ICYMI: Webtoon Expands Reach With Disney Pact

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2:34It's going to bring characters such as Marvel's Spider-Man and Luke Skywalker of Star Wars to its platform. The announcement also came as Webtoon reported quarterly results that beat analysts' expectations. That helped fuel the rally last week as well. We've got with us David Lee. He's CFO and COO of the$1.9 billion market cap company. It calls itself a, quote, global storytelling platform that enables creators and users to discover, create and share stories. David joins us from our Los Angeles bureau. Also with us is Nina Tretman. She's Bloomberg News senior editor. She writes the Bloomberg CFO briefing newsletter.

3:08She joins us here in the studio. Check out her newsletter at Bloomberg dot com slash CFO briefing. David will be featured in an upcoming edition of that. David, welcome. Good to talk to you again. I think last time we spoke, you were CFO and COO at Impossible Foods. It was a previous lifetime. You're at Webtoon now. I think, though, at Webtoon, a lot of people maybe who don't have kids of a certain age, maybe they're too young, maybe they're too old, might not be familiar with the platform. What is it? So Webtoon is, as you say, it's a global storytelling platform. And while many of us may not have heard it ourselves, I bet our Gen Z kids and friends have.

3:48In fact, the majority of our 150 plus million monthly active users are exactly in that demographic. They spend 30 minutes a day plus enjoying new stories from this network of 24 million creators globally that get to write great webcomic and webnovel stories on our platform. I bet you've seen a movie or two, though, that you didn't realize started as a webtoon. David, thanks for joining us. Just wondering, actually, in terms of the spending on the platform, one of the things that we've been wondering about at CFO Briefing recently is this. What is the consumer doing and how are consumers responding to all the different news that we're hearing on tariffs, on what's going on in D.C.?

4:31I'm wondering, are you seeing any changes in terms of spending amongst your consumers? Well, Webtoon's very fortunate. You know, our consumers love a good story. They love a good story in good times and bad times. and increasingly they love a good story independent of the language or the country that the story came out of. We have examples of 900 adaptations, 100 rich film, movie, and TV series that came from all over the world because in good times and bad, people want to tuck into a story from an unexpected source. And our privilege is to allow these 24 million creators, by the way, most of them who have full-time jobs, they're kindergarten teachers, they're plumbers, They're people who are hard at work, who get a chance to break through and maybe even have a great movie like we saw with Sidelined, the quarterback in me on Tubi.

5:21So, so far, we've been immune from some of the news that you carry every day because our product is great storytelling and consumers seem to still love it. That is good to hear. I'm just wondering, Tim just mentioned the Disney partnership. I'm curious for you as a CFO, how does it change the financial trajectory of the company? Well, the Disney collaboration, I think, is pivotal. What it indicates to me is that we are not niche. We are mainstream for our Gen Z consumers today here in the U.S., the largest market that we see ahead of us. It also means that a wonderful company is comfortable allowing us to take their iconic stories.

6:03You know, the amazing Spider-Man's coming out soon, and it's coming out as a webcomic in our platform. Disney recently said in an article, they said, you know, we looked at a lot and they're the leader. And we feel grateful to be able to bring their stories to life. And frankly, we're going to bring alternative endings, background characters to the forefront. We're going to write original stories with Disney because our powerhouse of creators can allow a story that may have been written years ago to be really fresh for the Gen Z consumers on our platform. How important is it to really be working with such an established company like Walt Disney and just getting that visibility through this partnership?

6:43I think it's critical because, frankly, the biggest challenge we have is that while our Gen Z consumers here in the U.S. know us, love us, and spend 30 to 60 minutes every day on us, a lot of investors, a lot of corporations, a lot of your audience has never heard of Webtoon. Even though we went public a little over a year ago, I think part of the movement that you may have seen in the company stock is simply awareness that Disney is recognizing that Webtoon is going mainstream here in the U.S., that we're a great source of fresh content. but we're the powerful leader of the category where we just released short form video on Monday of this week.

7:20You know, these short five minute videos crafted out of proven stories on our platform is exactly what Gen Z wants. And so for us, it's really important to bring awareness to investors and companies about what Gen Z consumers here already know, which is that we're a great source of storytelling. Should investors expect more partnerships similar to the one that was announced last week with Disney? Well, I think if you look at what we've talked about in the last couple of quarters, I mean, just the quarter release prior, we talked about our partnership with IDW. We talked about bringing Sonic the Hedgehog and Godzilla and other great platforms to our content and our storytelling.

8:01We also are constantly seeing things hit the main screens. You know, just last week we saw a major movie release called My Daughter is a Zombie. It just got released in the last couple of weeks here in the U.S., but it's one of the number one best-selling releases in Cree already. That came from us. So increasingly you're going to see us partner, but also create original content on our platform and on screens coming to you, whether it's Amazon, Tubi, Netflix, or even a movie theater, more and more. David, I'm wondering how you're thinking about profitability on the back of the partnership with Disney.

8:38We talked about this before. I'm wondering, does that change how you're thinking about that? Well, one of the great things about our collaboration with Disney is it's notable what I did not release. I did not release onerous upfront financial terms. I didn't even talk about it as being different than the great way in which we partner with franchises previously. And we posted in the quarter a positive 9.7 million adjusted EBITDA, which I think it shows that our cash balance that was given to us from the IPO on NASDAQ a little over a year ago is growing. So even as we grow our webcomic app MAU here in the U.S.

9:13and in English-speaking locales, 19%. You're on year for the last two quarters. We're still building cash. That doesn't mean we hoard it. We love the ability to create shareholder value, but we're very careful to return shareholder value very prudently. We believe in self-reliance. That's why we went public. And right now, there is no need for me to disclose any different set of financial conditions other than excitement strategically for the Disney collaboration. We're speaking with David Lee, CFO and COO of the$1.9 billion market cap Webtoon. Also with us is Nina Trapman, Bloomberg News senior editor.

9:50She writes the Bloomberg CFO briefing newsletter. Yeah, we're unfortunately running out of time, David. But maybe one question in terms of the customer group that you mostly tracked at Webtoon. You mentioned Gen Zs to us. I'm wondering, how do you keep track of that specific customer group? Well, it's funny. This generation of consumers, the younger generation, Gen Z and Gen Alpha, they want to discover on their own content. So we're very data rich and we want to make sure we have the best source of stories. And we have 120 ,000 stories that arrive every single day to our platform. But because we're so data driven, we can tell, we call her Maddie, our target consumer.

10:27We know what Maddie is reading 30 minutes every day. We know what chapter of what story she's reading. And so it's easier for us to use our technology to ensure she finds her next story, which is part of the reason why we've revamped our product here in the U.S. Importantly, as Maddie grows older, we know from a longer experience elsewhere that she'll like different genres. And the great thing about Webtoon is we can offer every genre because it comes from 24 million creators that we've cultivated over the last over 10 years. So she, Maddie, will grow old with us even as she changes her taste.

11:01We'd love her to finish in complete stories because we have so many more coming as an evergreen platform every day. And she's not a zombie. I just want to make sure. I would never characterize Maddie as a zombie. Okay. You said my daughter's a zombie. Talk about Maddie. I just want to make sure we're... Yeah, no. Okay. No zombie there. Okay. All right. Sorry. Go ahead, Nora. Well, David, I did want to ask you about how you all are thinking about AI. Of course, we know this has been a really big topic this year as people think about how we're using AI spend for some of these large companies. So how are you all integrating AI into your platform?

11:34You know, it's interesting. Webtoon started from a parent called Naver, which is a tech powerhouse. and we use our technology, including our AI, which we have a lot of actually, to protect the human creator. We protect them by fighting piracy, arguably better than a lot of other bigger consumer tech platforms I know. We allow consumers to find these 120 ,000 stories I mentioned that come every day. We help them find the stories they want using AI and technology. We may be the best untold story about AI promoting human creativity, generating returns for our human creators, protecting them in a way that I don't think is oftentimes on your network or in the press.

12:15And we're really excited to have a business model. You know, we've shared$2.8 billion with our creators from 2017 to 2023, because from the very beginning, our founder said, we will build a global network of people who can fair share in the success neither of us know how big is yet. And that allows an amateur creator somewhere in the world with a dream of being a storyteller to change their lives and contribute to the platform that we've built. So I feel really good about our use of AI. I'm held accountable by my teenage daughters who are also consumers. And this is one case where I think tech is at work for human good.

12:54David, good to see you. Thanks for joining us on Bloomberg Business Week Daily for the CFO Brief. And that's David Lee, CFO and COO of Webtoon. Also, a big thank you to Nina Tretman. She's Bloomberg News Senior Editor. She writes the Bloomberg CFO Briefing newsletter. You can sign up for it at Bloomberg.com slash CFO dash briefing.

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