Webtoon Entertainment, the U.S. parent of Naver Webtoon, cut its first-quarter operating loss 69.8 percent from a year earlier through improved gross profit and cost controls.

Webtoon Entertainment on May 11 (local time) released its first-quarter results. Revenue fell 1.5 percent from a year earlier to $320.87 million. On a constant-currency basis excluding exchange-rate effects, revenue rose 0.2 percent to $326.40 million.

Its operating loss was $8.03 million, down 69.8 percent from $26.63 million a year earlier. Net loss also fell 60 percent to $8.80 million from $21.97 million. Adjusted EBITDA rose 132 percent from a year earlier to $9.48 million.

The company attributed the profitability improvement to a higher gross margin and lower general and administrative expenses. First-quarter gross profit rose 16 percent from a year earlier to about $83 million, and gross margin expanded 3.9 percentage points to 25.9 percent. General and administrative expenses fell 9.2 percent to $60.60 million from $66.70 million.

By segment, paid content revenue, which accounts for the largest share of total revenue, rose 0.5 percent from a year earlier to $261.40 million. On a constant-currency basis, it increased 2.3 percent to $266.20 million. The company explained that content diversification and stronger AI recommendation features affected paid content revenue growth. Ad revenue fell 0.5 percent to $39.70 million, while intellectual property (IP) business revenue dropped 22.8 percent to $19.80 million.

By region, South Korea led growth. Revenue in South Korea rose 2.3 percent from a year earlier to $120.44 million, and increased 3.2 percent on a constant-currency basis. South Korea monthly paying users (MPU) rose 8.5 percent to 3.71 million. The company said content diversification and stronger artificial intelligence (AI) recommendation features affected the expansion in paying users.

Japan revenue fell 6.1 percent to $154.28 million, and Japan MPU also declined 8.3 percent to 2.10 million. MPU in global markets excluding South Korea and Japan rose 3.3 percent, and global revenue on a constant-currency basis increased 5.6 percent. Total MPU rose 2.2 percent to 7.50 million, but total monthly active users (MAU) fell 5.9 percent to 144.30 million.

Global IP collaboration to diversify content also continued. In North America, it partnered with Walt Disney Company to introduce reformatted webtoons based on Disney, Marvel and Star Wars. It also produced a webtoon to commemorate the 2026 Formula One (F1) season and a webtoon based on the Xbox game "Sea of Thieves". "Love Me Love Me", an original from global web novel platform Wattpad, was adapted for Amazon Prime Video, and "Kissing Is the Easy Part" was adapted for Tubi.

To strengthen platform capabilities, it expanded the AI chatbot service "Character Chat" to Japan to increase user engagement and immersion, and signed a partnership with Zinnies, an AI avatar production company.

It also outlined this year's investment direction. Webtoon Entertainment plans to invest about $50 million to expand the global creator ecosystem, including discovering creators and supporting works. In the first half, it will integrate the amateur creator platform "Canvas", which is operated separately in 7 languages including English and Spanish, into a single platform. It will also upgrade an optional translation program, ad revenue sharing and personalised recommendation features.

Junkoo Kim (김준구), chief executive officer and founder of Webtoon Entertainment, said, "The first quarter delivered solid results, including constant-currency revenue of $326.40 million and a 132 percent increase in adjusted EBITDA." He added, "Through expanding the creator ecosystem and revamping Canvas, we will showcase more diverse content while continuing investment for business innovation and long-term growth."