Naver reports best-ever Q4, 2020, to issue debts for new business

South Korea’s internet giant Naver Corp. posted record high earnings for the fourth quarter and full year in 2020 owing to explosive e-commerce, and online content and financial services during Covid-19 environment.

Naver in a regulatory filing Thursday said it registered 323.8 billion won ($291 million) in operating income for the fourth quarter ended Dec 31, 2020 on a consolidated basis. The figure, a quarterly record high, is up 11 percent from three months earlier and 17.6 percent from a year ago.

Revenue expanded 11.2 percent on quarter and 28.3 percent on year to 1.5 trillion won, also a record high.

The results are above market consensus of 312.9 billion won in operating income on revenue of 1.47 trillion won, compiled by local financial data tracker FnGuide.

For full 2020, the company posted 1.2 trillion won in operating income, up 5.2 percent on year and exceeding 1 trillion won for the first time since 2017. Annual revenue came at 5.3 trillion won, up 21.8 percent on year.

Both annual operating profit and revenue were record highs.

On Thursday, shares of Naver gained 3.95 percent to 355,500 won.

The company attributed its outstanding performance to new businesses centered on e-commerce and fintech businesses, as well as flying webtoon and other content business. Its mainstay search platform also fared well.

The main search platform business delivered 770.2 billion won in revenue in the fourth quarter, up 8.5 percent on quarter and 11.3 percent on year, thanks to brisk ad sales, which jumped 21.8 percent on quarter and 35 percent on year. The division’s full-year revenue totaled at 2.8 billion won, up 5.6 percent on year.

Revenue from commerce business rose 11 percent on quarter and 44.6 percent on year to 316.8 billion won in the fourth quarter on the rapid growth of Smart Stores. The number of Smart Stores members, or the small businesses running stores through Naver, reached 410,000 in the fourth quarter. Also, the number of Smart Stores members with monthly gross merchandize value (GMV) of 100 million won doubled compared with a year earlier, Naver CEO Han Seong-sook said in a conference call after the earnings report. The commerce business raked in 1.1 trillion in revenue, up 37.6 percent on year.

Robust growth of online stores fed revenue in fintech services. The company’s fintech service revenue rose 15.6 percent on quarter and 67.8 percent on year to 201.1 billion won. Transactions at its mobile payment service Naver Pay expanded on the back of Smart Stores’ growth as well as addition of outside partners including KT and KTX. In full year, revenue soared 66.6 percent to 677.5 billion won.

Digital content business, propelled by webtoon, or online comic or fiction service, recorded 138.9 billion won in revenue, up 20.9 percent on quarter and 48.8 percent on year. Annual figure totaled at 460.2 billion won, up 48.8 percent on year. The company said the monthly active user number of its webtoon service marked 72 million globally and annual GMV hit 820 billion won to exceed internal target.

Cloud business saw revenue gain 12.2 percent on quarter and 56.3 percent on year to 85.6 billion won, on steady demand. Annual revenue rose 41.4 percent on year to 273.7 billion won.

Following the overview of the company’s performance, CFO Park Sang-in said the company is reviewing a plan of issuing bonds at home and abroad in the first half of this year. The scale and exact schedule are yet to be decided.

Its bond issue is to secure funds for global expansion as well as fund its acquisition of Wattpad, a Canada-based online storytelling platform and investment in its strategic partner Big Hit Entertainment’s subsidiary beNX.

Separately, the company announced a cash dividend payout of 402 won per common share, totaling 59.4 billion won, as well as buy back 51.4 billion won worth of its shares for immediate cancellation as part of its shareholder return policy. In addition, it will make a separate cancellation of 35.5 billion won worth of shares it currently holds.

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