[Click eStock] "Naver, Q3 Revenue Up 24% YoY... Demonstrating Unstoppable Growth Momentum"

[Asia Economy Reporter Park Ji-hwan] Meritz Securities evaluated NAVER on the 30th as showing unstoppable growth with a dual engine of Shopping and Pay.

Kim Dong-hee, a researcher at Meritz Securities, said, "In the third quarter, NAVER's sales and operating profit were 1.3608 trillion KRW and 291.7 billion KRW, respectively, increasing by 24.2% and 1.8% compared to the previous year," adding, "The results stood out with strong performance in advertising and commerce businesses, as well as growth in new businesses such as fintech and cloud."

In the third quarter, search platform search and display advertising sales increased by 8.2% year-on-year to 710.1 billion KRW. Despite the resurgence of COVID-19 in August, the expansion of performance-based advertising application led to a remarkable recovery in sales. In particular, commerce sales were driven by shopping ads, brokerage fees, and Plus Membership revenue, with Smart Store transaction volume increasing by 72%, leading the growth.

Researcher Kim Dong-hee explained, "Fintech sales also maintained high growth in the first half, with NAVER Pay transaction volume increasing by 62% to 6.8 trillion KRW," adding, "In the upcoming fourth quarter, plans are in place to start offline point QR payments and seller loan services."

Cloud sales increased by 66% to 76.3 billion KRW. Although the proportion of total sales is still small at 5.6%, growth is expected as enterprise-oriented technology and service sales increase in the future. Regarding operating profit margin, it was 21.4%, and profitability improvement was limited due to increased Pay reserves from the launch of NAVER Bank and Plus Membership, as well as increased global marketing expenses for webtoons.

The strategic alliance with CJ Group was evaluated positively. Researcher Kim said, "On the 26th, NAVER became a major shareholder by holding 7.9% of CJ Logistics, 5.0% of CJ ENM, and 6.3% of Studio Dragon through a 600 billion KRW scale share swap," adding, "Through cooperation with CJ Logistics on NAVER Shopping's delivery logistics services and partnerships with CJ ENM and Studio Dragon, plans are in place to strengthen premium content competitiveness."