Naver's Quarterly Revenue Surpasses 2 Trillion Won for the First Time... 1.3608 Trillion Won Excluding Line (Comprehensive)

[Asia Economy Reporter Buaeri] Naver has surpassed the 2 trillion won mark in quarterly sales for the first time in history. This was thanks to the explosive growth of untact (contactless) businesses such as online shopping and webtoons due to the impact of the novel coronavirus (COVID-19). However, from this quarter, with the separation of subsidiary Line's sales, the actual sales were recorded at around 1.36 trillion won.

First-ever breakthrough of 2 trillion... 1.3608 trillion excluding Line

On the 29th, Naver announced, "If Line's sales are included as before, quarterly sales will reach 2.0598 trillion won for the first time in history." Following the antitrust approval of the management integration between Line and Z Holdings, Naver changed the sales classification from this quarter. The sales of subsidiary Line were excluded from the existing sales. Applying the new standard, third-quarter sales were 1.3608 trillion won, and operating profit was 291.7 billion won. These figures represent increases of 24.2% and 1.8% year-on-year, respectively.

Naver's strong performance was driven by growth in the advertising sector. Sales in the 'Search Platform' segment, which includes advertising, reached 710.1 billion won, an 8.2% increase compared to the previous year. Specifically, display advertising sales were 168.1 billion won, and search advertising sales were 542 billion won. Naver explained, "Despite the resurgence of COVID-19, sales grew thanks to the expansion of performance-based advertising and efforts to improve advertising efficiency."

Shopping business surges due to untact impact

The shopping business once again played a key role due to the untact effect. Commerce sales reached 285.4 billion won, growing 40.9% year-on-year. Naver plans to strengthen the shopping ecosystem through Plus Membership, Shopping Live, and enhanced logistics partnerships with CJ Logistics. The fintech segment grew 67.6% year-on-year, recording sales of 174 billion won. This was a result of increased Naver Pay transaction volume due to the expansion of online shopping. Naver plans to accelerate fintech services for small and medium enterprises (SMEs) in the fourth quarter with the launch of offline point QR payments and smart store seller loans.

The growth of content businesses such as webtoons is also remarkable. Content sales, including Naver Webtoon, increased 31.8% year-on-year to 115 billion won. Monthly users of Naver Webtoon surpassed 67 million, and annual transaction volume is approaching 1 trillion won. On the 26th, Naver formed a 600 billion won alliance with CJ Group and is expected to further accelerate its global content business. When Naver Webtoon and web novels are produced into various content such as movies, dramas, and animations, business synergies are anticipated. Naver also plans to expand the global entertainment intellectual property (IP) business of 'Naver Z,' which attracted investments from Big Hit Entertainment and YG. Naver Z operates the global augmented reality (AR) avatar service Zepeto.

Hansung-sook, CEO of Naver

Cloud segment sales recorded 76.3 billion won, a 66.2% increase year-on-year. This was due to increased demand for cloud services for remote work and online classes. Naver plans to commercialize B2B (business-to-business) technologies and services based on cloud infrastructure. Han Seong-sook, CEO of Naver, said, "Naver achieved good results through balanced growth in new growth engines such as commerce, fintech, content, and cloud businesses. Just as we laid the foundation for long-term growth through the CJ partnership and Line management integration, we will further enhance global competitiveness through synergies with various partners."

Kakao also expected to surpass 1 trillion won

Kakao, which will announce its earnings on the 5th of next month, is also expected to surpass 1 trillion won in quarterly sales, driven by advertising and shopping businesses. According to FnGuide, Kakao's third-quarter sales are projected to be 1.028 trillion won, with an operating profit of 108.4 billion won.

Kakao's strong performance appears to be driven by the expansion of advertising and commerce businesses based on KakaoTalk, as well as global paid content businesses such as webtoons. The securities industry predicts that platform segment sales, including Talk Biz, portal, and new businesses, will increase by 52% year-on-year, and content segment sales such as webtoons will grow by 13%.