WEBTOON Entertainment’s shares jumped 40% in after-hours trading following a high-profile Disney partnership announcement that overshadowed concerning profitability trends in the digital comics platform’s second-quarter results.
The Los Angeles-based company reported revenue of $348.3 million for the quarter ended June 30, an 8.5% increase from the prior year that exceeded analyst expectations. However, adjusted earnings before interest, taxes, depreciation and amortization fell to $9.7 million from $20.4 million a year earlier, representing a margin compression to 2.8% from 6.3%.
The earnings disappointment was quickly eclipsed by news that Disney agreed to bring approximately 100 comics featuring Marvel, Star Wars and other franchise characters to WEBTOON’s vertical-scroll mobile format under a multi-year deal. Financial terms weren’t disclosed, though Disney’s digital innovation chief called it “one of the biggest” publishing partnerships the company has done.
While analysts at Goldman Sachs and Evercore ISI raised their price targets following the announcement, the immediate financial impact remains unclear. Company executives acknowledged that no short-term financial benefits from the Disney collaboration are included in third-quarter guidance.
The partnership represents a strategic bet for both companies as traditional comic book sales continue declining while mobile consumption grows. WEBTOON’s platform attracts readers “who are not traditional comics readers,” according to Disney, making it appealing for reaching younger demographics.
Yet WEBTOON’s underlying business shows stress. The company faces user growth challenges in certain segments, with “rest of world” monthly active users declining 4.9% year-over-year. The business remains highly exposed to currency fluctuations, with Korean won and Japanese yen representing 90% of revenue.
For the third quarter, WEBTOON projects revenue growth of 9.4% to 12.2% on a constant currency basis, with adjusted EBITDA expected between $2.0 million and $7.0 million — a range that suggests continued margin pressure.
The stock’s dramatic after-hours surge reflects investor enthusiasm for the Disney deal, but the underlying financials suggest WEBTOON still faces significant hurdles in converting its storytelling platform into consistent profits.
