Naver Surpasses 6 Trillion Won in Sales for the First Time... This Year, 'New Businesses' Begin Full-Scale Monetization (Comprehensive)

Operating Profit of 710.1 Billion KRW Last Year... 24.7% Decrease from Previous Year
Profitability Declined Due to New Business Initiatives and Line Marketing Expenses
Naver Financial Expects Revenue Growth from Line-Yahoo Japan Merger
Kakao Also Forecasts Record High Performance with Over 3 Trillion KRW in Sales

[Asia Economy Reporter Jin-gyu Lee] Naver surpassed annual sales of 6 trillion won last year, its 20th anniversary, achieving its highest-ever performance. This figure increased by about 1 trillion won compared to 2018. However, operating profit decreased by about 25% compared to the previous year due to increased costs in new industries. Expectations are growing that profits from new businesses will be generated in earnest this year.

◆ Naver Surpasses Annual Sales of 6 Trillion Won = On the 30th, Naver announced that last year's sales amounted to 6.5934 trillion won, an 18% increase compared to the previous year. This marks the entry into the 6 trillion won club in just 20 years since its founding. However, last year's operating profit was 710.1 billion won, down 24.7% from the previous year. Looking at the fourth-quarter performance alone, sales increased by 17.9% year-on-year to 1.7874 trillion won, while operating profit decreased by 18.7% to 173.4 billion won.

By sector, steady growth continued across advertising, business platform, IT platform, and content services. Advertising revenue was 633.3 billion won, up 10.5% from the previous year, thanks to improvements in mobile advertising product quality. Business platform revenue reached 2.851 trillion won, a 15.2% increase year-on-year, driven by solid growth in shopping search advertising. IT platform revenue grew 28.6% year-on-year to 457.5 billion won, supported by the growth of Naver Pay. Content service revenue also grew 66.6% year-on-year to 209.5 billion won, fueled by the global growth of Naver Webtoon and V LIVE.

However, the momentum of surpassing 1 trillion won in operating profit consecutively in 2016 and 2017 was not maintained. This decline in profitability is attributed to increased labor costs from developing and operating new business platforms and increased marketing expenses for the Japanese subsidiary Line's simple payment service, Line Pay. Han Seong-sook, CEO of Naver, stated, "We will strengthen the competitiveness of our domestic business and, based on this, leverage new business opportunities emerging in the US and Japan to create a stepping stone for a new leap forward."

◆ Expectations for Full-Scale Profitability of 'New Businesses' This Year = Naver expects that profits from new businesses it has invested in will be generated in earnest starting this year. Portal advertising revenue growth rates remain in double digits, and the content sector has entered a growth trajectory led by Naver Webtoon, which has achieved 60 million global monthly active users (MAU). Additionally, concrete business plans related to the management integration of Line and Yahoo Japan, decided at the end of last year, are scheduled to proceed this year. An industry insider evaluated, "The merger with Yahoo Japan has significantly reduced uncertainties regarding Line's fintech business in Japan." Furthermore, Naver Financial, launched in November last year, is expected to begin full-scale sales of financial products this year. Ju Young-hoon, a researcher at Eugene Investment & Securities, predicted, "This will be the first year to shift from the operating profit decline that continued for the past two years to an increase in operating profit."

◆ Kakao Also Expected to Achieve Record High Performance = Meanwhile, Kakao is also expected to achieve record-high sales and operating profit growth. According to the securities industry, Kakao's sales last year are estimated to be about 3.08 trillion won, and operating profit around 194 billion won, increasing approximately 27% and 166% respectively compared to the previous year. Hwang Hyun-joon, a researcher at DB Financial Investment, analyzed, "With an increase in advertisers mainly among small and medium-sized advertisers, KakaoTalk Bizboard's daily sales rose to about 400 to 500 million won in December last year, leading to a sharp growth trend in KakaoTalk-related business performance."

This content was produced with the assistance of AI translation services.