Naver Q3 income falls on increased capex despite thriving contents biz

[Photo by Park Hyung-ki]

South Korean internet giant Naver Corp. on Monday reported subdued income gain due to increased investment on datacenter infrastructure and sluggish equity value despite robust revenue on burgeoning contents business.

According to Naver’s regulatory filing on Monday, its consolidated operating income fell 1.8 percent on quarter and 5.6 percent on year to 330.2 billion won in the July-September period, but managed to come above the market consensus of 321.6 billion.

Its revenue in the quarter totaled 2.06 trillion won, up 0.6 percent on quarter and 19.1 percent on year. Quarterly revenue stayed below 2 trillion after messenger app operator Line’s merger with SoftBank in 2021.

Net profit was up 46.1 percent on quarter but down 28.3 percent on year at 231.6 billion won.

Shares of Naver were flat at 174,000 won on Monday morning.

Naver’s earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7.2 percent to 463.7 billion won. Its adjusted EBITDA margin that shows operating profit as a percentage of its revenue improved 1.4 percentage points in the third quarter, the company said.

The rise in its revenue in the third quarter was largely owed to the robust performance of its content business especially webtoons.

Contents business raised 311.9 billion won in revenue in the third quarter, up 3.9 percent on quarter and 77.3 percent on year, on strong demand for e-comics around the world. Total global gross merchandise value (GMV), which shows the total value of goods sold via e-commerce platforms, rose 11.9 percent on quarter and 18.1 percent on year to 457 billion won in the third quarter.

Search platform business also reaped 896.2 billion won in revenue in the July-September period, down 1.0 percent on quarter but up 8.0 percent on year thanks to strong search advertisement business that grew by more than 10 percent from a year ago.

Commerce business earned 458.3 billion won, up 4.3 percent on quarter and 19.4 percent on year in the third quarter, on the back of an increase in membership and brand store subscriptions and commerce advertisement. Its GMV amounted to 10.5 trillion won in the third quarter.

Fintech business raked in 296.2 billion won in revenue, up 0.2 percent on quarter and 22.5 percent on year. Total payment value of digital wallet Naver Pay jumped 3.3 percent on quarter and 27.7 percent on year to 12.4 trillion won.

Cloud and other data-based businesses raised 94.8 billion won in revenue, down 9.6 percent on quarter and 1.5 percent on year.

Naver will continue to strive to sustain solid growth and pioneer new markets with a diverse range of new growth engines while improving efficiency in management operations to enhance synergy between business units, said Naver’s CEO Choi Soo-yeon. Naver said Naver’s CEO Choi Soo-yeon.

Naver recently acquired U.S.-based fashion marketplace operator Poshmark as part of efforts to diversify its business portfolio while introducing new advertisement products and delivery-guarantee solution.

By Lee Eun-joo