NHN reports weaker than expected Q3 profit on jump in operating expenses

[Provided by Maekyung Media Group]

Korean platform major NHN closed the third quarter far weaker than expected on jump in operating expenses across its business spanning from online games to mobile wallet and music streaming.

Its consolidated operating income came to 8.3 billion won ($6 million) in the third quarter ended September, up 59.7 percent from the previous quarter but down 70.3 percent from a year earlier, NHN disclosed on Tuesday.

The result is off 46.6 percent versus consensus estimate of 15.5 billion won, compiled by local financial data tracker Yonhap Infomax.

Revenue grew 2.2 percent on year and 10.6 percent on year to 522.4 billion won.

Its shares, however, rose 1.24 percent to trade at 24,400 won apiece on Tuesday, around noon in Seoul.

Revenue from digital payment and advertisement services rose 4.8 percent on quarter and 8.9 percent on year to 227.0 billion won on growth in the number of business clients using its payment system.

PC and mobile game business contributed 115.9 billion won in revenue, up 21.4 percent on year.

Revenue from technology services amounted 71.3 billion won, from e-commerce 66.3 billion won and from digital contents service 51.0 billion won.

Operating expense totaled 71.3 billion won, up 1.6 percent on quarter and 15.6 percent on year. Commission fee rose 12 percent on year to 335.5 billion won due to a rise in fees on revenue-tied payment business. Payroll expense jumped 14.9 percent on year to 102.8 billion won, largely due to one-off payment to outsourced game publisher for a new game’s launch in Japan.

NHN merged in its game business subsidiary under its strategy to expand game development and publishing operations.

By Cho Jeehyun