[Big Tech, Big Change] Leading E-commerce and Boosting Webtoons... Naver's Two Top Stars Shined

Achieved 777.2 Billion KRW in Business Platform Sales Including Naver Shopping
Naver Pay and IT Platform Sales Grow 70% Year-on-Year
Kakao Expected to Continue High Growth Led by KakaoTalk Commerce

[Asia Economy Reporter Jin-gyu Lee] Naver's 'Untact Surprise' achieved in the second quarter of this year is analyzed to be due to increased performance in e-commerce and webtoons. As the prolonged COVID-19 pandemic increased demand for non-face-to-face services, e-commerce, represented by online transactions, and webtoons, the leader in content, have greatly benefited. There is strong anticipation that this trend will continue in the second half of the year, leading to the highest annual performance ever.

◆ E-commerce and Webtoon Duo Driving Growth = Analyzing Naver's second-quarter results announced on the 30th reveals that the e-commerce sector showed remarkable growth, driving overall performance. The business platform segment related to e-commerce recorded sales of 777.2 billion KRW, an 8.6% increase compared to the same period last year, accounting for more than 40% of total second-quarter sales. Payment amounts accompanying e-commerce also increased significantly, with the IT platform segment, including Naver Pay, achieving an impressive 70.2% growth compared to the same period last year. Specifically, Naver Pay recorded 13 million monthly payers, and the transaction amount in the second quarter reached 6 trillion KRW, a 56% increase year-on-year.

Since the COVID-19 outbreak, the number of new sellers entering online shopping startups has increased, and the newly created Smart Stores have doubled from an average of 15,000 per month in 2018 to 35,000 per month as of April this year. Han Seong-sook, CEO of Naver, explained during the conference call that "New Smart Stores in the second quarter increased by 61% compared to the same period last year, expanding the total number of Smart Stores to 350,000."

With increased indoor activities due to COVID-19, content sectors such as Naver Webtoon have also maintained steady growth. The global monthly users of Naver Webtoon have surpassed 64 million, and it is expected to reach 70 million within this year. The global business restructuring of Naver Webtoon is also expected to lead to increased sales. In May, Naver reorganized its webtoon business structure across three countries?Korea's Naver Webtoon, the U.S.'s Webtoon Entertainment, and Japan's Line Digital Frontier?appointing the U.S. corporation to oversee the webtoon business. CEO Han stated, "Webtoon transaction volume grew 57% year-on-year, and global transaction volume expanded by 27%. We will focus our capabilities on the U.S. market to strengthen synergy among the U.S., Korea, and Japan under unified leadership."

Naver is also putting full effort into expanding its financial territory. 'Naver Account,' launched last month by Naver Financial in partnership with Mirae Asset Daewoo, introduced a differentiated method where yield and point accumulation are linked to usage performance of Naver Pay and Naver Shopping. CEO Han said, "We will focus on services targeting new filers (those with insufficient financial history) that existing financial institutions have not supported, providing full support in data analysis and funding."

◆ Kakao Also Signals Record-Breaking Performance = Kakao, which is scheduled to announce its results on the 6th of next month, is also expected to achieve both external growth and profitability improvement. Securities firms forecast Kakao's second-quarter sales to increase by about 22% from 733 billion KRW in the same period last year to 900 billion KRW, and operating profit to rise 120% from 40.5 billion KRW last year to around 90 billion KRW. This would also be Kakao's highest quarterly performance ever. The 'Talk Biz' segment of KakaoTalk (Kakao Talk), which includes the e-commerce business, is expected to record second-quarter sales of around 240 billion KRW, a 72% increase from 138.9 billion KRW in the same period last year.