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WEBTOON Entertainment Inc. Common stock beats earnings expectations. Reported EPS is $0.03, expectations were $0.02.

Operator: Thank you for standing by. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment First Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead.

Soohwan Kim: Good afternoon and thank you for joining us. Our remarks today will include forward-looking statements, including those regarding our future plans, objectives, expected performance, in particular our guidance for the next quarter. Actual results may vary materially from today’s statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings, including those stated in the Risk Factors section of our Annual Report on Form 10-K. 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 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. 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; David Lee, CFO and COO; and Yongsoo Kim, Chief Strategy Officer. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim.

Junkoo Kim: Thank you everyone for joining us today. I will make a few brief comments on our first quarter performance and then David will provide more detail on our results and outlook. For my full thoughts on the first quarter and our path forward, please refer to the shareholder letter posted on our Investor Relations website. We reported strong first quarter results with revenue and adjusted EBITDA both coming in at the top end of our guidance range as our flywheel of creators, contents and users continue to drive significant value. Now I’d like to share a few highlights from the first quarter. We have grown our presence in Japan, which represented over 50% of our revenue in Q1. Japan grew all three businesses in this quarter: paid contents, advertising and IP adaptations.

We are pleased to maintain our top position in Japan with LINE Manga ranking number one in overall app ranking chart for revenue including the mobile games according to Sense Tower. We talked last year quarter about how we initially exported Korean contents to Japan to get started, but have since built a local creator ecosystem in the market. We are now taking our cross-border strategy one step further by taking Japanese contents to other markets. We launched overturned, overpowered and over hit in the U.S. and France, ranking in the top 10 of paid GMB for each respective country for the month ending March 31. The Beloved Incompetent Stepmom was another Japanese title that performed well on our English language platform, ranking second in launch of GMB.

Leveraging our learning from core market in Korea and Japan, we are making key investment in our English language platform. We have a number of initiatives from a new user onboarding experience to a revamp of the home search and new and hot tabs which form the core content discovery experience. Even though it’s in the early days, we are pleased to see users in our test group show a 9% increase in a number of episodes compared to the control group. We look forward to bringing reformative titles like Sonic the Hedgehog and Fullmetal Alchemist to our platform this quarter, which we believe will help us expand our user base. Finishing up with IP adaptations, our adaptations of Wattpad key title, Marla Influencia, recently launched on Netflix.

As we discussed in the shareholder level, we are pleased to continue building on our past Spanish language success. We believe we have compelling contents that resonates with audience around the globe and that IP adaptation will continue to drive new users to our platform. Before I turn the call over to David, I want to acknowledge the recent uncertainty and volatility in the market. While we are monitoring the market health of our users closely, we believe we have a resident global business model that can withstand a potential downturn. Our ARPPU is around $12 per month, which is not a large amount, especially for the entertainment value that we provide. This is also not a single subscription price, but rather made up of many micro transactions.

Depends on the geographic market, a fast pass practically cost $0.15 to $0.17 per episode, while a daily pass costs $0.30 to $0.40 per episode. We also provide a large amount of free content and offer our users the option of reading episode for free by watching advertisement. As a result, we believe we can continue to deliver great value to our users regardless of the environment. I am pleased with the results we delivered this quarter and look forward to making continued strategic progress as we move through the balance of the year. With that, I will now turn the call over to David. David, please go ahead.

David Lee: Thank you, JK and thank you everyone for joining us. I am going to focus my commentary on the first quarter 2025 results compared to the comparable quarter in the prior year, unless otherwise noted. During the first quarter, we grew revenue 5.3% on a constant currency basis with growth across all revenue streams. Our reported revenue was roughly flat year-over-year. We faced a tough comparison from Q1 last year as there was an extra day in February, as well as increased traffic from a successful IP adaptation of Marry My Husband on Amazon Prime. Net loss was $22 million in the quarter compared to net income of $6.2 million in the year prior driven by higher general and administrative expenses due to public company costs and higher marketing expense.

Adjusted EBITDA was $4.1 million in the quarter compared to $22.2 million in the same quarter of 2024. As a result, our adjusted earnings per share for the quarter was $0.03 compared to adjusted earnings per share of $0.20 in prior year. Turning to operational health, total company MAU was down 10.5% in the quarter, driven almost entirely by rest of world. As a reminder, Wattpad remains the largest contributor to rest of world MAU. A Wattpad security upgrade in January temporarily affected search engine indexing, causing a dip in search traffic and contributing to a drop in web MAU in February. While we promptly address these settings, we expect to see the impact for another quarter. As we have discussed for the past two quarters, Wattpad also continues to be impacted by a government ban in one country and we are actively working to address concerns expressed by the government.

While web novels may generate lower revenue and profitability, they serve as a valuable source of content as we convert popular titles like Marry My Husband to web comics. Web novels also have lower barriers of entry, allowing more creators to showcase their stories on our platform. Millions of creators come to our platform to share their love of writing and storytelling with the world. Wattpad remains the leading global platform for web novels and we are focused on driving growth over time. We continue to be focused on driving web comic app users who are more engaged and present better monetization opportunities. While app MAU decreased by 3.2% overall, we saw a 4.2% increase in web comic app MAU when we removed the impact of web novel users.

This growth was led by increases across important English-speaking markets as well as other key countries like France and Thailand. We are particularly pleased to see 19% growth in English platform web comic app MAU ahead of product changes we are introducing in May. We believe these product changes will also drive better user engagement as we make it easier for users to find new titles and read more episodes. Now, I’d like to provide an update on our revenue streams at a consolidated level, starting with paid content. In the quarter, we posted 2.8% revenue growth on a constant currency basis year-over-year. This was driven by our ongoing strength in Japan, offset by declines in Korea and the rest of the world. Additionally, ARPPU growth on a constant currency basis was 8.4% in the quarter, with an increase in all three regions.

There is still a great deal of free content available before users get to the paywall and we believe our ARPPU still represents tremendous entertainment value for our users. Advertising posted 13.6% revenue growth in the first quarter on a constant currency basis year-over-year. This strong performance was driven by double-digit constant currency revenue growth in Korea and Japan, offset by a decline in rest of world revenue. In Korea, this growth was the result of increased ad sales from NAVER, while ad sales from other partners were relatively consistent. Japan’s growth was driven by achievement-based ads and pre-roll ads, and in rest of world, the decline was primarily driven by a decline in Wattpad revenue. Finally, our IP adaptation business saw revenue increase 20.7% year-over-year on a constant currency basis in Q1 driven by double-digit revenue growth on a constant currency basis in Korea and triple-digit revenue growth on a constant currency basis in Japan, offset by a double-digit revenue decline on a constant currency basis in rest of world.

Now, I’d like to look at our results in the context of core geographies. In Korea, during the first quarter, our revenue grew 3.6% year-over-year on a constant currency basis, primarily driven by double-digit constant currency revenue growth in advertising and IP adaptations, offset by a single-digit constant currency decline in paid content. Korea faced tough comps from last year as the Marry My Husband IP adaptation released on Amazon Prime drove increased traffic to our original web comic. During the first quarter, MAU of $24.2 million decreased 10.3%, MPU of $3.4 million declined 10.6%. That said, we saw healthy 6.7% growth in the first quarter ARPPU on a constant currency basis. Our paying ratio of 14.2% was consistent with the prior year.

Starting January 1, 2025, NAVER adjusted their methodology for measuring MAU in Korea. Korea is the only region where NAVER serves as a source of our MAU data. NAVER recently adjusted their methodology for identifying and counting web users for all their services. This change is only related to web MAU in Korea. There is no change in the app MAU numbers and MPU and ARPU are also unaffected. All the other regions are reporting their metrics in the same way as previous quarters. Please see the table in our shareholder letter for a reconciliation with previously reported MAU. Moving to Japan, for the quarter, Japan posted revenue growth on a constant currency basis of 9.4%. This was driven by all three revenue streams as we saw single-digit constant currency revenue growth in paid content, double-digit constant currency revenue growth in advertising, and triple-digit constant currency revenue growth in IP adaptations.

As JK mentioned, we are pleased to be number one on Japan’s overall app ranking charts for revenue, including mobile games. Compared to Q1 2024 Japan’s MAU of $21.9 million increased 3.7%, MPU of $2.2 million grew 5.2%, and paying ratio of 10.3% was up 14 basis points year-over-year. Engagement with paid users remains strong. With first quarter ARPU of $23 growing 3.5% year-over-year on a constant currency basis. In the rest of world, we saw revenue decline 4% year-over-year on a constant currency basis in the quarter, driven by declines in paid content, advertising, and IP adaptation. While first quarter MAU and MPU declined 4.9% and 5.9% year-over-year respectively. Paying ratio of 1.6% was up 12 basis points year-over-year. ARPU of $6.50 grew 3.5% year-over-year on a constant currency basis.

We’re making significant changes to our English language web comic app, and while it’s early, we believe these changes have been well received by our users. Turning to profitability. Gross profit for the quarter was $71.6 million compared to $82.4 million in the prior year. This resulted in a gross margin of 22% compared to 25.2% in the prior year. There were one-time impacts from a larger SPC expense recognized in cost of revenue, as well as a true up accrual for Japan creator revenue share from the prior year. In addition, free coin marketing expenses in Korea were moved from marketing to cost of revenue starting in Q1. While these discrete items temporarily affect our reported progress on gross margin expansion, we believe our gross margin can improve over time as we execute on our cross border content distribution strategies.

Adjusted EBITDA for the quarter was $4.1 million compared to $22.2 million in the prior year, driven by higher general and administrative expenses due to public company costs and higher marketing expense. On the cost side, total G&A expenses for the quarter were $66.7 million as compared to $48.7 million in the prior year quarter, primarily as a result of public company costs. Interest income in the first quarter was $5.1 million compared to $1.2 million in the prior year, and other income was $2.7 million compared to $1.4 million in the prior year period. Income tax expense of $2.5 million in the quarter compared to $6.7 million in the prior year. Depreciation and amortization was $8.4 million compared to $9 million in the prior year. Net loss of $22 million was primarily driven by higher general and administrative expenses due to public company costs and higher marketing expense.

As a result, GAAP loss per share was $0.17 compared to earnings per share of $0.6 in the prior year period. Adjusted earnings per share was $0.3 in the quarter compared to adjusted earnings per share of $0.20 in the prior year period. Before I wrap up, I’d like to spend a few moments discussing our second quarter outlook. For the second quarter of 2025, we expect to deliver revenue growth in the range of 2.2% to 5.2% on a constant currency basis. This represents anticipated revenue in the range of $335 million to $345 million. This guidance is based on current FX rates. As we’ve discussed previously, we expect we will face FX headwinds in the first half of this year as rates were more favorable in the first half of 2024. Our infrastructure investments are proceeding on schedule as we prepare for anticipated product improvements in the back half of 2025.

We anticipate second quarter adjusted EBITDA in the range of $0.5 million to $5.5 million, representing an adjusted EBITDA margin in the range of 0.1% to 1.6%. We expect to maintain our investment in marketing to drive future growth. We also have additional public company expenses this quarter that we did not have in the year ago quarter as a private company. J.K. noted this earlier, but I would like to reiterate that we are monitoring the market health of our users closely and believe in the resilience of our business model, regardless of the current macroeconomic uncertainty. In addition to the free content our users can already enjoy, with or without ads, we believe we deliver a tremendous amount of entertainment value with flexible price points made up of many micro transactions.

In closing, we believe we are off to a great start to the year. While there remains a lot of work ahead of us, the first quarter laid a strong foundation to the year, and we have many anticipated developments we’re encouraged about in 2025. We remain focused on executing our strategy, underpinned by our powerful flywheel of creators, content, and users, which we believe will generate profitable growth over the long-term. With that, I’d like to turn it back to our operator to begin the Q&A session.

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan: Thank you so much for taking the questions. Two, if I could, in terms of the user growth initiatives you have planned for the remainder of this year, can you talk through a little bit of what your key priorities are and how we should be thinking about that as an investment cadence, putting pressure on margin for the remainder of this year, and how to think about it as an output for user growth exiting the year in the media? I have a quick follow-up.

David Lee: Tanks, Eric. It’s a good question. Well, first, it’s important to note that we have strong signs of great long-term growth in newer markets. So I think you probably noticed that for the first time, we were very happy to disclose that our English-speaking platform, our web comic app, MOU, is up 19% as a function of our continued flow of content and product innovation along with marketing. Those three elements will continue to persist. And we think it’s a good investment for the long-term as we’re seeing great signs of habituation in the form of average revenue purchaser, ARPU, because this ARPU represents habituation, particularly in interesting markets that we’ve highlighted in the script, such as English-speaking markets, but we also noted France’s important market for us as well, along with our Spanish adaptations.

With regard to guidance and the impact on the P&L, you’ve seen that we only guide the Q2, but importantly, even as we persist in investments in infrastructure and marketing in the guided Q2 quarter, we still guide to a positive consistent 0.5 to 5.5 positive adjusted EBITDA. We believe that we can grow profitably and that these investments will actually pay off in the mid to long-term at a faster rate than what we would see in a given quarter. The underlying business we see, we’re increasingly more bullish on, and that is why we’re making the investments with a strong product cadence in the back half.

Eric Sheridan: And then maybe just to follow-up, to go a little bit deeper on how important you think local content is in local markets. I think in the prepared remarks, you gave the comment around Japan, just thinking through a little bit of dollars to invest or cadence of investments against potential impact in the market like that specifically. Thank you so much.

David Lee: It’s a great question. Let me first answer your question on Japan, but I would love to highlight some of the Spanish IP adaptations, as well as the announcement of great content with partners, which is a relatively new disclosure for our English speaking platform. First in Japan, Japan is early days. We’re very excited about the long-term growth prospect for us. Remember, we are now the number one consumer app inclusive of mobile games. So we have a strong competitive position. We mentioned that key IP, local creator IP that we’re building is enhanced by the fact that these creators can publish globally. So the example of over-sum and overpowered and over it, which actually debuted in the U.S. and in France from a local Japanese creator, we highlight that because it shows that we’re the only platform in the world that J.K. created that can give local Japanese creators the ability to be strong in Japan, give our number one status, but also globally.

We also talked about how beyond Japan, there were a number of IP adaptations. And you know, as we disclosed in Q1 of 2024, Mary and My Husband was a sensation globally. It was Amazon Prime’s hit even in North America, which we lapped this quarter. Well, the examples that we highlighted intentionally were not in the English language, which there to show that we’re strong in Spanish as well. So J.K. mentioned Mala Influencia and Sigmivås. Sigmivås on Amazon Prime, Mala Influencia on Wattpad. This represents how even our web novelist creators, local to one market, can publish globally. And then finally, I think if you look to the content we’re offering on our platform in the English language, this is the first time we’ve spent a bit of our airtime to talk about our partnership with IDW Publishing, where Sonic the Hedgehog and Godzilla, great franchises, starting April 25th, are now able to be offered here on our platform in English.

So for us, JK founded this company built on creators, creators who could publish locally and globally and with our large consumer base. So it’s critical for the economic growth of the business, but also the core strategic

Operator: Your next question comes from the line of Mark Mahaney with Evercore. Please go ahead.

Mark Mahaney: Okay, two questions. On the Korea MAU decline year-over-year, I understand that there was a change in methodology by NAVER. Do you have a separate opinion as to what’s happening to your MAUs in that country or maybe better, what would be realistic expectations? Do you think you can continue to grow MAUs in Korea or are you kind of at mature levels? And then just give us an update please on advertising revenue in North America. Thank you very much.

David Lee: Thanks, Mark. First on Korea, I need to make sure we all remember that Korea has such high penetration of its population that you will see movement in a given quarter on total MAU. I think what’s the most important metric for me for Korea, our most mature market, is the 3.6% constant currency revenue growth we saw. And that was not accidental. If you think about why that was the case, it was driven by our intent to grow constant currency ARPU, which at $8.40 was up 6.7%. We talked about the AI personalization engine. We talked about improved product. We talked about continuing our strong flow of content. These three areas of focus are showing up. They’re showing up in constant currency revenue. Now, as for your question on what is the MAU growth potential, one of the reasons why we’re so focused on describing webcomic app MAU, which you saw on a global basis grew 4.2%, is even in Korea, we think that our improvement in the product on the app will actually be a better predictor of long-term pay content revenue growth.

It’s also important that independent of the MAU, you saw good performance across the board, across the company with regard to our advertising, which was your other question. Advertising on a constant currency basis was up 13.6%, and a part of that was from Korea, as we mentioned in our script. Now, with regard to the question on North America advertising, I believe it continues to be early days. North America advertising is our largest advertising market potential, but we are still putting in place fundamental products, the backbone of it, and the selling organization to benefit us in 2026 and beyond. We’re going to continue to deliver on strong growth and profit in the form of pay content and advertising, but I think North America is a proposition that’s more mid to long-term, consistent with what we said to you during the IPO process.

That being said, we’re not in any way taking our foot off the gas. We think it’s a great opportunity, and we hope to be able to give you more tangible examples of our progress in North America over time.

Mark Mahaney: Thank you, David.

Operator: The next question comes from the line of Doug Anmuth with JPMorgan. Please go ahead.

Unidentified Analyst: Great, thanks. This is [indiscernible]. Thanks for taking our questions. I wanted to follow-up on the global franchises and reform and launches. How does that affect your monetization? Because right now, pay content is monetized on unlocking new episodes, so wondering if the global franchises, every format launches have that type of monetization capabilities built into it as well, and does that affect how your gross margins could look like over time as you get more of these franchises on the platform?

David Lee: Thanks for your question. First, I wanted to note that global franchises are actually not a new phenomenon for this platform. So, when we look back, when we look back even at cross collaborations, for example, in 2021 with BTS, or the crossover IP is a form, Marry My Husband, when it crossed over to Amazon Prime, in some ways is a form of IP outside of the core of our platform benefiting the core. And we made note of it that we left a pretty significant impact of that crossover IP as an example. So, when we talk about IDW, we talk about Godzilla. In the past, we had done Collabs with, for example, the Batman franchise. This is not a new phenomenon for us. And we believe that the fresh addition of content continues to power the core pay content margin structure and business, meaning if we can create more and more content, even if it originates outside of our existing set of creators, it gives our creators a bigger audience as we attract more consumers.

And so the one thing I would also say is that there is a difference between us discovering an amateur creator on canvas and turning it into a WEBTOON original, which is clearly an important profit margin for us versus when we collaborate with an existing franchise. I don’t want to make you believe that there is not a difference, but being competitive in new markets like the one that we are building here in the U.S. means we need to be open to both. Higher margin U.S. originals we create and really popular franchises that don’t have access to our audience because we have this great Gen-Z audience for them as well. I think both are very important for our structure of margin.

Unidentified Analyst: Got it. And then following-up on the U.S. market, you did talk about significant changes to the English app. So, curious what the changes are and is this more about tailoring your app to the U.S. market or English speaking markets or is this more about bringing the learning that you have from Korea and Japanese market to the English market? Thank you.

David Lee: We believe that we have the benefit of both advantages. Our global lessons learned, but tested to the local English speaking audience is what’s required for us to roll out product innovation. I am going to describe some of it. It’s quite extensive. It’s probably the most extensive product rollout that I have been a part of since I joined less than 2 years ago. So, for example, in our AB testing, we saw very promising results to our local English audience. We saw AB testing results of up to 9% increase on episodes read. Now with regard to the origin of these product innovations, I want to go through each of them because they are significant and they have benefited from lessons learned from our global product organization across the world.

We installed in Q2 of 2024 a new leader, our Chief Strategy Officer, Yongsoo Kim, benefiting from the lessons outside of just the U.S., applied to the U.S., took on the global leadership role of leading our global WEBTOON business. So, these four areas of new product innovation reflect that global kind of ability to find great product, but the ability to test it locally before we roll it out. It’s everything from onboarding to the home tab, to the search tab, even a recurring new and hot feature that could benefit from us seeing different types of trailer style format. So, it’s quite extensive. It’s exciting, but you may not see, even though it’s begun to hit the U.S.-based platform, you may not see it at full scale and towards the back end of this fiscal year, but it’s extensive.

And again, it’s the benefit of a global product organization, but carefully tested for our local consumers.

Unidentified Analyst: Got it.

Operator: The next question comes from the line of Matthew Witkos with Morgan Stanley. Please go ahead.

Matthew Witkos: Hi everybody. Thanks for taking the questions. Maybe I will start just with the security update to Wattpad that caused the search indexing issue. I guess, could you just give a little more update, a little more detail on what specifically was changed, what impact that’s having, the amount of user impact it had on rest of world for this quarter and then kind of where you are in the process of resolving it. Thank you.

David Lee: Thanks Matt for the question. First, I want to be clear, Wattpad is a very contained source of the majority, the vast majority of our rest of world total MAU declines. And yet, Wattpad is not a significant contributor to the paid content engine. So, one of the reasons, I just want to make sure we understand this. It’s important from a source of IP standpoint, it’s important from a potential of advertising business. But the reason why I can begin to describe these two key issues, which were significant for the Wattpad business and have it not be a significant paid content issue is because the role of that business today is really to source IP and to provide advertising revenue. With regard to your question, however, both the ban from one country, as well as that security issue that we disclosed accounted for the majority of all of the Wattpad disruption we saw in the quarter.

And remember, Wattpad was the primary contributor to total rest of world MAU declines, so they were significant. Internally, we have talked about having remedying or seeking to remedy these problems. We don’t have an update on the country ban, but we believe that we have begun to address the security issue. And while they will have persistent impact through the Q2 period and possibly a portion of Q3, we believe that we have identified the issues and are already at work to remedy them. But I want to be clear, Wattpad in and of itself to total company performance was the most significant contributor to total MAU loss, particularly in rest of world. And the two issues that we have identified, we believe were on the mend on, but they were very significant in terms of total MAU impact.

Matthew Witkos: Great. Thank you. And then just following-up on a couple of the prior questions, you have talked a lot about the early success you are seeing with the new onboarding search and discovery, new and hot, which is great to hear. It sounds like most of those things won’t be fully rolled out until the back half. I think you mentioned in the prepared remarks something about some product changes coming in May. Is that just a further rollout and more expanded testing of those same features or are there other things on the roadmap that we should be aware of? Thank you.

David Lee: Well, first, I want to be clear that we are really only offering you financial guidance for the Q2 period. We want to be very transparent about how excited we are about the product rollout, not because it’s the only items we are working on. The company is constantly working on a portfolio of global product innovation. The ones we have highlighted are the ones that we know are rolling out in the back half of this year. But there is – it’s not the total limit of what our global product organization continues to test and work on.

Operator: The next question comes from the line of Andrew Marok with Raymond James. Please go ahead.

Andrew Marok: Hi. Thanks for taking my questions. Maybe expanding on that last question that was just asked on the onboarding process, it sounds like, you have made some good progress so far, but it sounds again like an ongoing sort of iterative piece of product. So, I guess one, would you categorize maybe the heaviest lifts as being done and maybe what you are looking forward as more incremental, or do you think that there is still some kind of fundamental improvements that can be made along the way? Then I have a follow-up, Thank you.

David Lee: Well, first, you did not hear us disclose significant impact from the product innovation rollout. We specifically talked, JK and I, in our script talked about how it would benefit later fiscal periods the back half of the year. So, I don’t know that you should infer that the major impact of these product innovations are already in the results we have disclosed today. The second is, I have said and I believe that these product innovations are significant, not incremental. And in terms of level of completeness, the ones that we have talked about, those significant, have been fully tested. In fact, when we say in the script that we saw in certain AB testing, a 9% increase in episodes read, that’s a very significant finding in an AB test.

I think it reflects the level of significance of the product update that we have talked through. And when we talk about rolling it out and we specify May, it means that we are not disclosing work yet to be done or that this is incremental. This is a major product rollout that we are going forward with based on strong results. That’s how I think we have characterized it. The other thing to point out is, parts of it have been already begun to roll out. When we talk about May, we are talking about a nearly set rollout rate because we have been hard at work today. So, I don’t want to lead you to believe that the results or the impact of the products already in our numbers. But the strong results that we saw in March, that 9% increase in episodes read, as well as the fact that we are going to see even more features in the pipeline, possibly impacting the back half of 2025 means that we believe that we are in the beginning of a process, not at the end.

And that is significant.

Andrew Marok: Understood. Thank you for the detail. And then maybe one more if I could. We heard some rumblings from the U.S. presidential administration earlier in the week, or maybe last week about potential tariffs on foreign produced films, I guess is that having any impact to-date, or do you see that it having any impact on maybe the visibility or planning for your IP adaptations business? Thank you.

David Lee: It’s a good question. Let me echo what JK and I both said. First, we are very clear-eyed about closely monitoring the health in particular of our consumers and creators through changes announced, not just by the U.S. presidential administration, but globally. That said, we do not see any impact by any announcements, particularly tariffs, on our core business, with the exception of swings in reported FX rates on our results, but not on the core health of our business. In fact, when I recall my time in other consumer tech businesses like mobile gaming, I am really grateful that JK created a business model that appears to me to be very resilient for the consumer and the creator. There is so much free, evergreen, new, fresh content by design of the flywheel that arrives today, which does not demand a subscription.

The vast majority, almost all, of the 80% of paid content is from micro-payments, one fresh episode at a time. That is highly differentiated from almost any consumer platform I have seen. So, not only do we not, we haven’t seen any specific impact. I actually think we could be quite resilient compared to others. Our focus is just to keep our heads down, provide more and more great access to consumers for creators and great stories for consumers, and weather the storm, but we don’t see an impact other than reported FX rates to-date.

Andrew Marok: Thank you very much.

Operator: The next question comes from the line of Jeff Seiner with Deutsche Bank. Please go ahead.

Jeff Seiner: Hi. Thank you for taking my questions. Are you guys – are you seeing a difference in the monetization levels in the app versus the web platform in the U.S. for web comics?

David Lee: Thanks for your question. One of the reasons why we are so clear about the difference in disclosing that 19% increase in our English speaking web comic app MAU is, we monetize on the app. We do not monetize paid content on the web. And so it’s a really important distinguish. So, when we talk about overall rest of world MAU declining driven by a web novel business, it’s an important disclosure, but it is not one that materially is an indication of our future performance on paid content. The app is also where our new product features are really focused. So, it’s not only where we monetize in a big market like English-speaking North America, it’s also the beneficiary of this product rollout that we are taught to discussing.

And that’s why I really want investors to continue to focus on where they see growth in our future revenue and paid content, which to me is about the web comic app business, which is why we are focused on disclosing that part of the business today.

Jeff Seiner: Got it. And then maybe you could talk a little bit about the engagement of the comics around your license IP in the U.S. compared to sort of the other content on the platform. Are you seeing a benefit where license IP is driving new users to the platform or is it more driving engagement of your existing users? Thanks.

David Lee: Well, first, I think it clearly depends upon the actual platform. We have historical experience with great platforms that have potential to drive user engagement that increases, but part of I think the attraction in our partners is that we have this strong penetration among Gen Z and they are spending 30 minutes to 60 minutes per day on average as users. And so I don’t know if I can categorically answer your question because I do think it depends on the IP that we are talking about, but we see great potential to be kind of additive to our platform and to our partners, which is why we picked IDW, for example, and others that we will announce later to come.

Jeff Seiner: Great. Thank you

Operator: And it seems that we have no further questions for today. That concludes the question-and-answer session of today’s conference call. We thank you for your participation. You may now disconnect your lines. Have a pleasant day everyone.