NHN Joins 2 Trillion Won Revenue Club Last Year... Rapid Growth in Cloud Business

Growth Driven by Technology Sector and Cloud Public Achievements
Operating Profit Declines Amid Global Economic Downturn
Focus on Profitability-Centered Management This Year

[Asia Economy Reporter Seungjin Lee] NHN surpassed annual sales of 2 trillion KRW for the first time since its founding last year. This was due to the rapid growth of the Cloud Service Provider (CSP) business, including NHN Cloud. On the other hand, the commerce sector struggled due to the global economic downturn.

NHN announced on the 10th that it recorded sales of 2.1156 trillion KRW and an operating profit of 40.7 billion KRW last year. Sales increased by 10% compared to the previous year, but operating profit decreased by 58.4% during the same period. Sales in the fourth quarter of last year rose 2.8% year-on-year to 561.4 billion KRW, while operating profit fell 53.1% to 11.7 billion KRW.

Looking at the sales by sector in the fourth quarter, the gaming sector saw an increase in web board game sales, but due to the base effect from the Chuseok holiday in the third quarter and major title events in Japan, sales increased 5.3% year-on-year but decreased 6.4% quarter-on-quarter to 108.5 billion KRW.

Mobile web board game sales hit a quarterly record high, rising 64% year-on-year. Web board game sales in January increased 12% compared to the previous month and 30% compared to the same period last year.

The payment and advertising sector recorded 238.2 billion KRW, up 5.8% year-on-year and 5.0% quarter-on-quarter, driven by increased transaction volume during the year-end peak season and rising Payco coupon sales. Among these, Payco point payment amounts rose 81% year-on-year, and Payco coupon sales increased 76% year-on-year, contributing to improved Payco profitability. Payco transaction volume in the fourth quarter grew 33% year-on-year to 2.7 trillion KRW.

The commerce sector recorded 73.6 billion KRW, down 34.2% year-on-year but up 11% quarter-on-quarter, due to continued contraction in Chinese consumer sentiment and a slowdown in the U.S. economy. NHN Global in the U.S. saw sales increase both year-on-year and quarter-on-quarter due to commission revenue growth from increased users in the fourth quarter.

The technology sector recorded sales of 104.7 billion KRW, up 58.3% year-on-year, thanks to public sector contract wins and attracting large clients by Japan NHN Tecorus. NHN Cloud sales increased 60% year-on-year, and Japan NHN Tecorus also grew 24% year-on-year, significantly contributing to overall sales growth. Including NHN Cloud, the annual sales of the Cloud Service Provider (CSP) business grew 65% year-on-year.

The content sector recorded sales of 49.5 billion KRW, down 5.3% year-on-year and 2.9% quarter-on-quarter. Among these, NHN Link expanded its business into the performance and exhibition fields, doubling its annual sales compared to the previous year and recovering its business strength to pre-COVID levels.

NHN plans to focus on profitability-centered management this year.

In the web board game business, in addition to the effects of regulatory easing, NHN aims to target younger users who enjoy mind sports through new releases such as ‘Double A Poker’ launched in January. Also, Japan NHN PlayArt is developing three new titles aiming for release in 2024.

NHN Cloud, which secured 150 billion KRW in investment from IMM Investment recognizing its value at 1 trillion KRW, plans to focus on the linkage between artificial intelligence (AI) and cloud. To this end, it will open the ‘Gwangju National AI Data Center’ in the second half of the year to actively collaborate with AI companies and participate in the AI semiconductor business to lead the K-Cloud market.

NHN CEO Woojin Jung said, “Last year, NHN was a period of reviewing the overall business model and striving to improve the profit structure in response to the volatile macroeconomic environment. In 2023, as a comprehensive IT company, we will focus our capabilities on building AI competitiveness based on cloud and ensuring that the management performance of key businesses such as gaming, technology, payment, commerce, and content, as well as the equity value of subsidiaries, contribute to enhancing NHN’s corporate value.”