Naver’s first-quarter commerce revenue surges on back of Poshmark acquisition

[Photo provided by Naver]

South Korean internet portal giant Naver Corp. Monday reported a 23.6 percent rise in revenue for the first quarter, boosted by its acquisition of U.S.-based social commerce platform Poshmark.

Naver reported first-quarter revenue of 2.28 trillion won, up 23.6 percent on-year, with an operating profit of 330.5 billion won, up 9.5 percent from a year ago. Its commerce division, which includes Poshmark, saw revenue surge 45 percent. The company bought a 100 percent stake in Poshmark for $1.6 billion in October 2022, broadening its North American business.

Sales from its fintech and content divisions also rose 15 percent and 94 percent, respectively. The content division benefited from the inclusion of e-book sales in Japan following Naver‘s acquisition of a Japanese company.

While operating expenses increased, reduction in infrastructure costs from changes in asset depreciation periods offset some of the increased costs, said Naver’s Chief Financial Officer Kim Nam-sun.

Although Naver’s operating profit grew 9.5 percent, the company’s operating profit margin fell to 14.5 percent, down 1.9 percentage points from the same period last year. The annual operating profit margin has been declining after hitting 26.5 percent in 2019.

Naver plans to exercise cost control measures and refrain from mergers and acquisitions in the near future.

Kim added that Naver will reduce its shareholder return plan to between 15 percent and 30 percent over the next three years to manage the company’s debt ratio by repaying some of its borrowings and investments made in recent years.

Kim also said that Naver will seek to control future capital investment through more efficient use of infrastructure, despite the ongoing demand for artificial intelligence and other technologies.

Naver also said it will retire 3 percent of the 8 percent of treasury shares it currently holds at a rate of 1 percent per year over the next three years to further boost shareholder value.