[Asia Economy Reporter Bu Aeri] Naver achieved mid-5 trillion KRW in sales and 1.2 trillion KRW in operating profit last year. Considering that subsidiary Line's sales have been excluded since the third quarter of last year, this marks the highest performance ever. Following the management integration of Line and Z Holdings, Naver changed its sales classification from the third quarter of last year. Sales from subsidiary Line were removed from the existing sales. Due to the impact of the novel coronavirus infection (COVID-19), non-face-to-face (untact) businesses such as online shopping and webtoons performed well, and new business areas such as fintech and cloud also grew explosively.
Operating Profit Surpasses 1 Trillion KRW for the First Time in 3 Years
On the 28th, Naver announced that it recorded sales of 5.3041 trillion KRW and operating profit of 1.2153 trillion KRW last year. These figures represent increases of 21.8% and 5.2%, respectively, compared to the previous year. The operating profit exceeding 1 trillion KRW is the first time in three years since 2017. However, despite the exclusion of the loss-making Line, the growth rate of operating profit was not as large as the growth rate of sales. Looking at the fourth quarter of last year alone, sales increased by 11.2% from the previous quarter to 1.5126 trillion KRW. Operating profit was 323.8 billion KRW, an 11% increase from the previous quarter.
Despite COVID-19, sales from the ‘Search Platform,’ which includes advertising, remained steady. Fourth-quarter sales of the Search Platform recorded 770.2 billion KRW, an 8.5% increase from the previous quarter. Annual sales grew 5.6% year-on-year to 2.8031 trillion KRW.
The shopping business once again played a key role. Commerce division’s fourth-quarter sales rose 11% from the previous quarter to 316.8 billion KRW. Annual sales showed a 37.6% growth year-on-year, reaching 1.0897 trillion KRW. A Naver official explained, "This result was achieved as small and medium-sized enterprises (SMEs) settled into the digital environment and grew rapidly." Last year, Naver Smart Store reached 410,000 stores, with 4,000 stores having monthly transaction amounts exceeding 100 million KRW.
New Businesses Take Flight
The growth of new businesses such as fintech and content also stood out. The fintech division recorded 201.1 billion KRW, a 15.6% increase from the previous quarter, thanks to the growth of Naver Pay. Annual sales reached 677.5 billion KRW, a 66.6% increase year-on-year. Naver Financial is expanding its business by actively promoting fintech for new filers and SMEs without financial history through ‘Smart Store Business Loans.’
The content business, including webtoons, also showed strong growth. Fourth-quarter sales of content, including Naver Webtoon, increased 20.9% from the previous quarter to 138.9 billion KRW. Annual sales grew 48.8% year-on-year to 460.2 billion KRW. Naver Webtoon's transaction amount last year reached 820 billion KRW, exceeding its target, and its monthly active users (MAU) reached 72 million.
Recently, Naver acquired the world’s largest web novel company ‘Wattpad’ and invested 411.8 billion KRW in Big Hit Entertainment, signaling plans to further accelerate its global content business. Han Seong-sook, CEO of Naver, said, "The acquisition of Wattpad was a strategic decision to secure a leading position in the global IP market," adding, "Following YG and SM Entertainment, we plan to strengthen cooperation with Big Hit and further enhance our global competitiveness in the content sector."
The cloud division recorded sales of 85.6 billion KRW. This was due to increased demand for cloud services for remote work and online classes amid COVID-19. Annual cloud sales grew 41.4% year-on-year to 273.7 billion KRW.
Naver plans to further expand its business through active investments and partnerships. CEO Han said, "We will continuously challenge ourselves to expand the ecosystem that Naver encompasses and grow together through aggressive mergers and acquisitions (M&A) and partnerships, including increasing our annual R&D investment, which is about 25% of sales, focused on developing advanced technology-based smart tools that enhance the digital competitiveness of SMEs and creators."
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