WEBTOON Entertainment Inc.WBTN
WEBTOON Entertainment Inc. Fair Value Disclosure
Fair Value Measurements
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 1. Description of Business and Summary of Significant Accounting Policies should be read in conjunction with the information outlined below.
The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 3 Instruments.
| Level 3 Instruments | Valuation Techniques and Significant Inputs | |||||||
| Debt and Equity Securities | Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available (i) Transactions in similar instruments; (ii) discounted cash flow techniques; (iii) third party appraisals; (iv) binomial option pricing models; and (v) industry multiples and public comparables. | |||||||
| Evidence of value in investees includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including (i) current financial performance as compared to projected performance; (ii) capitalization rates and multiples; and (iii) market yields implied by transactions of similar or related assets. | ||||||||
The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets as of December 31, 2025, and December 31, 2024. These ranges do not represent a range of values for any single instrument. For example, the lowest discount rate for a particular redeemable convertible preferred stock investment may be appropriate for valuing that specific debt security but may not be appropriate for valuing any other debt securities in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets.
| Level 3 Instruments | Amount | Valuation Techniques | Significant Unobservable Inputs | Range of Significant Unobservable Inputs | ||||||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||||||||
| Debt Securities | ||||||||||||||||||||||||||
| Redeemable Convertible Preferred Stock | $ | 46,024 | Option Pricing model | Discount rate | 8.25%-21.68% | |||||||||||||||||||||
| Volatility | 39.98%-51.46% | |||||||||||||||||||||||||
| Total | $ | 46,024 | ||||||||||||||||||||||||
| Equity Securities | ||||||||||||||||||||||||||
| Redeemable Convertible Preferred Stock | $ | 15,000 | Measurement alternative | |||||||||||||||||||||||
| Contribution to investment fund | 642 | Measurement alternative | ||||||||||||||||||||||||
| Private equity securities | 735 | Measurement alternative | ||||||||||||||||||||||||
| Convertible Preferred Stock | 6,268 | Option Pricing model | Discount rate | 2.35%-2.94% | ||||||||||||||||||||||
| Volatility | 51.46%-51.46% | |||||||||||||||||||||||||
| Simple Agreement For Future Equity (SAFE) | 1,000 | Measurement alternative | ||||||||||||||||||||||||
| Total | $ | 23,645 | ||||||||||||||||||||||||
| Level 3 Instruments | Amount | Valuation Techniques | Significant Unobservable Inputs | Range of Significant Unobservable Inputs | ||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||
| Debt Securities | ||||||||||||||||||||||||||
| Redeemable Convertible Preferred Stock | $ | 48,142 | Option Pricing model | Discount rate | 9.01%-21.94% | |||||||||||||||||||||
| Volatility | 41.60%-66.30% | |||||||||||||||||||||||||
| Total | $ | 48,142 | ||||||||||||||||||||||||
| Equity Securities | ||||||||||||||||||||||||||
| Redeemable Convertible Preferred Stock | $ | 15,000 | Measurement alternative | |||||||||||||||||||||||
| Contribution to investment fund | 506 | Measurement alternative | ||||||||||||||||||||||||
| Private equity securities | 51 | Measurement alternative | ||||||||||||||||||||||||
| Convertible Preferred Stock | 5,477 | Option Pricing model | Discount rate | 3.00%-16.71% | ||||||||||||||||||||||
| Volatility | 44.96%-50.60% | |||||||||||||||||||||||||
| Simple Agreement For Future Equity (SAFE) | 1,000 | Measurement alternative | ||||||||||||||||||||||||
| Total | $ | 22,034 | ||||||||||||||||||||||||
______________
As noted above, the binomial optional pricing model was used in the determination of fair value of Level 3 assets as of December 31, 2025, and December 31, 2024. The significant unobservable inputs used in the binomial option pricing model are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates or market yields is risk of default, rating of the investment, call provisions and comparable company investments.
The following tables present a summary of the Company’s assets categorized within the fair value hierarchy, or accounted for under the measurement alternative, as of December 31, 2025, and December 31, 2024:
| As of December 31, 2025 | |||||||||||||||||||||||
| (in thousands of USD) | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Equity Securities | $ | — | $ | — | $ | 23,645 | $ | 23,645 | |||||||||||||||
| Debt Securities | — | — | 46,024 | 46,024 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 69,669 | $ | 69,669 | |||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||
| (in thousands of USD) | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Equity Securities | $ | 2 | $ | — | $ | 22,034 | $ | 22,036 | |||||||||||||||
| Debt Securities | — | — | 48,142 | 48,142 | |||||||||||||||||||
| Total | $ | 2 | $ | — | $ | 70,176 | $ | 70,178 | |||||||||||||||
The Level 1 equity securities relate to a contribution to investments in public equity securities that have readily determinable fair values.
The Level 3 equity securities relate to the Company’s investments in privately held companies through the purchase of convertible preferred stock, private equity securities, Simple Agreement For Future Equity (SAFE), contribution to investment fund and redeemable convertible preferred stock. For these equity securities, the Company does not have the ability to exercise significant influence on the investee, and therefore accounts for them as equity securities under ASC Topic 321, Investments in Equity Securities.
The Level 3 debt securities relate to the Company’s investments in privately held companies through the purchase of redeemable convertible preferred stock that meet the definition of a debt security.
The Level 3 equity securities include non-marketable equity investments without readily determinable fair values. The company has elected to account for these investments using the measurement alternative, under which the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. For the year ended December 31, 2025, there were no upward or downward adjustments resulting from observable price changes, and no impairment losses were identified or recognized for these investments.
The following table presents a summary of the changes in the carrying value of our equity securities measured using the measurement alternative for the year ended December 31, 2025, and December 31, 2024.
| 2025 | 2024 | ||||||||||
| (in thousands of USD) | |||||||||||
| Beginning balance, January 1 | $ | 16,557 | $ | 16,431 | |||||||
| Purchases | 844 | 1,000 | |||||||||
| Disposition and Other | — | (773) | |||||||||
| Net unrealized gain (loss) | — | — | |||||||||
| Currency translation differences | (24) | (101) | |||||||||
| Ending balance, December 31 | $ | 17,377 | $ | 16,557 | |||||||
The below tables present a summary of changes in fair value of Level 1 and Level 3 assets by investment type (in thousands of USD):
| Year Ended December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 3 | Total | |||||||||||||||||||||
| Equity Securities | Equity Securities | Debt Securities | Debt & Equity Securities | ||||||||||||||||||||
| Beginning balance, January 1 | $ | 2 | $ | 22,034 | $ | 48,142 | $ | 70,178 | |||||||||||||||
| Purchases | — | 846 | 5,955 | 6,801 | |||||||||||||||||||
| (2) | 649 | (9,252) | (8,605) | ||||||||||||||||||||
| Currency translation differences | — | 117 | 1,178 | 1,295 | |||||||||||||||||||
| Ending balance, December 31 | $ | — | $ | 23,646 | $ | 46,023 | $ | 69,669 | |||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 3 | Total | |||||||||||||||||||||
| Equity Securities | Equity Securities | Debt Securities | Debt & Equity Securities | ||||||||||||||||||||
| Beginning balance, January 1 | $ | 16,109 | $ | 26,847 | $ | 48,277 | $ | 91,233 | |||||||||||||||
| Purchases | — | 1,000 | — | 1,000 | |||||||||||||||||||
| Consolidation inclusion | — | (776) | 6,522 | 5,746 | |||||||||||||||||||
| Net unrealized gain (loss) | 3,351 | (949) | (81) | 2,321 | |||||||||||||||||||
| Sales and settlement | — | (2,713) | (19) | (2,732) | |||||||||||||||||||
Reclassification1 | (18,702) | — | — | (18,702) | |||||||||||||||||||
| Currency translation differences | (756) | (1,375) | (6,557) | (8,688) | |||||||||||||||||||
| Ending balance, December 31 | $ | 2 | $ | 22,034 | $ | 48,142 | $ | 70,178 | |||||||||||||||
1Relates to reclassification of Celsys, which was an equity security as of December 31, 2023, and became an equity method investee as the Company acquired the right to appoint directors during 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.