[Concall Summary] Naver Hits Record Sales, Focuses on 'Risk Management' Including Fair Trade Issues

Han Seong-sook, CEO of Naver, is appearing as a witness at the comprehensive government audit on the Office for Government Policy Coordination and others during the Political Affairs Committee held at the National Assembly on the 22nd. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Buaeri] Naver, which achieved record-high sales in the third quarter, announced on the 29th that it will strengthen management of business risks such as fair trade issues and increase investments in eco-friendly initiatives.

"Advancing Risk Management Systems for Fair Trade and More"

Han Seong-sook, CEO of Naver, stated during the third-quarter earnings conference call, "We will advance risk management systems related to climate change, information protection and security, fair trade, and ethical management, which could be significant factors in the decline of corporate value," adding, "We are establishing mid- to long-term Environmental, Social, and Governance (ESG) strategies."

Earlier, on the 6th, the Fair Trade Commission imposed a fine of 26.7 billion KRW on Naver for manipulating shopping and video search results to increase the market share of its own services, causing damage to competitors and consumers.

CEO Han said, "Due to COVID-19 this year, demands for the social role and responsibility of online platforms in a non-face-to-face environment have expanded further," and added, "In this context, Naver intends to strengthen efforts and investments to create social and environmental value."

She explained, "We aim to participate in expanding eco-friendly businesses and accelerating the transition to a low-carbon economy," and "We plan to pursue a 'carbon negative' goal by 2040, reducing more carbon emissions than are produced."

Han also noted, "With the advent of the 5G and non-face-to-face era, data usage is surging, and considering the completion of the Data Center 'Gak' and Sejong IDC, Naver's carbon emissions are expected to increase sharply over the next decade," adding, "We are reviewing expanding renewable energy, investing in carbon reduction solutions, maintaining and improving data center efficiency, and will increase eco-friendly related businesses and investments going forward."

First-ever Quarterly Sales Surpass 2 Trillion KRW... 1.3608 Trillion KRW Excluding Line

Naver has surpassed the 2 trillion KRW mark in quarterly sales for the first time in history. This was thanks to explosive growth in untact (non-face-to-face) businesses such as online shopping and webtoons due to the impact of COVID-19. However, from this quarter, sales from the subsidiary Line have been separated, resulting in actual sales being recorded at around 1.36 trillion KRW.

Naver stated, "Including Line's sales as before, quarterly sales would have reached a record 2.0598 trillion KRW." Following the approval of the Line-Z Holdings business integration antitrust review, Naver changed its sales classification from this quarter, excluding Line's sales from the existing figures. Applying the new standard, third-quarter sales were 1.3608 trillion KRW, and operating profit was 291.7 billion KRW, representing increases of 24.2% and 1.8% year-on-year, respectively.

The shopping business continued to be a strong contributor amid the untact trend. Commerce sales reached 285.4 billion KRW, growing 40.9% year-on-year. The number of Smart Store sellers reached 380,000, and transaction volume increased by 72% compared to the previous year. Naver Plus Membership subscribers also surpassed 1.6 million. Naver plans to strengthen the shopping ecosystem through Plus Membership, Shopping Live, and enhanced logistics partnerships with CJ Logistics.

The fintech sector grew 67.6% year-on-year, generating 174 billion KRW in sales, driven by increased Naver Pay transaction volume due to online shopping expansion. Naver Pay transaction volume recorded 6.8 trillion KRW, up 62% year-on-year. Naver plans to accelerate fintech services for small and medium enterprises (SMEs) in the fourth quarter with offline point QR payments and Smart Store seller loans.

The content business, including webtoons, also showed strong growth. Content sales, including Naver Webtoon, increased 31.8% year-on-year to 115 billion KRW. Monthly users of Naver Webtoon surpassed 67 million. After forming a 600 billion KRW alliance with CJ Group on the 26th, Naver is expected to further accelerate its global content business. Synergies are anticipated as Naver Webtoon and web novels are produced into various content such as movies, dramas, and animations.

Cloud sales grew 66.2% year-on-year to 76.3 billion KRW, driven by increased demand for cloud services for remote work and online classes. Naver plans to commercialize B2B technologies and services based on cloud platforms. CEO Han said, "Naver achieved good results through balanced growth in new growth engines such as commerce, fintech, content, and cloud businesses," adding, "We will further enhance global competitiveness through synergies with various partners, as we have laid the foundation for long-term growth through the CJ partnership and Line business integration."