Naver, Key Momentum to Watch This Year Is

[Asia Economy Reporter Song Hwajeong] Naver (NAVER) posted earnings below expectations in the fourth quarter of last year, but this year, an increase in Line Pay transaction volume is expected to act as a new momentum.

NAVER recorded consolidated sales of 1.7874 trillion KRW and operating profit of 173.4 billion KRW in the fourth quarter of last year. Sales increased by 7% compared to the previous quarter, but operating profit decreased by 14%. Seong Jonghwa, a researcher at eBest Investment & Securities, analyzed, "Fourth-quarter sales met market expectations, but operating profit fell significantly short," adding, "This was due to a one-time increase in costs such as incentives and stock compensation expenses."

While Naver Pay, Webtoon, and the management integration of Line and Yahoo Japan are acting as momentum, the increase in Line Pay transaction volume and its scale are expected to be new momentum this year. Naver Pay was spun off in November last year and became an independent corporation called Naver Financial. Naver Pay plans to launch the Naver Bank account in the first half of this year and aims to continuously add securities, insurance, loans, and other services to develop into a comprehensive asset management platform.

Naver Webtoon continues its rapid growth with 60 million global monthly active users (MAU) in the fourth quarter (10 million in North America) and a 128% year-on-year increase in transaction volume. Researcher Seong said, "The domestic market is also experiencing high growth, but especially the North American market is growing rapidly after applying the domestic monetization model," explaining, "At the end of last year, the number of paid users in the North American market increased more than threefold compared to the beginning of the year, and revenue per paying user more than doubled compared to the beginning of the year." The newly entered European market at the end of last year is also a market with promising growth potential.

Researcher Seong added, "However, the momentum from Naver Pay and Naver Webtoon has already been reflected in the stock price in the short term," and "The management integration of Line and Yahoo Japan is also targeted to be completed by October this year from the company's side, but related momentum has primarily been reflected in Line's stock price."

This year, attention should be paid to whether and to what extent Line Pay transaction volume increases due to the Tokyo Olympics effect. Line Pay has made large-scale marketing investments over the past two years, securing 1.33 million merchants in 2018 and 10 million MAU in 2019, thus securing a significant level of both merchants and users, the two pillars of payment. Researcher Seong said, "Now, the key point is whether this investment will bear fruit in the form of increased transaction volume through the Tokyo Olympics," adding, "If Line Pay transaction volume increases significantly this year, it could become another strong new momentum."

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