Naver shoots all cylinders including new ventures
Naver’s second quarter performance exceeded expectations, with consistent growth across a range of businesses including advertising, commerce, and selling content like webtoons.
Revenue hit a record 1.66 trillion won, up 30.4% year-on-year, while operating profit jumped 8.9% to 335.6 billion won .
Net profit jumped 496.1 percent to 540.6 billion won ($ 470 million) from the same period last year, above the market consensus of 296 billion won compiled by FnGuide, thanks to an extraordinary gain from the creation of A Holdings, a joint venture with SoftBank which controls Yahoo Japan and Line Messenger.
The biggest contributor to sales was advertising from his search engine, his regular cash cow. But newer companies such as e-commerce, fintech, cloud services, and content platforms for webtoons and web novels have seen double-digit growth.
Search-based advertising revenue increased 21.8 percent to 826 billion won in one year, and Naver touted its improved search function and effect on advertising.
Its business activity, built around the trading platform, increased 42.6 percent to 365.3 billion won in sales between April and June. Live broadcasts on the platform have helped boost shopping sales, the company said.
Fintech-related revenue rose 41.2% to 232.6 billion won, with more stores using Naver Pay and a growing user base for payment services. Total transactions on Naver Pay climbed 47% in the quarter over a year ago to 91 trillion won.
The content business which includes webtoons and mobile entertainment applications recorded a 28.2% increase in sales to 144.8 billion won, driven by growth in the number of paid subscribers to the webtoon service.
The cloud business also saw a strong boom, with sales rising 48.1 percent to 94.9 billion won.
CEO Han Seong-sook called content and commerce at the center of the business for the remainder of the year in a bid to capitalize on the partnership with Wattpad, a Toronto-based web novel platform acquired by Naver.
Naver is planning a 100 billion won investment fund with Wattpad to adapt works on its webtoon platform to other formats, including dramas, films and publications.
“We will quickly work on publishing popular webtoons in books and videos through the 100 billion won fund,” Han said on a conference call Thursday.
Regarding trading activities, Naver aims to expand the range of agricultural products sold and accelerate delivery services, aided by the existing partnership with Emart and CJ Logistics.
“We will be opening a grocery section in cooperation with Emart by the fourth quarter,” Han said.
Naver and CJ Logistics have agreed to expand the size of their joint distribution centers to 200,000 pyeong (7.1 million square feet).
BY THE EUN-JEE PARK [[email protected]]