our ambition to be the world's storytelling technology platform is also being supported by exciting collaborations like the one we have with Disney. A quick update on our Disney collaboration. We are excited to introduce an original series later this year and remain well-positioned to launch the new digital comics platform before the end of this year.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

Before I turn it over to Yongsoo, I want to reiterate my belief in our strategy. We are launching new initiatives to accelerate our growth and receiving great feedback from the fans and creators who make WEBTOON the destination of storytelling.

Junkoo Kim
Junkoo Kim
Founder and CEO at WEBTOON Entertainment

We continue to expect to return to double-digit growth by the end of the year, and look forward to the road ahead. With that, Yongsoo will provide an update on our off-platform initiatives. Yongsoo, please go ahead.

Yongsoo Kim
Yongsoo Kim
President at WEBTOON Entertainment

Thank you, JK, and thank you to everyone joining us. I am excited to share more details on the next phase of growth for our off-platform IP adaptation business. IP adaptations are a critical element of our flywheel, creating greater franchise value and bringing more fans back to our global platform. With a massive catalog of popular content and database of our user engagement, we have a unique opportunity to identify high-potential franchises and participate in their growth. The strong performance of multiple WEBTOON adaptations this quarter, including three series reaching Netflix global top 10, reinforces our confidence in this strategy. To support this evolution, we made two strategic investments during the third quarter. The first is an investment in RI Games Holdings, which will enable us to turn proven IP into immersive gaming experiences.

Yongsoo Kim
Yongsoo Kim
President at WEBTOON Entertainment

Games are one of the most engaging form of fandom, pulling fans deep into a story universe. Unlike many others in this space, we are starting with a strong pipeline from day one. Together, WEBTOON and RI Games Holdings plan to develop and launch multiple games over the next four years based on proven IP. The formula underpinning our strategy does not stop at games. With RI Games Holdings, we are building an adaptation pipeline that can extend a single IP across multiple formats, creating a repeatable success formula of adaptations that flow from webcomics on our platform to animation and games. In particular, we hope to match game launches with animation release to maximize their impact. Today, we also announced a dedicated IP adaptation fund. Together with Naver, we entered into a limited partnership agreement in July to establish a $100 million fund to invest in IP adaptations.

Yongsoo Kim
Yongsoo Kim
President at WEBTOON Entertainment

This fund will help us capture more value from massive global hits, evolve beyond licensing to secure strong IP rights, and gain more control over our growing adaptation slate. Our investment reflects our conviction in the long-term value of these projects and aligns our capital with our strongest IP. I am excited about these investments we have made to accelerate our business and would like to thank our team, our creators, our users, and our partners. With that, I will now turn the call over to David. David, please go ahead.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thank you, Yongsoo, and thank you everyone for joining us. I will be discussing the details of our second quarter 2026 results compared to the comparable quarter in the prior year, unless otherwise noted. For the second quarter, we reported revenue of $338.5 million that declined 2.8%, but grew 5.2% on a constant currency basis. This growth was driven by increases across all three revenue streams: paid content, advertising, and IP adaptations. We expanded gross margin by almost 100 basis points to 26% in the second quarter. We remain focused on expanding profitability further over time and believe our cross-border content distribution, as well as growth in higher margin businesses like advertising, will continue to support this. We posted a net loss of $14.6 million in the quarter, compared to a net loss of $3.9 million the year prior, driven by higher income tax expense and marketing investment.

David Lee
David Lee
CFO at WEBTOON Entertainment

We reported adjusted EBITDA of $5.5 million, exceeding the high end of guidance. This compares to an adjusted EBITDA of $9.7 million in the same quarter of 2025 as we increased our marketing investments. As a result, our adjusted EPS for the quarter was $0.04 compared to an adjusted EPS of $0.07 in the prior year. Turning to operational health, global MAU increased 0.5% in the quarter. We continue to focus on driving users to our app, as well as converting them to paying users. While app MAU and webcomic app MAU declined 8.0% and 1.5% respectively year over year, we are pleased to have posted MPU growth of 1.8%, driven by growth in Korea, partially offset by decreases in both Japan and rest of world. We believe we can continue to drive MPU growth by further advancing our AI capabilities and initiatives.

David Lee
David Lee
CFO at WEBTOON Entertainment

Importantly, our English platform webcomic app MAU increased by 3.7% year over year. Titles that supported this growth included Situationship, an English language original, as well as Starting Over As a Tree and The Devil Never Cries. Now, I would like to provide an update on our revenue streams at a consolidated level starting with paid content. In the quarter, we posted 4.3% revenue growth on a constant currency basis. As I just mentioned, we are pleased to post another solid quarter of MPU growth, up 1.8% in Q2. We believe we can continue to drive MPU growth as we lean further into our AI capabilities, including the initiatives that JK mentioned earlier. ARPU also increased 2.5% in the quarter on a constant currency basis. Advertising revenue grew 11.5% in the second quarter on a constant currency basis.

David Lee
David Lee
CFO at WEBTOON Entertainment

This was driven primarily by growth in Korea and rest of world, offset by a decline in Japan. Korea, in particular, saw an increase in ad revenue from both Naver and other partners. Finally, our IP adaptation business revenue grew 4.2% year over year on a constant currency basis in Q2. As we have noted previously, revenue recognition for IP adaptations can vary quarterly based on the achievement of certain milestones. Now I would like to look at our results in the context of core geographies. In Korea, during the second quarter, our revenue grew an impressive 20% year over year on a constant currency basis, driven by double-digit growth in paid content and advertising, offset by a single-digit decline in IP adaptations. During the second quarter, MAU of 24.3 million increased 5.9% year over year, with MPU of 3.8 million representing 10.4% growth year over year.

David Lee
David Lee
CFO at WEBTOON Entertainment

Our paying ratio of 15.5% increased 64 basis points year-over-year, and Korea ARPU was up 14.8% year-over-year on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 6.7% year-over-year on a constant currency basis. While we saw triple-digit growth in IP adaptations in Japan, it was more than offset by single-digit declines in both paid content and advertising, all on a constant currency basis. Japan's MAU of 21.8 million declined 3.3% year-over-year, but increased on a sequential basis. MPU of 2.1 million remained steady from the first quarter, but declined 9.5% year-over-year, and paying ratio of 9.4% was down 65 basis points year-over-year. Second quarter Japan ARPU of $24.40 grew 2.9% year-over-year on a constant currency basis.

David Lee
David Lee
CFO at WEBTOON Entertainment

In rest of world, we saw revenue growth of 11.1% year-over-year on a constant currency basis in the quarter, driven by single-digit growth in paid content and double-digit growth in advertising and IP adaptations. Second quarter rest of world MAU of 110.7 million increased 0.2% year-over-year. While paying ratio of 1.5% was relatively flat year-over-year, MPU declined 0.6% to 1.7 million. However, we are pleased that rest of world ARPU of $6.90 increased 4.4% year-over-year on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter grew 1% year-over-year to $88.1 million. This resulted in a gross margin of 26%, which expanded almost a full percentage point compared to the prior year. Adjusted EBITDA for the quarter was $5.5 million, compared to $9.7 million in the prior year quarter, primarily due to increased marketing investment.

David Lee
David Lee
CFO at WEBTOON Entertainment

This resulted in an adjusted EBITDA margin of 1.6%, which compares to 2.8% in the prior year. On the cost side, total G&A expenses for the quarter were $65.4 million, roughly in line with the prior year quarter. Interest income in the second quarter was $4.5 million, compared to $4.9 million in the prior year, and other income was $2.5 million, compared to other loss of $1.4 million in the prior year period. We had an income tax expense of $6.9 million in the quarter, compared to a benefit of $0.8 million in the prior year. Depreciation and amortization was $7.3 million in the second quarter, compared to $8.4 million in the prior year. We posted a net loss of $14.6 million, driven by higher income tax expense and marketing investment. This compares to a net loss of $3.9 million in the prior year quarter.

David Lee
David Lee
CFO at WEBTOON Entertainment

As a result, Q2 GAAP loss per share was $0.11, compared to a loss per share of $0.03 in the prior year period. Adjusted EPS was $0.04 in the quarter, compared to an adjusted EPS of $0.07 in the prior year period. Our balance sheet remains strong, with a cash balance of $583 million and another $11 million of short-term deposits included in other current assets. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I would like to spend a few moments discussing our third quarter outlook. For the third quarter of 2026, we expect to deliver revenue growth in the range of 0.7%-3.3% on a constant currency basis. This represents revenue in the range of $358 million-$368 million based on current FX rates.

David Lee
David Lee
CFO at WEBTOON Entertainment

We anticipate third quarter adjusted EBITDA in the range of $0 million-$5 million, representing an adjusted EBITDA margin in the range of 0%-1.4%. We are excited about the new strategic direction for our company. We believe leaning further into AI-powered initiatives on platform and investing to scale our off-platform IP adaptations business will continue to strengthen our offering and improve engagement for the long term. We continue to build on WEBTOON's position as the destination for storytelling, and we continue to expect we will return to double-digit revenue growth by the end of the year. With that, I'd like to turn it back to our operator to begin the Q&A session.

Operator

Thank you. Ladies and gentlemen, this formally begins the question and answer session. At this time, I would like to give you a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. We would also like to ask everyone to stick to one question and one follow-up so we can take as many questions as possible. Our first question comes from the line of Kunal Madhukar with Deutsche Bank. Please go ahead.

Kunal Madhukar
Kunal Madhukar
Analyst at Deutsche Bank

Hi, thank you for taking my questions. One on engagement and another one on the financials. On the engagement side, can you talk about how many minutes per day do your users actually use the platform? Can you talk about how many minutes the paying users use on the platform? Then I have a follow-up.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thank you, Kunal. Great questions. First, with regard to engagement, what is remarkable about this business is even as you look at the Gen Z users, for example, in North America, or the users in our original market here in Korea, you're seeing a very consistent consumer behavior on webcomics and web novels. We say typically that it averages approximately 30 minutes per day. But the reality is, for those who have habituated, we know that that number can be larger for the heavier users. What's interesting, though, is even for users that are new to this idea of a webcomic, when you think about North America users, they're not traditional paper-based comic fans. They're fans of digital-first entertainment, and for them to flick a finger on their mobile device allows them instant gratification, and yet they still spend that 30-minute average we've seen.

David Lee
David Lee
CFO at WEBTOON Entertainment

With regard to our paid users, we haven't released a separate engagement number for our paid users, but we know that the amount of time they spend and the access because of our micro payment structure to multiple episodes is the driver of our paid content engine. This is why we tend to report ARPU, because, for example, when you see in Korea, where we've been for nearly 20 years and we have 50% market penetration, it's remarkable that you're seeing constant currency revenue growth of 20%, growth in MPU and MAU being a growth driver, and ARPU, which is up 14.8%. That's why we tend to focus more on ARPU as the measure of deep engagement because we see habit formation in markets that we've been in for some time.

Kunal Madhukar
Kunal Madhukar
Analyst at Deutsche Bank

That's a great segue to the second question that I had, which was on the marketing side. The marketing expense delevered during the quarter, and you had delivered three quarters of leverage on this line. Small leverage, but leverage. Where are you spending this money on? Is that in Korea? Is that in Japan? What kind of LTV to CAC are you targeting on this marketing spend? Thank you.

David Lee
David Lee
CFO at WEBTOON Entertainment

Another great question, Kunal. Thank you. Just as we think about marketing, as you know, we spent $38 million in the quarter, approximately up 11%. The question is: where do we spend and where do we leverage? We have a very diversified portfolio regionally. When you think about the business I just mentioned in Korea, our country of origin, where we have the largest market penetration that's driving 20% growth, there is, I would call it, a relatively efficient, steady state of marketing because we already have strong penetration and we have a flow of great content consistently arriving in the market. But when you look at hypergrowth markets, as we see Japan will become again, we are sub 20% penetration in Japan and we're sub 10% penetration in rest of world.

David Lee
David Lee
CFO at WEBTOON Entertainment

You see that we deliberately chose to invest with a longer LTV timeframe, particularly in rest of world. We're seeing it pay off. While we don't disclose these numbers, we have in the past noted that this north of 3% growth in English WEBTOON MAU is also paired with significant growth in English WEBTOON increase in actually paid users as well. We manage a diversified portfolio where we have efficient spend in mature markets like Korea, but we intentionally are investing on the forward curve because we think adoption will grow in places like North America.

Kunal Madhukar
Kunal Madhukar
Analyst at Deutsche Bank

Thank you.

Operator

Our next question comes from the line of Mark Mahaney with Evercore. Please go ahead.

Mark Mahaney
Mark Mahaney
Analyst at Evercore

Okay, I want to ask two questions, please. Can you spend a little bit more time on Japan and what specifically you need to do to return Japan to growth? I am sorry if you had mentioned this earlier or not, should we still count for lean on an exit of double-digit revenue growth, percent revenue growth in the fourth quarter? Thank you.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thanks, Mark. First, to cover your second question, we absolutely are strongly committed to the double-digit growth and believe we deliver it in the most important ways on platform by the end of Q4. To cover that, there are two components of that you see evident in the quarter. Korea, our most mature market, growing 20% on a constant currency basis, and then double-digit growth in advertising globally. I think it is up 11% on a constant currency basis. Importantly, within advertising, we typically do not disclose this, but I have to tell you, rest of world advertising on a constant currency basis is up north of 20%. Now, the question relates to your first piece, which is Japan. There are three key priorities that we have been working on since the completion of our infrastructure project by the end of Q1.

David Lee
David Lee
CFO at WEBTOON Entertainment

One is returning Japan's growth through stronger local content, greater engagement, and distribution partnerships. I think the evidence in the posted quarter in these areas would include things like our partnership with STUDIO WHITE, which we think is significant on content. Getting agreement with Kadokawa and featuring the spin-off of Ryo Mizuno's fantasy series, "Record of Lodoss War," is an example of the type of local content initiatives you are going to see much more of. Our partnerships, for example, with Lawson, which we talked about in our materials, is an example of what is more to come. You will remember we elevated Yong-gi Choi, our Chief Product Officer, to implement the proven track record of growth established in Korea and Japan. That includes things like CRM and deeper engagement with our customers there.

David Lee
David Lee
CFO at WEBTOON Entertainment

We feel very good about our Q4 commitment, and we think Japan is a proven growth market that we are now taking the time to deliver and stabilize through the course of this year.

Mark Mahaney
Mark Mahaney
Analyst at Evercore

Thank you, David.

Operator

Our next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan
Eric Sheridan
Analyst at Goldman Sachs

Thanks so much for taking the question. I want to go a little bit deeper in the pivot around IP commercialization. Can you talk a little bit about what you saw in the market from your IP adaptation strategy going backwards that made you want to take maybe a more proactive approach and make the type of investments you're making today? On the go forward over the next two to three years, how should we think about the capital or OpEx intensity of standing up IP commercialization, and how much of it either upfront will be borne through investment and whether you'll earn more of the return profile on larger hits, on the outside of the investment cycle as some of these properties mature? Thanks so much.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thank you, Eric. It's a great question. First, I want to distinguish between the generation of new IP on our platform. I think as you heard from JK, there's significant innovation, for example, in Korea, where I mentioned this 20% growth on allowing users through what we call Cuts Make to generate new storylines to continually grow on platform. Bios is yet another AI-powered initiative where I want to distinguish between what we have on platform, which has a strong growth story still, but candidly, you're right. You're seeing a much more deliberate, aggressive bet for the IP that's not just on our platform. With regard to the announcement of RI Games as an example, and the IP adaptation fund. First, the most important point here is that we start with a proven pipeline from day one.

David Lee
David Lee
CFO at WEBTOON Entertainment

Unlike former days that you and I had spent at Zynga and other places, we don't need to worry about what will generate the next hit because we are the source of the next hit. In the case of RI Games, you're seeing us deliberately partner with an icon in this world. Remember that this RI Games investment allows us to have, after two closings, significant majority control, but we want that organization to run independently. Founded by Kevin Han, who had created through Redice Studio, things like Solo Leveling and Omniscient Reader, our proven IP is now being applied to a proven game maker because we think our creators deserve to have a format that's outside our platform. As a shareholder, we know there's a whole world of deep engagement on gaming that we can enter with this significant strategic investment.

David Lee
David Lee
CFO at WEBTOON Entertainment

The IP adaptation fund is a clever way to address your second question, because while we leverage partnership with another, in this case, Naver for capital, we don't have to consolidate for the vagaries of quarter-to-quarter episodic changes in revenue as we aggressively bet on commercializing our proven IP. Then the last is, I'm not going to cover it, but if you look in our earnings material, across every region, you're seeing pretty significant increases in IP in full partnership. We're very proud to have announced with Marvel, Tony's Girl, an original. That Time Deadpool Fell Into WEBTOON...and Found The Longest Title of All Time!!!, which is hard to say, and X-Men Korea. So across the board, we feel that we are going to be a very efficient provider to IP, not just on platform, but in partnership in formats off our platform.

Yongsoo Kim
Yongsoo Kim
President at WEBTOON Entertainment

Our IP adaptations have consistently demonstrated the strength of WEBTOON's proven IP and built-in fandom, particularly in areas like film, television, and animation. However, historically, our adaptation business has been based on licensing model, which means that the success of those adaptations has not always translated directly into meaningful economics for WEBTOON. That is something we are looking to strengthen. Through strategic investments and partnerships, we are gradually expanding our ability to participate more directly in the commercialization and economic upside of our IP. The game pipeline currently under development at RI Games Holdings is a great example of that strategy. These games are based on some of the biggest hit titles on WEBTOON, and importantly, those are being adapted into anime. We see a very compelling opportunity to build a repeatable flywheel from successful web comic, to animation, to game, leveraging proven IP and establishes every step.

David Lee
David Lee
CFO at WEBTOON Entertainment

Eric, one last comment. What Yongsoo mentioned at the end, I think, is quite significant. We are not just able to provide games on hit WEBTOON IP, we are also, in a multimedia way, able to launch animation concurrently and in support of the games as well as our own platform IP. I think we are clearly in a position to do this, which you will see us begin to do with this partnership and investment.

Eric Sheridan
Eric Sheridan
Analyst at Goldman Sachs

Great. Really appreciate the color from both of you. Thank you.

Operator

Our next question comes from the line of Matthew Cost with Morgan Stanley. Please go ahead.

Matthew Cost
Matthew Cost
Analyst at Morgan Stanley

Great. Thanks for taking the question. Maybe I can just follow up on what was just discussed. If we look at the mobile game industry, in addition to low hit rates and licensed IP not necessarily being a guarantee of success, a lot of the companies that are IP holders really have exited the business of making games themselves over the years. I am wondering if you could reflect on the synergies, the opportunities available by becoming the majority shareholder of RI and the advantages that you see in combining the actual process of making the games with this obviously proven and very successful IP engine on the WEBTOON side. Thanks.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thank you, Matt, for your question. I have lived firsthand the question you have asked in my former days as CFO of Zynga. I think this is significantly advantaged. Let me explain why. First, we are leveraging a very strong partner. We are not seeking to build ground up capability in gaming. That would take us a long effort, and a lot of the companies that you mentioned may have taken the approach of trying to build that capability. We recognize what we are good at. We have 120,000 stories arriving every day from 27 million creators, and we know from data what can be a hit, not just on our platform, but off it. I think the second piece is by creating RI Games Holdings, we are leveraging a partner that has extremely deep expertise geographically first in Korea. I want to be clear, this is a global opportunity.

David Lee
David Lee
CFO at WEBTOON Entertainment

We are not limiting ourselves to Korea, but the proven track record in creating adoption on hits here in Korea that we know have global appeal, we believe de-risks this investment. Then later, Matt, in our follow-up, we can go through the detail of the queue. Only certain terms were redacted, but there is a very clever way that we have managed to the mutual benefit of both this partnership with Kevin as well as for ourselves, a structure that de-risks those hits, even though we feel that they are proven IP. We recognize that there is an uncertainty as to the size of the hits, and we can cover that financial risk management for both parties. But I think it is quite clever, and it includes forced puts on both sides that incents both of us to grow together, but also manages downside risk, which we can talk about in our follow-up.

Matthew Cost
Matthew Cost
Analyst at Morgan Stanley

Great. Thank you very much.

Operator

Our next question comes from the line of Dae Lee with JPMorgan. Please go ahead.

Dae Lee
Dae Lee
Analyst at JPMorgan

Great. Thanks for taking the questions. I have two follow-ups as well. First, on the IP adaptation and strategy development. If I'm understanding this correctly, it sounds like the direct ownership model is for more of the newer IP adaptations like video games and AI-driven products. Is that right, or are you guys looking to do more own content on the video adaptation as well? Then I have a follow-up.

David Lee
David Lee
CFO at WEBTOON Entertainment

Thank you, Dae. Let me just make sure I understand the question. The question is whether we seek to have only a primarily owned model for IP that we provide that's proven in the form of off-platform video games, et cetera. I think that was your question. And whether or not we're also

Dae Lee
Dae Lee
Analyst at JPMorgan

Yes

David Lee
David Lee
CFO at WEBTOON Entertainment

pursuing alternative models. Is that right?

Dae Lee
Dae Lee
Analyst at JPMorgan

Yeah, that and if the ownership model is going to apply to video adaptations like live action video or comics.

David Lee
David Lee
CFO at WEBTOON Entertainment

Okay. We have the benefit of both models. You are clearly seeing in the case of our strategic investment in RI Games, obviously related to games, that this is, as you see, a 60% ownership stake across two closes, where we have ownership of the venture, but we also leverage their independent capability to run that business well, because we acknowledge their specialized capability we lack. On the other hand, when you look at what we have done with Disney, when you look at what we have done with Warner Bros. Animation, which we have discussed in the past, that is a different approach, for example, for IP, where we are providing our creators an opportunity to have success outside our platform, but we do not primarily own the distribution or the production engine associated with that IP. I think it is very capital efficient, but limits our upside.

David Lee
David Lee
CFO at WEBTOON Entertainment

If you look at our work in Studio N, we have this Emmy-nominated internal studio with great IP like Chicken Nugget and Bloodhounds Season 2 and Clevatess Season 2. So we are also very carefully looking at opportunities where, in a de-risk way, we are taking more of the ownership on IP in the case of, here, feature-length film opportunities, either on theaters or on streamers. But we are very selective there, as we do not want to risk our balance sheet without understanding what could be a hit. And we have a pretty good track record in that limited or rare area with Studio N. Thank you for your question.

Dae Lee
Dae Lee
Analyst at JPMorgan

Okay. A follow-up, if I can. On your double-digit growth expectation for Q4, could you remind us if that was for the full quarter or a run rate within the quarter? And could you talk about the cadence of how you expect to get there given the Q3 guide in the single-digit percent range? Thank you.

David Lee
David Lee
CFO at WEBTOON Entertainment

Great question, Dae. The double-digit growth was really about exiting Q4 to set up, we hope, for persistent growth on a go-forward basis, going forward into 2027 and beyond. It was not a guidance for the full quarter. With regard to how we get there, I think you start with what you can see in the current posted quarter results, this strong growth from Korea. I do not know how many quarters have gone by where I have been able to say that Korea drove our total MAU growth. By the way, total MAU of 156 million MAU flat to a year ago is also a nice thing to say, but it was driven by our most mature market. That 20% constant currency growth was very healthily reflected across not just their MAU, but also the MPU and the ARPU. For me, Korea is clear.

David Lee
David Lee
CFO at WEBTOON Entertainment

Advertising, as I mentioned, is also clear. 11% growth on a constant currency basis, driven by both Korea, and I mentioned for the first time, over 20% rest-of-world constant currency advertising growth in the quarter. I think you can model and extend. Japan is the piece that we have already discussed, that I believe is what is going to provide us that on-platform growth and the timing of crossover IP. Remember, IP can be great as it was in Q3 of last year. But when you see my Q3 guidance, it does not particularly help me on the optics. That said, while there are quarterly variances, I feel really good about the fundamental growth platform we have exiting this calendar year.

Dae Lee
Dae Lee
Analyst at JPMorgan

Thank you.

Operator

At this time, we have no further questions. That concludes our Q&A session and today's conference call. We would like to thank you for your participation. You may now disconnect.

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