UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-42144

WEBTOON Entertainment Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-3830533
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5700 Wilshire Blvd., Suite 220 Los Angeles, CA	90036 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (323) 424-3795

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	WBTN	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2024, the registrant had 128,272,591 shares of common stock, par value $0.0001 per share, outstanding.

Table of Contents

	Page
Glossary	ii
Cautionary Note Regarding Forward-Looking Statements	iv
PART I-FINANCIAL INFORMATION	1
Item 1. Unaudited Financial Statements.	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations and Comprehensive Loss	3
Condensed Consolidated Statements of Stockholders’ Equity and Group Equity	4
Condensed Consolidated Statements of Cash Flows	5
Notes to the Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4. Controls and Procedures.	35
PART II-OTHER INFORMATION	38
Item 1. Legal Proceedings.	38
Item 1A. Risk Factors.	38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	76
Item 3. Defaults Upon Senior Securities.	76
Item 4. Mine Safety Disclosures.	76
Item 5. Other Information.	76
Item 6. Exhibits.	77
Signatures	79

i

Glossary

As used in this Quarterly Report on Form 10-Q (this “Report”), unless stated otherwise or the context otherwise requires:

•“amateur creator(s)” means creators who do not currently monetize their content as Paid Content on our platform as they are subject to our standard terms and conditions without Paid Content revenue sharing provisions. Amateur creators may monetize through other methods, including advertising if they meet certain viewership and subscriber thresholds.

•“Coins” means our in-app currency, which our users can purchase, earn by completing certain advertisement-associated actions or receive during in-app promotional events.

•“creators” means individuals who upload content to our platform and whose content remains available on our platform. Total creators include both amateur and professional creators.

•“Daily Pass” means a digital pass that provides users with access to locked episodes primarily from a series that is no longer publishing new episodes.

•“eBookJapan” means our eBook (including digital manga, which is manga in a digital format), web-comic and web-novel offering in Japan dedicated to professional creators.

•“episode” means a periodically uploaded chapter or installment of a web-comic or web-novel title.

•“Fast Pass” means a digital pass that provides users with early access to upcoming episodes for ongoing series of content on our platform, which must be purchased with Coins.

•“IP Adaptations” means adaptations of certain content on our offerings into other media formats such as film, streaming series, games and merchandise.

•“LINE MANGA” means our web-comic and digital manga offering in Japan dedicated to both amateur and professional creators.

•“manga” means a style of Japanese comic books and graphic novels typically presented in print format.

•“MAU” or “monthly active users” means users who visited our offerings at least once in the applicable calendar month, averaged over each month in the given period.

•“MPU” or “monthly paying users” means users who have paid to access Paid Content in the applicable calendar month, averaged over each month in the given period.

•“Munpia” means, as context requires, Munpia Inc., one of our wholly-owned subsidiaries in Korea, or Munpia, the namesake web-novel offering and web-novel creator community in Korea run by Munpia Inc.

•“NAVER” means NAVER Corporation, a global information communications technology (ICT) company and our parent, and its subsidiaries and affiliates, excluding WEBTOON, unless context otherwise requires.

•“NAVER SERIES” means our eBook, web-comic and web-novel offering in Korea dedicated to professional creators.

•“NAVER WEBTOON” means NAVER WEBTOON Ltd., one of our wholly-owned subsidiaries in Korea that operates our offerings including WEBTOON and WEBTOON Korea.

•“offering” means our mobile applications, websites or specific sections within such applications and websites where our creators post content, including WEBTOON, WEBTOON Korea, LINE MANGA, NAVER SERIES, eBookJapan, Munpia and Wattpad.

•“Paid Content” means content on our offerings that our users need to pay to access, including through the use of Coins.

•“Paid Content Average Revenue per Paying User" or "ARPPU" means the average Paid Content revenue in a given month divided by the number of monthly paying users for such month, averaged over each month in the given period.

ii

•“Paying ratio” means, with respect to a given period, the ratio of MPU divided by MAU.

•“Paying user” means, with respect to a given period, a user who has paid to access Paid Content on our platform.

•“professional creator(s)” means creators who monetize through Paid Content on our platform under formal creator agreements with Paid Content revenue sharing provisions.

•“title” means a sequential web-comic or web-novel story that is comprised of episodes.

•“Wattpad” means, as context requires, Wattpad Corp., one of our wholly-owned subsidiaries in Canada which was acquired by NAVER in May 2021 and subsequently acquired by us from NAVER in June 2023, or Wattpad, the namesake global web-novel offering with a global community of creators who are mostly amateur creators that is run by Wattpad Corp.

•“web-comics” means digitally created and serialized stories expressed through vertical, continuous and graphical content.

•“web-novels” means digitally created, serialized and text-based stories.

•“WEBTOON” means, as context requires, WEBTOON Entertainment Inc., a Delaware corporation, and its consolidated subsidiaries, or WEBTOON, the namesake global web-comic offering run by NAVER WEBTOON.

•“WEBTOON English” means WEBTOON offered in English.

•“WEBTOON Korea” means NAVER WEBTOON, our web-comic offering in Korea

iii

Cautionary Note Regarding Forward-Looking Statements

This Report contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

•expected operating results, such as revenue growth and earnings;

•economic and industry trends;

•the demand for our platform in general;

•our ability to continue to attract and empower creators to create engaging content;

•our ability to grow and retain our user base and strengthen our brand;

•our ability to increase engagement with users and strengthen our community;

•our ability to attract and retain our senior management team or key personnel;

•our ability to continue to innovate and expand our advertising business;

•our ability to increase paying ratio and strengthen our monetization capability;

•our ability to increase revenues from our intellectual property operations;

•our beliefs about and objectives for future operation;

•future acquisitions or investments;

•our ability to continue to grow across our current markets and expand into new markets;

•our ability to continue to innovate and enhance our offerings;

•the functionality and economics of our platform on mobile operating systems;

•our ability to maintain the security and availability of our platform;

•our ability to obtain, maintain, protect and enhance our intellectual property;

•the increased expenses associated with being a public company;

•our business model and expectations and management of future growth, including expansion in international markets and expenditures associated with such growth; and

•our ability to compete with existing and new competitors in existing and new markets.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to risks, uncertainties and changes that are difficult to predict and many of which are outside of our control. You should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, our actual results and financial condition could vary materially from expectations and projections expressed or implied in our forward-looking statements. Risks and uncertainties include:

•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;

iv

•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;

•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;

•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;

•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;

•our defenses to claims of infringement, misappropriation or other violations of third-party intellectual property rights are costly and may not be successful;

•failure to obtain, maintain, protect and enforce our proprietary and intellectual property rights could adversely affect our business;

v

•there are special risks involved with investing in companies operating in Korea, including the possibility of restrictions being imposed by the Korean government in emergency circumstances, accounting and corporate disclosure standards that differ from those in other jurisdictions, and the risk of direct or vicarious criminal liability for executive officers of our Korean affiliates;

•NAVER WEBTOON’s transactions with its subsidiaries and affiliates may be restricted under Korean fair trade regulations;

•NAVER controls a significant percentage of our voting power and may have interests that conflict with the interests of other stockholders; and

•we are “controlled company” and, as a result, qualify for exemptions from certain corporate governance requirements.

You should also carefully read the risk factors described in the section entitled “Risk Factors” in this Report for a description of the material risks that could, among other things, cause our actual results to differ materially from those expressed or implied in our forward-looking statements. You should understand that it is not possible to predict or identify all such factors and you should not consider the risks described above to be a complete statement of all potential risks and uncertainties. Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks only as of the date on which it is made. We do not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments, except as required by law.

vi

PART I-FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements.

WEBTOON Entertainment Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands of USD, except share and per share data)

	As of
	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	572,305		$	231,745
Receivables1, net of allowance for credit losses of $2,518 and $1,049 at June 30, 2024 and December 31, 2023 respectively		173,446			171,776
Asset held for sale		—			6,827
Other current assets, net2		80,639			82,479
Total current assets		826,390			492,827
Property and equipment, net		9,414			11,692
Operating lease right-of-use assets		7,854			29,472
Debt and equity securities		75,324			91,233
Intangible assets, net		194,351			219,502
Goodwill, net		741,307			779,176
Equity method investments		78,618			64,222
Deferred tax assets		24,108			24,045
Other non-current assets, net3		71,851			64,436
Total assets	$	2,029,217		$	1,776,605
Liabilities and equity
Current liabilities:
Accounts payable4	$	121,374		$	127,427
Accrued expenses		87,569			62,782
Short-term borrowings and current portion of long-term debt5		—			4,252
Current portion of operating lease liabilities6		4,865			9,945
Contract liabilities7		97,524			76,722
Income tax payables - corporate tax		9,742			9,459
Consumption taxes payables		5,633			7,339
Provisions and defined pension benefits		3,846			5,564
Other current liabilities		11,646			12,584
Total current liabilities		342,199			316,074
Non-current liabilities:
Long-term operating lease liabilities8		2,870			19,238
Defined severance benefits		19,964			23,361
Deferred tax liabilities		51,659			61,134
Other non-current liabilities		1,650			9,322
Total liabilities	$	418,342		$	429,129
Commitments and Contingencies (Note 8)
Redeemable non-controlling interest in subsidiary	$	41,706		$	41,429
Stockholders' equity:
Common stock, $0.0001 par value (2,000,000,000 authorized, 126,886,102 shares and 109,505,150 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)	$	13		$	11
Preferred stock, $0.0001 par value (100,000,000 authorized, no shares and - shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)		—			—
Additional paid-in capital		2,053,326			1,667,246
Accumulated other comprehensive loss		(104,008	)		(54,824	)
Accumulated deficit		(433,985	)		(363,292	)
Total stockholders' equity attributable to WEBTOON Entertainment Inc.		1,515,346			1,249,141
Non-controlling interests in consolidated subsidiaries		53,823			56,906
Total equity		1,569,169			1,306,047
Total liabilities, redeemable non-controlling interest, and equity	$	2,029,217		$	1,776,605

1.Includes amounts due from related parties of $54,585 and $63,723 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

2.Includes amounts due from related parties of $8,672 and $– as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

1

3.Includes amounts due from related parties of $30,520 and $15,876 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

4.Includes amounts due to related parties of $20,481 and $6,713 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

5.Includes amounts due to related parties of $– and as of $3,800 June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

6.Includes amounts due to related parties of $1,899 and $6,426 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

7.Includes amounts due to related parties of $1 and $16,160 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

8.Includes amounts due to related parties of $– and $14,852 as of June 30, 2024 and December 31, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2

WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands of USD, except share and per share data)

	Three Months Ended						Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Revenue1	$	320,972		$	320,663		$	647,716		$	630,920
Cost of revenue2		(237,915	)		(239,518	)		(482,300	)		(483,925	)
Marketing3		(23,448	)		(33,142	)		(42,926	)		(62,386	)
General and administrative expenses4		(138,705	)		(53,469	)		(187,398	)		(109,838	)
Operating Loss		(79,096	)		(5,466	)		(64,908	)		(25,229	)
Interest income		2,043			1,018			3,278			1,375
Interest expense		(11	)		(18	)		(44	)		(41	)
Income (loss) on equity method investments, net		120			2,007			(932	)		1,483
Other income (loss), net5		2,283			(6,090	)		846			(2,052	)
Loss before income tax		(74,661	)		(8,549	)		(61,760	)		(24,464	)
Income tax expense		(1,907	)		(11,201	)		(8,575	)		(13,578	)
Net Loss		(76,568	)		(19,750	)		(70,335	)		(38,042	)
Net Loss attributable to WEBTOON Entertainment Inc.		(76,885	)		(20,118	)		(70,693	)		(37,679	)
Net Income (loss) attributable to non-controlling interests and redeemable non-controlling interests		317			368			358			(363	)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax		(20,486	)		(16,209	)		(49,175	)		(34,605	)
Share of other comprehensive loss of equity method investments, net of tax		—			(25	)		(9	)		(856	)
Total other comprehensive loss, net of tax		(20,486	)		(16,234	)		(49,184	)		(35,461	)
Total Comprehensive Loss	$	(97,054	)	$	(35,984	)	$	(119,519	)	$	(73,503	)
Total comprehensive loss attributable to WEBTOON Entertainment Inc.		(97,371	)		(36,352	)		(119,877	)		(73,140	)
Total comprehensive income (loss) attributable to non-controlling interests and redeemable non-controlling interests		317			368			358			(363	)
Weighted average shares outstanding
Basic		110,102,868			109,505,150			109,804,009			109,505,150
Diluted		110,102,868			109,505,150			109,804,009			109,505,150
Loss Per Share Attributable to WEBTOON Entertainment Inc.
Basic	$	(0.70	)	$	(0.18	)	$	(0.64	)	$	(0.34	)
Diluted	$	(0.70	)	$	(0.18	)	$	(0.64	)	$	(0.34	)

1.Includes amounts earned from related parties of $20,880 and $27,663 for the three months ended June 30, 2024 and June 30, 2023, respectively and $34,167 and $46,774 for the six months ended June 30, 2024 and June 30, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

2.Includes amounts incurred from related parties of $31,508 and $3,563 for the three months ended June 30, 2024 and June 30, 2023, respectively and $40,462 and $7,143 for the six months ended June 30, 2024 and June 30, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

3.Includes amounts incurred from related parties of $(1,036) and $35 for the three months ended June 30, 2024 and June 30, 2023, respectively and $(2,941) and $97 for the six months ended June 30, 2024 and June 30, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

4.Includes amounts incurred from related parties of $7,953 and $7,602 for three months ended June 30, 2024 and June 30, 2023, respectively and $14,381 and $16,043 for the six months ended June 30, 2024 and June 30, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity).

5.Includes amounts earned from related parties of $2,885 and $(433) for three months ended June 30, 2024 and June 30, 2023, respectively and $2,679 and $(247) for the six months ended June 30, 2024 and June 30, 2023, respectively. (See Note 13. Related Parties and Variable Interest Entity)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Stockholders' Equity and Group Equity

(unaudited)

(in thousands of USD, except share and per share data)

	Common Stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders' equity attributable to WEBTOON Entertainment			Non- controlling interests in consolidated			Group
	Shares		Amount		capital		loss			deficit			Inc.			subsidiaries			Equity			Total equity
Balance as of January 1, 2023		97,091,692	$	10	$	1,038,284	$	(36,667	)	$	(212,033	)	$	789,594		$	85,395		$	593,513		$	1,468,502
Net loss		—		—		—		—			(10,875	)		(10,875	)		(320	)		(6,686	)		(17,881	)
Foreign currency translation adjustments, net of tax		—		—		—		(18,396	)		—			(18,396	)		—			—			(18,396	)
Equity in income of equity method investees		—		—		—		(831	)		—			(831	)		—			—			(831	)
Equity-based compensation		—		—		125		—			—			125			1,937			—			2,062
Balance as of March 31, 2023		97,091,692		10		1,038,409		(55,894	)		(222,908	)		759,617			87,012			586,827			1,433,456
Net income (loss)		—		—		—		—			(13,167	)		(13,167	)		451			(6,951	)		(19,667	)
Foreign currency translation adjustments, net of tax		—		—		—		(16,209	)		—			(16,209	)		—			—			(16,209	)
Equity in income of equity method investees		—		—		—		(25	)		—			(25	)		—			—			(25	)
Equity-based compensation		—		—		142		—			—			142			417			—			559
Changes in scope of consolidation		—		—		—		—			—			—			(11,131	)		—			(11,131	)
Common control transaction		12,413,458		1		628,316		—			(48,441	)		579,876			—			(579,876	)		—
Balance as of June 30, 2023		109,505,150	$	11	$	1,666,867	$	(72,128	)	$	(284,516	)	$	1,310,234		$	76,749		$	—		$	1,386,983
Balance as of January 1, 2024		109,505,150	$	11	$	1,667,246	$	(54,824	)	$	(363,292	)	$	1,249,141		$	56,906		$	—		$	1,306,047
Net income (loss)		—		—		—		—			6,192			6,192			(56	)		—			6,136
Foreign currency translation adjustments, net of tax		—		—		—		(28,689	)		—			(28,689	)		—			—			(28,689	)
Equity in income of equity method investees		—		—		—		(9	)		—			(9	)		—			—			(9	)
Equity-based compensation		—		—		1,121		—			—			1,121			472			—			1,593
Changes in scope of consolidation		—		—		—		—			—			—			(3,861	)		—			(3,861	)
Balance as of March 31, 2024		109,505,150		11		1,668,367		(83,522	)		(357,100	)		1,227,756			53,461			—			1,281,217
Net income (loss)		—		—		—		—			(76,885	)		(76,885	)		137			—			(76,748	)
Foreign currency translation adjustments, net of tax		—		—		—		(20,486	)		—			(20,486	)		—			—			(20,486	)
Issuance of common stock through initial public offering		15,000,000		2		281,735		—			—			281,737			—			—			281,737
Issuance of common stock through private placement		2,380,952		0		50,000		—			—			50,000			—			—			50,000
Equity-based compensation1		—		—		53,224		—			—			53,224			225			—			53,449
Balance as of June 30, 2024		126,886,102	$	13	$	2,053,326	$	(104,008	)	$	(433,985	)	$	1,515,346		$	53,823		$	—		$	1,569,169

1.During the three months ended June 30, 2024, the Company recorded a dividend of $17.3 million as a reduction in additional paid-in capital for stock options granted to NAVER's employees who did not provide services to the Company (See Note 1. Description of Business and Summary of Significant Accounting Policies for the definitions of the Company and NAVER).

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

WEBTOON Entertainment Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands of USD)

	For the Six Months Ended
	June 30, 2024			June 30, 2023
Operating activities:
Net Loss	$	(70,335	)	$	(38,042	)
Adjustments to reconcile net loss to cash used in operating activities:
Provision for bad debt expense		1,712			554
Depreciation and amortization		17,950			18,764
Operating lease expense		5,294			6,429
Loss on foreign currency, net		5,060			6,293
Deferred tax expense		(7,460	)		(841	)
Gain on debt and equity securities, net		(5,143	)		(1,100	)
Loss (gain) on equity method investments, net		932			(1,483	)
Contingent consideration liability		(3,814	)		1,987
Stock-based compensation		57,656			3,097
Gain on disposal of right-of-use assets		(1,883	)		(62	)
Other non-cash items		(1,471	)		715
Changes in operating assets and liabilities
Changes in receivables, net of allowance		(28,269	)		(30,643	)
Changes in other assets		(18,486	)		(10,879	)
Changes in accounts payable		17,957			16,540
Changes in accrued expenses		28,996			7,921
Changes in contract liabilities		28,304			2,152
Changes in other liabilities		207			(14,125	)
Changes in operating lease liabilities		(4,949	)		(5,584	)
Payment of severance benefits, net of cash transferred		136			(2,356	)
Net cash provided by (used in) operating activities	$	22,394		$	(40,663	)
Investing activities:
Proceeds from maturities of short-term investments	$	63,299		$	7,725
Proceeds from sale of debt and equity securities		2,977			—
Purchases of property and equipment		(679	)		(9,326	)
Proceeds from sale of equity method investments		5,927			—
Payment made for short-term investments		(68,035	)		(7,725	)
Payment made for loan receivable		(237	)		(12,307	)
Purchases of intangible assets		(4,669	)		(5,169	)
Purchases of equity method investments		(5,798	)		(687	)
Disposal of businesses, net of cash disposed		(360	)		2,031
Other investing activities		269			(17	)
Net cash used in investing activities	$	(